As filed with the U.S. Securities and Exchange Commission on April 23, 2020
Registration Nos. 333-40161
811-06025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-6
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 24
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 97
Metropolitan Life Separate Account UL
(Exact Name of Registrant)
Metropolitan Life Insurance Company
(Name of Depositor)
200 Park Avenue
New York, NY 10166
(Address of depositors principal executive offices)
Depositors Telephone Number including Area Code (212) 578-9500
Stephen W. Gauster, Esq.
Executive Vice President and General Counsel
Metropolitan Life Insurance Company
200 Park Avenue
New York, NY 10166
(Name and address of agent for service)
Copy to:
W. Thomas Conner
Vedder Price P.C.
1401 I Street, N.W.
Suite 1100
Washington, D.C. 20005
Approximate Date of Proposed Public Offering: on May 1, 2020 or as soon thereafter as practicable
It is proposed that this filing will become effective (check appropriate box)
☐ | immediately upon filing pursuant to paragraph (b) |
☒ | on May 1, 2020 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 Additional Insurance Options.
Note:
This registration statement incorporates by reference the prospectuses and supplements dated April 29, 2019, April 29, 2018, May 1, 2017, May 1, 2016, May 1, 2015, April 28, 2014, April 29, 2013, April 30, 2012, May 1, 2011, May 1, 2010, May 1, 2009, and April 28, 2008 for the policies, each as filed in Post-Effective Amendment No. 20 filed on April 14, 2016, Post-Effective Amendment No. 19 filed on April 15, 2015, Post-Effective Amendment No. 18 filed on April 11, 2014, Post-Effective Amendment No. 17 filed on April 11, 2013, Post-Effective Amendment No. 16 filed on April 12, 2012, Post-Effective Amendment No. 15 filed on April 14, 2011, Post-Effective Amendment No. 14 filed on April 16, 2010, Post-Effective Amendment No. 13 filed on April 16, 2009, Post-Effective Amendment No. 12 filed on April 18, 2008, respectively, to the Registration Statement on Form N-6 (File No. 333-40161).
METROPOLITAN LIFE INSURANCE COMPANY (METLIFE)
The Equity Options
Equity Additions (also known as Variable Additional Insurance Dividend Option)
Equity Enricher (also known as Variable Additional Benefits Rider)
Supplement Dated May 1, 2020 to
Prospectus Dated April 28, 2008
This supplement updates certain information contained in your last prospectus and subsequent supplements. You should read and retain this supplement with your Policy. We will send you an additional copy of your most recent prospectus (and any previous supplements thereto), without charge, on written request sent to MetLife, P.O. Box 543, Warwick, RI 02887-0543. Equity Options policies and riders are no longer available for sale.
You allocate net premiums to and may transfer cash value among the available Divisions (Divisions may be referred to as Investment Divisions in your Policy and marketing materials) of Metropolitan Life Separate Account UL. Each available Division, in turn, invests in the shares of one of the following Portfolios:
Brighthouse Funds Trust I (Class A) |
Morgan Stanley Discovery Portfolio | |
Brighthouse Funds Trust II (Class A) |
MetLife Stock Index Portfolio |
* | This Portfolio is not available for Equity Additions. |
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 1-800-638-5000.
IMPORTANT INFORMATION
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a Portfolios shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports from us. Instead, the shareholder reports will be made available on www.metlife.com, and you will be notified by mail each time a shareholder report is posted and provided with a website link to access the shareholder report.
If you already elected to receive your shareholder report electronically, you will not be affected by this change, and you need not take any action. You may elect to receive shareholder reports and other communications, including Portfolio prospectuses and other information we send you by contacting our Administrative Office.
If you wish to continue to receive shareholder reports in paper on and after January 1, 2021, we will continue to send you all future reports in paper, free of charge. Please contact us at our Administrative Office if you wish to continue receiving paper copies of the Portfolios shareholder reports. Your election to receive shareholder reports in paper will apply to all Portfolios available under your Policy.
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Sending Communications and Payments to Us
You can communicate all of your requests, instructions and notifications to us by contacting us in writing at our Designated Office. We may require that certain requests, instructions and notifications be made on forms that we provide. These include: changing your beneficiary; taking a Policy loan; taking a partial withdrawal; surrendering your Policy; making transfer requests or changing your premium allocations. As of the date of this prospectus, requests for partial withdrawals and Policy loans must be in writing. However, you should contact us at 1-800-MET-5000 for our current procedures. Below is a list of our Designated Offices for various functions. We may name additional or alternate Designated Offices. If we do, we will notify you in writing. You may also contact us at 1-800-MET-5000 for information on where to direct communication regarding any function not listed below or for any other inquiry.
Function | Designated Office Address | |
Premium Payments |
MetLife, P.O. Box 371487, Pittsburgh, PA 15250-7487 | |
Payment Inquiries |
MetLife, P.O. Box 354, Warwick, RI 02887-0354 | |
Surrenders, Withdrawals, Loans, Investment Division Transfers, Premium Reallocation |
MetLife, P.O. Box 543, Warwick, RI 02887-0543 | |
Death Claims |
MetLife, P.O. Box 353, Warwick, RI 02887-0353 | |
Beneficiary & Ownership |
MetLife, P.O. Box 313, Warwick, RI 02887-0313 | |
Address Changes |
MetLife, 500 Schoolhouse Road, Johnstown, PA 15904 Attn: Data Integrity |
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.
Our variable life insurance business is largely conducted through digital communications and data storage networks and systems operated by us and our service providers or other business partners (e.g., the Portfolios and the firms involved in the distribution and sale of our variable life insurance policies). For example, many routine operations, such as processing Owners requests and elections and day-to-day record keeping, are all executed through computer networks and systems.
We have established administrative and technical controls and a business continuity plan to protect our operations against cybersecurity breaches. Despite these protocols, a cybersecurity breach could have a material, negative impact on MetLife and the Separate Account, as well as individual Owners and their Policies. Our operations also could be negatively affected by a cybersecurity breach at a third party, such as a governmental or regulatory authority or another participant in the financial markets.
Cybersecurity breaches can be intentional or unintentional events, and can occur through unauthorized access to computer systems, networks or devices; infection from computer viruses or other malicious software code; or attacks that shut down, disable, slow or otherwise disrupt operations, business processes or website access or functionality. Cybersecurity breaches can interfere with our processing of Policy transactions, including the processing of transfer orders from our website or with the Funds; impact our ability to calculate unit values; cause the release and possible destruction of confidential Owner or business information; or impede order processing or cause other operational issues. Although we continually make efforts to identify and reduce our exposure to cybersecurity risk, there is no guarantee that we will be able to successfully manage this risk at all times.
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Fee Tables
The following tables describe the fees and expenses that the Portfolios will pay and that therefore a Policy Owner will indirectly pay periodically during the time that he or she owns an Equity Option. The first table shows the lowest and highest fees and expenses charged by the Portfolio(s) offered with Equity Additions and Equity Enricher for the fiscal year ended December 31, 2019. The next table describes the annual operating expenses for each Portfolio for the year ended December 31, 2019, as a percentage of the Portfolios average daily net assets for the year, before and after any fee waivers and expense reimbursements. More detail concerning each Portfolios fees and expenses is contained in the table that follows this table and in the prospectuses for the Portfolios.
Minimum and Maximum Total Annual Portfolio Operating Expenses
Minimum | Maximum | |||||||||
Total
Annual Portfolio Operating Expenses |
0.28% | 0.68% |
Total Annual Portfolio Operating Expenses
Portfolio | Management Fee |
Other Expenses |
Total Annual Operating Expenses |
Fee Waiver and/or Expense Reimbursement |
Net Total Annual Operating Expenses | ||||||||||||||||||||
Brighthouse Funds Trust I Class A |
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Morgan Stanley Discovery Portfolio1 |
0.64% | 0.04% | 0.68% | 0.02% | 0.66% | ||||||||||||||||||||
Brighthouse Funds Trust II Class A |
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MetLife Stock Index Portfolio |
0.25% | 0.03% | 0.28% | 0.01% | 0.27% |
1 | This Portfolio is not available for Equity Additions. |
The information shown in the table above was provided by the Portfolios. Certain Portfolios and their investment adviser have entered into expense reimbursement and/or fee waiver arrangements that will continue through April 30, 2021. These arrangements can be terminated with respect to a Portfolio only with the approval of the board of directors or trustees of that Portfolio. Please see the Portfolios prospectuses for additional information regarding these arrangements.
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The Portfolios
Management of the Portfolios
Brighthouse Investment Advisers, LLC is the investment adviser who is responsible for overall management of Brighthouse Funds Trust I and Brighthouse Funds Trust II. Brighthouse Investment Advisers, LLC has contracted with sub-advisers to make day-to-day investment decisions for the Portfolios. The sub-advisers and the investment objective of each Portfolio are as follows:
Portfolio | Investment Objective | Investment Adviser/Subadviser | ||
Brighthouse Funds Trust I Class A |
||||
Morgan Stanley Discovery Portfolio |
Seeks capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Morgan Stanley Investment Management Inc. | ||
Brighthouse Funds Trust II Class A |
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MetLife Stock Index Portfolio |
Seeks to track the performance of the Standard & Poors 500® Composite Stock Price Index. | Brighthouse Investment Advisers, LLC Subadviser: MetLife Investment Advisors, LLC |
Other Matters
The novel coronavirus COVID-19 pandemic is causing illnesses and deaths. This pandemic, other pandemics, and their related major public health issues are having a major impact on the global economy and financial markets. Governmental and non-governmental organizations may not effectively combat the spread and severity of such a pandemic, increasing its harm to the Company. Any of these events could materially adversely affect the Companys operations, business, financial results, or financial condition.
On August 4, 2017, MetLife, Inc. completed the separation of Brighthouse Financial, Inc. and its subsidiaries (Brighthouse) where MetLife, Inc. retained an ownership interest of 19.2% non-voting common stock outstanding of Brighthouse Financial, Inc. In June 2018, MetLife, Inc. sold Brighthouse Financial, Inc. common stock in exchange for MetLife, Inc. senior notes and Brighthouse was no longer considered a related party. At December 31, 2018, MetLife, Inc. no longer held any shares of Brighthouse Financial, Inc. for its own account; however, certain insurance company separate accounts managed by MetLife held shares of Brighthouse Financial, Inc. Brighthouse subsidiaries include Brighthouse Investment Advisers, LLC, which serves as the investment adviser for the Brighthouse Funds Trust I and Brighthouse Funds Trust II. We and Our affiliated companies have entered into agreements with Brighthouse Investment Advisers, LLC, Brighthouse Funds Trust I and Brighthouse Funds Trust II whereby We receive payments for certain administrative, marketing and support services described in the previous paragraphs. Currently, the Portfolios in Brighthouse Funds Trust I and Brighthouse Funds Trust II are only available in variable annuity contracts and variable life insurance policies issued by Metropolitan Life Insurance Company and its affiliates, as well as Brighthouse Life Insurance Company and its affiliates. As of December 31, 2019, approximately 89% of Portfolio assets held in Separate Accounts of Metropolitan Life Insurance Company and its affiliates were allocated to Portfolios in Brighthouse Funds Trust I and Brighthouse Funds Trust II. Should We or Brighthouse Investment Advisers, LLC decide to terminate the agreements, we would be required to find alternative Portfolios which could have higher or lower costs to the Contract Owner. In addition, the amount of payments We receive could cease or be substantially reduced which may have a material impact on Our financial statements.
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Federal Tax Matters
The following is a brief summary of some tax rules that may apply to your Policy. It does not purport to be complete or cover every situation. The summary does not address state, local or foreign tax issues related to your Policy. Because individual circumstances vary, you should consult with your own tax adviser to find out how taxes can affect your benefits and rights under your Policy, especially before you make unscheduled premium payments, change your specified face amount, change your death benefit option, change coverage provided by riders, take a loan or withdrawal, or assign or surrender the Policy. 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.
Insurance Proceeds
| Insurance proceeds are generally excludable from your beneficiarys gross income to the extent provided in Section 101 of the Internal Revenue Code (Code). |
| In the case of employer-owned life insurance as defined in Section 101(j) of the Code, the amount of the death benefit excludable from gross income is limited to premiums paid unless the Policy falls within certain specified exceptions and a notice and consent requirement is satisfied before the Policy is issued. Certain specified exceptions are based on the status of an employee as highly compensated, a director, or recently employed. There are also exceptions for Policy proceeds paid to an employees heirs. These exceptions only apply if proper notice is given to the insured employee and consent is received from the insured employee before the issuance of the Policy. These rules apply to Policies issued August 18, 2006 and later and also apply to Policies issued before August 18, 2006 after a material increase in the death benefit or other material change. An IRS reporting requirement applies to employer-owned life insurance subject to these rules. Because these rules are complex and will affect the tax treatment of death benefits, it is advisable to consult tax counsel. The death benefit will also be taxable in the case of a transfer-for-value unless certain exceptions apply. |
| The death proceeds may be subject to federal estate tax: (i) if paid to the insureds estate or (ii) if paid to a different beneficiary if the insured possessed incidents of ownership at or within three years before death. |
| If you die before the insured, the value of your Policy (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. Please consult your tax adviser for the applicable estate tax rates. |
| The insurance proceeds payable upon death of the insured will never be less than the minimum amount required for the Policy to be treated as life insurance under Section 7702 of the Code, as in effect on the date the Policy was issued. The rules with respect to Policies issued on a substandard risk basis are not entirely clear. |
Cash Value (If your Policy Is Not a Modified Endowment Contract)
| You are generally not taxed on your cash value (except with respect to the DWI option) until you withdraw it or surrender your Policy or receive a distribution (such as when your Policy terminates 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 treated as gain subject to ordinary income tax after you have received amounts equal to the total premiums you paid. Somewhat different rules apply in the first 15 Policy years. Distributions during the first 15 Policy years accompanied by a reduction in Policy benefits, including distributions which must be made in order to enable the Policy to continue to qualify as a life insurance contract for federal income tax purposes, are subject to different tax rules and may be treated in whole or in part as taxable income. |
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| For income tax purposes, if you surrender an Equity Option for its cash value but the base Policy remains in force, you will be considered to have made a partial withdrawal. |
| Amounts applied to the DWI option are treated as distributions from the Policy and interest credited on amounts applied to the DWI option is currently taxable as ordinary income. |
Split-Dollar Insurance Plans
The IRS has issued guidance on split dollar insurance plans. A tax adviser should be consulted with respect to this guidance if you have purchased or are considering the purchase of a Policy for a split dollar insurance plan. If your split dollar plan provides deferred compensation, specific tax rules governing deferred compensation arrangements may apply. Failure to adhere to these rules will result in adverse tax consequences.
The Sarbanes-Oxley Act of 2002 (the Act), which was signed into law on July 30, 2002, prohibits, with limited exceptions, publicly-traded companies, including non-U.S. companies that have securities listed on U.S. exchanges, from extending, directly or indirectly or through a subsidiary, many types of personal loans to their directors or executive officers. It is possible that this prohibition may be interpreted to apply to certain split-dollar life insurance arrangements for directors and executive officers of such companies, since at least some such arrangements can arguably be viewed as involving a loan from the employer for at least some purposes.
Any affected business contemplating the payment of a premium on an existing Policy or the purchase of a new Policy in connection with a split-dollar life insurance arrangement should consult legal counsel.
Loans
| Loan amounts you receive will generally not be subject to income tax, unless your Policy is or becomes a modified endowment contract, is exchanged or terminates. Loans from or secured by a Policy that is not classified as a modified endowment contract should not generally be treated as a taxable distribution so long as the Policy stays in force. |
| Interest on loans is generally not deductible. For businesses that own a Policy, at least part of the interest deduction unrelated to the Policy may be disallowed unless the insured is a 20% owner, officer, director or employee of the business. |
| If your Policy terminates (upon surrender, cancellation lapse or, in most cases, exchange) while any Policy 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 Policy distribution. 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. Since amounts borrowed reduce the cash value that will be distributed to you if the Policy is surrendered, cancelled or lapses, any cash value distributed to you in these circumstances may be insufficient to pay the income tax on any gain. |
| A loan that is taken from, or secured by, a Policy may have tax consequences. A loan from or secured by a Policy that is not classified as a modified endowment contract should generally not be treated as a taxable distribution so long as the Policy stays in force. A tax adviser should be consulted when considering a loan. |
Modified Endowment Contracts
These contracts are life insurance policies where the premiums paid during the first 7 years after the Policy is issued, or after a material change in the Policy, exceeds tax law limits referred to as the 7-pay test. Material changes in the Policy include changes in the level of benefits, receipt of an unnecessary premium and certain other changes to your Policy after the issue date. Unnecessary premiums are premiums paid into the Policy which are not needed in order to provide a death benefit equal to the lowest death benefit that was payable in the most recent 7-pay testing period. Reductions in benefits during a 7-pay testing period also may cause your Policy 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
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a procedure for the correction of inadvertent modified endowment contracts that may provide relief in limited circumstances.
Due to the flexibility of the Policies as to premiums and benefits, the individual circumstances of each Policy will determine whether it is classified as a modified endowment contract.
If your Policy is considered a modified endowment contract the following applies:
| The death benefit will still generally be income tax free to your beneficiary, to the extent discussed above. |
| Amounts withdrawn or distributed before the insureds death, including (without limitation) loans taken from or secured by the Policy, assignments and pledges, are (to the extent of any gain in your Policy) treated as income first and subject to income tax. 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 you receive before age 591⁄2 except if you are disabled or if the distribution is part of a series of substantially equal periodic payments for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your beneficiary. The foregoing exceptions to the 10% additional tax generally do not apply to a Policy Owner that is a non-natural person, such as a corporation. |
| If a Policy becomes a modified endowment contract, distributions that occur during the Policy year will be taxed as distributions from a modified endowment contract. In addition, distributions from a Policy within two years before it becomes a modified endowment contract will be taxed in this manner. This means that a distribution made from a Policy that is not a modified endowment contract could later become taxable as a distribution from a modified endowment contract. |
Diversification
In order for your Policy to qualify as life insurance, we must comply with certain diversification standards with respect to the investments underlying the Policy. 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 Policy Owners of gains under their Policy. If 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 policies who retain excessive control over the investment of the underlying Separate Account assets may be treated as the Owners of those assets and may be subject to tax on income produced by those assets. The Equity Options are supported by assets held in our Separate Account. Although published guidance in this area does not address certain aspects of the Policies, we believe that the Owner of a Policy should not be treated as an owner of the assets in our Separate Account. We reserve the right to modify the Policies to bring them into conformity with applicable standards should such modification be necessary to prevent Owners of the Policies from being treated as the owners of the 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 Owners estate for purposes of the Federal estate tax if the Policy Owner was the insured, if the insured possessed incidents of ownership in the Policy at the time of death, or the insured made a gift transfer of the policy within three years of death. If the Policy Owner was not the insured, the fair market value of the Policy would be included in the Policy Owners estate upon the Policy Owners death.
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Moreover, under certain circumstances, the 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 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.
In general, current rules provide for a $10 million federal estate, gift and generation-skipping transfer tax exemption (as indexed for inflation) and a top tax rate of 40 percent through the year 2025.
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 Policy distributions are taxable, they are generally subject to withholding for the recipients 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 IRS 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 and Foreign Corporations
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 policies 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 purchasers country of citizenship or residence. Prospective purchasers that are not U.S. citizens or residents are advised to consult with a qualified tax adviser regarding U.S. and foreign taxation with respect to a Policy purchase.
Business Uses of Policy
Businesses can use the policies in various arrangements, including nonqualified deferred compensation or salary continuance plans, split dollar insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit plans, retiree medical benefit plans and others. The tax consequences of such plans may vary depending on the particular facts and circumstances. As noted, in the case of a business owned Policy, the provisions of Section 101(j) of the Code may limit the amount of the death benefit excludable from gross income unless a specified exception applies and a notice and consent requirement is satisfied, as discussed above. If you are contemplating a change to an existing Policy or purchasing a Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser.
Transfer of Issued Life Insurance Policies to Third Parties
If you transfer the Policy to a third party, including a sale of the Policy to a life settlement company, such transfer for value may be taxable. The death benefit will also be taxable in the case of a transfer for value unless certain exceptions apply. We may be required to report certain information to the IRS, as required under IRC section 6050Y and applicable regulations. You should consult with a qualified tax advisor for further information prior to transferring the Policy.
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Changes to Tax Rules and Interpretations
Changes in applicable tax laws, rules and interpretations can adversely affect the tax treatment of your Policy. These changes may take effect retroactively. We reserve the right to amend the Policy in any way necessary to avoid any adverse tax treatment. Examples of changes that could create adverse tax consequences include:
| Possible taxation of cash value transfers ; |
| Possible taxation as if you were the owner of your allocable portion of the Separate Accounts assets; |
| Possible changes in the tax treatment of Policy benefits and rights. |
Tax Credits and Deductions
MetLife 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 MetLife is the owner of the assets from which the tax benefits are derived.
The Companys Income Taxes
Under current federal income tax law we are not taxed on the Separate Accounts 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.
Other Information
The Financial Industry Regulatory Authority (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.
Financial Statements
You can find the financial statements of the Separate Account and the financial statements of Metropolitan Life Insurance Company in the Statement of Additional Information. You may obtain a copy of the Statement of Additional Information, without charge, by e-mailing us at rcg@metlife.com or by calling 800-MET-5000. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy.
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Equity Options
Equity Additions (Variable Additional Insurance Dividend Option)
Equity Enricher (Variable Additional Benefits Rider)
Metropolitan Life Separate Account UL
Issued by Metropolitan Life Insurance Company
STATEMENT OF ADDITIONAL INFORMATION
(PART B)
May 1, 2020
This Statement of Additional Information is not a prospectus. This Statement of Additional Information relates to the prospectus dated April 28, 2008, as supplemented, and should be read in conjunction therewith. A copy of the prospectus, as supplemented, for Equity Options may be obtained by writing to MetLife, P.O. Box 543, Warwick, RI 02887-0543. You may obtain prospectuses for the Portfolios by calling 1-800-638-5000.
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DISTRIBUTION OF THE POLICIES THAT INCLUDE THE EQUITY OPTIONS |
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THE COMPANY AND THE SEPARATE ACCOUNT
Metropolitan Life Insurance Company (MetLife or the Company) is a provider of insurance, annuities, employee benefits and asset management. We are also one of the largest institutional investors in the United States with a $280.6 billion general account portfolio invested primarily in fixed income securities (corporate, structured products, municipals, and government and agency) and mortgage loans, as well as real estate, real estate joint ventures, other limited partnerships and equity securities, at December 31, 2019. The Company was incorporated under the laws of New York in 1868. The Companys office is located at 200 Park Avenue, New York, New York 10166-0188. The Company is a wholly-owned subsidiary of MetLife, Inc.
We established the Separate Account under New York law on December 13, 1988. The Separate Account receives premium payments from the Equity Options 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
DISTRIBUTION OF THE POLICIES THAT INCLUDE THE EQUITY OPTIONS
MetLife Investors Distribution Company (MLIDC), 200 Park Avenue, New York, New York 10166, is the principal underwriter and distributor of the Equity Options. 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). Beginning January 1, 2009, new Equity Options are no longer sold.
We do not pay commissions for the sale of the Equity Additions. MLIDC received sales compensation with respect to the sale of Equity Enricher in the following amounts:
Fiscal Year |
Aggregate Amount of Commissions Paid to Distributor |
Aggregate Amount of Commissions Retained by Distributor After Payments to Selling Firms | ||
2019 |
$161,057 | $0 | ||
2018 |
$182,247 | $0 | ||
2017 |
$255,055 | $0 |
Generally, you can receive the Policys insurance proceeds or amounts paid upon surrender of your Policy or your Equity Option under an income plan instead of in a lump sum. Before you choose an income plan you should consider:
| The tax consequences associated with the Policy proceeds, which can vary considerably, depending on whether a plan is chosen. You or your beneficiary should consult with a qualified tax adviser about tax consequences. |
| That your Policy or your Equity Option will terminate at the time you commence an income plan and you will receive a new contract, which describes the terms of the income plan. You should carefully review the terms of the new contract, because it contains important information about the terms and conditions of the income plan. |
| The rates of return that we credit under these plans are not based on the performance of any of the Portfolios. Generally, we currently make the following income plans available: |
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| Interest Income |
| Installment Income for a Stated Amount |
| Joint and Survivor Life Income |
| Installment Income for a Stated Period |
| Single Life Income-Guaranteed Payment Period |
| Single Life Income-Guaranteed Return |
POTENTIAL CONFLICTS OF INTEREST
The Portfolios Boards of Trustees monitor events to identify conflicts that may arise from the sale of Portfolio shares to variable life and variable annuity separate accounts of affiliated and, if applicable, unaffiliated insurance companies and qualified plans. Conflicts could result from changes in state insurance law or Federal income tax law, changes in investment management of a Portfolio, or differences in voting instructions given by variable life and variable annuity contract owners and qualified plans, if applicable. If there is a material conflict, the Board of Trustees will determine what action should be taken, including the removal of the affected Division from the Portfolio(s), if necessary. If we believe any Portfolio action is insufficient, we will consider taking other action to protect Policy Owners. There could, however, be unavoidable delays or interruptions of operations of the Separate Account that we may be unable to remedy.
LIMITS TO METLIFES RIGHT TO CHALLENGE THE POLICY
We will not contest your Policy after two Policy years from the base Policys issue or reinstatement (excluding riders added later). We will not contest an increase in a death benefit after it has been in effect for two years.
We will adjust benefits to reflect the correct age and sex of the insured, if this information is not correct in the Policy application.
Generally, you will promptly receive statements confirming your significant transactions such as:
| Transactions between an Equity Option and another part of the Policy. |
| Transfers between Divisions. |
| Partial withdrawals. |
| Loan amounts you request. |
| Premium payments. |
If your premium payments are made through preauthorized checking arrangement or another systematic payment method, 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 within 30 days after a Policy year. The statement will summarize the years transactions and include information on:
| Deductions and charges. |
| Status of the death benefit. |
4
| Cash values. |
| Amounts in the Divisions you are using. |
| Status of Policy loans. |
| Automatic loans to pay interest. |
| Information on your modified endowment contract status (if applicable). |
We will also send you a Funds annual and semi-annual reports to shareholders.
We may provide information concerning the historical investment experience of the Divisions, including average annual net rates of return for periods of one, three, five, and ten years, as well as average annual net rates of return and total net rates of return since inception of the Portfolios. These net rates of return represent past performance and are not an indication of future performance. Cost of insurance, sales, premium tax, and mortality and expense risk charges, which can significantly reduce the return to the Equity Options Owner, are not reflected in these rates. The rates of return reflect only the fees and expenses of the underlying Portfolios. The net rates of return show performance from the inception of the Portfolios, which in some instances, may precede the inception date of the corresponding Division.
We may provide personalized illustrations showing how the Equity Options work based on assumptions about investment returns and the Policy Owners and/or insureds characteristics. The illustrations are intended to show how the death benefit and cash value for the Equity Options could vary over an extended period of time assuming hypothetical gross rates of return (i.e., investment income and capital gains and losses, realized or unrealized) for the Separate Account equal to specified constant after-tax rates of return. One of the gross rates of return will be 0%. Gross rates of return do not reflect the deduction of any charges and expenses. The illustrations will be based on specified assumptions, such as face amount, premium payments, insured, underwriting class, and death benefit option. Illustrations will disclose the specific assumptions upon which they are based. Values will be given based on guaranteed mortality and expense risk and other charges and may also be based on current mortality and expense risk and other charges.
The illustrated death benefit, Cash Surrender Value, and Cash Value for a hypothetical Policy would be different, either higher or lower, from the amounts shown in the illustration if the actual gross rates of return averaged the gross rates of return upon which the illustration is based, but varied above and below the average during the period, or if premiums were paid in other amounts or at other than annual intervals. For example, as a result of variations in actual returns, additional Premium payments beyond those shown or to realize the Policy values shown in particular illustrations even if the average rate of return is realized. Illustrations may also show the internal rate of return on the Cash Surrender Value and the death benefit. The internal rate of return on the Cash Surrender Value is equivalent to an interest rate (after taxes) at which an amount equal to the illustrated premiums could have been invested outside the Policy to arrive at the death benefit of the Policy. Illustrations may also show values based on the historical performance of the Divisions. We reserve the right to impose a $25 fee for each illustration that you request in excess of one per year.
5
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements comprising each of the 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 are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The consolidated financial statements and related financial statement schedules of Metropolitan Life Insurance Company and subsidiaries 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 consolidated financial statements and financial statement schedules are 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 30 Rockefeller Plaza, New York, New York 10112-0015.
The financial statements of the Separate Account and the financial statements of Metropolitan Life Insurance Company are attached. Our financial statements should be considered only as bearing upon our ability to meet our obligations under the Policy.
6
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 OPINION ON THE FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS 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 Divisions listed in Notes 2A and 3 as of December 31, 2019, the related statements of operations and changes in net assets for each of the three years in the period then ended, and the financial highlights in Note 8 for each of the five years in the period then ended for the Divisions, except for the Divisions included in the table below; the related statements of operations, changes in net assets, and the financial highlights for the Divisions and periods indicated in the table below; and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Divisions constituting the Separate Account of the Company as of December 31, 2019, and the results of their operations for the three years then ended (or for the periods listed in the table below), the changes in their net assets for each of the three years in the period then ended (or for the periods listed in the table below), and the financial highlights for each of the five years in the period then ended (or for the periods listed in the table below), in conformity with accounting principles generally accepted in the United States of America. ------------------------------------------------------------------------------------------------------------------------------------ INDIVIDUAL DIVISIONS STATEMENTS OF COMPRISING THE STATEMENT OF CHANGES IN SEPARATE ACCOUNT OPERATIONS NET ASSETS ------------------------------------------------------------------------------------------------------------------------------------ BHFTI PanAgora Global For the years ended December 31, 2019, For the years ended December 31, Diversified Risk Division 2018, and 2017 2019, 2018, 2017, 2016, 2015, and the period from April 28, 2014 through December 31, 2014 (commenced April 28, 2014 and began transactions in 2015) ------------------------------------------------------------------------------------------------------------------------------------ Fidelity(R) VIP Government For the years ended December 31, 2019, For the years ended December 31, Money Market Division 2018, and 2017 2019, 2018, 2017, and the period from April 29, 2016 (commencement of operations) through December 31, 2016 ------------------------------------------------------------------------------------------------------------------------------------ Janus Henderson Enterprise For the years ended December 31, 2019, For the years ended December 31, Division 2018, and 2017 2019, 2018, 2017, and 2016 (commenced May 3, 2010 and began transactions in 2016) ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ INDIVIDUAL DIVISIONS COMPRISING THE SEPARATE ACCOUNT FINANCIAL HIGHLIGHTS ------------------------------------------------------------------------------------------------------------------------------------ BHFTI PanAgora Global Diversified Risk Division ------------------------------------------------------------------------------------------------------------------------------------ Fidelity(R) VIP Government Money Market Division ------------------------------------------------------------------------------------------------------------------------------------ Janus Henderson Enterprise Division ------------------------------------------------------------------------------------------------------------------------------------ BASIS FOR OPINION These financial statements and financial highlights are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on the Separate Account's financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Separate Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Separate Account's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of investments owned as of December 31, 2019, by correspondence with the custodian or mutual fund companies. We believe that our audits provide a reasonable basis for our opinion. /s/ DELOITTE & TOUCHE LLP Tampa, Florida March 27, 2020 We have served as the Separate Account's auditor since 1990. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES DECEMBER 31, 2019 AMERICAN FUNDS(R) AB VPS GLOBAL AB VPS AMERICAN GLOBAL SMALL THEMATIC GROWTH INTERMEDIATE BOND FUNDS(R) BOND CAPITALIZATION DIVISION DIVISION DIVISION DIVISION -------------------- --------------------- -------------------- -------------------- ASSETS: Investments at fair value............ $ 31,660 $ 158,911 $ 6,856,016 $ 77,030,169 -------------------- --------------------- -------------------- -------------------- Total Assets.................... 31,660 158,911 6,856,016 77,030,169 -------------------- --------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company.................. -- -- -- -- -------------------- --------------------- -------------------- -------------------- Total Liabilities............... -- -- -- -- -------------------- --------------------- -------------------- -------------------- NET ASSETS.............................. $ 31,660 $ 158,911 $ 6,856,016 $ 77,030,169 ==================== ===================== ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-1 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 AMERICAN FUNDS(R) AMERICAN FUNDS(R) AMERICAN FUNDS(R) AMERICAN FUNDS(R) GROWTH GROWTH-INCOME HIGH-INCOME BOND INTERNATIONAL DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 223,225,743 $ 129,723,951 $ 34,035 $ 2,106,276 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 223,225,743 129,723,951 34,035 2,106,276 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- 1 -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... -- 1 -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 223,225,743 $ 129,723,950 $ 34,035 $ 2,106,276 ==================== ==================== ==================== ==================== AMERICAN FUNDS(R) U.S. BHFTI AMERICAN BHFTI AMERICAN GOVERNMENT/AAA- BHFTI AB GLOBAL FUNDS(R) BALANCED FUNDS(R) GROWTH RATED SECURITIES DYNAMIC ALLOCATION ALLOCATION ALLOCATION DIVISION DIVISION DIVISION DIVISION ------------------- ------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 59,401 $ 91,680 $ 1,445,605 $ 2,246,552 ------------------- ------------------- -------------------- -------------------- Total Assets.......... 59,401 91,680 1,445,605 2,246,552 ------------------- ------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- ------------------- ------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- ------------------- ------------------- -------------------- -------------------- NET ASSETS.................... $ 59,401 $ 91,680 $ 1,445,605 $ 2,246,552 =================== =================== ==================== ==================== BHFTI AMERICAN BHFTI FUNDS(R) MODERATE AQR GLOBAL ALLOCATION RISK BALANCED DIVISION DIVISION -------------------- -------------------- ASSETS: Investments at fair value.. $ 1,627,630 $ 184,175 -------------------- -------------------- Total Assets.......... 1,627,630 184,175 -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -------------------- -------------------- Total Liabilities..... -- -- -------------------- -------------------- NET ASSETS.................... $ 1,627,630 $ 184,175 ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-2 The accompanying notes are an integral part of these financial statements. UL-3 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 BHFTI BLACKROCK GLOBAL BHFTI BRIGHTHOUSE BHFTI BRIGHTHOUSE BHFTI BRIGHTHOUSE TACTICAL STRATEGIES ASSET ALLOCATION 100 BALANCED PLUS SMALL CAP VALUE DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 567,933 $ 26,239,391 $ 463,179 $ 1,006,269 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 567,933 26,239,391 463,179 1,006,269 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- 1 -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... -- 1 -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 567,933 $ 26,239,390 $ 463,179 $ 1,006,269 ==================== ==================== ==================== ==================== BHFTI BRIGHTHOUSE/ BHFTI BRIGHTHOUSE/ BHFTI BRIGHTHOUSE/ ABERDEEN EMERGING TEMPLETON WELLINGTON BHFTI CLARION MARKETS EQUITY INTERNATIONAL BOND LARGE CAP RESEARCH GLOBAL REAL ESTATE DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 1,613,170 $ 303,898 $ 499,000,336 $ 29,628,630 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 1,613,170 303,898 499,000,336 29,628,630 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 1,613,170 $ 303,898 $ 499,000,336 $ 29,628,630 ==================== ==================== ==================== ==================== BHFTI HARRIS BHFTI INVESCO OAKMARK BALANCED-RISK INTERNATIONAL ALLOCATION DIVISION DIVISION -------------------- -------------------- ASSETS: Investments at fair value.. $ 42,162,984 $ 70,629 -------------------- -------------------- Total Assets.......... 42,162,984 70,629 -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -------------------- -------------------- Total Liabilities..... -- -- -------------------- -------------------- NET ASSETS.................... $ 42,162,984 $ 70,629 ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-4 The accompanying notes are an integral part of these financial statements. UL-5 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 BHFTI JPMORGAN BHFTI INVESCO BHFTI INVESCO GLOBAL BHFTI JPMORGAN GLOBAL EQUITY SMALL CAP GROWTH ACTIVE ALLOCATION SMALL CAP VALUE DIVISION DIVISION DIVISION DIVISION -------------------- --------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 61,706,401 $ 7,743,564 $ 180,493 $ 517,568 -------------------- --------------------- -------------------- -------------------- Total Assets.......... 61,706,401 7,743,564 180,493 517,568 -------------------- --------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- --------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- --------------------- -------------------- -------------------- NET ASSETS.................... $ 61,706,401 $ 7,743,564 $ 180,493 $ 517,568 ==================== ===================== ==================== ==================== BHFTI BHFTI BHFTI BHFTI LOOMIS SAYLES LOOMIS SAYLES METLIFE MULTI-INDEX MFS(R) RESEARCH GLOBAL ALLOCATION GROWTH TARGETED RISK INTERNATIONAL DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 458,663 $ 44,014,963 $ 190,385 $ 19,669,707 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 458,663 44,014,963 190,385 19,669,707 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 458,663 $ 44,014,963 $ 190,385 $ 19,669,707 ==================== ==================== ==================== ==================== BHFTI BHFTI MORGAN STANLEY PANAGORA GLOBAL DISCOVERY DIVERSIFIED RISK DIVISION DIVISION -------------------- --------------------- ASSETS: Investments at fair value.. $ 339,317,318 $ 675 -------------------- --------------------- Total Assets.......... 339,317,318 675 -------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- 1 -------------------- --------------------- Total Liabilities..... -- 1 -------------------- --------------------- NET ASSETS.................... $ 339,317,318 $ 674 ==================== ===================== The accompanying notes are an integral part of these financial statements. UL-6 The accompanying notes are an integral part of these financial statements. UL-7 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 BHFTI BHFTI PIMCO INFLATION BHFTI BHFTI SCHRODERS SSGA GROWTH AND PROTECTED BOND PIMCO TOTAL RETURN GLOBAL MULTI-ASSET INCOME ETF DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- ------------------- ASSETS: Investments at fair value.. $ 9,924,534 $ 49,636,590 $ 112,663 $ 8,774,580 -------------------- -------------------- -------------------- ------------------- Total Assets.......... 9,924,534 49,636,590 112,663 8,774,580 -------------------- -------------------- -------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- ------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- ------------------- NET ASSETS.................... $ 9,924,534 $ 49,636,590 $ 112,663 $ 8,774,580 ==================== ==================== ==================== =================== BHFTI BHFTI BHFTI T. ROWE PRICE BHFTI T. ROWE PRICE VICTORY SYCAMORE SSGA GROWTH ETF LARGE CAP VALUE MID CAP GROWTH MID CAP VALUE DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- ------------------- ASSETS: Investments at fair value.. $ 7,772,729 $ 3,102,498 $ 46,858,064 $ 94,502,489 -------------------- -------------------- -------------------- ------------------- Total Assets.......... 7,772,729 3,102,498 46,858,064 94,502,489 -------------------- -------------------- -------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- ------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- ------------------- NET ASSETS.................... $ 7,772,729 $ 3,102,498 $ 46,858,064 $ 94,502,489 ==================== ==================== ==================== =================== BHFTII BAILLIE GIFFORD BHFTII BLACKROCK INTERNATIONAL STOCK BOND INCOME DIVISION DIVISION -------------------- -------------------- ASSETS: Investments at fair value.. $ 49,933,924 $ 82,259,521 -------------------- -------------------- Total Assets.......... 49,933,924 82,259,521 -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -------------------- -------------------- Total Liabilities..... -- -- -------------------- -------------------- NET ASSETS.................... $ 49,933,924 $ 82,259,521 ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-8 The accompanying notes are an integral part of these financial statements. UL-9 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 BHFTII BLACKROCK BHFTII BLACKROCK ULTRA-SHORT BHFTII BRIGHTHOUSE BHFTII BRIGHTHOUSE CAPITAL APPRECIATION TERM BOND ASSET ALLOCATION 20 ASSET ALLOCATION 40 DIVISION DIVISION DIVISION DIVISION -------------------- --------------------- --------------------- -------------------- ASSETS: Investments at fair value.. $ 15,931,824 $ 28,087,767 $ 4,516,440 $ 11,161,607 -------------------- --------------------- --------------------- -------------------- Total Assets.......... 15,931,824 28,087,767 4,516,440 11,161,607 -------------------- --------------------- --------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- --------------------- --------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- --------------------- --------------------- -------------------- NET ASSETS.................... $ 15,931,824 $ 28,087,767 $ 4,516,440 $ 11,161,607 ==================== ===================== ===================== ==================== BHFTII BHFTII BRIGHTHOUSE BHFTII BRIGHTHOUSE BRIGHTHOUSE/ARTISAN BHFTII BRIGHTHOUSE/ ASSET ALLOCATION 60 ASSET ALLOCATION 80 MID CAP VALUE WELLINGTON BALANCED DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- --------------------- -------------------- ASSETS: Investments at fair value.. $ 57,435,303 $ 110,596,939 $ 63,307,525 $ 339,265,361 -------------------- -------------------- --------------------- -------------------- Total Assets.......... 57,435,303 110,596,939 63,307,525 339,265,361 -------------------- -------------------- --------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- --------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- --------------------- -------------------- NET ASSETS.................... $ 57,435,303 $ 110,596,939 $ 63,307,525 $ 339,265,361 ==================== ==================== ===================== ==================== BHFTII BRIGHTHOUSE/ WELLINGTON CORE BHFTII FRONTIER EQUITY OPPORTUNITIES MID CAP GROWTH DIVISION DIVISION --------------------- --------------------- ASSETS: Investments at fair value.. $ 90,517,969 $ 284,652,778 --------------------- --------------------- Total Assets.......... 90,517,969 284,652,778 --------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- --------------------- --------------------- Total Liabilities..... -- -- --------------------- --------------------- NET ASSETS.................... $ 90,517,969 $ 284,652,778 ===================== ===================== The accompanying notes are an integral part of these financial statements. UL-10 The accompanying notes are an integral part of these financial statements. UL-11 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 BHFTII BHFTII BHFTII BHFTII LOOMIS SAYLES LOOMIS SAYLES METLIFE AGGREGATE JENNISON GROWTH SMALL CAP CORE SMALL CAP GROWTH BOND INDEX DIVISION DIVISION DIVISION DIVISION ------------------- ------------------- ------------------- ------------------- ASSETS: Investments at fair value.. $ 46,586,115 $ 26,944,851 $ 15,100,926 $ 145,313,344 ------------------- ------------------- ------------------- ------------------- Total Assets.......... 46,586,115 26,944,851 15,100,926 145,313,344 ------------------- ------------------- ------------------- ------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- 2 -- -- ------------------- ------------------- ------------------- ------------------- Total Liabilities..... -- 2 -- -- ------------------- ------------------- ------------------- ------------------- NET ASSETS.................... $ 46,586,115 $ 26,944,849 $ 15,100,926 $ 145,313,344 =================== =================== =================== =================== BHFTII METLIFE BHFTII METLIFE BHFTII METLIFE BHFTII MID CAP STOCK INDEX MSCI EAFE(R) INDEX RUSSELL 2000(R) INDEX METLIFE STOCK INDEX DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- --------------------- -------------------- ASSETS: Investments at fair value.. $ 105,130,206 $ 100,342,710 $ 83,270,353 $ 1,253,040,903 -------------------- -------------------- --------------------- -------------------- Total Assets.......... 105,130,206 100,342,710 83,270,353 1,253,040,903 -------------------- -------------------- --------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ 1 -- -- -- -------------------- -------------------- --------------------- -------------------- Total Liabilities..... 1 -- -- -- -------------------- -------------------- --------------------- -------------------- NET ASSETS.................... $ 105,130,205 $ 100,342,710 $ 83,270,353 $ 1,253,040,903 ==================== ==================== ===================== ==================== BHFTII MFS(R) TOTAL RETURN BHFTII MFS(R) VALUE DIVISION DIVISION -------------------- -------------------- ASSETS: Investments at fair value.. $ 11,322,426 $ 129,708,718 -------------------- -------------------- Total Assets.......... 11,322,426 129,708,718 -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -------------------- -------------------- Total Liabilities..... -- -- -------------------- -------------------- NET ASSETS.................... $ 11,322,426 $ 129,708,718 ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-12 The accompanying notes are an integral part of these financial statements. UL-13 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 BHFTII BHFTII BHFTII BHFTII NEUBERGER T. ROWE PRICE T. ROWE PRICE VAN ECK GLOBAL BERMAN GENESIS LARGE CAP GROWTH SMALL CAP GROWTH NATURAL RESOURCES DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 129,615,155 $ 120,058,035 $ 145,221,926 $ 350,488 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 129,615,155 120,058,035 145,221,926 350,488 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ 1 1 -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... 1 1 -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 129,615,154 $ 120,058,034 $ 145,221,926 $ 350,488 ==================== ==================== ==================== ==================== BHFTII WESTERN ASSET MANAGEMENT BHFTII WESTERN STRATEGIC ASSET MANAGEMENT BNY MELLON VI FIDELITY(R) VIP ASSET BOND OPPORTUNITIES U.S. GOVERNMENT INTERNATIONAL VALUE MANAGER: GROWTH DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- --------------------- ASSETS: Investments at fair value.. $ 56,510,228 $ 16,117,304 $ 139,460 $ 2,167,176 -------------------- -------------------- -------------------- --------------------- Total Assets.......... 56,510,228 16,117,304 139,460 2,167,176 -------------------- -------------------- -------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- --------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- --------------------- NET ASSETS.................... $ 56,510,228 $ 16,117,304 $ 139,460 $ 2,167,176 ==================== ==================== ==================== ===================== FIDELITY(R) VIP FIDELITY(R) VIP CONTRAFUND EQUITY-INCOME DIVISION DIVISION -------------------- -------------------- ASSETS: Investments at fair value.. $ 3,207,960 $ 177,511 -------------------- -------------------- Total Assets.......... 3,207,960 177,511 -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -------------------- -------------------- Total Liabilities..... -- -- -------------------- -------------------- NET ASSETS.................... $ 3,207,960 $ 177,511 ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-14 The accompanying notes are an integral part of these financial statements. UL-15 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 FIDELITY(R) VIP FIDELITY(R) VIP FIDELITY(R) VIP FIDELITY(R) VIP FREEDOM 2010 FREEDOM 2020 FREEDOM 2025 FREEDOM 2030 DIVISION DIVISION DIVISION DIVISION --------------------- --------------------- -------------------- --------------------- ASSETS: Investments at fair value.. $ 166,694 $ 642,648 $ 562,315 $ 371,247 --------------------- --------------------- -------------------- --------------------- Total Assets.......... 166,694 642,648 562,315 371,247 --------------------- --------------------- -------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company....... -- -- -- -- --------------------- --------------------- -------------------- --------------------- Total Liabilities..... -- -- -- -- --------------------- --------------------- -------------------- --------------------- NET ASSETS.................... $ 166,694 $ 642,648 $ 562,315 $ 371,247 ===================== ===================== ==================== ===================== FIDELITY(R) VIP FIDELITY(R) VIP FIDELITY(R) VIP GOVERNMENT FIDELITY(R) VIP FREEDOM 2040 FREEDOM 2050 MONEY MARKET HIGH INCOME DIVISION DIVISION DIVISION DIVISION --------------------- --------------------- --------------------- --------------------- ASSETS: Investments at fair value.. $ 358,173 $ 254,996 $ 4,141,088 $ 430,482 --------------------- --------------------- --------------------- --------------------- Total Assets.......... 358,173 254,996 4,141,088 430,482 --------------------- --------------------- --------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company....... -- 14 -- -- --------------------- --------------------- --------------------- --------------------- Total Liabilities..... -- 14 -- -- --------------------- --------------------- --------------------- --------------------- NET ASSETS.................... $ 358,173 $ 254,982 $ 4,141,088 $ 430,482 ===================== ===================== ===================== ===================== FIDELITY(R) VIP INVESTMENT FIDELITY(R) VIP GRADE BOND MID CAP DIVISION DIVISION --------------------- --------------------- ASSETS: Investments at fair value.. $ 574,150 $ 256,466 --------------------- --------------------- Total Assets.......... 574,150 256,466 --------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company....... -- -- --------------------- --------------------- Total Liabilities..... -- -- --------------------- --------------------- NET ASSETS.................... $ 574,150 $ 256,466 ===================== ===================== The accompanying notes are an integral part of these financial statements. UL-16 The accompanying notes are an integral part of these financial statements. UL-17 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 FTVIPT FTVIPT FRANKLIN MUTUAL FTVIPT FRANKLIN FTVIPT TEMPLETON FRANKLIN INCOME VIP GLOBAL DISCOVERY VIP MUTUAL SHARES VIP FOREIGN VIP DIVISION DIVISION DIVISION DIVISION -------------------- --------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 17,748 $ 675,612 $ 93,359 $ 6,806,440 -------------------- --------------------- -------------------- -------------------- Total Assets.......... 17,748 675,612 93,359 6,806,440 -------------------- --------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- --------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- --------------------- -------------------- -------------------- NET ASSETS.................... $ 17,748 $ 675,612 $ 93,359 $ 6,806,440 ==================== ===================== ==================== ==================== GOLDMAN SACHS FTVIPT TEMPLETON SMALL CAP EQUITY INVESCO V.I. GLOBAL BOND VIP INSIGHTS INVESCO V.I. COMSTOCK INTERNATIONAL GROWTH DIVISION DIVISION DIVISION DIVISION -------------------- --------------------- --------------------- --------------------- ASSETS: Investments at fair value.. $ 1,027,522 $ 7,614 $ 640,358 $ 402,441 -------------------- --------------------- --------------------- --------------------- Total Assets.......... 1,027,522 7,614 640,358 402,441 -------------------- --------------------- --------------------- --------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- --------------------- --------------------- --------------------- Total Liabilities..... -- -- -- -- -------------------- --------------------- --------------------- --------------------- NET ASSETS.................... $ 1,027,522 $ 7,614 $ 640,358 $ 402,441 ==================== ===================== ===================== ===================== JANUS JANUS HENDERSON HENDERSON BALANCED ENTERPRISE DIVISION DIVISION -------------------- -------------------- ASSETS: Investments at fair value.. $ 1,487,502 $ 438,944 -------------------- -------------------- Total Assets.......... 1,487,502 438,944 -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -------------------- -------------------- Total Liabilities..... -- -- -------------------- -------------------- NET ASSETS.................... $ 1,487,502 $ 438,944 ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-18 The accompanying notes are an integral part of these financial statements. UL-19 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2019 JANUS JANUS MFS(R) VIT MFS(R) VIT HENDERSON FORTY HENDERSON RESEARCH GLOBAL EQUITY NEW DISCOVERY DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 489,146 $ 442,566 $ 125,958 $ 24,852 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 489,146 442,566 125,958 24,852 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 489,146 $ 442,566 $ 125,958 $ 24,852 ==================== ==================== ==================== ==================== MORGAN STANLEY MORGAN STANLEY MFS(R) VIT II VIF EMERGING VIF EMERGING PIMCO VIT HIGH YIELD MARKETS DEBT MARKETS EQUITY ALL ASSET DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value.. $ 169,033 $ 976,803 $ 4,289,769 $ 90,296 -------------------- -------------------- -------------------- -------------------- Total Assets.......... 169,033 976,803 4,289,769 90,296 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- -- -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities..... -- -- -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS.................... $ 169,033 $ 976,803 $ 4,289,769 $ 90,296 ==================== ==================== ==================== ==================== PIMCO VIT COMMODITYREALRETURN(R) PIMCO VIT STRATEGY LOW DURATION DIVISION DIVISION ---------------------- -------------------- ASSETS: Investments at fair value.. $ 23,957 $ 898,209 ---------------------- -------------------- Total Assets.......... 23,957 898,209 ---------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company........ -- 1 ---------------------- -------------------- Total Liabilities..... -- 1 ---------------------- -------------------- NET ASSETS.................... $ 23,957 $ 898,208 ====================== ==================== The accompanying notes are an integral part of these financial statements. UL-20 The accompanying notes are an integral part of these financial statements. UL-21 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2019 PIONEER MID CAP PUTNAM VT VALUE VCT INTERNATIONAL VALUE ROYCE MICRO-CAP ROYCE SMALL-CAP DIVISION DIVISION DIVISION DIVISION -------------------- -------------------- -------------------- -------------------- ASSETS: Investments at fair value........... $ 12,380 $ 5,300 $ 11,867 $ 15,444 -------------------- -------------------- -------------------- -------------------- Total Assets................... 12,380 5,300 11,867 15,444 -------------------- -------------------- -------------------- -------------------- LIABILITIES: Due to Metropolitan Life Insurance Company................. -- -- -- -- -------------------- -------------------- -------------------- -------------------- Total Liabilities.............. -- -- -- -- -------------------- -------------------- -------------------- -------------------- NET ASSETS............................. $ 12,380 $ 5,300 $ 11,867 $ 15,444 ==================== ==================== ==================== ==================== The accompanying notes are an integral part of these financial statements. UL-22 This page is intentionally left blank. METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 AB VPS GLOBAL THEMATIC GROWTH DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 62 $ -- $ 88 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 62 -- 88 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,180 -- -- Realized gains (losses) on sale of investments....... 5,451 255 2,867 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 7,631 255 2,867 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 1,729 (3,771) 8,219 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 9,360 (3,516) 11,086 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 9,422 $ (3,516) $ 11,174 ==================== ==================== ==================== AB VPS INTERMEDIATE BOND DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 4,181 $ 1,502 $ 3,922 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 4,181 1,502 3,922 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 2,128 1,238 Realized gains (losses) on sale of investments....... (547) (128) (3,842) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (547) 2,000 (2,604) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 8,336 (3,792) 2,197 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 7,789 (1,792) (407) -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 11,970 $ (290) $ 3,515 ==================== ==================== ==================== AMERICAN FUNDS(R) BOND DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 171,098 $ 143,554 $ 128,797 ------------------- ------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 8,236 9,184 9,943 ------------------- ------------------- ------------------- Net investment income (loss).................... 162,862 134,370 118,854 ------------------- ------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 8,476 98,810 Realized gains (losses) on sale of investments....... 15,843 (58,891) (4,363) ------------------- ------------------- ------------------- Net realized gains (losses)..................... 15,843 (50,415) 94,447 ------------------- ------------------- ------------------- Change in unrealized gains (losses) on investments... 366,899 (150,359) 12,429 ------------------- ------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 382,742 (200,774) 106,876 ------------------- ------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 545,604 $ (66,404) $ 225,730 =================== =================== =================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-24 The accompanying notes are an integral part of these financial statements. UL-25 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 AMERICAN FUNDS(R) GLOBAL SMALL CAPITALIZATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 113,773 $ 60,502 $ 302,899 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 84,254 87,722 83,802 --------------------- -------------------- -------------------- Net investment income (loss).................... 29,519 (27,220) 219,097 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 4,582,021 3,364,592 -- Realized gains (losses) on sale of investments....... 850,815 1,028,140 493,132 --------------------- -------------------- -------------------- Net realized gains (losses)..................... 5,432,836 4,392,732 493,132 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 13,829,624 (11,769,834) 15,300,486 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 19,262,460 (7,377,102) 15,793,618 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 19,291,979 $ (7,404,322) $ 16,012,715 ===================== ==================== ==================== AMERICAN FUNDS(R) GROWTH DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,547,525 $ 886,745 $ 940,051 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 184,266 188,253 168,990 -------------------- --------------------- -------------------- Net investment income (loss).................... 1,363,259 698,492 771,061 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 21,693,591 20,636,517 17,857,311 Realized gains (losses) on sale of investments....... 3,503,831 4,289,446 3,386,491 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 25,197,422 24,925,963 21,243,802 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 28,236,428 (24,996,188) 23,936,579 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 53,433,850 (70,225) 45,180,381 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 54,797,109 $ 628,267 $ 45,951,442 ==================== ===================== ==================== AMERICAN FUNDS(R) GROWTH-INCOME DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,035,465 $ 1,702,454 $ 1,583,807 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 115,931 118,217 110,967 -------------------- --------------------- -------------------- Net investment income (loss).................... 1,919,534 1,584,237 1,472,840 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 12,277,110 8,360,753 7,249,514 Realized gains (losses) on sale of investments....... 1,527,730 2,193,496 1,686,109 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 13,804,840 10,554,249 8,935,623 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 12,081,513 (13,751,075) 12,349,992 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 25,886,353 (3,196,826) 21,285,615 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 27,805,887 $ (1,612,589) $ 22,758,455 ==================== ===================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-26 The accompanying notes are an integral part of these financial statements. UL-27 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 AMERICAN FUNDS(R) HIGH-INCOME BOND DIVISION ------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,102 $ 530 $ 468 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- -------------------- Net investment income (loss).................... 2,102 530 468 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (4) (7) -- --------------------- -------------------- -------------------- Net realized gains (losses)..................... (4) (7) -- --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 343 (720) (375) --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 339 (727) (375) --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 2,441 $ (197) $ 93 ===================== ==================== ==================== AMERICAN FUNDS(R) INTERNATIONAL DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 28,874 $ 33,657 $ 7,618 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 28,874 33,657 7,618 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 49,902 90,607 6,927 Realized gains (losses) on sale of investments....... (13,713) (1,756) 7,074 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 36,189 88,851 14,001 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 343,260 (417,075) 132,723 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 379,449 (328,224) 146,724 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 408,323 $ (294,567) $ 154,342 ==================== ==================== ==================== AMERICAN FUNDS(R) U.S. GOVERNMENT/AAA-RATED SECURITIES DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,186 $ 975 $ 724 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 1,186 975 724 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (20) (138) (41) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (20) (138) (41) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 1,822 (457) 178 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 1,802 (595) 137 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 2,988 $ 380 $ 861 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-28 The accompanying notes are an integral part of these financial statements. UL-29 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI AB GLOBAL DYNAMIC ALLOCATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,929 $ 1,338 $ 1,050 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 2,929 1,338 1,050 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 1,656 325 -- Realized gains (losses) on sale of investments....... 423 276 227 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 2,079 601 227 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 8,823 (7,744) 7,735 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 10,902 (7,143) 7,962 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 13,831 $ (5,805) $ 9,012 ==================== ==================== ==================== BHFTI AMERICAN FUNDS(R) BALANCED ALLOCATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 27,411 $ 21,884 $ 19,259 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 27,411 21,884 19,259 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 91,658 64,740 53,965 Realized gains (losses) on sale of investments....... 1,187 3,011 1,827 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 92,845 67,751 55,792 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 117,054 (138,831) 98,370 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 209,899 (71,080) 154,162 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 237,310 $ (49,196) $ 173,421 ==================== ==================== ==================== BHFTI AMERICAN FUNDS(R) GROWTH ALLOCATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 41,457 $ 33,504 $ 29,710 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 41,457 33,504 29,710 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 172,533 127,865 125,095 Realized gains (losses) on sale of investments....... 17,886 16,892 2,793 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 190,419 144,757 127,888 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 243,425 (302,410) 236,441 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 433,844 (157,653) 364,329 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 475,301 $ (124,149) $ 394,039 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-30 The accompanying notes are an integral part of these financial statements. UL-31 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI AMERICAN FUNDS(R) MODERATE ALLOCATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 34,529 $ 30,889 $ 27,088 -------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- --------------------- Net investment income (loss).................... 34,529 30,889 27,088 -------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 83,518 71,305 56,192 Realized gains (losses) on sale of investments....... (3,223) (2,660) (553) -------------------- -------------------- --------------------- Net realized gains (losses)..................... 80,295 68,645 55,639 -------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 117,199 (144,806) 80,012 -------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 197,494 (76,161) 135,651 -------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 232,023 $ (45,272) $ 162,739 ==================== ==================== ===================== BHFTI AQR GLOBAL RISK BALANCED DIVISION ------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 4,902 $ 581 $ 2,366 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- -------------------- Net investment income (loss).................... 4,902 581 2,366 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 14,063 6,628 Realized gains (losses) on sale of investments....... (1,016) (2,977) (1,940) --------------------- -------------------- -------------------- Net realized gains (losses)..................... (1,016) 11,086 4,688 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 25,631 (21,378) 6,767 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 24,615 (10,292) 11,455 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 29,517 $ (9,711) $ 13,821 ===================== ==================== ==================== BHFTI BLACKROCK GLOBAL TACTICAL STRATEGIES DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,019 $ 6,588 $ 2,651 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 1,019 6,588 2,651 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 32,982 4,771 Realized gains (losses) on sale of investments....... 166 (2,141) (105) -------------------- -------------------- -------------------- Net realized gains (losses)..................... 166 30,841 4,666 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 92,537 (70,520) 40,461 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 92,703 (39,679) 45,127 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 93,722 $ (33,091) $ 47,778 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-32 The accompanying notes are an integral part of these financial statements. UL-33 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI BRIGHTHOUSE ASSET ALLOCATION 100 DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 437,490 $ 323,815 $ 349,648 --------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 14,505 16,824 15,750 --------------------- --------------------- -------------------- Net investment income (loss).................... 422,985 306,991 333,898 --------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,591,967 924,071 1,313,399 Realized gains (losses) on sale of investments....... 107,616 295,201 313,827 --------------------- --------------------- -------------------- Net realized gains (losses)..................... 2,699,583 1,219,272 1,627,226 --------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 2,812,582 (3,976,492) 2,972,083 --------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 5,512,165 (2,757,220) 4,599,309 --------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 5,935,150 $ (2,450,229) $ 4,933,207 ===================== ===================== ==================== BHFTI BRIGHTHOUSE BALANCED PLUS DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 8,336 $ 6,389 $ 5,462 --------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- --------------------- Net investment income (loss).................... 8,336 6,389 5,462 --------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 32,825 17,375 Realized gains (losses) on sale of investments....... (708) 1,438 860 --------------------- -------------------- --------------------- Net realized gains (losses)..................... (708) 34,263 18,235 --------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 78,503 (69,687) 35,046 --------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 77,795 (35,424) 53,281 --------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 86,131 $ (29,035) $ 58,743 ===================== ==================== ===================== BHFTI BRIGHTHOUSE SMALL CAP VALUE DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 8,105 $ 7,790 $ 6,610 --------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- --------------------- Net investment income (loss).................... 8,105 7,790 6,610 --------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 78,352 40,963 26,213 Realized gains (losses) on sale of investments....... 4,336 4,882 9,255 --------------------- -------------------- --------------------- Net realized gains (losses)..................... 82,688 45,845 35,468 --------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 159,172 (239,971) 41,355 --------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 241,860 (194,126) 76,823 --------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 249,965 $ (186,336) $ 83,433 ===================== ==================== ===================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-34 The accompanying notes are an integral part of these financial statements. UL-35 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI BRIGHTHOUSE/ABERDEEN EMERGING MARKETS EQUITY DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 25,684 $ 25,457 $ 9,611 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 25,684 25,457 9,611 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 8,040 5,756 7,574 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 8,040 5,756 7,574 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 228,830 (176,226) 170,725 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 236,870 (170,470) 178,299 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 262,554 $ (145,013) $ 187,910 ==================== ==================== ==================== BHFTI BRIGHTHOUSE/TEMPLETON INTERNATIONAL BOND DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 23,805 $ -- $ -- -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 23,805 -- -- -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 547 -- 100 Realized gains (losses) on sale of investments....... (330) (2,152) (1,448) -------------------- -------------------- -------------------- Net realized gains (losses)..................... 217 (2,152) (1,348) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... (20,553) 5,338 2,100 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... (20,336) 3,186 752 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 3,469 $ 3,186 $ 752 ==================== ==================== ==================== BHFTI BRIGHTHOUSE/WELLINGTON LARGE CAP RESEARCH DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 5,323,552 $ 4,769,893 $ 4,789,366 -------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 2,366,473 2,376,878 2,236,275 -------------------- -------------------- ------------------- Net investment income (loss).................... 2,957,079 2,393,015 2,553,091 -------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 53,086,818 52,915,129 16,060,148 Realized gains (losses) on sale of investments....... 5,968,496 7,449,838 9,245,393 -------------------- -------------------- ------------------- Net realized gains (losses)..................... 59,055,314 60,364,967 25,305,541 -------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 61,834,004 (90,699,272) 57,041,217 -------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 120,889,318 (30,334,305) 82,346,758 -------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 123,846,397 $ (27,941,290) $ 84,899,849 ==================== ==================== =================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-36 The accompanying notes are an integral part of these financial statements. UL-37 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI CLARION GLOBAL REAL ESTATE DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 923,160 $ 1,695,231 $ 1,053,750 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 26,443 26,861 27,604 -------------------- --------------------- -------------------- Net investment income (loss).................... 896,717 1,668,370 1,026,146 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 102,738 (37,998) 11,186 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 102,738 (37,998) 11,186 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 5,116,259 (4,019,685) 1,949,598 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 5,218,997 (4,057,683) 1,960,784 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 6,115,714 $ (2,389,313) $ 2,986,930 ==================== ===================== ==================== BHFTI HARRIS OAKMARK INTERNATIONAL DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 958,784 $ 864,792 $ 809,196 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 47,758 56,149 57,884 --------------------- -------------------- -------------------- Net investment income (loss).................... 911,026 808,643 751,312 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 3,015,811 1,816,908 -- Realized gains (losses) on sale of investments....... (382,142) 174,708 298,648 --------------------- -------------------- -------------------- Net realized gains (losses)..................... 2,633,669 1,991,616 298,648 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 5,117,038 (14,097,059) 10,649,156 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 7,750,707 (12,105,443) 10,947,804 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 8,661,733 $ (11,296,800) $ 11,699,116 ===================== ==================== ==================== BHFTI INVESCO BALANCED-RISK ALLOCATION DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ 716 $ 1,933 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- -------------------- Net investment income (loss).................... -- 716 1,933 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 4,805 2,679 Realized gains (losses) on sale of investments....... (81) (1,079) 1 --------------------- -------------------- -------------------- Net realized gains (losses)..................... (81) 3,726 2,680 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 8,923 (8,568) 724 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 8,842 (4,842) 3,404 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 8,842 $ (4,126) $ 5,337 ===================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-38 The accompanying notes are an integral part of these financial statements. UL-39 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI INVESCO GLOBAL EQUITY DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 607,931 $ 741,251 $ 631,796 -------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... 150,718 158,814 143,449 -------------------- -------------------- --------------------- Net investment income (loss).................... 457,213 582,437 488,347 -------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,183,124 5,598,037 -- Realized gains (losses) on sale of investments....... 1,423,101 2,033,817 2,246,334 -------------------- -------------------- --------------------- Net realized gains (losses)..................... 8,606,225 7,631,854 2,246,334 -------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 6,426,053 (15,951,838) 14,255,607 -------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 15,032,278 (8,319,984) 16,501,941 -------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 15,489,491 $ (7,737,547) $ 16,990,288 ==================== ==================== ===================== BHFTI INVESCO SMALL CAP GROWTH DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 9,658 9,936 8,930 -------------------- -------------------- -------------------- Net investment income (loss).................... (9,658) (9,936) (8,930) -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 1,237,304 995,359 722,548 Realized gains (losses) on sale of investments....... (130,839) 35,226 (32,646) -------------------- -------------------- -------------------- Net realized gains (losses)..................... 1,106,465 1,030,585 689,902 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 530,138 (1,648,375) 961,544 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 1,636,603 (617,790) 1,651,446 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 1,626,945 $ (627,726) $ 1,642,516 ==================== ==================== ==================== BHFTI JPMORGAN GLOBAL ACTIVE ALLOCATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 6,307 $ 4,106 $ 5,628 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 6,307 4,106 5,628 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 13,795 -- Realized gains (losses) on sale of investments....... 1,202 353 761 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 1,202 14,148 761 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 24,387 (35,582) 28,770 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 25,589 (21,434) 29,531 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 31,896 $ (17,328) $ 35,159 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-40 The accompanying notes are an integral part of these financial statements. UL-41 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI JPMORGAN SMALL CAP VALUE DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 6,510 $ 6,199 $ 7,780 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 6,510 6,199 7,780 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 48,689 27,152 27,983 Realized gains (losses) on sale of investments....... (6,186) 189 12,875 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 42,503 27,341 40,858 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 23,626 (83,319) (24,944) -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 66,129 (55,978) 15,914 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 72,639 $ (49,779) $ 23,694 ==================== ==================== ==================== BHFTI LOOMIS SAYLES GLOBAL ALLOCATION DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 7,435 $ 7,771 $ 6,635 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 7,435 7,771 6,635 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 36,635 23,454 1,769 Realized gains (losses) on sale of investments....... 4,431 28,212 6,743 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 41,066 51,666 8,512 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 51,557 (79,434) 71,276 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 92,623 (27,768) 79,788 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 100,058 $ (19,997) $ 86,423 ==================== ==================== ==================== BHFTI LOOMIS SAYLES GROWTH DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 438,816 $ 362,296 $ 411,128 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 35,948 38,636 38,033 -------------------- -------------------- -------------------- Net investment income (loss).................... 402,868 323,660 373,095 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 5,572,046 2,042,880 -- Realized gains (losses) on sale of investments....... 889,628 1,792,006 1,758,844 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 6,461,674 3,834,886 1,758,844 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 1,909,460 (6,744,510) 5,283,206 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 8,371,134 (2,909,624) 7,042,050 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 8,774,002 $ (2,585,964) $ 7,415,145 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-42 The accompanying notes are an integral part of these financial statements. UL-43 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI METLIFE MULTI-INDEX TARGETED RISK DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 3,660 $ 2,857 $ 2,477 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 3,660 2,857 2,477 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 10,572 4,511 Realized gains (losses) on sale of investments....... 195 1,259 1,795 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 195 11,831 6,306 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 29,440 (26,654) 15,712 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 29,635 (14,823) 22,018 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 33,295 $ (11,966) $ 24,495 ==================== ==================== ==================== BHFTI MFS(R) RESEARCH INTERNATIONAL DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 275,831 $ 402,618 $ 365,364 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 16,692 17,303 16,781 -------------------- -------------------- -------------------- Net investment income (loss).................... 259,139 385,315 348,583 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 828,454 -- -- Realized gains (losses) on sale of investments....... 128,654 430,859 120,626 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 957,108 430,859 120,626 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 3,282,254 (3,418,696) 4,288,325 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 4,239,362 (2,987,837) 4,408,951 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 4,498,501 $ (2,602,522) $ 4,757,534 ==================== ==================== ==================== BHFTI MORGAN STANLEY DISCOVERY DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ 795,262 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 994,679 850,555 672,898 -------------------- -------------------- -------------------- Net investment income (loss).................... (994,679) (850,555) 122,364 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 59,365,038 50,863,381 -- Realized gains (losses) on sale of investments....... 10,398,472 8,538,350 6,098,517 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 69,763,510 59,401,731 6,098,517 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 33,805,835 (32,615,883) 66,869,811 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 103,569,345 26,785,848 72,968,328 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 102,574,666 $ 25,935,293 $ 73,090,692 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-44 The accompanying notes are an integral part of these financial statements. UL-45 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI PANAGORA GLOBAL DIVERSIFIED RISK DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 18 $ -- $ -- ------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- ------------------- -------------------- Net investment income (loss).................... 18 -- -- ------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 24 -- Realized gains (losses) on sale of investments....... 6 (1) 81 ------------------- ------------------- -------------------- Net realized gains (losses)..................... 6 23 81 ------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... 81 (46) 16 ------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 87 (23) 97 ------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 105 $ (23) $ 97 =================== =================== ==================== BHFTI PIMCO INFLATION PROTECTED BOND DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 353,831 $ 187,843 $ 184,363 ------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 15,434 15,966 17,161 ------------------- ------------------- -------------------- Net investment income (loss).................... 338,397 171,877 167,202 ------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (70,827) (178,843) (123,809) ------------------- ------------------- -------------------- Net realized gains (losses)..................... (70,827) (178,843) (123,809) ------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... 505,478 (228,280) 327,314 ------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 434,651 (407,123) 203,505 ------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 773,048 $ (235,246) $ 370,707 =================== =================== ==================== BHFTI PIMCO TOTAL RETURN DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 1,496,759 $ 751,586 $ 849,953 -------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 50,367 50,991 52,719 -------------------- -------------------- ------------------- Net investment income (loss).................... 1,446,392 700,595 797,234 -------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- 211,560 Realized gains (losses) on sale of investments....... 34,984 (156,469) (75,048) -------------------- -------------------- ------------------- Net realized gains (losses)..................... 34,984 (156,469) 136,512 -------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 2,500,341 (573,439) 1,034,223 -------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 2,535,325 (729,908) 1,170,735 -------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 3,981,717 $ (29,313) $ 1,967,969 ==================== ==================== =================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-46 The accompanying notes are an integral part of these financial statements. UL-47 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI SCHRODERS GLOBAL MULTI-ASSET DIVISION --------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 1,541 $ 1,307 $ 508 ------------------- ------------------- ------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- ------------------- ------------------- Net investment income (loss)..................... 1,541 1,307 508 ------------------- ------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 4,392 1,219 Realized gains (losses) on sale of investments....... 466 174 255 ------------------- ------------------- ------------------- Net realized gains (losses)...................... 466 4,566 1,474 ------------------- ------------------- ------------------- Change in unrealized gains (losses) on investments... 17,790 (14,319) 6,574 ------------------- ------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 18,256 (9,753) 8,048 ------------------- ------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 19,797 $ (8,446) $ 8,556 =================== =================== =================== BHFTI SSGA GROWTH AND INCOME ETF DIVISION --------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 216,512 $ 218,265 $ 220,103 ------------------- ------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 8,078 8,299 8,503 ------------------- ------------------- ------------------- Net investment income (loss)..................... 208,434 209,966 211,600 ------------------- ------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 412,900 373,779 25,075 Realized gains (losses) on sale of investments....... (7,380) 44,773 31,915 ------------------- ------------------- ------------------- Net realized gains (losses)...................... 405,520 418,552 56,990 ------------------- ------------------- ------------------- Change in unrealized gains (losses) on investments... 865,423 (1,161,353) 993,368 ------------------- ------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 1,270,943 (742,801) 1,050,358 ------------------- ------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 1,479,377 $ (532,835) $ 1,261,958 =================== =================== =================== BHFTI SSGA GROWTH ETF DIVISION --------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 165,401 $ 177,323 $ 183,120 ------------------- ------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 7,352 7,744 7,493 ------------------- ------------------- ------------------- Net investment income (loss)..................... 158,049 169,579 175,627 ------------------- ------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 475,376 444,221 82,762 Realized gains (losses) on sale of investments....... 13,517 79,167 70,763 ------------------- ------------------- ------------------- Net realized gains (losses)...................... 488,893 523,388 153,525 ------------------- ------------------- ------------------- Change in unrealized gains (losses) on investments... 831,026 (1,317,908) 1,057,422 ------------------- ------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 1,319,919 (794,520) 1,210,947 ------------------- ------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 1,477,968 $ (624,941) $ 1,386,574 =================== =================== =================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-48 The accompanying notes are an integral part of these financial statements. UL-49 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTI T. ROWE PRICE LARGE CAP VALUE DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 63,674 $ 55,375 $ 56,019 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 63,674 55,375 56,019 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 318,371 258,158 211,170 Realized gains (losses) on sale of investments....... 42,589 14,760 7,745 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 360,960 272,918 218,915 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 266,789 (630,098) 129,307 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 627,749 (357,180) 348,222 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 691,423 $ (301,805) $ 404,241 ==================== ==================== ==================== BHFTI T. ROWE PRICE MID CAP GROWTH DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 117,144 $ -- $ -- -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 58,484 57,557 53,030 -------------------- -------------------- -------------------- Net investment income (loss).................... 58,660 (57,557) (53,030) -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,183,577 5,657,019 3,182,369 Realized gains (losses) on sale of investments....... 462,768 586,722 414,597 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 7,646,345 6,243,741 3,596,966 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 4,165,082 (6,867,777) 4,985,555 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 11,811,427 (624,036) 8,582,521 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 11,870,087 $ (681,593) $ 8,529,491 ==================== ==================== ==================== BHFTI VICTORY SYCAMORE MID CAP VALUE DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,163,012 $ 715,890 $ 1,006,939 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 80,884 83,689 82,275 -------------------- -------------------- -------------------- Net investment income (loss).................... 1,082,128 632,201 924,664 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,848,890 15,510,953 -- Realized gains (losses) on sale of investments....... 63,300 489,826 763,180 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 2,912,190 16,000,779 763,180 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 18,174,933 (25,172,760) 6,544,581 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 21,087,123 (9,171,981) 7,307,761 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 22,169,251 $ (8,539,780) $ 8,232,425 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-50 The accompanying notes are an integral part of these financial statements. UL-51 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII BAILLIE GIFFORD INTERNATIONAL STOCK DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 609,814 $ 555,119 $ 553,050 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 207,189 218,023 209,721 -------------------- --------------------- -------------------- Net investment income (loss).................... 402,625 337,096 343,329 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,687,434 -- -- Realized gains (losses) on sale of investments....... 421,664 545,059 322,047 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 3,109,098 545,059 322,047 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 9,101,083 (9,369,507) 12,519,996 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 12,210,181 (8,824,448) 12,842,043 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 12,612,806 $ (8,487,352) $ 13,185,372 ==================== ===================== ==================== BHFTII BLACKROCK BOND INCOME DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,861,606 $ 2,524,969 $ 2,411,937 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 258,824 262,304 272,659 -------------------- -------------------- -------------------- Net investment income (loss).................... 2,602,782 2,262,665 2,139,278 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (16,881) (360,052) (33,084) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (16,881) (360,052) (33,084) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 4,310,845 (2,511,644) 749,028 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 4,293,964 (2,871,696) 715,944 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 6,896,746 $ (609,031) $ 2,855,222 ==================== ==================== ==================== BHFTII BLACKROCK CAPITAL APPRECIATION DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 32,055 $ 16,615 $ 11,274 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 18,807 16,344 11,518 -------------------- -------------------- -------------------- Net investment income (loss).................... 13,248 271 (244) -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,437,479 1,760,862 248,842 Realized gains (losses) on sale of investments....... 293,868 426,638 337,629 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 2,731,347 2,187,500 586,471 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 1,309,526 (1,958,446) 2,528,190 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 4,040,873 229,054 3,114,661 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 4,054,121 $ 229,325 $ 3,114,417 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-52 The accompanying notes are an integral part of these financial statements. UL-53 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII BLACKROCK ULTRA-SHORT TERM BOND DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 531,767 $ 295,427 $ 91,995 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 28,042 27,731 31,108 -------------------- --------------------- -------------------- Net investment income (loss).................... 503,725 267,696 60,887 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 1,698 532 Realized gains (losses) on sale of investments....... 77,768 45,399 25,191 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 77,768 47,097 25,723 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 14,618 157,511 119,513 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 92,386 204,608 145,236 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 596,111 $ 472,304 $ 206,123 ==================== ===================== ==================== BHFTII BRIGHTHOUSE ASSET ALLOCATION 20 DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 102,407 $ 102,219 $ 126,677 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 8,207 8,431 7,207 --------------------- -------------------- -------------------- Net investment income (loss).................... 94,200 93,788 119,470 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 80,812 53,466 87,901 Realized gains (losses) on sale of investments....... (9,210) (38,606) (47,017) --------------------- -------------------- -------------------- Net realized gains (losses)..................... 71,602 14,860 40,884 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 319,183 (220,034) 193,850 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 390,785 (205,174) 234,734 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 484,985 $ (111,386) $ 354,204 ===================== ==================== ==================== BHFTII BRIGHTHOUSE ASSET ALLOCATION 40 DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 264,198 $ 246,761 $ 243,164 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 15,756 16,035 15,988 --------------------- -------------------- -------------------- Net investment income (loss).................... 248,442 230,726 227,176 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 544,621 332,035 340,561 Realized gains (losses) on sale of investments....... (23,488) (38,307) 8,343 --------------------- -------------------- -------------------- Net realized gains (losses)..................... 521,133 293,728 348,904 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 805,166 (1,013,336) 555,970 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 1,326,299 (719,608) 904,874 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 1,574,741 $ (488,882) $ 1,132,050 ===================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-54 The accompanying notes are an integral part of these financial statements. UL-55 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII BRIGHTHOUSE ASSET ALLOCATION 60 DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,202,259 $ 1,053,491 $ 1,067,522 --------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 78,171 80,173 79,507 --------------------- --------------------- -------------------- Net investment income (loss).................... 1,124,088 973,318 988,015 --------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 4,325,793 2,115,913 2,146,384 Realized gains (losses) on sale of investments....... 152,202 392,182 456,295 --------------------- --------------------- -------------------- Net realized gains (losses)..................... 4,477,995 2,508,095 2,602,679 --------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 4,107,625 (6,730,312) 3,901,633 --------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 8,585,620 (4,222,217) 6,504,312 --------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 9,709,708 $ (3,248,899) $ 7,492,327 ===================== ===================== ==================== BHFTII BRIGHTHOUSE ASSET ALLOCATION 80 DIVISION --------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 2,096,807 $ 1,641,433 $ 1,815,853 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... 91,513 94,356 89,663 --------------------- --------------------- --------------------- Net investment income (loss).................... 2,005,294 1,547,077 1,726,190 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 10,484,034 4,666,674 5,578,827 Realized gains (losses) on sale of investments....... 794,324 1,357,981 1,298,195 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 11,278,358 6,024,655 6,877,022 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 8,872,398 (15,781,080) 9,496,898 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 20,150,756 (9,756,425) 16,373,920 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 22,156,050 $ (8,209,348) $ 18,100,110 ===================== ===================== ===================== BHFTII BRIGHTHOUSE/ARTISAN MID CAP VALUE DIVISION -------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 459,916 $ 397,910 $ 441,768 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 52,118 55,047 54,893 -------------------- -------------------- -------------------- Net investment income (loss).................... 407,798 342,863 386,875 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,064,734 3,368,314 -- Realized gains (losses) on sale of investments....... 233,732 746,054 643,877 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 7,298,466 4,114,368 643,877 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 4,852,816 (12,674,858) 6,536,022 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 12,151,282 (8,560,490) 7,179,899 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 12,559,080 $ (8,217,627) $ 7,566,774 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-56 The accompanying notes are an integral part of these financial statements. UL-57 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII BRIGHTHOUSE/WELLINGTON BALANCED DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 7,100,724 $ 5,606,001 $ 6,002,089 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 1,677,435 1,687,659 1,662,608 -------------------- --------------------- -------------------- Net investment income (loss).................... 5,423,289 3,918,342 4,339,481 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 19,282,553 23,957,136 7,530,180 Realized gains (losses) on sale of investments....... 2,392,122 2,733,442 2,933,892 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 21,674,675 26,690,578 10,464,072 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 36,982,209 (43,500,876) 27,671,155 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 58,656,884 (16,810,298) 38,135,227 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 64,080,173 $ (12,891,956) $ 42,474,708 ==================== ===================== ==================== BHFTII BRIGHTHOUSE/WELLINGTON CORE EQUITY OPPORTUNITIES DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,373,185 $ 1,411,380 $ 1,196,624 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 63,496 61,310 58,748 -------------------- -------------------- -------------------- Net investment income (loss).................... 1,309,689 1,350,070 1,137,876 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 6,923,541 4,282,724 2,824,131 Realized gains (losses) on sale of investments....... 1,034,821 639,830 379,451 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 7,958,362 4,922,554 3,203,582 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 13,108,141 (6,175,203) 9,056,499 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 21,066,503 (1,252,649) 12,260,081 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 22,376,192 $ 97,421 $ 13,397,957 ==================== ==================== ==================== BHFTII FRONTIER MID CAP GROWTH DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 1,808,302 1,754,856 1,632,964 -------------------- -------------------- -------------------- Net investment income (loss).................... (1,808,302) (1,754,856) (1,632,964) -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 34,434,199 28,331,222 5,792,652 Realized gains (losses) on sale of investments....... 4,203,173 4,778,324 5,416,830 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 38,637,372 33,109,546 11,209,482 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 35,345,162 (46,139,301) 43,545,366 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 73,982,534 (13,029,755) 54,754,848 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 72,174,232 $ (14,784,611) $ 53,121,884 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-58 The accompanying notes are an integral part of these financial statements. UL-59 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII JENNISON GROWTH DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 195,127 $ 135,573 $ 84,450 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 25,076 24,797 17,500 -------------------- -------------------- -------------------- Net investment income (loss).................... 170,051 110,776 66,950 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 6,383,428 5,749,143 1,883,231 Realized gains (losses) on sale of investments....... 420,812 670,411 374,997 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 6,804,240 6,419,554 2,258,228 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 5,030,053 (6,671,580) 6,383,010 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 11,834,293 (252,026) 8,641,238 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 12,004,344 $ (141,250) $ 8,708,188 ==================== ==================== ==================== BHFTII LOOMIS SAYLES SMALL CAP CORE DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 7,499 $ 5,587 $ 75,600 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 25,945 27,358 26,031 -------------------- -------------------- -------------------- Net investment income (loss).................... (18,446) (21,771) 49,569 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,683,546 2,792,999 1,682,939 Realized gains (losses) on sale of investments....... 151,478 352,664 473,735 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 2,835,024 3,145,663 2,156,674 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 2,924,448 (5,945,164) 1,501,241 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 5,759,472 (2,799,501) 3,657,915 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 5,741,026 $ (2,821,272) $ 3,707,484 ==================== ==================== ==================== BHFTII LOOMIS SAYLES SMALL CAP GROWTH DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- -------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 11,876 12,018 9,721 -------------------- -------------------- ------------------- Net investment income (loss).................... (11,876) (12,018) (9,721) -------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,354,174 1,921,803 548,702 Realized gains (losses) on sale of investments....... 226,813 280,750 214,228 -------------------- -------------------- ------------------- Net realized gains (losses)..................... 2,580,987 2,202,553 762,930 -------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 820,229 (2,123,091) 2,111,346 -------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 3,401,216 79,462 2,874,276 -------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 3,389,340 $ 67,444 $ 2,864,555 ==================== ==================== =================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-60 The accompanying notes are an integral part of these financial statements. UL-61 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII METLIFE AGGREGATE BOND INDEX DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 4,093,397 $ 3,810,820 $ 3,851,349 -------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 38,274 40,049 41,255 -------------------- ------------------- -------------------- Net investment income (loss).................... 4,055,123 3,770,771 3,810,094 -------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 4,630 (845,236) (60,039) -------------------- ------------------- -------------------- Net realized gains (losses)..................... 4,630 (845,236) (60,039) -------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... 6,573,697 (3,257,308) 463,003 -------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 6,578,327 (4,102,544) 402,964 -------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 10,633,450 $ (331,773) $ 4,213,058 ==================== =================== ==================== BHFTII METLIFE MID CAP STOCK INDEX DIVISION ---------------------------------------------------------------- 2019 2018 2017 ------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 1,397,554 $ 1,356,581 $ 1,393,301 ------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 70,708 75,164 73,593 ------------------- -------------------- ------------------- Net investment income (loss).................... 1,326,846 1,281,417 1,319,708 ------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 9,734,869 8,878,478 6,351,214 Realized gains (losses) on sale of investments....... 944,006 2,094,579 2,402,793 ------------------- -------------------- ------------------- Net realized gains (losses)..................... 10,678,875 10,973,057 8,754,007 ------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 10,598,269 (23,434,639) 4,956,766 ------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 21,277,144 (12,461,582) 13,710,773 ------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 22,603,990 $ (11,180,165) $ 15,030,481 =================== ==================== =================== BHFTII METLIFE MSCI EAFE(R) INDEX DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,387,869 $ 2,694,273 $ 2,349,651 -------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 38,450 41,726 40,550 -------------------- ------------------- -------------------- Net investment income (loss).................... 2,349,419 2,652,547 2,309,101 -------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 645,899 -- -- Realized gains (losses) on sale of investments....... 739,520 1,021,937 1,359,240 -------------------- ------------------- -------------------- Net realized gains (losses)..................... 1,385,419 1,021,937 1,359,240 -------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... 14,100,152 (16,649,850) 15,314,940 -------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 15,485,571 (15,627,913) 16,674,180 -------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 17,834,990 $ (12,975,366) $ 18,983,281 ==================== =================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-62 The accompanying notes are an integral part of these financial statements. UL-63 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII METLIFE RUSSELL 2000(R) INDEX DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 944,809 $ 945,477 $ 973,933 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 52,038 57,241 54,478 -------------------- -------------------- -------------------- Net investment income (loss).................... 892,771 888,236 919,455 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,573,708 5,684,074 3,194,653 Realized gains (losses) on sale of investments....... 1,796,600 3,015,270 2,846,816 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 9,370,308 8,699,344 6,041,469 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 7,594,549 (17,938,965) 4,109,388 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 16,964,857 (9,239,621) 10,150,857 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 17,857,628 $ (8,351,385) $ 11,070,312 ==================== ==================== ==================== BHFTII METLIFE STOCK INDEX DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 24,301,379 $ 20,232,875 $ 19,102,288 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 2,501,274 2,506,370 2,334,132 -------------------- -------------------- -------------------- Net investment income (loss).................... 21,800,105 17,726,505 16,768,156 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 84,711,821 63,212,282 30,024,000 Realized gains (losses) on sale of investments....... 27,102,836 30,717,054 34,571,519 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 111,814,657 93,929,336 64,595,519 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 171,992,283 (159,803,991) 126,477,450 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 283,806,940 (65,874,655) 191,072,969 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 305,607,045 $ (48,148,150) $ 207,841,125 ==================== ==================== ==================== BHFTII MFS(R) TOTAL RETURN DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 707,106 $ 682,160 $ 265,892 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 9,502 9,715 9,874 -------------------- -------------------- -------------------- Net investment income (loss).................... 697,604 672,445 256,018 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 1,278,480 1,954,294 556,179 Realized gains (losses) on sale of investments....... (773,756) 77,778 137,114 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 504,724 2,032,072 693,293 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 3,070,709 (4,570,024) 1,181,033 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 3,575,433 (2,537,952) 1,874,326 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 4,273,037 $ (1,865,507) $ 2,130,344 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-64 The accompanying notes are an integral part of these financial statements. UL-65 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII MFS(R) VALUE DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 2,313,890 $ 1,817,803 $ 1,881,888 -------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... 96,478 91,293 74,868 -------------------- -------------------- ------------------- Net investment income (loss).................... 2,217,412 1,726,510 1,807,020 -------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,945,106 7,633,263 5,556,050 Realized gains (losses) on sale of investments....... 488,474 717,887 820,001 -------------------- -------------------- ------------------- Net realized gains (losses)..................... 8,433,580 8,351,150 6,376,051 -------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 20,526,971 (21,548,270) 7,634,853 -------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 28,960,551 (13,197,120) 14,010,904 -------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 31,177,963 $ (11,470,610) $ 15,817,924 ==================== ==================== =================== BHFTII NEUBERGER BERMAN GENESIS DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 289,917 $ 427,961 $ 467,365 ------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 102,653 103,468 97,289 ------------------- ------------------- -------------------- Net investment income (loss).................... 187,264 324,493 370,076 ------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 16,720,383 14,931,674 9,271,091 Realized gains (losses) on sale of investments....... 1,848,685 2,455,941 2,786,014 ------------------- ------------------- -------------------- Net realized gains (losses)..................... 18,569,068 17,387,615 12,057,105 ------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... 12,124,576 (25,138,689) 4,394,645 ------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 30,693,644 (7,751,074) 16,451,750 ------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 30,880,908 $ (7,426,581) $ 16,821,826 =================== =================== ==================== BHFTII T. ROWE PRICE LARGE CAP GROWTH DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 473,244 $ 463,194 $ 290,388 ------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 82,157 80,800 68,479 ------------------- -------------------- -------------------- Net investment income (loss).................... 391,087 382,394 221,909 ------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 16,761,108 19,742,610 5,723,064 Realized gains (losses) on sale of investments....... 1,511,661 2,588,381 2,250,944 ------------------- -------------------- -------------------- Net realized gains (losses)..................... 18,272,769 22,330,991 7,974,008 ------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 10,875,848 (23,124,361) 19,425,313 ------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 29,148,617 (793,370) 27,399,321 ------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 29,539,704 $ (410,976) $ 27,621,230 =================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-66 The accompanying notes are an integral part of these financial statements. UL-67 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII T. ROWE PRICE SMALL CAP GROWTH DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 64,058 $ 159,008 $ 383,598 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 455,772 462,454 422,353 -------------------- -------------------- -------------------- Net investment income (loss).................... (391,714) (303,446) (38,755) -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 18,395,410 10,935,636 7,083,773 Realized gains (losses) on sale of investments....... 2,742,690 3,925,105 2,988,428 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 21,138,100 14,860,741 10,072,201 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 16,651,176 (22,939,008) 14,656,850 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 37,789,276 (8,078,267) 24,729,051 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 37,397,562 $ (8,381,713) $ 24,690,296 ==================== ==================== ==================== BHFTII VAN ECK GLOBAL NATURAL RESOURCES DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,794 $ 567 $ 290 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 1,794 567 290 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (9,662) (2,432) (3,647) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (9,662) (2,432) (3,647) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 45,337 (96,127) 5,530 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 35,675 (98,559) 1,883 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 37,469 $ (97,992) $ 2,173 ==================== ==================== ==================== BHFTII WESTERN ASSET MANAGEMENT STRATEGIC BOND OPPORTUNITIES DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,611,420 $ 2,776,967 $ 2,088,016 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 76,795 80,667 86,369 -------------------- -------------------- -------------------- Net investment income (loss).................... 2,534,625 2,696,300 2,001,647 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... 153,935 89,897 364,897 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 153,935 89,897 364,897 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 4,329,971 (4,895,547) 1,796,363 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 4,483,906 (4,805,650) 2,161,260 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 7,018,531 $ (2,109,350) $ 4,162,907 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-68 The accompanying notes are an integral part of these financial statements. UL-69 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 BHFTII WESTERN ASSET MANAGEMENT U.S. GOVERNMENT DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 432,382 $ 360,455 $ 418,500 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... 17,471 16,625 16,252 -------------------- -------------------- -------------------- Net investment income (loss).................... 414,911 343,830 402,248 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (53,391) (86,126) (35,219) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (53,391) (86,126) (35,219) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 547,272 (115,445) (80,512) -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 493,881 (201,571) (115,731) -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 908,792 $ 142,259 $ 286,517 ==================== ==================== ==================== BNY MELLON VI INTERNATIONAL VALUE DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 1,914 $ 3,466 $ 2,916 --------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- --------------------- Net investment income (loss).................... 1,914 3,466 2,916 --------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (17,157) (123) (300) --------------------- -------------------- --------------------- Net realized gains (losses)..................... (17,157) (123) (300) --------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 46,979 (44,641) 51,516 --------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 29,822 (44,764) 51,216 --------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 31,736 $ (41,298) $ 54,132 ===================== ==================== ===================== FIDELITY(R) VIP ASSET MANAGER: GROWTH DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 30,328 $ 28,546 $ 24,598 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- --------------------- -------------------- Net investment income (loss).................... 30,328 28,546 24,598 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 108,882 82,828 254,110 Realized gains (losses) on sale of investments....... 21,653 24,180 39,851 -------------------- --------------------- -------------------- Net realized gains (losses)..................... 130,535 107,008 293,961 -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 255,311 (293,123) 9,749 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 385,846 (186,115) 303,710 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 416,174 $ (157,569) $ 328,308 ==================== ===================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-70 The accompanying notes are an integral part of these financial statements. UL-71 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 FIDELITY(R) VIP CONTRAFUND DIVISION --------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 10,856 $ 18,473 $ 25,600 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 10,856 18,473 25,600 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 345,025 260,686 151,989 Realized gains (losses) on sale of investments....... 123,721 55,502 64,249 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 468,746 316,188 216,238 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 377,490 (515,972) 321,303 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 846,236 (199,784) 537,541 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 857,092 $ (181,311) $ 563,141 ===================== ===================== ===================== FIDELITY(R) VIP EQUITY-INCOME DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 2,569 $ 36 $ 40 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 2,569 36 40 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 415 75 208 Realized gains (losses) on sale of investments....... 27 1 645 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 442 76 853 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 14,839 (250) (214) --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 15,281 (174) 639 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 17,850 $ (138) $ 679 ===================== ===================== ===================== FIDELITY(R) VIP FREEDOM 2010 DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 3,334 $ 2,455 $ 2,182 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 3,334 2,455 2,182 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 6,365 3,961 1,201 Realized gains (losses) on sale of investments....... (1,009) (395) 700 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 5,356 3,566 1,901 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 14,163 (11,906) 324 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 19,519 (8,340) 2,225 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 22,853 $ (5,885) $ 4,407 ===================== ===================== ===================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-72 The accompanying notes are an integral part of these financial statements. UL-73 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 FIDELITY(R) VIP FREEDOM 2020 DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 12,592 $ 8,406 $ 8,288 --------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- --------------------- Net investment income (loss).................... 12,592 8,406 8,288 --------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 30,193 17,605 15,960 Realized gains (losses) on sale of investments....... 2,981 6,369 17,690 --------------------- -------------------- --------------------- Net realized gains (losses)..................... 33,174 23,974 33,650 --------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 59,075 (64,092) 50,769 --------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 92,249 (40,118) 84,419 --------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 104,841 $ (31,712) $ 92,707 ===================== ==================== ===================== FIDELITY(R) VIP FREEDOM 2025 DIVISION --------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 10,696 $ 7,186 $ 7,280 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 10,696 7,186 7,280 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 14,406 9,975 13,035 Realized gains (losses) on sale of investments....... 972 1,100 687 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 15,378 11,075 13,722 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 75,905 (51,118) 58,295 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 91,283 (40,043) 72,017 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 101,979 $ (32,857) $ 79,297 ===================== ===================== ===================== FIDELITY(R) VIP FREEDOM 2030 DIVISION --------------------------------------------------------------------- 2019 2018 2017 -------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 6,478 $ 3,464 $ 3,686 -------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- --------------------- --------------------- Net investment income (loss).................... 6,478 3,464 3,686 -------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 9,464 6,179 7,522 Realized gains (losses) on sale of investments....... 2,735 13,421 8,178 -------------------- --------------------- --------------------- Net realized gains (losses)..................... 12,199 19,600 15,700 -------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 43,948 (40,198) 21,517 -------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 56,147 (20,598) 37,217 -------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 62,625 $ (17,134) $ 40,903 ==================== ===================== ===================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-74 The accompanying notes are an integral part of these financial statements. UL-75 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 FIDELITY(R) VIP FREEDOM 2040 DIVISION -------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 5,643 $ 3,024 $ 2,654 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 5,643 3,024 2,654 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 9,735 5,014 5,908 Realized gains (losses) on sale of investments....... 5,694 8,456 6,961 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 15,429 13,470 12,869 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 51,562 (41,836) 24,961 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 66,991 (28,366) 37,830 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 72,634 $ (25,342) $ 40,484 ==================== ==================== ==================== FIDELITY(R) VIP FREEDOM 2050 DIVISION -------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 3,915 $ 2,456 $ 2,270 --------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- -------------------- Net investment income (loss).................... 3,915 2,456 2,270 --------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 7,066 5,193 4,679 Realized gains (losses) on sale of investments....... 6,247 5,282 3,738 --------------------- -------------------- -------------------- Net realized gains (losses)..................... 13,313 10,475 8,417 --------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 38,724 (34,149) 19,567 --------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 52,037 (23,674) 27,984 --------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 55,952 $ (21,218) $ 30,254 ===================== ==================== ==================== FIDELITY(R) VIP GOVERNMENT MONEY MARKET DIVISION --------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 78,815 $ 56,758 $ 22,875 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 78,815 56,758 22,875 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... -- -- -- --------------------- --------------------- --------------------- Net realized gains (losses)..................... -- -- -- --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... -- -- -- --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... -- -- -- --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 78,815 $ 56,758 $ 22,875 ===================== ===================== ===================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-76 The accompanying notes are an integral part of these financial statements. UL-77 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 FIDELITY(R) VIP HIGH INCOME DIVISION --------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 22,492 $ 28,272 $ 24,337 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 22,492 28,272 24,337 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (8,256) (649) (18) --------------------- --------------------- --------------------- Net realized gains (losses)..................... (8,256) (649) (18) --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 48,742 (43,948) 2,185 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 40,486 (44,597) 2,167 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 62,978 $ (16,325) $ 26,504 ===================== ===================== ===================== FIDELITY(R) VIP INVESTMENT GRADE BOND DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- -------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 17,697 $ 28,459 $ 28,197 --------------------- -------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- -------------------- --------------------- Net investment income (loss).................... 17,697 28,459 28,197 --------------------- -------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 7,286 5,616 Realized gains (losses) on sale of investments....... (9,542) (1,484) (2,296) --------------------- -------------------- --------------------- Net realized gains (losses)..................... (9,542) 5,802 3,320 --------------------- -------------------- --------------------- Change in unrealized gains (losses) on investments... 64,066 (41,933) 18,959 --------------------- -------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 54,524 (36,131) 22,279 --------------------- -------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 72,221 $ (7,672) $ 50,476 ===================== ==================== ===================== FIDELITY(R) VIP MID CAP DIVISION --------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 1,650 $ 1,054 $ 1,285 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 1,650 1,054 1,285 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 26,301 23,976 12,504 Realized gains (losses) on sale of investments....... (46) 5,031 3,777 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 26,255 29,007 16,281 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 20,941 (65,288) 31,948 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 47,196 (36,281) 48,229 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 48,846 $ (35,227) $ 49,514 ===================== ===================== ===================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-78 The accompanying notes are an integral part of these financial statements. UL-79 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 FTVIPT FRANKLIN INCOME VIP DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,119 $ 2,119 $ 2,194 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 2,119 2,119 2,194 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 640 -- -- Realized gains (losses) on sale of investments....... 1,952 5,563 186 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 2,592 5,563 186 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 3,455 (10,139) 6,858 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 6,047 (4,576) 7,044 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 8,166 $ (2,457) $ 9,238 ==================== ==================== ==================== FTVIPT FRANKLIN MUTUAL GLOBAL DISCOVERY VIP DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 11,418 $ 16,822 $ 9,201 ------------------- ------------------- ------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- ------------------- ------------------- Net investment income (loss).................... 11,418 16,822 9,201 ------------------- ------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 71,726 8,912 29,295 Realized gains (losses) on sale of investments....... (13,785) (775) 1,492 ------------------- ------------------- ------------------- Net realized gains (losses)..................... 57,941 8,137 30,787 ------------------- ------------------- ------------------- Change in unrealized gains (losses) on investments... 77,099 (108,582) 6,135 ------------------- ------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 135,040 (100,445) 36,922 ------------------- ------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 146,458 $ (83,623) $ 46,123 =================== =================== =================== FTVIPT FRANKLIN MUTUAL SHARES VIP DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,632 $ 2,853 $ 2,384 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 1,632 2,853 2,384 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 8,727 4,442 4,324 Realized gains (losses) on sale of investments....... (2,853) (352) (2) -------------------- -------------------- -------------------- Net realized gains (losses)..................... 5,874 4,090 4,322 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 12,534 (17,095) 1,445 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 18,408 (13,005) 5,767 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 20,040 $ (10,152) $ 8,151 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-80 The accompanying notes are an integral part of these financial statements. UL-81 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 FTVIPT TEMPLETON FOREIGN VIP DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 135,594 $ 219,516 $ 225,978 -------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- ------------------- Net investment income (loss).................... 135,594 219,516 225,978 -------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 69,198 -- -- Realized gains (losses) on sale of investments....... (44,427) 137,505 5,599 -------------------- -------------------- ------------------- Net realized gains (losses)..................... 24,771 137,505 5,599 -------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 684,100 (1,579,348) 996,224 -------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 708,871 (1,441,843) 1,001,823 -------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 844,465 $ (1,222,327) $ 1,227,801 ==================== ==================== =================== FTVIPT TEMPLETON GLOBAL BOND VIP DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 67,748 $ -- $ -- ------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- ------------------- -------------------- Net investment income (loss).................... 67,748 -- -- ------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- 1,934 Realized gains (losses) on sale of investments....... 322 (1,042) (2,105) ------------------- ------------------- -------------------- Net realized gains (losses)..................... 322 (1,042) (171) ------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... (49,912) 19,604 11,918 ------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... (49,590) 18,562 11,747 ------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 18,158 $ 18,562 $ 11,747 =================== =================== ==================== GOLDMAN SACHS MID-CAP VALUE DIVISION ----------------------------------------------------------------- 2019 (a) 2018 2017 ------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ 780 $ 623 ------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- -------------------- -------------------- Net investment income (loss).................... -- 780 623 ------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- 7,077 4,676 Realized gains (losses) on sale of investments....... (3,493) 766 316 ------------------- -------------------- -------------------- Net realized gains (losses)..................... (3,493) 7,843 4,992 ------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 10,370 (15,671) 3,256 ------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 6,877 (7,828) 8,248 ------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 6,877 $ (7,048) $ 8,871 =================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-82 The accompanying notes are an integral part of these financial statements. UL-83 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 GOLDMAN SACHS SMALL CAP EQUITY INSIGHTS DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 35 $ 37 $ 41 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 35 37 41 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 156 1,104 836 Realized gains (losses) on sale of investments....... (138) 144 3,260 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 18 1,248 4,096 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 1,566 (1,847) (3,129) --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 1,584 (599) 967 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 1,619 $ (562) $ 1,008 ===================== ===================== ===================== INVESCO V.I. COMSTOCK DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 10,095 $ 10,995 $ 10,939 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 10,095 10,995 10,939 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 77,087 75,626 23,965 Realized gains (losses) on sale of investments....... 417 45,604 4,332 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 77,504 121,230 28,297 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 32,442 (184,052) 52,013 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 109,946 (62,822) 80,310 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 120,041 $ (51,827) $ 91,249 ===================== ===================== ===================== INVESCO V.I. INTERNATIONAL GROWTH DIVISION ---------------------------------------------------------------------- 2019 2018 2017 --------------------- --------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ 5,657 $ 7,440 $ 4,975 --------------------- --------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- --------------------- --------------------- --------------------- Net investment income (loss).................... 5,657 7,440 4,975 --------------------- --------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 22,850 2,520 -- Realized gains (losses) on sale of investments....... 4,744 2,195 6,211 --------------------- --------------------- --------------------- Net realized gains (losses)..................... 27,594 4,715 6,211 --------------------- --------------------- --------------------- Change in unrealized gains (losses) on investments... 56,665 (67,377) 61,391 --------------------- --------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 84,259 (62,662) 67,602 --------------------- --------------------- --------------------- Net increase (decrease) in net assets resulting from operations................................... $ 89,916 $ (55,222) $ 72,577 ===================== ===================== ===================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-84 The accompanying notes are an integral part of these financial statements. UL-85 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 JANUS HENDERSON BALANCED DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 22,745 $ 23,404 $ 15,832 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 22,745 23,404 15,832 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 35,536 33,075 2,191 Realized gains (losses) on sale of investments....... 29,699 6,353 11,402 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 65,235 39,428 13,593 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 195,105 (64,594) 160,350 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 260,340 (25,166) 173,943 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 283,085 $ (1,762) $ 189,775 ==================== ==================== ==================== JANUS HENDERSON ENTERPRISE DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 204 $ 446 $ 710 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 204 446 710 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 23,873 20,616 32,459 Realized gains (losses) on sale of investments....... 11,008 16,295 20,860 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 34,881 36,911 53,319 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 82,268 (40,219) 49,008 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 117,149 (3,308) 102,327 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 117,353 $ (2,862) $ 103,037 ==================== ==================== ==================== JANUS HENDERSON FORTY DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 97 $ -- $ -- -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 97 -- -- -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 34,059 51,565 29,535 Realized gains (losses) on sale of investments....... 786 812 20,272 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 34,845 52,377 49,807 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 88,897 (46,227) 82,066 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 123,742 6,150 131,873 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 123,839 $ 6,150 $ 131,873 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-86 The accompanying notes are an integral part of these financial statements. UL-87 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 JANUS HENDERSON OVERSEAS DIVISION ------------------------------------------------------------------- 2019 (a) 2018 2017 -------------------- --------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ 400 $ 358 -------------------- --------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- --------------------- -------------------- Net investment income (loss).................... -- 400 358 -------------------- --------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (1,542) (52) (10,688) -------------------- --------------------- -------------------- Net realized gains (losses)..................... (1,542) (52) (10,688) -------------------- --------------------- -------------------- Change in unrealized gains (losses) on investments... 3,707 (3,790) 18,215 -------------------- --------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 2,165 (3,842) 7,527 -------------------- --------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 2,165 $ (3,442) $ 7,885 ==================== ===================== ==================== JANUS HENDERSON RESEARCH DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,819 $ 1,975 $ 1,234 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 1,819 1,975 1,234 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 40,577 17,143 2,957 Realized gains (losses) on sale of investments....... 8,576 4,135 2,574 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 49,153 21,278 5,531 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 65,232 (31,506) 68,064 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 114,385 (10,228) 73,595 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 116,204 $ (8,253) $ 74,829 ==================== ==================== ==================== MFS(R) VIT GLOBAL EQUITY DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 412 $ 2,659 $ 1,698 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 412 2,659 1,698 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 2,895 16,597 9,831 Realized gains (losses) on sale of investments....... 139 57,295 2,533 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 3,034 73,892 12,364 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 11,154 (71,225) 40,361 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments.................................... 14,188 2,667 52,725 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations................................... $ 14,600 $ 5,326 $ 54,423 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-88 The accompanying notes are an integral part of these financial statements. UL-89 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 MFS(R) VIT NEW DISCOVERY DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ -- -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... -- -- -- -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 4,660 3,132 4,695 Realized gains (losses) on sale of investments....... 942 277 37,307 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 5,602 3,409 42,002 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 2,141 (3,646) (961) -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 7,743 (237) 41,041 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 7,743 $ (237) $ 41,041 ==================== ==================== ==================== MFS(R) VIT II HIGH YIELD DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 8,930 $ 8,422 $ 9,827 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 8,930 8,422 9,827 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (222) (212) (95) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (222) (212) (95) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 12,834 (13,260) (254) -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 12,612 (13,472) (349) -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 21,542 $ (5,050) $ 9,478 ==================== ==================== ==================== MORGAN STANLEY VIF EMERGING MARKETS DEBT DIVISION ------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 52,530 $ 86,325 $ 70,167 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 52,530 86,325 70,167 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (25,748) (84,029) (7,471) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (25,748) (84,029) (7,471) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 107,048 (126,520) 58,835 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 81,300 (210,549) 51,364 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 133,830 $ (124,224) $ 121,531 ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-90 The accompanying notes are an integral part of these financial statements. UL-91 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 MORGAN STANLEY VIF EMERGING MARKETS EQUITY DIVISION ----------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- ------------------- INVESTMENT INCOME: Dividends............................................ $ 50,609 $ 15,121 $ 29,128 -------------------- -------------------- ------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- ------------------- Net investment income (loss).................... 50,609 15,121 29,128 -------------------- -------------------- ------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 326,042 -- -- Realized gains (losses) on sale of investments....... (12,040) 37,607 244,612 -------------------- -------------------- ------------------- Net realized gains (losses)..................... 314,002 37,607 244,612 -------------------- -------------------- ------------------- Change in unrealized gains (losses) on investments... 424,306 (717,637) 807,706 -------------------- -------------------- ------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 738,308 (680,030) 1,052,318 -------------------- -------------------- ------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 788,917 $ (664,909) $ 1,081,446 ==================== ==================== =================== PIMCO VIT ALL ASSET DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 2,217 $ 4,773 $ 6,628 ------------------- ------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- ------------------- -------------------- Net investment income (loss).................... 2,217 4,773 6,628 ------------------- ------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (3,753) (152) (130) ------------------- ------------------- -------------------- Net realized gains (losses)..................... (3,753) (152) (130) ------------------- ------------------- -------------------- Change in unrealized gains (losses) on investments... 12,666 (12,773) 11,089 ------------------- ------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 8,913 (12,925) 10,959 ------------------- ------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 11,130 $ (8,152) $ 17,587 =================== =================== ==================== PIMCO VIT COMMODITYREALRETURN(R) STRATEGY DIVISION ----------------------------------------------------------------- 2019 2018 2017 ------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 1,113 $ 503 $ 1,293 ------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- -------------------- -------------------- Net investment income (loss).................... 1,113 503 1,293 ------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (679) (347) (3,603) ------------------- -------------------- -------------------- Net realized gains (losses)..................... (679) (347) (3,603) ------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 2,187 (3,284) 2,335 ------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 1,508 (3,631) (1,268) ------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 2,621 $ (3,128) $ 25 =================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-92 The accompanying notes are an integral part of these financial statements. UL-93 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 PIMCO VIT LOW DURATION DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 25,038 $ 18,308 $ 12,109 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 25,038 18,308 12,109 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... (3,978) (478) (327) -------------------- -------------------- -------------------- Net realized gains (losses)..................... (3,978) (478) (327) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 14,745 (14,452) 386 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 10,767 (14,930) 59 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 35,805 $ 3,378 $ 12,168 ==================== ==================== ==================== PIONEER MID CAP VALUE VCT DIVISION ------------------------------------------------------------------ 2019 2018 2017 ------------------- ------------------- --------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ ------------------- ------------------- --------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- ------------------- ------------------- --------------------- Net investment income (loss).................... -- -- -- ------------------- ------------------- --------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... -- -- -- Realized gains (losses) on sale of investments....... -- -- 8,044 ------------------- ------------------- --------------------- Net realized gains (losses)..................... -- -- 8,044 ------------------- ------------------- --------------------- Change in unrealized gains (losses) on investments... 241 -- (6,197) ------------------- ------------------- --------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 241 -- 1,847 ------------------- ------------------- --------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 241 $ -- $ 1,847 =================== =================== ===================== PUTNAM VT INTERNATIONAL VALUE DIVISION --------------------------------------------------------------------- 2019 2018 2017 -------------------- -------------------- ----------------------- INVESTMENT INCOME: Dividends............................................ $ 154 $ 124 $ 86 -------------------- -------------------- ----------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- ----------------------- Net investment income (loss).................... 154 124 86 -------------------- -------------------- ----------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 323 -- -- Realized gains (losses) on sale of investments....... (110) 71 45 -------------------- -------------------- ----------------------- Net realized gains (losses)..................... 213 71 45 -------------------- -------------------- ----------------------- Change in unrealized gains (losses) on investments... 568 (1,236) 1,055 -------------------- -------------------- ----------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 781 (1,165) 1,100 -------------------- -------------------- ----------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 935 $ (1,041) $ 1,186 ==================== ==================== ======================= (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-94 The accompanying notes are an integral part of these financial statements. UL-95 METROPOLITAN LIFE SEPARATE ACCOUNT UL OF METROPOLITAN LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 ROYCE MICRO-CAP DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ -- $ -- $ 73 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... -- -- 73 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 1,056 519 1,139 Realized gains (losses) on sale of investments....... (5) (33) 5 -------------------- -------------------- -------------------- Net realized gains (losses)..................... 1,051 486 1,144 -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 898 (1,513) (673) -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 1,949 (1,027) 471 -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 1,949 $ (1,027) $ 544 ==================== ==================== ==================== ROYCE SMALL-CAP DIVISION ------------------------------------------------------------------ 2019 2018 2017 -------------------- -------------------- -------------------- INVESTMENT INCOME: Dividends............................................ $ 100 $ 116 $ 136 -------------------- -------------------- -------------------- EXPENSES: Mortality and expense risk charges................... -- -- -- -------------------- -------------------- -------------------- Net investment income (loss).................... 100 116 136 -------------------- -------------------- -------------------- NET REALIZED AND CHANGES IN UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions.......................... 1,787 190 -- Realized gains (losses) on sale of investments....... (98) (35) (13,382) -------------------- -------------------- -------------------- Net realized gains (losses)..................... 1,689 155 (13,382) -------------------- -------------------- -------------------- Change in unrealized gains (losses) on investments... 695 (1,492) 13,095 -------------------- -------------------- -------------------- Net realized and changes in unrealized gains (losses) on investments..................................... 2,384 (1,337) (287) -------------------- -------------------- -------------------- Net increase (decrease) in net assets resulting from operations.................................... $ 2,484 $ (1,221) $ (151) ==================== ==================== ==================== (a) Had no net assets at December 31, 2019. The accompanying notes are an integral part of these financial statements. UL-96 The accompanying notes are an integral part of these financial statements. UL-97
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements, Notes and Schedules Page ------ Report of Independent Registered Public Accounting Firm.................. 2 Financial Statements at December 31, 2019 and 2018 and for the Years Ended December 31, 2019, 2018 and 2017: Consolidated Balance Sheets............................................ 3 Consolidated Statements of Operations.................................. 4 Consolidated Statements of Comprehensive Income (Loss)................. 5 Consolidated Statements of Equity...................................... 6 Consolidated Statements of Cash Flows.................................. 7 Notes to the Consolidated Financial Statements......................... 9 Note 1 -- Business, Basis of Presentation and Summary of Significant Accounting Policies................................... 9 Note 2 -- Segment Information....................................... 27 Note 3 -- Insurance................................................. 32 Note 4 -- Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles.................................... 41 Note 5 -- Reinsurance............................................... 44 Note 6 -- Closed Block.............................................. 50 Note 7 -- Investments............................................... 52 Note 8 -- Derivatives............................................... 72 Note 9 -- Fair Value................................................ 84 Note 10 -- Leases................................................... 99 Note 11 -- Long-term and Short-term Debt............................ 100 Note 12 -- Equity................................................... 102 Note 13 -- Other Revenues and Other Expenses........................ 106 Note 14 -- Employee Benefit Plans................................... 107 Note 15 -- Income Tax............................................... 113 Note 16 -- Contingencies, Commitments and Guarantees................ 118 Note 17 -- Quarterly Results of Operations (Unaudited).............. 124 Note 18 -- Related Party Transactions............................... 125 Financial Statement Schedules at December 31, 2019 and 2018 and for the Years Ended December 31, 2019, 2018 and 2017: Schedule I -- Consolidated Summary of Investments -- Other Than Investments in Related Parties........................................ 126 Schedule III -- Consolidated Supplementary Insurance Information....... 127 Schedule IV -- Consolidated Reinsurance................................ 129 MLIC-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholder and the Board of Directors of Metropolitan Life Insurance Company Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Metropolitan Life Insurance Company and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes and the schedules listed in the Index to Consolidated Financial Statements, Notes and Schedules (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ DELOITTE & TOUCHE LLP New York, New York March 9, 2020 We have served as the Company's auditor since at least 1968; however, an earlier year could not be reliably determined. MLIC-2
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Consolidated Balance Sheets December 31, 2019 and 2018 (In millions, except share and per share data) 2019 2018 ------------- ------------- Assets Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $154,397 and $155,175, respectively)...................... $ 169,564 $ 159,073 Mortgage loans (net of valuation allowances of $289 and $291, respectively; includes $210 and $210, respectively, relating to variable interest entities; includes $188 and $299, respectively, under the fair value option and $59 and $0, respectively, of mortgage loans held-for-sale)................................... 65,549 63,687 Policy loans...................................... 6,100 6,061 Real estate and real estate joint ventures (includes $1,378 and $1,394, respectively, relating to variable interest entities and $127 and $0, respectively, under the fair value option).......................................... 6,659 6,152 Other limited partnership interests............... 4,954 4,481 Short-term investments, at estimated fair value... 1,883 1,506 Other invested assets (includes $1,085 and $1,130, respectively, of leveraged and direct financing leases and $94 and $113, respectively, relating to variable interest entities).......... 16,979 16,463 ------------- ------------- Total investments............................... 271,688 257,423 Cash and cash equivalents, principally at estimated fair value (includes $5 and $14, respectively, relating to variable interest entities)........................................ 8,927 6,882 Accrued investment income (includes $1 and $1, respectively, relating to variable interest entities)........................................ 1,987 2,050 Premiums, reinsurance and other receivables (includes $3 and $2, respectively, relating to variable interest entities)...................... 22,435 21,829 Deferred policy acquisition costs and value of business acquired................................ 3,453 4,117 Deferred income tax asset......................... -- 43 Other assets (includes $2 and $2, respectively, relating to variable interest entities).......... 4,460 3,723 Separate account assets........................... 117,867 110,850 ------------- ------------- Total assets.................................... $ 430,817 $ 406,917 ============= ============= Liabilities and Equity Liabilities Future policy benefits............................ $ 128,304 $ 126,099 Policyholder account balances..................... 91,708 90,656 Other policy-related balances..................... 7,732 7,264 Policyholder dividends payable.................... 495 494 Policyholder dividend obligation.................. 2,020 428 Payables for collateral under securities loaned and other transactions........................... 20,365 18,472 Short-term debt................................... 128 129 Long-term debt (includes $5 and $5, respectively, at estimated fair value, relating to variable interest entities)............................... 1,548 1,567 Current income tax payable........................ 388 611 Deferred income tax liability..................... 1,568 -- Other liabilities................................. 26,082 24,620 Separate account liabilities...................... 117,867 110,850 ------------- ------------- Total liabilities............................... 398,205 381,190 ------------- ------------- Contingencies, Commitments and Guarantees (Note 16) Equity Metropolitan Life Insurance Company stockholder's equity: Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding.................... 5 5 Additional paid-in capital........................ 12,455 12,450 Retained earnings................................. 9,943 9,512 Accumulated other comprehensive income (loss)..... 10,025 3,562 ------------- ------------- Total Metropolitan Life Insurance Company stockholder's equity........................... 32,428 25,529 Noncontrolling interests.......................... 184 198 ------------- ------------- Total equity.................................... 32,612 25,727 ------------- ------------- Total liabilities and equity.................... $ 430,817 $ 406,917 ============= ============= See accompanying notes to the consolidated financial statements. MLIC-3
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Consolidated Statements of Operations For the Years Ended December 31, 2019, 2018 and 2017 (In millions) 2019 2018 2017 ------------ ------------ ------------ Revenues Premiums.......................................... $ 21,608 $ 26,613 $ 22,925 Universal life and investment-type product policy fees............................................. 2,037 2,124 2,227 Net investment income............................. 10,973 10,919 10,513 Other revenues.................................... 1,573 1,586 1,570 Net investment gains (losses)..................... 346 153 334 Net derivative gains (losses)..................... (288) 766 (344) ------------ ------------ ------------ Total revenues................................... 36,249 42,161 37,225 ------------ ------------ ------------ Expenses Policyholder benefits and claims.................. 24,051 29,097 25,792 Interest credited to policyholder account balances 2,624 2,479 2,235 Policyholder dividends............................ 1,038 1,085 1,097 Other expenses.................................... 4,976 5,191 5,135 ------------ ------------ ------------ Total expenses................................... 32,689 37,852 34,259 ------------ ------------ ------------ Income (loss) before provision for income tax.... 3,560 4,309 2,966 Provision for income tax expense (benefit)........ 148 173 (561) ------------ ------------ ------------ Net income (loss)................................ 3,412 4,136 3,527 Less: Net income (loss) attributable to noncontrolling interests......................... (6) 6 2 ------------ ------------ ------------ Net income (loss) attributable to Metropolitan Life Insurance Company......................... $ 3,418 $ 4,130 $ 3,525 ============ ============ ============ See accompanying notes to the consolidated financial statements. MLIC-4
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Consolidated Statements of Comprehensive Income (Loss) For the Years Ended December 31, 2019, 2018 and 2017 (In millions) 2019 2018 2017 ----------- ----------- ----------- Net income (loss)................................. $ 3,412 $ 4,136 $ 3,527 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets.................................. 8,053 (6,318) 4,079 Unrealized gains (losses) on derivatives.......... 279 346 (848) Foreign currency translation adjustments.......... (32) (20) 26 Defined benefit plans adjustment.................. (143) 2,409 129 ----------- ----------- ----------- Other comprehensive income (loss), before income tax............................................ 8,157 (3,583) 3,386 Income tax (expense) benefit related to items of other comprehensive income (loss)................ (1,711) 793 (1,077) ----------- ----------- ----------- Other comprehensive income (loss), net of income tax............................................ 6,446 (2,790) 2,309 ----------- ----------- ----------- Comprehensive income (loss)....................... 9,858 1,346 5,836 Less: Comprehensive income (loss) attributable to noncontrolling interest, net of income tax....... (6) 6 2 ----------- ----------- ----------- Comprehensive income (loss) attributable to Metropolitan Life Insurance Company............ $ 9,864 $ 1,340 $ 5,834 =========== =========== =========== See accompanying notes to the consolidated financial statements. MLIC-5
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Consolidated Statements of Equity For the Years Ended December 31, 2019, 2018 and 2017 (In millions) Accumulated Total Additional Other Metropolitan Life Common Paid-in Retained Comprehensive Insurance Company Noncontrolling Total Stock Capital Earnings Income (Loss) Stockholder's Equity Interests Equity -------- ----------- ---------- -------------- --------------------- --------------- --------- Balance at December 31, 2016.. $ 5 $ 14,413 $ 9,033 $ 3,119 $ 26,570 $ 190 $ 26,760 Capital contributions from MetLife, Inc................. 6 6 6 Returns of capital............ (20) (20) (20) Purchase of operating joint venture interest from former affiliate.................... (249) (249) (249) Dividends to MetLife, Inc..... (2,523) (2,523) (2,523) Change in equity of noncontrolling interests..... -- (49) (49) Net income (loss)............. 3,525 3,525 2 3,527 Other comprehensive income (loss), net of income tax.... 2,309 2,309 2,309 -------- ----------- ---------- ----------- -------------- --------- --------- Balance at December 31, 2017.. 5 14,150 10,035 5,428 29,618 143 29,761 Cumulative effects of changes in accounting principles, net of income tax (Note 1)... (917) 924 7 7 -------- ----------- ---------- ----------- -------------- --------- --------- Balance at January 1, 2018.... 5 14,150 9,118 6,352 29,625 143 29,768 Capital contributions from MetLife, Inc................. 74 74 74 Returns of capital............ (2) (2) (2) Transfer of employee benefit plans to an affiliate (Note 14).......................... (1,772) (1,772) (1,772) Dividends to MetLife, Inc..... (3,736) (3,736) (3,736) Change in equity of noncontrolling interests..... -- 49 49 Net income (loss)............. 4,130 4,130 6 4,136 Other comprehensive income (loss), net of income tax.... (2,790) (2,790) (2,790) -------- ----------- ---------- ----------- -------------- --------- --------- Balance at December 31, 2018.. 5 12,450 9,512 3,562 25,529 198 25,727 Cumulative effects of changes in accounting principles, net of income tax (Note 1)... 78 17 95 95 -------- ----------- ---------- ----------- -------------- --------- --------- Balance at January 1, 2019.... 5 12,450 9,590 3,579 25,624 198 25,822 Capital contributions from MetLife, Inc................. 5 5 5 Dividends to MetLife, Inc..... (3,065) (3,065) (3,065) Change in equity of noncontrolling interests..... -- (8) (8) Net income (loss)............. 3,418 3,418 (6) 3,412 Other comprehensive income (loss), net of income tax.... 6,446 6,446 6,446 -------- ----------- ---------- ----------- -------------- --------- --------- Balance at December 31, 2019.. $ 5 $ 12,455 $ 9,943 $ 10,025 $ 32,428 $ 184 $ 32,612 ======== =========== ========== =========== ============== ========= ========= See accompanying notes to the consolidated financial statements. MLIC-6
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Consolidated Statements of Cash Flows For the Years Ended December 31, 2019, 2018 and 2017 (In millions) 2019 2018 2017 --------------- -------------- -------------- Cash flows from operating activities Net income (loss)................................ $ 3,412 $ 4,136 $ 3,527 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization expenses.......... 99 264 395 Amortization of premiums and accretion of discounts associated with investments, net..... (823) (907) (823) (Gains) losses on investments and from sales of businesses, net................................ (346) (153) (334) (Gains) losses on derivatives, net.............. 499 (346) 900 (Income) loss from equity method investments, net of dividends or distributions.............. 366 375 314 Interest credited to policyholder account balances....................................... 2,624 2,479 2,235 Universal life and investment-type product policy fees.................................... (2,037) (2,124) (2,227) Change in fair value option and trading securities..................................... (151) 3 17 Change in accrued investment income............. 45 11 (40) Change in premiums, reinsurance and other receivables.................................... (200) (309) 277 Change in deferred policy acquisition costs and value of business acquired, net................ 197 436 180 Change in income tax............................ (351) 911 (2,200) Change in other assets.......................... 961 947 309 Change in insurance-related liabilities and policy-related balances........................ 1,571 3,997 4,029 Change in other liabilities..................... 277 (1,675) (156) Other, net...................................... (1) (19) (49) --------------- -------------- -------------- Net cash provided by (used in) operating activities................................... 6,142 8,026 6,354 --------------- -------------- -------------- Cash flows from investing activities Sales, maturities and repayments of: Fixed maturity securities available-for-sale.... 49,464 67,609 53,984 Equity securities............................... 183 135 831 Mortgage loans.................................. 11,482 8,908 8,810 Real estate and real estate joint ventures...... 1,101 1,131 955 Other limited partnership interests............. 494 479 565 Purchases and originations of: Fixed maturity securities available-for-sale.... (48,421) (61,109) (55,973) Equity securities............................... (49) (161) (607) Mortgage loans.................................. (13,458) (13,968) (10,680) Real estate and real estate joint ventures...... (1,443) (463) (885) Other limited partnership interests............. (971) (871) (794) Cash received in connection with freestanding derivatives..................................... 1,759 1,798 1,661 Cash paid in connection with freestanding derivatives..................................... (1,957) (2,258) (2,688) Net change in policy loans....................... (39) (55) (61) Net change in short-term investments............. (377) 1,671 1,623 Net change in other invested assets.............. (8) 351 (177) Net change in property, equipment and leasehold improvements.................................... 60 209 (177) Other, net....................................... (4) 4 -- --------------- -------------- -------------- Net cash provided by (used in) investing activities..................................... $ (2,184) $ 3,410 $ (3,613) --------------- -------------- -------------- See accompanying notes to the consolidated financial statements. MLIC-7
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Consolidated Statements of Cash Flows -- (continued) For the Years Ended December 31, 2019, 2018 and 2017 (In millions) 2019 2018 2017 --------------- --------------- --------------- Cash flows from financing activities Policyholder account balances: Deposits....................................... $ 74,049 $ 74,550 $ 70,258 Withdrawals.................................... (74,571) (78,746) (70,215) Net change in payables for collateral under securities loaned and other transactions........ 1,893 (1,399) (525) Long-term debt issued............................ -- 24 169 Long-term debt repaid............................ (28) (109) (92) Financing element on certain derivative instruments and other derivative related transactions, net............................... (175) (149) (300) Dividends paid to MetLife, Inc................... (3,065) (3,736) (2,523) Return of capital associated with the purchase of operating joint venture interest from an affiliate....................................... -- -- (249) Other, net....................................... (19) (54) 88 --------------- --------------- --------------- Net cash provided by (used in) financing activities.................................... (1,916) (9,619) (3,389) --------------- --------------- --------------- Effect of change in foreign currency exchange rates on cash and cash equivalents balances..... 3 (4) 3 --------------- --------------- --------------- Change in cash and cash equivalents............ 2,045 1,813 (645) Cash and cash equivalents, beginning of year..... 6,882 5,069 5,714 --------------- --------------- --------------- Cash and cash equivalents, end of year......... $ 8,927 $ 6,882 $ 5,069 =============== =============== =============== Supplemental disclosures of cash flow information Net cash paid (received) for: Interest......................................... $ 104 $ 107 $ 105 =============== =============== =============== Income tax....................................... $ 552 $ 483 $ 1,693 =============== =============== =============== Non-cash transactions Capital contributions from MetLife, Inc.......... $ 5 $ 74 $ 6 =============== =============== =============== Returns of capital............................... $ -- $ -- $ 15 =============== =============== =============== Operating lease liability associated with the recognition of right-of-use assets.............. $ 152 $ -- $ -- =============== =============== =============== Transfer of employee benefit plans to an affiliate....................................... $ -- $ 1,772 $ -- =============== =============== =============== Fixed maturity securities available-for-sale received in connection with pension risk transfer transactions........................... $ -- $ 3,016 $ -- =============== =============== =============== Reclassification of certain equity securities to other invested assets........................... $ -- $ 733 $ -- =============== =============== =============== Transfer of fixed maturity securities available-for-sale from affiliates.............. $ -- $ -- $ 292 =============== =============== =============== See accompanying notes to the consolidated financial statements. MLIC-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 provider of insurance, annuities, employee benefits and asset management and is organized into two segments: U.S. and MetLife Holdings. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together with its subsidiaries and affiliates, "MetLife"). Basis of Presentation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's business and operations. Actual results could differ from these estimates. Consolidation The accompanying consolidated financial statements include the accounts of Metropolitan Life Insurance Company and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities ("VIEs") for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. Separate Accounts Separate accounts are established in conformity with insurance laws. Generally, the assets of the separate accounts cannot be used to settle the liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. The Company reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if: . such separate accounts are legally recognized; . assets supporting the contract liabilities are legally insulated from the Company's general account liabilities; . investment objectives are directed by the contractholder; and . all investment performance, net of contract fees and assessments, is passed through to the contractholder. The Company reports separate account assets at their fair value, which is based on the estimated fair values of the underlying assets comprising the individual separate account portfolios. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to contractholders of such separate accounts are offset within the same line on the statements of operations. Separate accounts credited with a contractual investment return are combined on a line-by-line basis with the Company's general account assets, liabilities, revenues and expenses and the accounting for these investments is consistent with the methodologies described herein for similar financial instruments held within the general account. The Company's revenues reflect fees charged to the separate accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. Such fees are included in universal life and investment-type product policy fees on the statements of operations. Reclassifications Certain amounts in the prior years' consolidated financial statements and related footnotes thereto have been reclassified to conform to the current year presentation as discussed throughout the Notes to the Consolidated Financial Statements. MLIC-9
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Summary of Significant Accounting Policies The following are the Company's significant accounting policies with references to notes providing additional information on such policies and critical accounting estimates relating to such policies. --------------------------------------------------------------------------------------------- Accounting Policy Note --------------------------------------------------------------------------------------------- Insurance 3 --------------------------------------------------------------------------------------------- Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles 4 --------------------------------------------------------------------------------------------- Reinsurance 5 --------------------------------------------------------------------------------------------- Investments 7 --------------------------------------------------------------------------------------------- Derivatives 8 --------------------------------------------------------------------------------------------- Fair Value 9 --------------------------------------------------------------------------------------------- Employee Benefit Plans 14 --------------------------------------------------------------------------------------------- Income Tax 15 --------------------------------------------------------------------------------------------- Litigation Contingencies 16 --------------------------------------------------------------------------------------------- Insurance Future Policy Benefit Liabilities and Policyholder Account Balances The Company establishes liabilities for amounts payable under insurance policies. 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 the establishment of premium deficiency reserves. Such reserves are determined based on the then current assumptions 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 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. Liabilities for universal and variable life policies with 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 life of the contract based on total expected assessments. The assumptions used in estimating the secondary and paid-up guarantee liabilities are consistent with those used for amortizing deferred policy acquisition costs ("DAC"), and are thus subject to the same variability and risk as further discussed herein. The assumptions of investment performance and volatility for variable products are consistent with historical experience of appropriate underlying equity indices, such as the S&P Global Ratings ("S&P") 500 Index. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. The Company regularly reviews its estimates of liabilities for future policy benefits and compares them with its actual experience. Differences result in changes to the liability balances with related charges or credits to benefit expenses in the period in which the changes occur. Policyholder account balances relate to contracts or contract features where the Company has no significant insurance risk. MLIC-10
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) The Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum benefits that provide the policyholder a minimum return based on their initial deposit adjusted for withdrawals. 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 is paid without requiring (i) the occurrence of a 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 split and accounted for under both models. Guarantees accounted for as insurance liabilities in future policy benefits include guaranteed minimum death benefits ("GMDBs"), the life-contingent portion of guaranteed minimum withdrawal benefits ("GMWBs"), elective annuitizations of guaranteed minimum income benefits ("GMIBs"), and the life contingent portion of GMIBs that require annuitization when the account balance goes to zero. Guarantees accounted for as embedded derivatives in policyholder account balances include guaranteed minimum accumulation benefits ("GMABs"), the non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs. 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. Other Policy-Related Balances Other policy-related balances include policy and contract claims, premiums received in advance, unearned revenue liabilities, obligations assumed under structured settlement assignments, policyholder dividends due and unpaid, and policyholder dividends left on deposit. The liability for policy and contract claims generally relates to incurred but not reported ("IBNR") death, disability, and dental claims. In addition, included in other policy-related balances are claims which have been reported but not yet settled for death, disability and dental. The liability for these claims is based on the Company's estimated ultimate cost of settling all claims. The Company derives estimates for the development of IBNR claims principally from analyses of historical patterns of claims by business line. The methods used to determine these estimates are continually reviewed. Adjustments resulting from this continuous review process and differences between estimates and payments for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or payments are made. The Company accounts for the prepayment of premiums on its individual life, group life and health contracts as premiums received in advance and applies the cash received to premiums when due. The unearned revenue liability relates to universal life and investment-type products and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized using the product's estimated gross profits and margins, similar to DAC as discussed further herein. Such amortization is recorded in universal life and investment-type product policy fees. See Note 3 for additional information on obligations assumed under structured settlement assignments. Recognition of Insurance Revenues and Deposits Premiums related to traditional life and annuity contracts with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided to recognize profits over the estimated lives of the insurance policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into earnings in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Premiums related to short-duration non-medical health, disability and accident & health contracts are recognized on a pro rata basis over the applicable contract term. MLIC-11
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Deposits related to universal life and investment-type products are credited to policyholder account balances. Revenues from such contracts consist of fees for mortality, policy administration and surrender charges and are recorded in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are charged to earnings include interest credited and benefit claims incurred in excess of related policyholder account balances. All revenues and expenses are presented net of reinsurance, as applicable. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that are related directly to the successful acquisition or renewal of insurance contracts are capitalized as DAC. Such costs include: . incremental direct costs of contract acquisition, such as commissions; . the portion of an employee's total compensation and benefits related to time spent selling, underwriting or processing the issuance of new and renewal insurance business only with respect to actual policies acquired or renewed; and . other essential direct costs that would not have been incurred had a policy not been acquired or renewed. All other acquisition-related costs, including those related to general advertising and solicitation, market research, agent training, product development, unsuccessful sales and underwriting efforts, as well as all indirect costs, are expensed as incurred. Value of business acquired ("VOBA") is an intangible asset resulting from a business combination that represents the excess of book value over the estimated fair value of acquired insurance, annuity, and investment-type contracts in-force at the acquisition date. The estimated fair value of the acquired liabilities is based on projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, investment returns, nonperformance risk adjustment and other factors. Actual experience with the purchased business may vary from these projections. DAC and VOBA are amortized as follows: Products: In proportion to the following over estimated lives of the contracts: ------------------------------------------------------------------------------ . Nonparticipating and Actual and expected future gross non-dividend-paying traditional premiums. contracts: . Term insurance . Nonparticipating whole life insurance . Traditional group life insurance . Non-medical health insurance ------------------------------------------------------------------------------ . Participating, dividend-paying Actual and expected future gross traditional contracts margins. ------------------------------------------------------------------------------ . Fixed and variable universal life Actual and expected future gross contracts profits. . Fixed and variable deferred annuity contracts See Note 4 for additional information on DAC and VOBA amortization. Amortization of DAC and VOBA is included in other expenses. The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA are aggregated on the financial statements for reporting purposes. 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 potential recoverability issue exists, the Company reviews deferred sales inducements ("DSI") to determine the recoverability of the asset. MLIC-12
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Value of distribution agreements acquired ("VODA") is reported in other assets and represents the present value of expected future profits associated with the expected future business derived from the distribution agreements acquired as part of a business combination. Value of customer relationships acquired ("VOCRA") is also reported in other assets and represents the present value of the expected future profits associated with the expected future business acquired through existing customers of the acquired company or business. The VODA and VOCRA associated with past business combinations are amortized over useful lives ranging from 10 to 30 years and such amortization is included in other expenses. Each year, or more frequently if circumstances indicate a possible impairment exists, the Company reviews VODA and VOCRA to determine whether the asset is impaired. Reinsurance For each of its reinsurance agreements, the Company determines whether the agreement provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. Cessions under reinsurance agreements do not discharge the Company's obligations as the primary insurer. The Company reviews all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying 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 when there is a gain at inception on the ceding entity, and to other liabilities when there is a loss at inception. The net cost of reinsurance is recognized as a component of other expenses when there is a gain at inception, and as policyholder benefits and claims when there is a loss at inception and is subsequently amortized on a basis consistent with the methodology used for amortizing DAC related to the underlying reinsured contracts. 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) premiums, reinsurance and other receivables (future policy benefits) 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. Unearned premiums are reflected as a component of premiums, reinsurance and other receivables (future policy benefits). Such amounts are amortized through earned premiums over the remaining contract period in proportion to the amount of insurance protection provided. For retroactive reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid (received) in excess of the related insurance liabilities ceded (assumed) are recognized immediately as a loss and are reported in the appropriate line item within the statement of operations. Any gain on such retroactive agreement is deferred and is amortized as part of DAC, primarily using the recovery method. Amounts currently recoverable under reinsurance agreements are included in premiums, reinsurance and other receivables and amounts currently payable are included in other liabilities. Assets and liabilities relating to reinsurance agreements with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance agreement. In the event that reinsurers do not meet their obligations to the Company under the terms of the reinsurance agreements, reinsurance recoverable balances 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. 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. With respect to GMIBs, a portion of the directly written GMIBs are accounted for as insurance liabilities, but the associated reinsurance agreements contain embedded derivatives. These embedded derivatives are included in premiums, reinsurance MLIC-13
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) and other receivables with changes in estimated fair value reported in net derivative gains (losses). Certain assumed GMWB, GMAB and GMIB are also accounted for as embedded derivatives with changes in estimated fair value reported in net derivative gains (losses). If the Company determines that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the agreement using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within premiums, reinsurance and other receivables. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate. Investments Net Investment Income and Net Investment Gains (Losses) Income from investments is reported within net investment income, unless otherwise stated herein. Gains and losses on sales of investments, impairment losses and changes in valuation allowances are reported within net investment gains (losses), unless otherwise stated herein. Fixed Maturity Securities The majority of the Company's fixed maturity securities are classified as available-for-sale ("AFS") 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) ("OCI"), net of policy-related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Sales of securities are determined on a specific identification basis. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premium and accretion of discount, and is based on the estimated economic life of the securities, which for mortgage-backed and asset-backed securities considers the estimated timing and amount of prepayments of the underlying loans. See Note 7 "-- Fixed Maturity Securities AFS -- Methodology for Amortization of Premium and Accretion of Discount on Structured Products." The amortization of premium and accretion of discount also takes into consideration call and maturity dates. The Company periodically evaluates these securities for impairment. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in estimated fair value, as well as an analysis of the gross unrealized losses by severity and/or age as described in Note 7 "-- Fixed Maturity Securities AFS -- Evaluation of Fixed Maturity Securities AFS for OTTI and Evaluating Temporarily Impaired Fixed Maturity Securities AFS." For securities in an unrealized loss position, an other-than-temporary impairment ("OTTI") is recognized in earnings within net investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security; or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the OTTI recognized in earnings is the entire difference between the security's amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized 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 loss") is recorded in OCI. Mortgage Loans The Company disaggregates its mortgage loan investments into three portfolio segments: commercial, agricultural and residential. The accounting policies that are applicable to all portfolio segments are presented below and the accounting policies related to each of the portfolio segments are included in Note 7. MLIC-14
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Mortgage loans held-for-investment are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, and are net of valuation allowances. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premium and accretion of discount. Also included in mortgage loans held-for-investment are residential mortgage loans for which the fair value option ("FVO") was elected, and which are stated at estimated fair value. Changes in estimated fair value are recognized in net investment income. Mortgage loans held-for-sale that were previously designated as held-for-investment, but now are designated as held-for-sale and mortgage loans originated with the intent to sell for which FVO was not elected, are stated at the lower of amortized cost or estimated fair value. Policy Loans Policy loans are stated at unpaid principal balances. Interest income is recorded as earned using the contractual interest rate. Generally, accrued interest is capitalized on the policy's anniversary date. Valuation allowances are not established for policy loans, as they are fully collateralized by the cash surrender value of the underlying insurance policies. Any unpaid principal and accrued interest are deducted from the cash surrender value or the death benefit prior to settlement of the insurance policy. Real Estate Real estate held-for-investment is stated at cost less accumulated depreciation. Depreciation is recorded 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 periodically reviews its real estate held-for-investment for impairment and tests for recoverability whenever events or changes in circumstances indicate the carrying value may not be recoverable. Properties whose carrying values are greater than their undiscounted cash flows are written down to their estimated fair value, which is generally computed using the present value of expected future cash flows discounted at a rate commensurate with the underlying risks. Real estate for which the Company commits to a plan to sell within one year and actively markets in its current condition for a reasonable price in comparison to its estimated fair value is classified as held-for-sale. Real estate held-for-sale is stated at the lower of depreciated cost or estimated fair value less expected disposition costs and is not depreciated. Real Estate Joint Ventures and Other Limited Partnership Interests The Company uses the equity method of accounting or the FVO for real estate joint ventures and other limited partnership interests ("investee") when it has more than a minor ownership interest or more than a minor influence over the investee's operations. The Company generally recognizes its share of the investee's earnings in net investment income on a three-month lag in instances where the investee's financial information is not sufficiently timely or when the investee's reporting period differs from the Company's reporting period. The Company accounts for its interest in real estate joint ventures and other limited partnership interests in which it has virtually no influence over the investee's operations at estimated fair value. Changes in estimated fair value of these investments are included in net investment gains (losses). Because of the nature and structure of these investments, they do not meet the characteristics of an equity security in accordance with applicable accounting standards. The Company routinely evaluates its equity method investments for impairment. 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. MLIC-15
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Short-term Investments Short-term investments include highly liquid securities and other investments with remaining maturities of one year or less, but greater than three months, at the time of purchase. Securities included within short-term investments are stated at estimated fair value, while other investments included within short-term investments are stated at amortized cost, 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 the following: . Freestanding derivatives with positive estimated fair values which are described in "-- Derivatives" below. . Affiliated investments include affiliated loans and affiliated preferred stock. Affiliated loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount. Interest income is recognized using an effective yield method giving effect to amortization of premium and accretion of discount. Affiliated preferred stock is stated at cost. Dividends are recognized in net investment income when declared. . Tax credit and renewable energy partnerships which derive a significant source of investment return in the form of income tax credits or other tax incentives. Where tax credits are guaranteed by a creditworthy third party, the investment is accounted for under the effective yield method. Otherwise, the investment is accounted for under the equity method. See Note 15. . Annuities funding structured settlement claims represent annuities funding claims assumed by the Company in its capacity as a structured settlements assignment company. The annuities are stated at their contract value, which represents the present value of the future periodic claim payments to be provided. The net investment income recognized reflects the amortization of discount of the annuity at its implied effective interest rate. See Note 3. . Leveraged leases net investment is equal to the minimum lease payments plus the unguaranteed residual value, less the unearned income, and is recorded net of non-recourse debt. Income is determined by applying the leveraged lease's estimated rate of return to the net investment in the lease in those periods in which the net investment at the beginning of the period is positive. Leveraged leases derive investment returns in part from their income tax treatment. The Company regularly reviews residual values for impairment. . Investments in Federal Home Loan Bank ("FHLB") common stock are carried at redemption value and are considered restricted investments until redeemed by the respective regional FHLBs. . Equity securities are reported at their estimated fair value, with changes in estimated fair value included in net investment gains (losses). Sales of securities are determined on a specific identification basis. Dividends are recognized in net investment income when declared. . Fair value option securities ("FVO Securities") are primarily investments in fixed maturity securities held-for-investment that are managed on a total return basis where the FVO has been elected, with changes in estimated fair value included in net investment income. . Investment in an operating joint venture that engages in insurance underwriting activities accounted for under the equity method. . Direct financing leases net investment is equal to the minimum lease payments plus the unguaranteed residual value, less unearned income. Income is determined by applying the pre-tax internal rate of return to the investment balance. The Company regularly reviews lease receivables for impairment. . 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. MLIC-16
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Securities Lending and Repurchase Agreements The Company accounts for securities lending transactions and repurchase agreements as financing arrangements and the associated liability is recorded at the amount of cash received. Income and expenses associated with securities lending transactions and repurchase agreements are reported as investment income and investment expense, respectively, within net investment income. Securities Lending The Company enters into securities lending transactions, whereby blocks of securities are loaned to third parties, primarily brokerage firms and commercial banks. The Company obtains collateral at the inception of the loan, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned, and maintains it at a level greater than or equal to 100% for the duration of the loan. Securities loaned under such transactions may be sold or re-pledged by the transferee. The Company is liable to return to the counterparties the cash collateral received. Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the Company's consolidated financial statements. The Company monitors the ratio of the collateral held to the estimated fair value of the securities loaned on a daily basis and additional collateral is obtained as necessary throughout the duration of the loan. Repurchase Agreements The Company participates in short-term repurchase agreements with unaffiliated financial institutions. Under these agreements, the Company lends fixed maturity securities and receives cash as collateral in an amount generally equal to 95% to 100% of the estimated fair value of the securities loaned at the inception of the transaction. The Company monitors the ratio of the collateral held to the estimated fair value of the securities loaned throughout the duration of the transaction and additional collateral is obtained as necessary. Securities loaned under such transactions may be sold or re-pledged by the transferee. Derivatives Freestanding Derivatives Freestanding derivatives are carried on the Company's balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivative's carrying value in other invested assets or other liabilities. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses) except as follows: Statement of Operations Presentation: Derivative: ----------------------------------------------------------------------------------------------------------- Policyholder benefits and claims Economic hedges of variable annuity guarantees included in future policy benefits ----------------------------------------------------------------------------------------------------------- Net investment income Economic hedges of equity method investments in joint ventures ----------------------------------------------------------------------------------------------------------- Hedge Accounting To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. Hedge designation and financial statement presentation of changes in estimated fair value of the hedging derivatives are as follows: . Fair value hedge -- a hedge of the estimated fair value of a recognized asset or liability -- in the same line item as the earnings effect of the hedged item. The carrying value of the hedged recognized asset or liability is adjusted for changes in its estimated fair value due to the hedged risk. MLIC-17
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) . Cash flow hedge -- a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability - in OCI and reclassified into the statement of operations when the Company's earnings are affected by the variability in cash flows of the hedged item. The changes in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported on the statement of operations within interest income or interest expense to match the location of the hedged item. In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. Assessments of hedge effectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; or (iv) the derivative is de-designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurring, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company's earnings are affected by the variability in cash flows of the hedged item. When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded in OCI pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable of occurring are recognized immediately in net investment gains (losses). In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses). Embedded Derivatives The Company issues certain insurance products, which include variable annuities, and investment contracts and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if: . the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings; . the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and . a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses). If the Company is unable to properly MLIC-18
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) 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. 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. Fair Value Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In most cases, the exit price and the transaction (or entry) price will be the same at initial recognition. Subsequent to initial recognition, fair values are based on unadjusted quoted prices for identical assets or liabilities in active markets that are readily and regularly obtainable. When such unadjusted quoted prices are not available, estimated fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical assets or liabilities, or other observable inputs. If these inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring management's judgment are used to determine the estimated fair value of assets and liabilities. Employee Benefit Plans Through September 30, 2018, the Company sponsored various qualified and nonqualified defined benefit pension plans and other postretirement employee benefit plans covering employees 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. As of October 1, 2018, except for the nonqualified defined benefit pension plan, the plan sponsor was changed from the Company to an affiliate. Following such change, the Company remains a participating affiliate in these plans. Accordingly, beginning October 1, 2018, the Company's obligation and expense related to such plans is limited to the amount of associated expense allocated to it as a participating affiliate. The Company recognizes the funded status of each of its defined benefit pension and other postretirement benefit plans, measured as the difference between the fair value of plan assets and the benefit obligation, which is the projected benefit obligation ("PBO") for pension benefits and the accumulated postretirement benefit obligation ("APBO") for other postretirement benefits in other assets or other liabilities. Actuarial gains and losses result from differences between the actual experience and the assumed experience on plan assets or PBO during a particular period and are recorded in accumulated OCI ("AOCI"). To the extent such gains and losses exceed 10% of the greater of the PBO or the estimated fair value of plan assets, the excess is amortized into net periodic benefit costs, generally over the average projected future service years of the active employees. In addition, prior service costs (credit) are recognized in AOCI at the time of the amendment and then amortized to net periodic benefit costs over the average projected future service years of the active employees. Net periodic benefit costs are determined using management's estimates and actuarial assumptions and are comprised of service cost, interest cost, settlement and curtailment costs, expected return on plan assets, amortization of net actuarial (gains) losses, and amortization of prior service costs (credit). Fair value is used to determine the expected return on plan assets. Through September 30, 2018, the Company also sponsored defined contribution plans for substantially all employees under which a portion of employee contributions is matched. Applicable matching contributions were made each payroll period. Accordingly, the Company recognized compensation cost for current matching contributions. As of October 1, 2018, except for the nonqualified defined contribution plan, the plan sponsor was changed from the Company to an affiliate. MLIC-19
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) See Note 14 for information on the plan sponsor change. Income Tax Metropolitan Life Insurance Company and its includable subsidiaries join with MetLife, Inc. and its includable subsidiaries in filing a consolidated U.S. life insurance and non-life insurance federal income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended. Current taxes (and the benefits of tax attributes such as losses) are allocated to Metropolitan Life Insurance Company and its subsidiaries under the consolidated tax return regulations and a tax sharing agreement. Under the consolidated tax return regulations, MetLife, Inc. has elected the "percentage method" (and 100% under such method) of reimbursing companies for tax attributes, e.g., net operating losses. As a result, 100% of tax attributes are reimbursed by MetLife, Inc. to the extent that consolidated federal income tax of the consolidated federal tax return group is reduced in a year by tax attributes. On an annual basis, each of the profitable subsidiaries pays to MetLife, Inc. the federal income tax which it would have paid based upon that year's taxable income. If Metropolitan Life Insurance Company or its includable subsidiaries have current or prior deductions and credits (including but not limited to losses) which reduce the consolidated tax liability of the consolidated federal tax return group, the deductions and credits are characterized as realized (or realizable) by Metropolitan Life Insurance Company and its includable subsidiaries when those tax attributes are realized (or realizable) by the consolidated federal tax return group, even if Metropolitan Life Insurance Company or its includable subsidiaries would not have realized the attributes on a stand-alone basis under a "wait and see" method. The Company's accounting for income taxes represents management's best estimate of various events and transactions. Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established against deferred tax assets when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established, as well as the amount of such allowances. When making such determination, the Company considers many factors, including: . the nature, frequency, and amount of cumulative financial reporting income and losses in recent years; . the jurisdiction in which the deferred tax asset was generated; . the length of time that carryforward can be utilized in the various taxing jurisdictions; . future taxable income exclusive of reversing temporary differences and carryforwards; . future reversals of existing taxable temporary differences; . taxable income in prior carryback years; and . tax planning strategies. The Company may be required to change its provision for income taxes when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, the effect of changes in tax laws, tax regulations, or interpretations of such laws or regulations, is recognized in net income tax expense (benefit) in the period of change. The Company determines whether it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded on the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. MLIC-20
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax expense. On December 22, 2017, President Trump signed into law H.R. 1, commonly referred to as the Tax Cuts and Jobs Act of 2017 ("U.S. Tax Reform"). See Note 15 for additional information on U.S. Tax Reform and related Staff Accounting Bulletin 118 ("SAB 118") provisional amounts. Litigation Contingencies The Company is a defendant in a large number of litigation matters and is involved in a number of regulatory investigations. Given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company's consolidated net income or cash flows in particular quarterly or annual periods. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Except as otherwise disclosed in Note 16, legal costs are recognized as incurred. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected on the Company's consolidated financial statements. Other Accounting Policies Stock-Based Compensation The Company recognizes stock-based compensation on its consolidated results of operations based on MetLife, Inc.'s allocation. MetLife, Inc. applies the accounting policies described below to determine those expenses. MetLife, Inc. grants certain employees stock-based compensation awards under various plans that are subject to specific vesting conditions. With the exception of performance shares granted in 2013 through 2018, and cash-payable awards, each of which are re-measured quarterly, MetLife, Inc. measures the cost of all stock-based transactions at fair value at grant date and recognizes it over the period during which a grantee must provide services in exchange for the award. Employees who meet certain age-and-service criteria receive payment or may exercise their awards regardless of ending employment. However, the award's payment or exercisability takes place at the originally-scheduled time, i.e., is not accelerated. As a result, the award does not require the employee to provide any substantive service after attaining those age-and-service criteria. Accordingly, MetLife, Inc. recognizes compensation expense related to stock-based awards from the beginning of the vesting to the earlier of the end of the vesting period or the date the employee attains the age-and-service criteria. MetLife, Inc. incorporates an estimation of future forfeitures of stock-based awards into the determination of compensation expense when recognizing expense over the requisite service period. Cash and Cash Equivalents The Company considers highly liquid securities and other investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Securities included within cash equivalents are stated at estimated fair value, while other investments included within cash equivalents are stated at amortized cost, which approximates estimated fair value. Property, Equipment, 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 is generally 40 years for company occupied real estate property, from one to 25 years for leasehold improvements, and from three to seven years for all other property and equipment. The cost basis of the property, equipment and leasehold improvements was $890 million and $926 million at December 31, 2019 and 2018, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $635 million and $572 million at December 31, 2019 and 2018, respectively. Related depreciation and amortization expense was $24 million, $81 million and $124 million for the years ended December 31, 2019, 2018 and 2017, respectively. MLIC-21
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) 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 $1.3 billion at both December 31, 2019 and 2018. Accumulated amortization of capitalized software was $1.3 billion at both December 31, 2019 and 2018. Related amortization expense was $0, $90 million and $164 million for the years ended December 31, 2019, 2018 and 2017, respectively. During the year ended December 31, 2018, the Company sold to an affiliate certain property, equipment, leasehold improvements and computer software at carrying value for a total of $785 million. Leases The Company, as lessee, has entered into various lease and sublease agreements for office space and equipment. At contract inception, the Company determines that an arrangement contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For contracts that contain a lease, the Company recognizes the right-of-use ("ROU") asset in Other assets and the lease liability in Other liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and lease liabilities are determined using the Company's incremental borrowing rate based upon information available at commencement date to recognize the present value of lease payments over the lease term. ROU assets also include lease payments and excludes lease incentives. Lease terms may include options to extend or terminate the lease and are included in the lease measurement when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components. The Company does not separate lease and non-lease components and accounts for these items as a single lease component for all asset classes. The majority of the Company's leases and subleases are operating leases related to office space. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term. Other Revenues Other revenues primarily include fees related to service contracts from customers for prepaid legal plans, administrative services-only ("ASO") contracts, and recordkeeping and related services. Substantially all of the revenue from the services is recognized over time as the applicable services are provided or are made available to the customers. The revenue recognized includes variable consideration to the extent it is probable that a significant reversal will not occur. In addition to the service fees, other revenues also include certain stable value fees and reinsurance ceded. These fees are recognized as earned. Policyholder Dividends Policyholder dividends are approved annually by Metropolitan Life Insurance Company's Board of Directors. The aggregate amount of policyholder dividends is related to actual interest, mortality, morbidity and expense experience for the year, as well as management's judgment as to the appropriate level of statutory surplus to be retained by Metropolitan Life Insurance Company. Foreign Currency Assets, liabilities and operations of foreign affiliates and subsidiaries 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 are translated from the functional currency to U.S. dollars at the exchange rates in effect at each year-end and revenues and expenses are translated at the average exchange rates during the year. The resulting translation adjustments are charged or credited directly to OCI, net of applicable taxes. Gains and losses from foreign currency transactions, including the effect of re-measurement of monetary assets and liabilities to the appropriate functional currency, are reported as part of net investment gains (losses) in the period in which they occur. MLIC-22
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Goodwill Goodwill, which is included in other assets, represents the future economic benefits arising from net assets acquired in a business combination that are not individually identified and recognized. Goodwill is calculated as the excess of cost over the estimated fair value of such net assets acquired, is not amortized, and is tested for impairment based on a fair value approach at least annually or more frequently if events or circumstances indicate that there may be justification for conducting an interim test. The Company performs its annual goodwill impairment testing during the third quarter based upon data as of the close of the second quarter. Goodwill associated with a business acquisition is not tested for impairment during the year the business is acquired unless there is a significant identified impairment event. The impairment test is performed at the reporting unit level, which 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 may 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 combination. 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. The Company tests goodwill for impairment by either performing a qualitative assessment or a quantitative test. The qualitative assessment is an assessment of historical information and relevant events and circumstances to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. The Company may elect not to perform the qualitative assessment for some or all of its reporting units and perform a quantitative impairment test. In performing the quantitative impairment test, the Company may determine the fair values of its reporting units by applying a market multiple, discounted cash flow, and/or an actuarial based valuation approach. For the 2019 annual goodwill impairment tests, the Company concluded that goodwill was not impaired. The goodwill balance was $86 million and $70 million in the U.S. segment at December 31, 2019 and 2018, respectively. The goodwill balance was $31 million in the MetLife Holdings segment at both December 31, 2019 and 2018. Recent Accounting Pronouncements Changes to GAAP are established by the Financial Accounting Standards Board ("FASB") in the form of accounting standards updates ("ASUs") to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. The following tables provide a description of new ASUs issued by the FASB and the impact of the adoption on the Company's consolidated financial statements. Adoption of New Accounting Pronouncements Except as noted below, the ASUs adopted by the Company effective January 1, 2019 did not have a material impact on its consolidated financial statements or disclosures. Standard Description Effective Date and Impact on Financial Statements Method of Adoption --------------------------------------------------------------------------------------------------------------------------- ASU 2018-14, The new guidance removes certain December 31, 2020. The adoption of the new guidance did not Compensation- disclosures that no longer are The Company early have an impact on the Company's Retirement considered cost beneficial, clarifies adopted using a consolidated financial statements. The Benefits-Defined the specific requirements of certain retrospective Company has included updated disclosures Benefit Plans- disclosures, and adds disclosure approach to all within Note 14. General (Subtopic requirements identified as relevant for periods presented. 715-20): Disclosure employers that sponsor defined benefit Framework- pension or other postretirement plans. Changes to the Disclosure Requirements for Defined Benefit Plans MLIC-23
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Standard Description Effective Date and Impact on Financial Statements Method of Adoption ----------------------------------------------------------------------------------------------------------------------------- ASU 2017-12, The new guidance simplifies the January 1, 2019. The The adoption of the guidance resulted in an Derivatives and application of hedge accounting in Company adopted $18 million, net of income tax, increase to Hedging certain situations and amends the using a modified AOCI with a corresponding decrease to (Topic 815): hedge accounting model to enable retrospective retained earnings due to the reclassification Targeted entities to better portray the approach. of hedge ineffectiveness for cash flow Improvements to economics of their risk management hedging relationships existing as of Accounting for activities in their financial January 1, 2019. The Company has Hedging Activities, statements. included expanded disclosures within as clarified and Note 8. amended by ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments -- Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments ----------------------------------------------------------------------------------------------------------------------------- ASU 2016-02, The new guidance requires a lessee January 1, 2019. The The Company elected the package of Leases (Topic 842), to recognize assets and Company adopted practical expedients allowed under the as clarified and liabilities for leases with lease using a modified transition guidance. This allowed the amended by ASU terms of more than 12 months. retrospective Company to carry forward its historical 2018-10, Leases are classified as finance approach. lease classification. In addition, the Codification or operating leases and both types Company elected all other practical Improvements to of leases are recognized on the expedients that were allowed under the Topic 842, Leases, balance sheet. Lessor accounting new guidance and were applicable, ASU 2018-11, remains largely unchanged from including the practical expedient to Leases (Topic previous guidance except for combine lease and non-lease components 842): Targeted certain targeted changes. The new into one lease component for certain real Improvements, and guidance also requires new estate leases. ASU 2018-20, qualitative and quantitative The adoption of this guidance resulted in Leases (Topic disclosures. In July 2018, two the recording of additional net ROU assets 842): Narrow- amendments to the new guidance and lease liabilities of approximately Scope were issued. The amendments $866 million and $950 million, Improvements for provide the option to adopt the respectively, as of January 1, 2019. The Lessors new guidance prospectively without reduction of ROU assets was a result of adjusting comparative periods. adjustments for prepaid/deferred Also, the amendments provide rent, unamortized initial direct costs and lessors with a practical expedient impairment of certain ROU assets based on not to separate lease and the net present value of the remaining non-lease components for certain minimum lease payments and sublease operating leases. In December revenues. In addition, retained earnings 2018, an amendment was issued to increased by $95 million, net of income clarify lessor accounting relating tax, as a result of the recognition of to taxes, certain lessor's costs deferred gains on previous sale leaseback and variable payments related to transactions. The guidance did not have a both lease and non-lease material impact on the Company's components. consolidated net income and cash flows. The Company has included expanded disclosures on the consolidated balance sheets and in Notes 7 and 10. MLIC-24
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) Future Adoption of New Accounting Pronouncements ASUs not listed below were assessed and either determined to be not applicable or are not expected to have a material impact on the Company's consolidated financial statements or disclosures. ASUs issued but not yet adopted as of December 31, 2019 that are currently being assessed and may or may not have a material impact on the Company's consolidated financial statements or disclosures are summarized in the table below. ------------------------------------------------------------------------------------------------------------------------------- Effective Date and Standard Description Method of Adoption Impact on Financial Statements ------------------------------------------------------------------------------------------------------------------------------- ASU 2019-12, The new guidance simplifies the January 1, 2021. The The Company has started its Income Taxes accounting for income taxes by removing new guidance should implementation efforts and is (Topic 740): certain exceptions to the tax be applied either on a currently evaluating the impact of the Simplifying the accounting guidance and providing retrospective, modified new guidance on its consolidated Accounting for clarification to other specific tax retrospective or financial statements. Income Taxes accounting guidance to eliminate prospective basis based variations in practice. Specifically, on what items the it removes the exceptions related to amendments relates to. the a) incremental approach for Early adoption is intraperiod tax allocation when there permitted. is a loss from continuing operations and income or a gain from other items, b) recognition of a deferred tax liability when foreign investment ownership changes from equity method investment to consolidated subsidiary and vice versa and c) use of interim period tax accounting for year-to-date losses that exceed anticipated losses. The guidance also simplifies the application of the income tax guidance for franchise taxes that are partially based on income and the accounting for tax law changes during interim periods, clarifies the accounting for transactions that result in a step-up in tax basis of goodwill, provides for the option to elect allocation of consolidated income taxes to entities disregarded by taxing authorities for their stand-alone reporting, and requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. ------------------------------------------------------------------------------------------------------------------------------- ASU 2018-15, The new guidance requires a customer in January 1, 2020. The The new guidance will not have a Intangibles -- a cloud computing arrangement that is a new guidance can be material impact on the Company's Goodwill and service contract to follow the applied either consolidated financial statements and Other -- internal-use software guidance to prospectively to will be adopted prospectively. Internal-Use determine which implementation costs to eligible costs incurred Software (Subtopic capitalize as an asset and which costs on or after the 350-40): Customer's to expense as incurred. Implementation guidance is first Accounting for costs that are capitalized under the applied, or Implementation new guidance are required to be retrospectively to all Costs Incurred in a amortized over the term of the hosting periods presented. Cloud Computing arrangement, beginning when the module Arrangement That Is or component of the hosting arrangement a Service Contract is ready for its intended use. ------------------------------------------------------------------------------------------------------------------------------- ASU 2018-13, Fair The new guidance modifies the January 1, 2020. As of December 31, 2018, the Value Measurement disclosure requirements on fair value Amendments related to Company early adopted the (Topic 820): by removing some requirements, changes in unrealized provisions of the guidance that Disclosure modifying others, adding changes in gains and losses, the removed the requirements relating to Framework -- unrealized gains and losses included in range and weighted transfers between fair value Changes to the OCI for recurring Level 3 fair value average of significant hierarchy levels and certain Disclosure measurements, and under certain unobservable inputs disclosures about valuation processes Requirements for circumstances, providing the option to used to develop for Level 3 fair value measurements. Fair Value disclose certain other quantitative Level 3 fair value The Company will adopt the Measurement information with respect to significant measurements, and the remainder of the new guidance at the unobservable inputs in lieu of a narrative description of effective date. The new guidance weighted average. measurement will not have a material impact on uncertainty should be the Company's consolidated applied prospectively. financial statements. All other amendments should be applied retrospectively. ------------------------------------------------------------------------------------------------------------------------------- MLIC-25
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued) ------------------------------------------------------------------------------------------------------------------------------- Effective Date and Standard Description Method of Adoption Impact on Financial Statements ------------------------------------------------------------------------------------------------------------------------------- ASU 2018-12, The new guidance (i) prescribes the January 1, 2022, to be The Company has started its Financial discount rate to be used in measuring applied retrospectively implementation efforts and is Services -- the liability for future policy to January 1, 2020 currently evaluating the impact of the Insurance (Topic benefits for traditional and limited (with early adoption new guidance. Given the nature and 944): Targeted payment long-duration contracts, and permitted). extent of the required changes to a Improvements to the requires assumptions for those significant portion of the Company's Accounting for liability valuations to be updated operations, the adoption of this Long-Duration after contract inception, (ii) requires guidance is expected to have a Contracts, as more market-based product guarantees on material impact on the Company's amended by ASU certain separate account and other consolidated financial statements. 2019-09, Financial account balance long-duration contracts Services -- to be accounted for at fair value, Insurance (Topic (iii) simplifies the amortization of 944): Effective Date DAC for virtually all long-duration contracts, and (iv) introduces certain financial statement presentation requirements, as well as significant additional quantitative and qualitative disclosures. The amendments in ASU 2019-09 defer the effective date of the amendments in update 2018-12 for all entities. ------------------------------------------------------------------------------------------------------------------------------- ASU 2017-04, The new guidance simplifies the current January 1, 2020, to be The new guidance will reduce the Intangibles -- two-step goodwill impairment test by applied on a complexity involved with the Goodwill and Other eliminating Step 2 of the test. The new prospective basis. evaluation of goodwill for (Topic 350): guidance requires a one-step impairment impairment. The impact of the new Simplifying the Test test in which an entity compares the guidance will depend on the for Goodwill fair value of a reporting unit with its outcomes of future goodwill Impairment carrying amount and recognizes an impairment tests. impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if any. ------------------------------------------------------------------------------------------------------------------------------- ASU 2016-13, This new guidance requires an allowance January 1, 2020, to be The Company has finalized the Financial for credit losses based on the applied on a modified development of the credit loss Instruments -- expectation of lifetime credit losses retrospective basis, models for its financing receivables Credit Losses on financing receivables carried at which requires carried at amortized cost. The (Topic 326): amortized cost, including, but not transition adjustments development of these credit loss Measurement of limited to, mortgage loans, premium to be recorded as a models included data input Credit Losses on receivables, reinsurance receivables cumulative effect validations, updates to information Financial and leases other than operating leases. adjustment to retained systems and enhanced policies and Instruments, as The current model for OTTI on AFS debt earnings. controls. At December 31, 2019, the clarified and securities has been modified and allowance for credit losses was amended by ASU requires the recording of an allowance approximately 0.50% of the 2018-19, for credit losses instead of a amortized cost of financing Codification reduction of the carrying value. Any receivables in scope. The Company Improvements to improvements in expected future cash estimates that upon adoption, the Topic 326, flows will no longer be reflected as a allowance for credit losses will be Financial prospective yield adjustment, but less than 1.00% of the amortized cost Instruments -- instead will be reflected as a of financing receivables in scope. Credit Losses, ASU reduction in the allowance. The new The increase in the allowance for 2019-04, guidance also replaces the model for credit losses primarily relates to the Codification purchased credit impaired debt Company's residential mortgage loan Improvements to securities and financing receivables portfolio. Topic 326, and requires the establishment of an Financial allowance for credit losses at Instruments -- acquisition, which is added to the Credit Losses, Topic purchase price to establish the initial 815, Derivatives amortized cost of the instrument. and Hedging, and The new guidance also requires enhanced Topic 825, disclosures. Financial Instruments, ASU 2019-05, Financial Instruments -- Credit Losses (Topic 326): Targeted Transition Relief, and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments -- Credit Losses MLIC-26
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 2. Segment Information The Company is organized into two segments: U.S. and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other. U.S. The U.S. segment offers a broad range of protection products and services aimed at serving the financial needs of customers throughout their lives. These products are sold to corporations and their respective employees, other institutions and their respective members, as well as individuals. The U.S. segment is organized into two businesses: Group Benefits and Retirement and Income Solutions ("RIS"). . The Group Benefits business offers life, dental, group short- and long-term disability, individual disability, accidental death and dismemberment, vision and accident & health coverages, as well as prepaid legal plans. This business also sells ASO arrangements to some employers. . The RIS business offers a broad range of life and annuity-based insurance and investment products, including stable value and pension risk transfer products, institutional income annuities, tort settlements, and capital markets investment products, as well as solutions for funding postretirement benefits and company-, bank- or trust-owned life insurance. MetLife Holdings The MetLife Holdings segment consists of operations relating to products and businesses, previously included in MLIC's former retail business, that the Company no longer actively markets, such as variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, and long-term care insurance. Corporate & Other Corporate & Other contains various start-up, developing and run-off businesses. Also included in Corporate & Other are: the excess capital, as well as certain charges and activities, not allocated to the segments (including enterprise-wide strategic initiative restructuring charges), the Company's ancillary non-U.S. operations, interest expense related to the majority of the Company's outstanding debt, expenses associated with certain legal proceedings and income tax audit issues, and the elimination of intersegment amounts (which generally relate to affiliated reinsurance and intersegment loans, bearing interest rates commensurate with related borrowings). Financial Measures and Segment Accounting Policies Adjusted earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is also the Company's GAAP measure of segment performance and is reported below. Adjusted earnings should not be viewed as a substitute for net income (loss). The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax. The financial measures of adjusted revenues and adjusted expenses focus on the Company's primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MLIC but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also includes the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MLIC that do not meet the criteria to be included in results of discontinued operations under GAAP. Adjusted revenues also excludes net investment gains (losses) and net derivative gains (losses). The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted 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 MLIC-27
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 2. Segment Information (continued) . Net investment income: (i) includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment, (ii) excludes post-tax adjusted earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (iv) includes distributions of profits from certain other limited partnership interests that were previously accounted for under the cost method, but are now accounted for at estimated fair value, where the change in estimated fair value is recognized in net investment gains (losses) under GAAP. The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted expenses: . Policyholder benefits and claims and policyholder dividends excludes: (i) amortization of basis adjustments associated with de-designated fair value hedges of future policy benefits, (ii) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (iii) amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass-through adjustments, (iv) benefits and hedging costs related to GMIBs ("GMIB costs") and (v) market value adjustments associated with surrenders or terminations of contracts ("Market value adjustments"); . Interest credited to policyholder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policyholder account balances 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: (i) noncontrolling interests, (ii) acquisition, integration and other costs, and (iii) goodwill impairments. The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from the Company's effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms. Set forth in the tables below is certain financial information with respect to the Company's segments, as well as Corporate & Other, for the years ended December 31, 2019, 2018 and 2017 and at December 31, 2019 and 2018. The segment accounting policies are the same as those used to prepare the Company's consolidated financial statements, except for adjusted earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below. Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in MetLife's and the Company's business. MetLife's economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. MetLife's management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards. Segment net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company's consolidated net investment income, net income (loss), or adjusted earnings. MLIC-28
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 2. Segment Information (continued) Net investment income is based upon the actual results of each segment's specifically identifiable investment portfolios 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. MetLife Corporate Total Year Ended December 31, 2019 U.S. Holdings & Other Total Adjustments Consolidated ---------------------------------- ------------ ----------- --------- ------------ ----------- ------------ (In millions) Revenues Premiums........................... $ 18,510 $ 3,098 $ -- $ 21,608 $ -- $ 21,608 Universal life and investment-type product policy fees............... 1,037 912 -- 1,949 88 2,037 Net investment income.............. 6,647 4,688 (73) 11,262 (289) 10,973 Other revenues..................... 815 220 538 1,573 -- 1,573 Net investment gains (losses)...... -- -- -- -- 346 346 Net derivative gains (losses)...... -- -- -- -- (288) (288) ------------ ----------- --------- ------------ ----------- ------------ Total revenues.................... 27,009 8,918 465 36,392 (143) 36,249 ------------ ----------- --------- ------------ ----------- ------------ Expenses Policyholder benefits and claims and policyholder dividends........ 18,963 5,920 -- 24,883 206 25,089 Interest credited to policyholder account balances.................. 1,925 718 -- 2,643 (19) 2,624 Capitalization of DAC.............. (53) 10 -- (43) -- (43) Amortization of DAC and VOBA....... 55 220 -- 275 (36) 239 Interest expense on debt........... 10 8 87 105 -- 105 Other expenses..................... 2,947 844 877 4,668 7 4,675 ------------ ----------- --------- ------------ ----------- ------------ Total expenses.................... 23,847 7,720 964 32,531 158 32,689 ------------ ----------- --------- ------------ ----------- ------------ Provision for income tax expense (benefit)......................... 656 232 (677) 211 (63) 148 ------------ ----------- --------- ------------ ------------ Adjusted earnings................. $ 2,506 $ 966 $ 178 3,650 ============ =========== ========= Adjustments to: Total revenues..................... (143) Total expenses..................... (158) Provision for income tax (expense) benefit........................... 63 ------------ Net income (loss)................. $ 3,412 $ 3,412 ============ ============ MetLife Corporate At December 31, 2019 U.S. Holdings & Other Total ----------------------------- ----------- ----------- ---------- ----------- (In millions) Total assets.................. $ 246,319 $ 156,327 $ 28,171 $ 430,817 Separate account assets....... $ 73,056 $ 44,811 $ -- $ 117,867 Separate account liabilities.. $ 73,056 $ 44,811 $ -- $ 117,867 MLIC-29
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 2. Segment Information (continued) MetLife Corporate Total Year Ended December 31, 2018 U.S. Holdings & Other Total Adjustments Consolidated --------------------------------------- ------------ ------------ ---------- ------------ ----------- ------------ (In millions) Revenues Premiums................................ $ 23,388 $ 3,205 $ 20 $ 26,613 $ -- $ 26,613 Universal life and investment-type product policy fees.................... 1,023 1,008 -- 2,031 93 2,124 Net investment income................... 6,678 4,780 (154) 11,304 (385) 10,919 Other revenues.......................... 775 240 571 1,586 -- 1,586 Net investment gains (losses)........... -- -- -- -- 153 153 Net derivative gains (losses)........... -- -- -- -- 766 766 ------------ ------------ ---------- ------------ ----------- ------------ Total revenues......................... 31,864 9,233 437 41,534 627 42,161 ------------ ------------ ---------- ------------ ----------- ------------ Expenses Policyholder benefits and claims and policyholder dividends................. 24,202 5,870 5 30,077 105 30,182 Interest credited to policyholder account balances....................... 1,735 748 -- 2,483 (4) 2,479 Capitalization of DAC................... (40) 6 -- (34) -- (34) Amortization of DAC and VOBA............ 75 245 -- 320 150 470 Interest expense on debt................ 12 8 88 108 -- 108 Other expenses.......................... 2,838 980 834 4,652 (5) 4,647 ------------ ------------ ---------- ------------ ----------- ------------ Total expenses......................... 28,822 7,857 927 37,606 246 37,852 ------------ ------------ ---------- ------------ ----------- ------------ Provision for income tax expense (benefit).............................. 648 269 (823) 94 79 173 ------------ ------------ ---------- ------------ ------------ Adjusted earnings...................... $ 2,394 $ 1,107 $ 333 3,834 ============ ============ ========== Adjustments to: Total revenues.......................... 627 Total expenses.......................... (246) Provision for income tax (expense) benefit................................ (79) ------------ Net income (loss)...................... $ 4,136 $ 4,136 ============ ============ MetLife Corporate At December 31, 2018 U.S. Holdings & Other Total ----------------------------- ------------- ------------- ----------- ------------- (In millions) Total assets.................. $ 233,998 $ 147,498 $ 25,421 $ 406,917 Separate account assets....... $ 69,328 $ 41,522 $ -- $ 110,850 Separate account liabilities.. $ 69,328 $ 41,522 $ -- $ 110,850 MLIC-30
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 2. Segment Information (continued) MetLife Corporate Total Year Ended December 31, 2017 U.S. Holdings & Other Total Adjustments Consolidated --------------------------------------- ----------- ---------- ---------- ----------- ----------- ------------ (In millions) Revenues Premiums................................ $ 19,496 $ 3,420 $ 9 $ 22,925 $ -- $ 22,925 Universal life and investment-type product policy fees.................... 1,004 1,126 -- 2,130 97 2,227 Net investment income................... 6,206 4,920 (243) 10,883 (370) 10,513 Other revenues.......................... 781 200 589 1,570 -- 1,570 Net investment gains (losses)........... -- -- -- -- 334 334 Net derivative gains (losses)........... -- -- -- -- (344) (344) ----------- ---------- ---------- ----------- ----------- ------------ Total revenues......................... 27,487 9,666 355 37,508 (283) 37,225 ----------- ---------- ---------- ----------- ----------- ------------ Expenses Policyholder benefits and claims and policyholder dividends................. 20,558 6,006 4 26,568 321 26,889 Interest credited to policyholder account balances....................... 1,459 779 -- 2,238 (3) 2,235 Capitalization of DAC................... (48) (13) -- (61) -- (61) Amortization of DAC and VOBA............ 56 303 -- 359 (118) 241 Interest expense on debt................ 11 8 87 106 -- 106 Other expenses.......................... 2,717 1,201 930 4,848 1 4,849 ----------- ---------- ---------- ----------- ----------- ------------ Total expenses......................... 24,753 8,284 1,021 34,058 201 34,259 ----------- ---------- ---------- ----------- -------- ----------- Provision for income tax expense (benefit).............................. 954 427 (368) 1,013 (1,574) (561) ----------- ---------- ---------- ----------- ------------ Adjusted earnings...................... $ 1,780 $ 955 $ (298) 2,437 =========== ========== ========== Adjustments to: Total revenues.......................... (283) Total expenses.......................... (201) Provision for income tax (expense) benefit................................ 1,574 ----------- Net income (loss)...................... $ 3,527 $ 3,527 =========== ============ The following table presents total premiums, universal life and investment-type product policy fees and other revenues by major product groups of the Company's segments, as well as Corporate & Other: Years Ended December 31, ----------------------- 2019 2018 2017 ------- ------- ------- (In millions) Life insurance....................................... $13,413 $13,251 $13,139 Accident & health insurance.......................... 8,556 8,071 7,933 Annuities............................................ 2,917 8,685 5,390 Other................................................ 332 316 260 ------- ------- ------- Total............................................... $25,218 $30,323 $26,722 ======= ======= ======= Substantially all of the Company's consolidated premiums, universal life and investment-type product policy fees and other revenues originated in the U.S. Revenues derived from one U.S. segment customer were $3.0 billion, $3.1 billion and $2.8 billion for the years ended December 31, 2019, 2018 and 2017, respectively, which represented 12%, 10% and 11% of the consolidated premiums, universal life and investment-type product policy fees and other revenues, respectively. Revenues derived from the second U.S. segment customer were $6.0 billion for the year ended December 31, 2018, which represented 20% of consolidated premiums, universal life and investment-type product policy fees and other revenues. The revenue was from a single premium received for a pension risk transfer. Revenues derived from any other customer did not exceed 10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the years ended December 31, 2019, 2018 and 2017. MLIC-31
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance Insurance Liabilities Insurance liabilities, including affiliated insurance liabilities on reinsurance assumed and ceded, are comprised of future policy benefits, policyholder account balances and other policy-related balances. Information regarding insurance liabilities by segment, as well as Corporate & Other, was as follows at: December 31, ----------------- 2019 2018 -------- -------- (In millions) U.S........................... $139,081 $135,003 MetLife Holdings.............. 88,451 88,725 Corporate & Other............. 212 291 -------- -------- Total........................ $227,744 $224,019 ======== ======== See Note 5 for discussion of affiliated reinsurance liabilities included in the table above. Future policy benefits are measured as follows: ------------------------------------------------------------------- Product Type: Measurement Assumptions: ------------------------------------------------------------------- Participating life 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. ------------------------------------------------------------------- Nonparticipating life Aggregate of the present value of future expected benefit payments and related expenses less the present value of future expected 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 11%. ------------------------------------------------------------------- Individual and group Present value of future expected traditional fixed annuities payments. Interest rate assumptions after annuitization used in establishing such liabilities range from 1% to 11%. ------------------------------------------------------------------- Non-medical health The net level premium method and insurance 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 1% to 7%. ------------------------------------------------------------------- Disabled lives 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 8%. ------------------------------------------------------------------- Participating business represented 3% of the Company's life insurance in-force at both December 31, 2019 and 2018. Participating policies represented 19%, 20% and 21% of gross traditional life insurance premiums for the years ended December 31, 2019, 2018 and 2017, respectively. Policyholder account balances are equal to: (i) policy account values, which consist of an accumulation of gross premium payments; and (ii) credited interest, ranging from less than 1% to 8%, less expenses, mortality charges and withdrawals. MLIC-32
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Guarantees The Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum benefits. GMABs, the non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 8. Guarantees accounted for as insurance liabilities include: ------------------------------------------------------------------------------ Guarantee: Measurement Assumptions: ------------------------------------------------------------------------------ GMDBs . A return of purchase payment . Present value of expected death upon death even if the account benefits in excess of the value is reduced to zero. projected account balance recognizing the excess ratably over the accumulation period based on the present value of total expected assessments. . An enhanced death benefit may be . Assumptions are consistent with available for an additional fee. those used for amortizing DAC, and are thus subject to the same variability and risk. . Investment performance and volatility assumptions are consistent with the historical experience of the appropriate underlying equity index, such as the S&P 500 Index. . Benefit assumptions are based on the average benefits payable over a range of scenarios. ------------------------------------------------------------------------------ GMIBs . After a specified period of time . Present value of expected income determined at the time of benefits in excess of the issuance of the variable projected account balance at annuity contract, a minimum any future date of accumulation of purchase annuitization and recognizing payments, even if the account the excess ratably over the value is reduced to zero, that accumulation period based on can be annuitized to receive a present value of total expected monthly income stream that is assessments. not less than a specified amount. . Certain contracts also provide . Assumptions are consistent with for a guaranteed lump sum those used for estimating GMDB return of purchase premium in liabilities. lieu of the annuitization benefit. . Calculation incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder. ------------------------------------------------------------------------------ GMWBs. . A return of purchase payment via . Expected value of the life partial withdrawals, even if contingent payments and the account value is reduced to expected assessments using zero, provided that cumulative assumptions consistent with withdrawals in a contract year those used for estimating the do not exceed a certain limit. GMDB liabilities. . Certain contracts include guaranteed withdrawals that are life contingent. ------------------------------------------------------------------------------ The Company also issues other annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize. These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed annuitization benefits that may be above what would be provided by the current account value of the contract. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit. MLIC-33
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Information regarding the liabilities for guarantees (excluding base policy liabilities and embedded derivatives) relating to annuity and universal and variable life contracts was as follows: Universal and Variable Annuity Contracts Life Contracts ---------------------- --------------------- GMDBs and Secondary Paid-Up GMWBs GMIBs Guarantees Guarantees Total ---------- ---------- ---------- ---------- ------------ (In millions) Direct: Balance at January 1, 2017.... $ 268 $ 467 $ 620 $ 102 $ 1,457 Incurred guaranteed benefits.. 58 112 105 7 282 Paid guaranteed benefits...... -- -- -- -- -- ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2017.. 326 579 725 109 1,739 Incurred guaranteed benefits.. 3 162 95 5 265 Paid guaranteed benefits...... (12) (3) -- -- (15) ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2018.. 317 738 820 114 1,989 Incurred guaranteed benefits.. 57 19 255 52 383 Paid guaranteed benefits...... (13) -- -- -- (13) ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2019.. $ 361 $ 757 $ 1,075 $ 166 $ 2,359 ========== ========== ========== ========== ============ Ceded: Balance at January 1, 2017.... $ 44 $ (21) $ 249 $ 71 $ 343 Incurred guaranteed benefits.. (44) 21 23 5 5 Paid guaranteed benefits...... -- -- -- -- -- ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2017.. -- -- 272 76 348 Incurred guaranteed benefits.. -- -- 29 4 33 Paid guaranteed benefits...... -- -- -- -- -- ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2018.. -- -- 301 80 381 Incurred guaranteed benefits.. -- -- 95 15 110 Paid guaranteed benefits...... -- -- -- -- -- ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2019.. $ -- $ -- $ 396 $ 95 $ 491 ========== ========== ========== ========== ============ Net: Balance at January 1, 2017.... $ 224 $ 488 $ 371 $ 31 $ 1,114 Incurred guaranteed benefits.. 102 91 82 2 277 Paid guaranteed benefits...... -- -- -- -- -- ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2017.. 326 579 453 33 1,391 Incurred guaranteed benefits.. 3 162 66 1 232 Paid guaranteed benefits...... (12) (3) -- -- (15) ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2018.. 317 738 519 34 1,608 Incurred guaranteed benefits.. 57 19 160 37 273 Paid guaranteed benefits...... (13) -- -- -- (13) ---------- ---------- ---------- ---------- ------------ Balance at December 31, 2019.. $ 361 $ 757 $ 679 $ 71 $ 1,868 ========== ========== ========== ========== ============ MLIC-34
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Information regarding the Company's guarantee exposure, which includes direct business, but excludes offsets from hedging or reinsurance, if any, was as follows at: December 31, ----------------------------------------------------------------------- 2019 2018 --------------------------------- --------------------------------- In the At In the At Event of Death Annuitization Event of Death Annuitization ---------------- --------------- ---------------- --------------- (Dollars in millions) Annuity Contracts: Variable Annuity Guarantees: Total account value (1), (2)................ $ 49,207 $ 21,472 $ 47,393 $ 20,692 Separate account value (1).................. $ 39,679 $ 20,666 $ 37,342 $ 19,839 Net amount at risk.......................... $ 1,195 (3) $ 524 (4) $ 2,433 (3) $ 418 (4) Average attained age of contractholders...... 68 years 66 years 67 years 65 years Other Annuity Guarantees: Total account value (1), (2)................ N/A $ 143 N/A $ 144 Net amount at risk.......................... N/A $ 80 (5) N/A $ 85 (5) Average attained age of contractholders...... N/A 54 years N/A 53 years December 31, ----------------------------------------------------------------------- 2019 2018 --------------------------------- --------------------------------- Secondary Paid-Up Secondary Paid-Up Guarantees Guarantees Guarantees Guarantees ---------------- --------------- ---------------- --------------- (Dollars in millions) Universal and Variable Life Contracts: Total account value (1), (2)................ $ 4,909 $ 899 $ 4,614 $ 937 Net amount at risk (6)...................... $ 41,385 $ 5,884 $ 44,596 $ 6,290 Average attained age of policyholders........ 57 years 64 years 55 years 63 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) Includes the contractholder's investments in the general account and separate account, if applicable. (3) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. (4) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company's potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved. (5) Defined as either the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date or the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. These amounts represent the Company's potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date. (6) Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date. MLIC-35
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Guarantees -- Separate Accounts Account balances of contracts with guarantees were invested in separate account asset classes as follows at: December 31, --------------------------- 2019 2018 ------------- ------------- (In millions) Fund Groupings: Equity........................ $ 21,960 $ 18,073 Balanced...................... 17,396 15,831 Bond.......................... 3,024 2,885 Money Market.................. 48 53 ------------- ------------- Total........................ $ 42,428 $ 36,842 ============= ============= Obligations Assumed Under Structured Settlement Assignments The Company assumed structured settlement claim obligations as an assignment company. These liabilities are measured at the present value of the periodic claims to be provided and reported as other policy-related balances. The Company received a fee for assuming these claim obligations and, as the assignee of the claim, is legally obligated to ensure periodic payments are made to the claimant. The Company purchased annuities to fund these periodic payment claim obligations and designates payments to be made directly to the claimant by the annuity writer. These annuities funding structured settlement claims are recorded as an investment. The Company has recorded unpaid claim obligations and annuity contracts of equal amounts of $1.3 billion for both the years ended December 31, 2019 and 2018. See Note 1. 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 unconsolidated special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. For the years ended December 31, 2019, 2018 and 2017, the Company issued $37.3 billion, $41.8 billion and $42.7 billion, respectively, and repaid $36.4 billion, $43.7 billion and $41.4 billion, respectively, of such funding agreements. At December 31, 2019 and 2018, liabilities for funding agreements outstanding, which are included in policyholder account balances, were $34.6 billion and $32.3 billion, respectively. Metropolitan Life Insurance Company is a member of the FHLB of New York. Holdings of common stock of the FHLB of New York, included in other invested assets, were $737 million and $724 million at December 31, 2019 and 2018, respectively. The Company has also entered into funding agreements with the FHLB of New York and a subsidiary of the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the U.S. ("Farmer Mac"). The liability for such funding agreements is included in policyholder account balances. Information related to such funding agreements was as follows at: Liability Collateral ------------------------- ------------------------ December 31, -------------------------------------------------- 2019 2018 2019 2018 ------------ ------------ ------------ ------- (In millions) FHLB of New York (1)..... $ 14,445 $ 14,245 $ 16,570 (2) $16,340 (2) Farmer Mac (3)........... $ 2,550 $ 2,550 $ 2,670 $ 2,639 -------- (1) Represents funding agreements issued to the FHLB of New York in exchange for cash and for which the FHLB of New York has been granted a lien on certain assets, some of which are in the custody of the FHLB of New York, including residential mortgage-backed securities ("RMBS"), to collateralize obligations under such funding agreements. The Company is permitted to withdraw any portion of the collateral in the custody of the FHLB of New York 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 of New York's recovery on the collateral is limited to the amount of the Company's liability to the FHLB of New York. MLIC-36
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) (2) Advances are collateralized by mortgage-backed securities. The amount of collateral presented is at estimated fair value. (3) Represents funding agreements issued to a subsidiary of Farmer Mac. The obligations under these funding agreements are secured by a pledge of certain eligible agricultural mortgage loans and may, under certain circumstances, be secured by other qualified collateral. The amount of collateral presented is at carrying value. Liabilities for Unpaid Claims and Claim Expenses The following is information about incurred and paid claims development by segment at December 31, 2019. Such amounts are presented net of reinsurance, and are not discounted. The tables present claims development and cumulative claim payments by incurral year. The development tables are only presented for significant short-duration product liabilities within each segment. Where practical, up to 10 years of history has been provided. The information about incurred and paid claims development prior to 2019 is presented as supplementary information. U.S. Group Life -- Term Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance At December 31, 2019 ------------------------------------------------------------------------------------------ ---------------------------- For the Years Ended December 31, Total IBNR ------------------------------------------------------------------------------------------ Liabilities Plus (Unaudited) Expected Cumulative --------------------------------------------------------------------------------- Development on Number of Incurral Reported Reported Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Claims Claims -------- ---------- ---------- --------- --------- --------- --------- --------- --------- -------- ---------------- ----------- (Dollars in millions) 2011.. $ 6,318 $ 6,290 $ 6,293 $ 6,269 $ 6,287 $ 6,295 $ 6,294 $ 6,295 $ 6,297 $ 1 207,857 2012.. 6,503 6,579 6,569 6,546 6,568 6,569 6,569 6,572 2 209,500 2013.. 6,637 6,713 6,719 6,720 6,730 6,720 6,723 2 212,019 2014.. 6,986 6,919 6,913 6,910 6,914 6,919 4 214,563 2015.. 7,040 7,015 7,014 7,021 7,024 5 216,429 2016.. 7,125 7,085 7,095 7,104 8 215,108 2017.. 7,432 7,418 7,425 15 253,613 2018.. 7,757 7,655 37 235,820 2019.. 7,935 848 185,891 -------- Total............................................................... 63,654 Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance......................................... (61,612) All outstanding liabilities for incurral years prior to 2011, net of reinsurance....................................................... 15 -------- Total unpaid claims and claim adjustment expenses, net of reinsurance........................................................ $ 2,057 ======== Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance ---------------------------------------------------------------------------------------------------- For the Years Ended December 31, ---------------------------------------------------------------------------------------------------- (Unaudited) --------------------------------------------------------------------------------------- ------------ Incurral Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 ------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ------------ (In millions) 2011...... $ 4,982 $ 6,194 $ 6,239 $ 6,256 $ 6,281 $ 6,290 $ 6,292 $ 6,295 $ 6,296 2012...... 5,132 6,472 6,518 6,532 6,558 6,565 6,566 6,569 2013...... 5,216 6,614 6,664 6,678 6,711 6,715 6,720 2014...... 5,428 6,809 6,858 6,869 6,902 6,912 2015...... 5,524 6,913 6,958 6,974 7,008 2016...... 5,582 6,980 7,034 7,053 2017...... 5,761 7,292 7,355 2018...... 6,008 7,521 2019...... 6,178 ------------ Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance....... $ 61,612 ============ MLIC-37
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Average Annual Percentage Payout The following is supplementary information about average historical claims duration at December 31, 2019: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance ----------------------------------------------------------------------------------- Years......................... 1 2 3 4 5 6 7 8 9 Group Life - Term............. 78.3% 20.0% 0.7% 0.2% 0.4% 0.1% --% --% --% Group Long-Term Disability Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance At December 31, 2019 --------------------------------------------------------------------------------------- ---------------------------- For the Years Ended December 31, Total IBNR --------------------------------------------------------------------------------------- Liabilities Plus (Unaudited) Expected Cumulative ------------------------------------------------------------------------------- Development on Number of Incurral Reported Reported Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Claims Claims -------- --------- --------- --------- --------- --------- --------- --------- --------- ------- ---------------- ----------- (Dollars in millions) 2011... $ 955 $ 916 $ 894 $ 914 $ 924 $ 923 $ 918 $ 917 $ 914 $ -- 21,644 2012... 966 979 980 1,014 1,034 1,037 1,021 1,015 -- 20,085 2013... 1,008 1,027 1,032 1,049 1,070 1,069 1,044 -- 21,137 2014... 1,076 1,077 1,079 1,101 1,109 1,098 -- 22,851 2015... 1,082 1,105 1,093 1,100 1,087 -- 21,203 2016... 1,131 1,139 1,159 1,162 -- 17,958 2017... 1,244 1,202 1,203 12 16,266 2018... 1,240 1,175 35 14,869 2019... 1,277 657 8,350 ------- Total.................................................................................. 9,975 Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance.. (4,713) All outstanding liabilities for incurral years prior to 2011, net of reinsurance......... 1,829 ------- Total unpaid claims and claim adjustment expenses, net of reinsurance.................. $ 7,091 ======= Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance -------------------------------------------------------------------------------------------------- For the Years Ended December 31, -------------------------------------------------------------------------------------------------- (Unaudited) -------------------------------------------------------------------------------------- Incurral Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 ------------- ------- -------- -------- -------- -------- -------- -------- -------- ----------- (In millions) 2011......... $ 44 $ 217 $ 337 $ 411 $ 478 $ 537 $ 588 $ 635 $ 670 2012......... 43 229 365 453 524 591 648 694 2013......... 43 234 382 475 551 622 676 2014......... 51 266 428 526 609 677 2015......... 50 264 427 524 601 2016......... 49 267 433 548 2017......... 56 290 476 2018......... 54 314 2019......... 57 ----------- Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance $ 4,713 =========== Average Annual Percentage Payout The following is supplementary information about average historical claims duration at December 31, 2019: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance ----------------------------------------------------------------------------------- Years......................... 1 2 3 4 5 6 7 8 9 Group Long-Term Disability.... 4.5% 19.4% 14.3% 8.9% 7.2% 6.5% 5.5% 4.8% 4.0% Significant Methodologies and Assumptions Group Life - Term and Group Long-Term Disability incurred but not paid ("IBNP") liabilities are developed using a combination of loss ratio and development methods. Claims in the course of settlement are then subtracted from the IBNP liabilities, resulting in the IBNR liabilities. The loss ratio method is used in the period in which the claims are neither MLIC-38
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) sufficient nor credible. In developing the loss ratios, any material rate increases that could change the underlying premium without affecting the estimated incurred losses are taken into account. For periods where sufficient and credible claim data exists, the development method is used based on the claim triangles which categorize claims according to both the period in which they were incurred and the period in which they were paid, adjudicated or reported. The end result is a triangle of known data that is used to develop known completion ratios and factors. Claims paid are then subtracted from the estimated ultimate incurred claims to calculate the IBNP liability. An expense liability is held for the future expenses associated with the payment of incurred but not yet paid claims (IBNR and pending). This is expressed as a percentage of the underlying claims liability and is based on past experience and the anticipated future expense structure. For Group Life - Term and Group Long-Term Disability, first year incurred claims and allocated loss adjustment expenses increased in 2019 compared to the 2018 incurral year due to the growth in the size of the business. There were no significant changes in methodologies for the year ended December 31, 2019. The assumptions used in calculating the unpaid claims and claim adjustment expenses for Group Life - Term and Group Long-Term Disability are updated annually to reflect emerging trends in claim experience. No additional premiums or return premiums have been accrued as a result of the prior year development. Liabilities for Group Life - Term unpaid claims and claim adjustment expenses are not discounted. The liabilities for Group Long-Term Disability unpaid claims and claim adjustment expenses were $6.0 billion at both December 31, 2019 and 2018. Using interest rates ranging from 3% to 8%, based on the incurral year, the total discount applied to these liabilities was $1.2 billion and $1.3 billion at December 31, 2019 and 2018, respectively. The amount of interest accretion recognized was $470 million, $509 million and $510 million for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts were reflected in policyholder benefits and claims. For Group Life - Term, claims were based upon individual death claims. For Group Long-Term Disability, claim frequency was determined by the number of reported claims as identified by a unique claim number assigned to individual claimants. Claim counts initially include claims that do not ultimately result in a liability. These claims are omitted from the claim counts once it is determined that there is no liability. The Group Long-Term Disability IBNR, included in the development tables above, was developed using discounted cash flows, and is presented on a discounted basis. MLIC-39
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses The reconciliation of the net incurred and paid claims development tables to the liability for unpaid claims and claims adjustment expenses on the consolidated balance sheet was as follows at: December 31, 2019 ------------------------------ (In millions) Short-Duration: Unpaid claims and allocated claims adjustment expenses, net of reinsurance: U.S.: Group Life - Term............................................................................ $ 2,057 Group Long-Term Disability................................................................... 7,091 -------------- Total...................................................................................... $ 9,148 Other insurance lines - all segments combined................................................ 671 --------------- Total unpaid claims and allocated claims adjustment expenses, net of reinsurance........... 9,819 --------------- Reinsurance recoverables on unpaid claims: U.S.: Group Life - Term............................................................................ 13 Group Long-Term Disability................................................................... 133 -------------- Total...................................................................................... 146 Other insurance lines - all segments combined................................................ 29 --------------- Total reinsurance recoverable on unpaid claims............................................. 175 --------------- Total unpaid claims and allocated claims adjustment expense................................ 9,994 Discounting.................................................................................. (1,233) --------------- Liability for unpaid claims and claim adjustment liabilities - short-duration................ 8,761 Liability for unpaid claims and claim adjustment liabilities - all long-duration lines....... 4,379 --------------- Total liability for unpaid claims and claim adjustment expense (included in future policy benefits and other policy-related balances)............................................... $ 13,140 =============== MLIC-40
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 3. Insurance (continued) Rollforward of Claims and Claim Adjustment Expenses Information regarding the liabilities for unpaid claims and claim adjustment expenses was as follows: Years Ended December 31, ------------------------------------------------- 2019 2018 2017 --------------- --------------- --------------- (In millions) Balance at January 1,.............. $ 12,590 $ 12,090 $ 11,621 Less: Reinsurance recoverables.... 1,497 1,401 1,251 --------------- --------------- --------------- Net balance at January 1,.......... 11,093 10,689 10,370 Incurred related to: Current year...................... 17,711 16,714 16,264 Prior years (1)................... 44 241 175 --------------- --------------- --------------- Total incurred.................. 17,755 16,955 16,439 --------------- --------------- --------------- Paid related to: Current year...................... (12,934) (12,359) (12,212) Prior years....................... (4,299) (4,192) (3,908) --------------- --------------- --------------- Total paid...................... (17,233) (16,551) (16,120) --------------- --------------- --------------- Net balance at December 31,........ 11,615 11,093 10,689 Add: Reinsurance recoverables..... 1,525 1,497 1,401 --------------- --------------- --------------- Balance at December 31,............ $ 13,140 $ 12,590 $ 12,090 =============== =============== =============== -------- (1) For the years ended December 31, 2019, 2018 and 2017, claims and claim adjustment expenses associated with prior years increased due to events incurred in prior years but reported in the current year. Separate Accounts Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $72.2 billion and $66.0 billion at December 31, 2019 and 2018, 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 $45.6 billion and $44.8 billion at December 31, 2019 and 2018, respectively. The latter category consisted primarily of guaranteed interest contracts ("GICs"). The average interest rate credited on these contracts was 2.91% and 2.68% at December 31, 2019 and 2018, respectively. For the years ended December 31, 2019, 2018 and 2017, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. 4. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles See Note 1 for a description of capitalized acquisition costs. Nonparticipating and Non-Dividend-Paying Traditional Contracts The Company amortizes DAC and VOBA related to these contracts (term insurance, nonparticipating whole life insurance, traditional group life insurance, and non-medical health insurance) over the appropriate premium paying period in proportion to the actual and expected future gross premiums that were set at contract issue. The expected premiums are 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), include provisions for adverse deviation, and are consistent with the assumptions used to calculate future policyholder benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after policy issuance or acquisition is caused only by variability in premium volumes. MLIC-41
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 4. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued) Participating, Dividend-Paying Traditional Contracts The Company amortizes DAC and VOBA related to these 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. See Note 6. 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. Fixed and Variable Universal Life Contracts and Fixed and Variable Deferred Annuity Contracts The Company amortizes DAC and VOBA related to these 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 significantly impact the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated gross profits, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross profits are below the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business remaining in-force, which impacts expected future gross profits. 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. Factors Impacting Amortization 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. MLIC-42
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 4. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued) The Company also periodically reviews other long-term assumptions underlying the projections of estimated gross margins and profits. These assumptions primarily relate to investment returns, policyholder dividend scales, interest crediting rates, mortality, persistency, policyholder behavior 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. Amortization of DAC and VOBA is attributed to net investment gains (losses) and net derivative gains (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. Information regarding DAC and VOBA was as follows: Years Ended December 31, ------------------------------------------------- 2019 2018 2017 --------------- --------------- --------------- (In millions) DAC: Balance at January 1,................................................. $ 4,089 $ 4,320 $ 4,714 Capitalizations....................................................... 43 34 61 Amortization related to: Net investment gains (losses) and net derivative gains (losses)....... 25 (114) 91 Other expenses........................................................ (263) (355) (331) --------------- --------------- --------------- Total amortization................................................... (238) (469) (240) --------------- --------------- --------------- Unrealized investment gains (losses).................................. (467) 204 (215) --------------- --------------- --------------- Balance at December 31,............................................... 3,427 4,089 4,320 --------------- --------------- --------------- VOBA: Balance at January 1,................................................. 28 28 29 Amortization related to other expenses................................ (1) (1) (1) Unrealized investment gains (losses).................................. (1) 1 -- --------------- --------------- --------------- Balance at December 31,............................................... 26 28 28 --------------- --------------- --------------- Total DAC and VOBA: Balance at December 31,............................................... $ 3,453 $ 4,117 $ 4,348 =============== =============== =============== Information regarding total DAC and VOBA by segment, as well as Corporate & Other, was as follows at: December 31, ----------------------------- 2019 2018 -------------- -------------- (In millions) U.S........................... $ 405 $ 403 MetLife Holdings.............. 3,048 3,709 Corporate & Other............. -- 5 -------------- -------------- Total........................ $ 3,453 $ 4,117 ============== ============== MLIC-43
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 4. Deferred Policy Acquisition Costs, Value of Business Acquired and Other Intangibles (continued) Information regarding other intangibles was as follows: Years Ended December 31, ---------------------------------- 2019 2018 2017 ---------- ---------- ---------- (In millions) DSI: Balance at January 1,................... $ 93 $ 93 $ 105 Capitalization.......................... 1 1 1 Amortization............................ (20) (15) (8) Unrealized investment gains (losses).... (12) 14 (5) ---------- ---------- ---------- Balance at December 31,................. $ 62 $ 93 $ 93 ========== ========== ========== VODA and VOCRA: Balance at January 1,................... $ 181 $ 207 $ 235 Amortization............................ (24) (26) (28) ---------- ---------- ---------- Balance at December 31,................. $ 157 $ 181 $ 207 ========== ========== ========== Accumulated amortization............... $ 300 $ 276 $ 250 ========== ========== ========== The estimated future amortization expense to be reported in other expenses for the next five years was as follows: VOBA VODA and VOCRA ------------ -------------- (In millions) 2020.............................................. $ 2 $ 22 2021.............................................. $ 2 $ 19 2022.............................................. $ 2 $ 17 2023.............................................. $ 2 $ 15 2024.............................................. $ 2 $ 13 5. Reinsurance The Company enters into reinsurance agreements that transfers risk from its various insurance products to affiliated and unaffiliated companies. These cessions limit losses, minimize exposure to significant risks and provide additional capacity for future growth. The Company also provides reinsurance by accepting risk from affiliates and nonaffiliates. Under the terms of the reinsurance agreements, the reinsurer agrees to reimburse the Company for the ceded amount in the event a claim is paid. Cessions under reinsurance agreements do not discharge the Company's obligations as the primary insurer. In the event that reinsurers do not meet their obligations under the terms of the reinsurance agreements, reinsurance recoverable balances could become uncollectible. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed in Note 7. U.S. For certain policies within its Group Benefits business, the Company generally retains most of the risk and only cedes particular risk on certain client arrangements. The majority of the Company's reinsurance activity within this business relates to client agreements for employer sponsored captive programs, risk-sharing agreements and multinational pooling. The risks ceded under these agreements are generally quota shares of group life and disability policies. The cessions vary from 50% to 100% of all the risks of the policies. MLIC-44
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 5. Reinsurance (continued) The Company's RIS business has periodically engaged in reinsurance activities on an opportunistic basis. There were no new transactions during the periods presented. MetLife Holdings For its life products, the Company has historically reinsured the mortality risk primarily on an excess of retention basis or on a quota share basis. In addition to reinsuring mortality risk as described above, the Company reinsures other risks, as well as specific coverages. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specified characteristics. Catastrophe Coverage The Company has exposure to catastrophes which could contribute to significant fluctuations in its results of operations. The Company purchases catastrophe coverage to reinsure risks issued within territories that it believes are subject to the greatest catastrophic risks. The Company uses excess of retention and quota share reinsurance agreements to provide greater diversification of risk and minimize exposure to larger risks. Excess of retention reinsurance agreements provide for a portion of a risk to remain with the direct writing company and quota share reinsurance agreements provide for the direct writing company to transfer a fixed percentage of all risks of a class of policies. Reinsurance Recoverables The Company reinsures its business through a diversified group of well-capitalized reinsurers. The Company analyzes recent trends in arbitration and litigation outcomes in disputes, if any, with its reinsurers. The Company monitors ratings and evaluates the financial strength of its reinsurers by analyzing their financial statements. In addition, the reinsurance recoverable balance due from each reinsurer is evaluated as part of the overall monitoring process. Recoverability of reinsurance recoverable balances is evaluated based on these analyses. The Company generally secures large reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts, and irrevocable letters of credit. These reinsurance recoverable balances are stated net of allowances for uncollectible reinsurance, which at December 31, 2019 and 2018 were not significant. The Company has secured certain reinsurance recoverable balances with various forms of collateral, including secured trusts, funds withheld accounts and irrevocable letters of credit. The Company had $1.8 billion and $1.9 billion of unsecured unaffiliated reinsurance recoverable balances at December 31, 2019 and 2018, respectively. At December 31, 2019, the Company had $2.6 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $1.9 billion, or 73%, were with the Company's five largest unaffiliated ceded reinsurers, including $1.3 billion of net unaffiliated ceded reinsurance recoverables which were unsecured. At December 31, 2018, the Company had $2.9 billion of net unaffiliated ceded reinsurance recoverables. Of this total, $2.0 billion, or 69%, were with the Company's five largest unaffiliated ceded reinsurers, including $1.3 billion of net unaffiliated ceded reinsurance recoverables which were unsecured. The Company has reinsured with an unaffiliated third-party reinsurer, 59.25% 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. MLIC-45
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 5. Reinsurance (continued) The amounts on the consolidated statements of operations include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows: Years Ended December 31, ------------------------------------------- 2019 2018 2017 ------------- ------------- ------------- (In millions) Premiums Direct premiums.............................. $ 21,804 $ 26,883 $ 23,062 Reinsurance assumed.......................... 811 752 1,116 Reinsurance ceded............................ (1,007) (1,022) (1,253) ------------- ------------- ------------- Net premiums................................ $ 21,608 $ 26,613 $ 22,925 ============= ============= ============= Universal life and investment-type product policy fees Direct universal life and investment-type product policy fees......................... $ 2,331 $ 2,382 $ 2,492 Reinsurance assumed.......................... (15) 9 12 Reinsurance ceded............................ (279) (267) (277) ------------- ------------- ------------- Net universal life and investment-type product policy fees....................... $ 2,037 $ 2,124 $ 2,227 ============= ============= ============= Other revenues Direct other revenues........................ $ 1,007 $ 1,017 $ 930 Reinsurance assumed.......................... (5) (11) 35 Reinsurance ceded............................ 571 580 605 ------------- ------------- ------------- Net other revenues.......................... $ 1,573 $ 1,586 $ 1,570 ============= ============= ============= Policyholder benefits and claims Direct policyholder benefits and claims...... $ 24,469 $ 29,589 $ 26,199 Reinsurance assumed.......................... 728 691 875 Reinsurance ceded............................ (1,146) (1,183) (1,282) ------------- ------------- ------------- Net policyholder benefits and claims........ $ 24,051 $ 29,097 $ 25,792 ============= ============= ============= Interest credited to policyholder account balances Direct interest credited to policyholder account balances............................ $ 2,592 $ 2,446 $ 2,199 Reinsurance assumed.......................... 44 46 49 Reinsurance ceded............................ (12) (13) (13) ------------- ------------- ------------- Net interest credited to policyholder account balances.......................... $ 2,624 $ 2,479 $ 2,235 ============= ============= ============= Other expenses Direct other expenses........................ $ 4,464 $ 4,650 $ 4,489 Reinsurance assumed.......................... 50 71 138 Reinsurance ceded............................ 462 470 508 ------------- ------------- ------------- Net other expenses.......................... $ 4,976 $ 5,191 $ 5,135 ============= ============= ============= MLIC-46
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 5. Reinsurance (continued) The amounts on the consolidated balance sheets include the impact of reinsurance. Information regarding the significant effects of reinsurance was as follows at: December 31, --------------------------------------------------------------------------- 2019 2018 ------------------------------------- ------------------------------------- Total Total Balance Balance Direct Assumed Ceded Sheet Direct Assumed Ceded Sheet --------- ------- -------- --------- --------- ------- -------- --------- (In millions) Assets Premiums, reinsurance and other receivables................................ $ 2,767 $ 700 $18,968 $ 22,435 $ 2,094 $ 518 $19,217 $ 21,829 Deferred policy acquisition costs and value of business acquired....................... 3,657 14 (218) 3,453 4,343 15 (241) 4,117 --------- ------- -------- --------- --------- ------- -------- --------- Total assets.............................. $ 6,424 $ 714 $18,750 $ 25,888 $ 6,437 $ 533 $18,976 $ 25,946 ========= ======= ======== ========= ========= ======= ======== ========= Liabilities Future policy benefits...................... $127,058 $1,252 $ (6) $128,304 $124,787 $1,313 $ (1) $126,099 Policyholder account balances............... 91,550 158 -- 91,708 90,489 167 -- 90,656 Other policy-related balances............... 7,466 257 9 7,732 7,021 231 12 7,264 Other liabilities........................... 7,211 2,318 16,553 26,082 6,084 2,242 16,294 24,620 --------- ------- -------- --------- --------- ------- -------- --------- Total liabilities......................... $233,285 $3,985 $16,556 $253,826 $228,381 $3,953 $16,305 $248,639 ========= ======= ======== ========= ========= ======= ======== ========= 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 $13.7 billion and $14.1 billion at December 31, 2019 and 2018, respectively. The deposit liabilities on reinsurance were $1.7 billion and $1.8 billion at December 31, 2019 and 2018, respectively. Related Party Reinsurance Transactions The Company has reinsurance agreements with certain of MetLife, Inc.'s subsidiaries, including MetLife Reinsurance Company of Charleston ("MRC"), MetLife Reinsurance Company of Vermont, and Metropolitan Tower Life Insurance Company, all of which are related parties. Additionally, the Company has reinsurance agreements with Brighthouse Financial, Inc. and its subsidiaries ("Brighthouse"), a former subsidiary of MetLife, Inc. In August 2017, MetLife, Inc. completed the separation of Brighthouse and retained 19.2% of Brighthouse Financial, Inc. common stock outstanding. In June 2018, MetLife, Inc. sold its Brighthouse Financial, Inc. common stock and Brighthouse was no longer considered a related party. MLIC-47
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 5. Reinsurance (continued) Information regarding the significant effects of affiliated reinsurance included on the consolidated statements of operations was as follows: Years Ended December 31, ------------------------------------- 2019 2018 2017 ----------- ----------- ----------- (In millions) Premiums Reinsurance assumed..................... $ 9 $ 9 $ 122 Reinsurance ceded....................... (115) (117) (132) ----------- ----------- ----------- Net premiums........................... $ (106) $ (108) $ (10) =========== =========== =========== Universal life and investment-type product policy fees Reinsurance assumed..................... $ 1 $ (1) $ 12 Reinsurance ceded....................... (17) (18) (19) ----------- ----------- ----------- Net universal life and investment-type product policy fees.................. $ (16) $ (19) $ (7) =========== =========== =========== Other revenues Reinsurance assumed..................... $ (19) $ -- $ 37 Reinsurance ceded....................... 533 541 563 ----------- ----------- ----------- Net other revenues..................... $ 514 $ 541 $ 600 =========== =========== =========== Policyholder benefits and claims Reinsurance assumed..................... $ 4 $ 11 $ 69 Reinsurance ceded....................... (153) (120) (122) ----------- ----------- ----------- Net policyholder benefits and claims... $ (149) $ (109) $ (53) =========== =========== =========== Interest credited to policyholder account balances Reinsurance assumed..................... $ 30 $ 38 $ 47 Reinsurance ceded....................... (12) (13) (13) ----------- ----------- ----------- Net interest credited to policyholder account balances..................... $ 18 $ 25 $ 34 =========== =========== =========== Other expenses Reinsurance assumed..................... $ -- $ 10 $ 40 Reinsurance ceded....................... 533 543 600 ----------- ----------- ----------- Net other expenses..................... $ 533 $ 553 $ 640 =========== =========== =========== Information regarding the significant effects of affiliated reinsurance included on the consolidated balance sheets was as follows at: December 31, -------------------------------------------------- 2019 2018 ------------------------ ------------------------ Assumed Ceded Assumed Ceded ----------- ------------ ----------- ------------ (In millions) Assets Premiums, reinsurance and other receivables............. $ -- $ 12,584 $ -- $ 12,676 Deferred policy acquisition costs and value of business acquired............................................... -- (160) -- (175) ----------- ------------ ----------- ------------ Total assets.......................................... $ -- $ 12,424 $ -- $ 12,501 =========== ============ =========== ============ Liabilities Future policy benefits.................................. $ 55 $ (6) $ 61 $ (1) Policyholder account balances........................... 131 -- 141 -- Other policy-related balances........................... 1 9 6 12 Other liabilities....................................... 824 12,695 841 12,366 ----------- ------------ ----------- ------------ Total liabilities..................................... $ 1,011 $ 12,698 $ 1,049 $ 12,377 =========== ============ =========== ============ MLIC-48
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 5. Reinsurance (continued) The Company ceded two blocks of business to an affiliate on a 75% coinsurance with funds withheld basis. Certain contractual features of these agreements qualify as embedded derivatives, which are separately accounted for at estimated fair value on the Company's consolidated balance sheets. The embedded derivatives related to the funds withheld associated with these reinsurance agreements are included within other liabilities and were $21 million and $4 million at December 31, 2019 and 2018, respectively. Net derivative gains (losses) associated with these embedded derivatives were ($17) million, $12 million and ($6) million for the years ended December 31, 2019, 2018 and 2017, respectively. The Company ceded risks to a former affiliate related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their estimated fair value are included within net derivative gains (losses). Related party net derivative gains (losses) associated with the embedded derivatives were $0, $0 and ($110) million for the years ended December 31, 2019, 2018 and 2017, 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 is included within other liabilities and was $996 million and $461 million at December 31, 2019 and 2018, respectively. Net derivative gains (losses) associated with the embedded derivative were ($535) million, $421 million and ($115) million for the years ended December 31, 2019, 2018 and 2017, respectively. The Company assumed risks from former affiliates related to guaranteed minimum benefit guarantees written directly by the affiliates. These assumed reinsurance agreements contain embedded derivatives and changes in their estimated fair value are also included within net derivative gains (losses). Related party net derivative gains (losses) associated with the embedded derivatives were $0, $1 million and $263 million for the years ended December 31, 2019, 2018 and 2017, respectively. In January 2017, Brighthouse recaptured risks related to certain variable annuities, including guaranteed minimum benefits, reinsured by the Company. The Company recognized a gain of $178 million, net of income tax, for the year ended December 31, 2017 as a result of these transactions. In January 2017, the Company recaptured risks related to guaranteed minimum benefit guarantees on certain variable annuities reinsured by Brighthouse. The Company recognized a loss of $89 million, net of income tax, for the year ended December 31, 2017, as a result of this transaction. 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 $528 million and $451 million of unsecured affiliated reinsurance recoverable balances at December 31, 2019 and 2018, 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 $11.2 billion and $11.4 billion at December 31, 2019 and 2018, respectively. The deposit liabilities on affiliated reinsurance were $821 million and $837 million at December 31, 2019 and 2018, respectively. MLIC-49
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 6. Closed Block On April 7, 2000 (the "Demutualization Date"), Metropolitan Life Insurance Company converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving Metropolitan Life Insurance Company's plan of reorganization, as amended (the "Plan of Reorganization"). On the Demutualization Date, Metropolitan Life Insurance Company established a closed block for the benefit of holders of certain individual life insurance policies of Metropolitan Life Insurance Company. Assets have been allocated to the closed block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the Company compares actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are adjusted periodically to give effect to changes in experience. The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated to the closed block and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of amounts assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders. If the closed block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years from the Demutualization Date. The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the Demutualization Date. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional dividends as described below. The excess of closed block liabilities over closed block assets at the Demutualization Date (adjusted to eliminate the impact of related amounts in AOCI) represents the estimated maximum future earnings from the closed block expected to result from operations, attributed net of income tax, to the closed block. Earnings of the closed block are recognized in income over the period the policies and contracts in the closed block remain in-force. 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 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. 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. MLIC-50
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 6. Closed Block (continued) Information regarding the closed block liabilities and assets designated to the closed block was as follows at: December 31, ------------------------------ 2019 2018 -------------- -------------- (In millions) Closed Block Liabilities Future policy benefits............................ $ 39,379 $ 40,032 Other policy-related balances..................... 423 317 Policyholder dividends payable.................... 432 431 Policyholder dividend obligation.................. 2,020 428 Deferred income tax liability..................... 79 28 Other liabilities................................. 81 328 -------------- -------------- Total closed block liabilities................... 42,414 41,564 -------------- -------------- Assets Designated to the Closed Block Investments: Fixed maturity securities available-for-sale, at estimated fair value............................. 25,977 25,354 Mortgage loans.................................... 7,052 6,778 Policy loans...................................... 4,489 4,527 Real estate and real estate joint ventures........ 544 544 Other invested assets............................. 416 747 -------------- -------------- Total investments................................ 38,478 37,950 Cash and cash equivalents......................... 448 -- Accrued investment income......................... 419 443 Premiums, reinsurance and other receivables....... 75 83 Current income tax recoverable.................... 91 69 -------------- -------------- Total assets designated to the closed block...... 39,511 38,545 -------------- -------------- Excess of closed block liabilities over assets designated to the closed block................. 2,903 3,019 -------------- -------------- Amounts included in AOCI: Unrealized investment gains (losses), net of income tax....................................... 2,453 1,089 Unrealized gains (losses) on derivatives, net of income tax....................................... 97 86 Allocated to policyholder dividend obligation, net of income tax................................ (1,596) (338) -------------- -------------- Total amounts included in AOCI................... 954 837 -------------- -------------- Maximum future earnings to be recognized from closed block assets and liabilities............ $ 3,857 $ 3,856 ============== ============== Information regarding the closed block policyholder dividend obligation was as follows: Years Ended December 31, ----------------------------------------- 2019 2018 2017 ------------- ------------ ------------- (In millions) Balance at January 1,........................ $ 428 $ 2,121 $ 1,931 Change in unrealized investment and derivative gains (losses)................... 1,592 (1,693) 190 ------------- ------------ ------------- Balance at December 31,...................... $ 2,020 $ 428 $ 2,121 ============= ============ ============= MLIC-51
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 6. Closed Block (continued) Information regarding the closed block revenues and expenses was as follows: Years Ended December 31, ---------------------------------------- 2019 2018 2017 ------------ ------------ ------------ (In millions) Revenues Premiums..................................... $ 1,580 $ 1,672 $ 1,736 Net investment income........................ 1,740 1,758 1,818 Net investment gains (losses)................ (7) (71) 1 Net derivative gains (losses)................ 12 22 (32) ------------ ------------ ------------ Total revenues.............................. 3,325 3,381 3,523 ------------ ------------ ------------ Expenses Policyholder benefits and claims............. 2,291 2,475 2,453 Policyholder dividends....................... 924 968 976 Other expenses............................... 111 117 125 ------------ ------------ ------------ Total expenses.............................. 3,326 3,560 3,554 ------------ ------------ ------------ Revenues, net of expenses before provision for income tax expense (benefit).......... (1) (179) (31) Provision for income tax expense (benefit)... (2) (39) 12 ------------ ------------ ------------ Revenues, net of expenses and provision for income tax expense (benefit).............. $ 1 $ (140) $ (43) ============ ============ ============ Metropolitan Life Insurance Company charges the closed block with federal income taxes, state and local premium taxes and other state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan of Reorganization. Metropolitan Life Insurance Company also charges the closed block for expenses of maintaining the policies included in the closed block. 7. Investments See Note 9 for information about the fair value hierarchy for investments and the related valuation methodologies. Investment Risks and Uncertainties Investments are exposed to the following primary sources of risk: credit, interest rate, liquidity, market valuation, currency and real estate risk. The financial statement risks, stemming from such investment risks, are those associated with the determination of estimated fair values, the diminished ability to sell certain investments in times of strained market conditions, the recognition of impairments, the recognition of income on certain investments and the potential consolidation of VIEs. The use of different methodologies, assumptions and inputs relating to these financial statement risks may have a material effect on the amounts presented within the consolidated financial statements. The determination of valuation allowances and impairments is highly subjective and is based upon periodic evaluations and assessments of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. The recognition of income on certain investments (e.g. structured securities, including mortgage-backed securities, asset-backed securities ("ABS"), certain structured investment transactions and FVO Securities) is dependent upon certain factors such as prepayments and defaults, and changes in such factors could result in changes in amounts to be earned. MLIC-52
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Fixed Maturity Securities AFS Fixed Maturity Securities AFS by Sector The following table presents the fixed maturity securities AFS by sector. U.S. corporate and foreign corporate sectors include redeemable preferred stock. RMBS includes agency, prime, alternative and sub-prime mortgage-backed securities. ABS includes securities collateralized by corporate loans and consumer loans. Municipals includes taxable and tax-exempt revenue bonds and, to a much lesser extent, general obligations of states, municipalities and political subdivisions. Commercial mortgage-backed securities ("CMBS") primarily includes securities collateralized by multiple commercial mortgage loans. RMBS, ABS and CMBS are collectively, "Structured Products." December 31, 2019 December 31, 2018 ------------------------------------------------- ------------------------------------------------- Gross Unrealized Gross Unrealized ---------------------------- Estimated ---------------------------- Estimated Amortized Temporary OTTI Fair Amortized Temporary OTTI Fair Cost Gains Losses Losses (1) Value Cost Gains Losses Losses (1) Value --------- -------- --------- ---------- --------- --------- -------- --------- ---------- --------- (In millions) U.S. corporate....... $ 52,446 $ 6,236 $ 223 $ -- $ 58,459 $ 53,927 $ 2,440 $ 1,565 $ -- $ 54,802 Foreign corporate.... 28,421 2,397 517 -- 30,301 26,592 674 1,303 -- 25,963 U.S. government and agency.............. 25,568 3,706 26 -- 29,248 28,139 2,388 366 -- 30,161 RMBS................. 21,476 1,324 59 (32) 22,773 22,186 831 305 (25) 22,737 ABS.................. 10,215 47 61 -- 10,201 8,599 40 112 -- 8,527 Municipals........... 6,419 1,450 13 -- 7,856 6,070 907 30 -- 6,947 CMBS................. 5,523 214 17 -- 5,720 5,471 48 75 -- 5,444 Foreign government... 4,329 724 47 -- 5,006 4,191 408 107 -- 4,492 --------- -------- ------- -------- --------- --------- -------- --------- -------- --------- Total fixed maturity securities AFS.... $ 154,397 $ 16,098 $ 963 $ (32) $ 169,564 $ 155,175 $ 7,736 $ 3,863 $ (25) $ 159,073 ========= ======== ======= ======== ========= ========= ======== ========= ======== ========= ------------- (1) Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit losses on such securities. See also "--Net Unrealized Investment Gains (Losses)." Methodology for Amortization of Premium and Accretion of Discount on Structured Products Amortization of premium and accretion of discount on Structured Products considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for Structured Products are estimated using inputs obtained from third-party specialists and based on management's knowledge of the current market. For credit-sensitive and certain prepayment-sensitive Structured Products, the effective yield is recalculated on a prospective basis. For all other Structured Products, the effective yield is recalculated on a retrospective basis. Maturities of Fixed Maturity Securities AFS The amortized cost and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at December 31, 2019: Due After Five Due After One Years Total Fixed Due in One Year Through Through Ten Due After Ten Structured Maturity Year or Less Five Years Years Years Products Securities AFS ------------ ------------- -------------- ------------- ----------- -------------- (In millions) Amortized cost........... $ 11,075 $ 22,190 $ 26,917 $ 57,001 $ 37,214 $ 154,397 Estimated fair value..... $ 11,064 $ 22,737 $ 29,214 $ 67,855 $ 38,694 $ 169,564 Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities AFS not due at a single maturity date have been presented in the year of final contractual maturity. Structured Products are shown separately, as they are not due at a single maturity. MLIC-53
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position by sector and aggregated by length of time that the securities have been in a continuous unrealized loss position at: December 31, 2019 December 31, 2018 ------------------------------------------ ------------------------------------------- Equal to or Greater Equal to or Greater Less than 12 Months than 12 Months Less than 12 Months than 12 Months --------------------- -------------------- --------------------- --------------------- Estimated Gross Estimated Gross Estimated Gross Estimated Gross Fair Unrealized Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses Value Losses ---------- ---------- --------- ---------- ---------- ---------- ---------- ---------- (Dollars in millions) U.S. corporate...... $ 2,036 $ 77 $ 1,304 $ 146 $ 23,398 $ 1,176 $ 3,043 $ 389 Foreign corporate... 1,368 93 3,499 424 12,911 893 2,138 410 U.S. government and agency............. 1,552 26 29 -- 4,322 29 7,948 337 RMBS................ 1,479 15 524 12 5,611 107 4,482 173 ABS................. 2,428 13 3,778 48 5,958 105 223 7 Municipals.......... 508 13 1 -- 675 22 94 8 CMBS................ 857 5 212 12 2,455 45 344 30 Foreign government.. 149 6 215 41 1,364 83 191 24 ---------- ------- --------- ------- ---------- --------- ---------- --------- Total fixed maturity securities AFS... $ 10,377 $ 248 $ 9,562 $ 683 $ 56,694 $ 2,460 $ 18,463 $ 1,378 ========== ======= ========= ======= ========== ========= ========== ========= Total number of securities in an unrealized loss position........... 1,059 802 5,263 1,125 ========== ========= ========== ========== Evaluation of Fixed Maturity Securities AFS for OTTI and Evaluating Temporarily Impaired Fixed Maturity Securities AFS Evaluation and Measurement Methodologies Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the 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 amortized cost; (ii) the potential for impairments 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 where the issuer, series of issuers or industry has suffered a catastrophic loss or has exhausted natural resources; (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers; (vii) with respect to Structured Products, changes in forecasted cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security; (viii) the potential for impairments due to weakening of foreign currencies on non-functional currency denominated securities that are near maturity; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies. The methodology and significant inputs used to determine the amount of credit loss are as follows: . The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows. The discount rate is generally the effective interest rate of the security prior to impairment. . When determining collectability and the period over which value is expected to recover, the Company applies 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 MLIC-54
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) 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: payment terms of the security; the likelihood that the issuer can service the interest and principal payments; the quality and amount of any credit enhancements; the security's position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies. . Additional considerations are made when assessing the unique features that apply to certain Structured Products including, but not limited to: the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying loans or assets backing a particular security, and the payment priority within the tranche structure of the security. . When determining the amount of the credit loss for the following types of securities: U.S. and foreign corporate, foreign government and municipals, the estimated fair value is considered 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 above, as well as any private and public sector programs to restructure such securities. With respect to securities that have attributes of debt and equity ("perpetual hybrid securities"), consideration is given in the OTTI analysis as to whether there has been any deterioration in the credit of the issuer and the likelihood of recovery in value of the securities that are in a severe and extended unrealized loss position. Consideration is also given as to whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any dividend payments. 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 amortized cost of 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 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 over the remaining term of the security in a prospective manner based on the amount and timing of estimated future cash flows. Current Period Evaluation Based on the Company's current evaluation of its 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 concluded that these securities were not other-than-temporarily impaired at December 31, 2019. Future OTTI will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), and changes in credit ratings, collateral valuation, and foreign currency exchange rates. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods. Gross unrealized losses on fixed maturity securities AFS decreased $2.9 billion for the year ended December 31, 2019 to $931 million. The decrease in gross unrealized losses for the year ended December 31, 2019, was primarily attributable to decreases in interest rates, narrowing credit spreads and to a lesser extent, foreign currency exchange rate movements. At December 31, 2019, $141 million of the total $931 million of gross unrealized losses were from 42 fixed maturity securities AFS with an unrealized loss position of 20% or more of amortized cost for six months or greater. Investment Grade Fixed Maturity Securities AFS Of the $141 million of gross unrealized losses on fixed maturity securities AFS with an unrealized loss of 20% or more of amortized cost for six months or greater, $90 million, or 64%, were related to gross unrealized losses on 18 investment grade fixed maturity securities AFS. Unrealized losses on investment grade fixed maturity securities AFS are principally related to widening credit spreads since purchase and, with respect to fixed-rate fixed maturity securities AFS, rising interest rates since purchase. MLIC-55
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Below Investment Grade Fixed Maturity Securities AFS Of the $141 million of gross unrealized losses on fixed maturity securities AFS with an unrealized loss of 20% or more of amortized cost for six months or greater, $51 million, or 36%, were related to gross unrealized losses on 24 below investment grade fixed maturity securities AFS. Unrealized losses on below investment grade fixed maturity securities AFS are principally related to U.S. and foreign corporate securities (primarily industrial) and CMBS and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty. Management evaluates 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 issuers and evaluates CMBS based on actual and projected cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, the payment terms of the underlying assets backing a particular security and the payment priority within the tranche structure of the security. Mortgage Loans Mortgage Loans by Portfolio Segment Mortgage loans are summarized as follows at: December 31, --------------------------------------------- 2019 2018 ---------------------- ---------------------- Carrying % of Carrying % of Value Total Value Total ----------- ---------- ----------- ---------- (Dollars in millions) Mortgage loans: Commercial.............................. $ 37,311 56.9% $ 38,123 59.9% Agricultural............................ 15,705 23.9 14,164 22.2 Residential............................. 12,575 19.2 11,392 17.9 ----------- ---------- ----------- ---------- Total recorded investment.............. 65,591 100.0 63,679 100.0 Valuation allowances.................... (289) (0.4) (291) (0.5) ----------- ---------- ----------- ---------- Subtotal mortgage loans, net........... 65,302 99.6 63,388 99.5 Residential -- FVO (1).................. 188 0.3 299 0.5 ----------- ---------- ----------- ---------- Total mortgage loans held-for-investment, net............. 65,490 99.9% 63,687 100.0% ----------- ---------- ----------- ---------- Mortgage loans held-for-sale............ 59 0.1 -- -- ----------- ---------- ----------- ---------- Total mortgage loans, net.............. $ 65,549 100.0% $ 63,687 100.0% =========== ========== =========== ========== ------------- (1) Information on residential mortgage loans -- FVO is presented in Note 9. The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. The amount of net discounts, included within total recorded investment, primarily residential, was $852 million and $907 million at December 31, 2019 and 2018, respectively. Purchases of mortgage loans, primarily residential, were $4.0 billion, $3.4 billion and $3.1 billion for the years ended December 31, 2019, 2018 and 2017, respectively. The Company originates and acquires unaffiliated mortgage loans and simultaneously sells a portion to affiliates under master participation agreements. The aggregate amount of mortgage loan participation interests in unaffiliated mortgage loans sold by the Company to affiliates for the years ended December 31, 2019, 2018 and 2017 was $100 million, $1.5 billion and $2.5 billion, respectively. In connection with the mortgage loan participations, the Company collected mortgage loan principal and interest payments from unaffiliated borrowers on behalf of affiliates and remitted such receipts to the affiliates in the amount of $951 million, $1.5 billion and $1.8 billion for the years ended December 31, 2019, 2018 and 2017, respectively. MLIC-56
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) The Company purchases unaffiliated mortgage loan participation interests under a master participation agreement from an affiliate, simultaneously with the affiliate's origination or acquisition of mortgage loans. The aggregate amount of unaffiliated mortgage loan participation interests purchased by the Company from such affiliate for the years ended December 31, 2019 and 2018 was $4.1 billion and $3.7 billion, respectively. The Company did not purchase any unaffiliated mortgage loan participation interests for the year ended December 31, 2017. In connection with the mortgage loan participations, the affiliate collected mortgage loan principal and interest payments on the Company's behalf and the affiliate remitted such payments to the Company in the amount of $403 million and $119 million for the year ended December 31, 2019 and 2018, respectively. Mortgage Loans, Valuation Allowance and Impaired Loans by Portfolio Segment Mortgage loans held-for-investment by portfolio segment, by method of evaluation of credit loss, impaired mortgage loans including those modified in a troubled debt restructuring, and the related valuation allowances, were as follows at and for the years ended: Evaluated Collectively for Impaired Evaluated Individually for Credit Losses Credit Losses Loans -------------------------------------------------------- -------------------------- -------------------- Impaired Loans with a Impaired Loans without a Valuation Allowance Valuation Allowance -------------------------------- ----------------------- Unpaid Unpaid Average Principal Recorded Valuation Principal Recorded Recorded Valuation Carrying Recorded Balance Investment Allowances Balance Investment Investment Allowances Value Investment ---------- ---------- ---------- ----------- ----------- ------------ ---------- --------- ---------- (In millions) December 31, 2019 Commercial........ $ -- $ -- $ -- $ -- $ -- $ 37,311 $ 186 $ -- $ -- Agricultural...... 56 56 3 196 196 15,453 46 249 200 Residential....... -- -- -- 473 427 12,148 54 427 406 ---------- ---------- --------- ----------- ----------- ------------ --------- --------- --------- Total........... $ 56 $ 56 $ 3 $ 669 $ 623 $ 64,912 $ 286 $ 676 $ 606 ========== ========== ========= =========== =========== ============ ========= ========= ========= December 31, 2018 Commercial........ $ -- $ -- $ -- $ -- $ -- $ 38,123 $ 190 $ -- $ -- Agricultural...... 31 31 3 169 169 13,964 41 197 123 Residential....... -- -- -- 431 386 11,006 57 386 358 ---------- ---------- --------- ----------- ----------- ------------ --------- --------- --------- Total........... $ 31 $ 31 $ 3 $ 600 $ 555 $ 63,093 $ 288 $ 583 $ 481 ========== ========== ========= =========== =========== ============ ========= ========= ========= The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $5 million, $32 million and $285 million, respectively, for the year ended December 31, 2017. Valuation Allowance Rollforward by Portfolio Segment The changes in the valuation allowance, by portfolio segment, were as follows: Commercial Agricultural Residential Total -------------- ------------- ------------- -------------- (In millions) Balance at January 1, 2017......... $ 167 $ 38 $ 62 $ 267 Provision (release)................ 6 4 8 18 Charge-offs, net of recoveries..... -- (2) (12) (14) -------------- ------------- ------------- -------------- Balance at December 31, 2017....... 173 40 58 271 Provision (release)................ 17 4 7 28 Charge-offs, net of recoveries..... -- -- (8) (8) -------------- ------------- ------------- -------------- Balance at December 31, 2018....... 190 44 57 291 Provision (release)................ (4) 10 7 13 Charge-offs, net of recoveries..... -- (5) (10) (15) -------------- ------------- ------------- -------------- Balance at December 31, 2019....... $ 186 $ 49 $ 54 $ 289 ============== ============= ============= ============== MLIC-57
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Valuation Allowance Methodology 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 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 with 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. Commercial and Agricultural Mortgage Loan Portfolio Segments The Company typically uses several years of historical experience in establishing non-specific valuation allowances which capture 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 evaluations of agricultural mortgage loans, in addition to historical experience, management considers factors that include increased stress in certain sectors, which may be evidenced by higher delinquency rates, or a change in the number of higher risk loans. 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 commercial and agricultural mortgage loans. All commercial mortgage 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. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher loan-to-value ratios and lower debt service coverage ratios. All agricultural mortgage loans are monitored on an ongoing basis. The monitoring process for agricultural mortgage loans is generally similar to the commercial mortgage loan monitoring process, with a focus on higher risk loans, including reviews on a geographic and property-type basis. Higher risk loans are reviewed individually on an ongoing basis for potential credit loss and specific valuation allowances are established using the methodology described above. 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 mortgage loans, the 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 mortgage loan portfolio. Loan-to-value ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. Generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss. The debt service coverage ratio and the values utilized in calculating the ratio are updated annually on a rolling basis, with a portion of the portfolio updated each quarter. In addition, the loan-to-value ratio is routinely updated for all but the lowest risk loans as part of the Company's ongoing review of its commercial mortgage loan portfolio. For agricultural mortgage loans, the Company's primary credit quality indicator is the loan-to-value ratio. The values utilized in calculating this ratio are developed in connection with the ongoing review of the agricultural mortgage loan portfolio and are routinely updated. MLIC-58
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Residential Mortgage Loan Portfolio Segment The Company's residential mortgage loan portfolio is comprised primarily of closed end, amortizing residential mortgage loans. For evaluations of residential mortgage loans, the key inputs of expected frequency and expected loss reflect current market conditions, with expected frequency adjusted, when appropriate, for differences from market conditions and the Company's historical experience. In contrast to the commercial and agricultural mortgage loan portfolios, residential mortgage 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 mortgage loans when they have been restructured and are established using the methodology described above for all loan portfolio segments. For residential mortgage loans, the Company's primary credit quality indicator is whether the loan is performing or nonperforming. The Company generally defines nonperforming residential mortgage loans as those that are 60 or more days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss. Credit Quality of Commercial Mortgage Loans The credit quality of commercial mortgage loans held-for-investment was as follows at: Recorded Investment ------------------------------------------------------- Debt Service Coverage Ratios Estimated ---------------------------------- % of Fair % of 1.20x 1.00x - 1.20x < 1.00x Total Total Value Total ----------- ------------- -------- ----------- -------- ----------- --------- (Dollars in millions) December 31, 2019 Loan-to-value ratios: Less than 65%......... $ 28,908 $ 961 $ 426 $ 30,295 81.2% $ 31,461 81.5% 65% to 75%............ 5,307 47 346 5,700 15.3 5,844 15.1 76% to 80%............ 482 -- 238 720 1.9 714 1.9 Greater than 80%...... 401 195 -- 596 1.6 575 1.5 ----------- ---------- -------- ----------- -------- ----------- --------- Total............... $ 35,098 $ 1,203 $ 1,010 $ 37,311 100.0% $ 38,594 100.0% =========== ========== ======== =========== ======== =========== ========= December 31, 2018 Loan-to-value ratios: Less than 65%......... $ 31,282 $ 723 $ 85 $ 32,090 84.2% $ 32,440 84.3% 65% to 75%............ 4,759 -- 21 4,780 12.5 4,829 12.6 76% to 80%............ 340 210 56 606 1.6 585 1.5 Greater than 80%...... 480 167 -- 647 1.7 613 1.6 ----------- ---------- -------- ----------- -------- ----------- --------- Total............... $ 36,861 $ 1,100 $ 162 $ 38,123 100.0% $ 38,467 100.0% =========== ========== ======== =========== ======== =========== ========= MLIC-59
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Credit Quality of Agricultural Mortgage Loans The credit quality of agricultural mortgage loans held-for-investment was as follows at: December 31, -------------------------------------------------- 2019 2018 ------------------------ ------------------------ Recorded % of Recorded % of Investment Total Investment Total -------------- --------- -------------- --------- (Dollars in millions) Loan-to-value ratios: Less than 65%......... $ 14,741 93.9% $ 13,075 92.3% 65% to 75%............ 851 5.4 1,034 7.3 76% to 80%............ 71 0.4 32 0.2 Greater than 80%...... 42 0.3 23 0.2 -------------- --------- -------------- --------- Total............. $ 15,705 100.0% $ 14,164 100.0% ============== ========= ============== ========= Credit Quality of Residential Mortgage Loans The credit quality of residential mortgage loans held-for-investment was as follows at: December 31, ------------------------------------------------- 2019 2018 ------------------------ ------------------------ Recorded % of Recorded % of Investment Total Investment Total ------------- ---------- ------------- ---------- (Dollars in millions) Performance indicators: Performing.............. $ 12,198 97.0% $ 10,990 96.5% Nonperforming (1)....... 377 3.0 402 3.5 ------------- ---------- ------------- ---------- Total................. $ 12,575 100.0% $ 11,392 100.0% ============= ========== ============= ========== -------- (1)Includes residential mortgage loans held-for-investment in process of foreclosure of $117 million and $140 million at December 31, 2019 and 2018, respectively. Past Due and Nonaccrual Mortgage Loans The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both December 31, 2019 and 2018. The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans -- 60 days and agricultural mortgage loans -- 90 days. The past due and nonaccrual mortgage loans at recorded investment, prior to valuation allowances, by portfolio segment, were as follows at: Greater than 90 Days Past Due and Still Past Due Accruing Interest Nonaccrual ----------------------------------- --------------------------------------- ----------------------------------- December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 December 31, 2019 December 31, 2018 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- (In millions) Commercial..... $ -- $ -- $-- $ -- $167 $167 Agricultural... 124 204 2 109 137 105 Residential.... 377 402 -- -- 377 402 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- Total......... $501 $606 $ 2 $109 $681 $674 ================= ================= ================= ================= ================= ================= MLIC-60
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Mortgage Loans Modified in a Troubled Debt Restructuring The Company may grant concessions related to borrowers experiencing financial difficulties, which are classified as troubled debt restructurings. 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 concessions granted are considered in determining any impairment or changes in the specific valuation allowance recorded with the restructuring. Through the continuous 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. For the year ended December 31, 2019, the Company had 396 residential mortgage loans modified in a troubled debt restructuring with carrying value of $97 million and $87 million pre-modification and post-modification, respectively. For the year ended December 31, 2018, the Company had 440 residential mortgage loans modified in a troubled debt restructuring with carrying value of $96 million and $92 million pre-modification and post-modification, respectively. For the year ended December 31, 2019, the Company had three agricultural mortgage loans modified in a troubled debt restructuring with carrying value of $111 million for both pre-modification and post-modification. For the year ended December 31, 2018, the Company did not have a significant amount of agricultural mortgage loans modified in a troubled debt restructuring. For both years ended December 31, 2019 and 2018, the Company did not have commercial mortgage loans modified in a troubled debt restructuring. Real Estate and Real Estate Joint Ventures The Company's real estate investment portfolio is diversified by property type, geography and income stream, including income from operating leases, operating income and equity in earnings from equity method real estate joint ventures. Real estate investments, by income type, as well as income earned, are as follows at and for the periods indicated: December 31, Years Ended December 31, --------------------- -------------------------- 2019 2018 2019 2018 2017 ---------- ---------- -------- -------- -------- Carrying Value Income --------------------- -------------------------- (In millions) Leased real estate investments..... $ 1,586 $ 1,134 $ 165 $ 210 $ 209 Other real estate investments...... 419 460 174 177 172 Real estate joint ventures......... 4,654 4,558 62 85 65 ---------- ---------- -------- -------- -------- Total real estate and real estate joint ventures.................. $ 6,659 $ 6,152 $ 401 $ 472 $ 446 ========== ========== ======== ======== ======== The carrying value of real estate investments acquired through foreclosure was $34 million and $42 million at December 31, 2019 and 2018, respectively. Depreciation expense on real estate investments was $62 million, $65 million and $76 million for the years ended December 31, 2019, 2018 and 2017, respectively. Real estate investments were net of accumulated depreciation of $652 million and $671 million at December 31, 2019 and 2018, respectively. Leases Leased Real Estate Investments -- Operating Leases The Company, as lessor, leases investment real estate, principally commercial real estate for office and retail use, through a variety of operating lease arrangements, which typically include tenant reimbursement for property operating costs and options to renew or extend the lease. In some circumstances, leases may include an option for the lessee to purchase the property. In addition, certain leases of retail space may stipulate that a portion of the income earned is contingent upon the level of the tenants' revenues. The Company has elected a practical expedient of not separating non-lease components related to reimbursement of property operating costs from associated lease components. These property operating costs have the same timing and pattern of transfer as the related lease component, because they are incurred over the same period of time as the operating lease. Therefore, the combined component is accounted for as a single operating lease. Risk is managed through lessee credit analysis, property type diversification, and geographic diversification, primarily across the United States. Leased real estate investments and income earned, by property type, are as follows at and for the periods indicated: MLIC-61
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) December 31, Years Ended December 31, --------------------- -------------------------- 2019 2018 2019 2018 2017 ---------- ---------- -------- -------- -------- Carrying Value Income --------------------- -------------------------- (In millions) Leased real estate investments: Office................................... $ 278 $ 373 $ 49 $ 60 $ 57 Retail................................... 507 450 70 65 63 Apartment (1)............................ 525 -- 3 49 53 Industrial............................... 243 209 42 35 36 Other.................................... 33 102 1 1 -- ---------- ---------- -------- -------- -------- Total leased real estate investments... $ 1,586 $ 1,134 $ 165 $ 210 $ 209 ========== ========== ======== ======== ======== -------- (1) The Company sold its investment in apartment properties in the fourth quarter of 2018 and subsequently, in the fourth quarter of 2019, purchased investments in apartment properties. Future contractual receipts under operating leases as of December 31, 2019 are $114 million in 2020, $107 million in 2021, $95 million in 2022, $87 million in 2023, $79 million in 2024, $259 million thereafter, and in total $741 million. Leveraged and Direct Financing Leases The Company has diversified leveraged lease and direct financing lease portfolios. Its leveraged leases principally include renewable energy generation facilities, rail cars, commercial real estate and commercial aircraft, and its direct financing leases principally include renewable energy generation facilities. These assets are leased through a variety of lease arrangements, which may include options to renew or extend the lease and options for the lessee to purchase the property. Residual values are estimated at inception of the lease using available third-party data. Risk is managed through lessee credit analysis, asset allocation, geographic diversification, and ongoing reviews of estimated residual values, using available third-party data and, in certain leases, linking the amount of future rents to changes in inflation rates. Generally, estimated residual values are not guaranteed by the lessee or a third party. Investment in leveraged and direct financing leases consisted of the following at: December 31, 2019 December 31, 2018 ---------------------- ---------------------- Direct Direct Leveraged Financing Leveraged Financing Leases Leases Leases Leases ---------- ---------- ---------- ---------- (In millions) Lease receivables, net (1).... $ 666 $ 232 $ 715 $ 256 Estimated residual values..... 592 42 618 42 ---------- ---------- ---------- ---------- Subtotal..................... 1,258 274 1,333 298 Unearned income............... (362) (85) (401) (100) ---------- ---------- ---------- ---------- Investment in leases......... $ 896 $ 189 $ 932 $ 198 ========== ========== ========== ========== -------- (1) Future contractual receipts under direct financing leases as of December 31, 2019 are $23 million in 2020, $21 million in 2021, $21 million in 2022, $21 million in 2023, $21 million in 2024, $125 million thereafter, and in total $232 million. Lease receivables are generally due in periodic installments. The remaining life of the payment periods for leveraged leases generally range from one to 15 years but in certain circumstances can be over 25 years, while the remaining life of the payment periods for direct financing leases generally range from one to 25 years but in certain circumstances can be over 25 years. For lease receivables, the primary credit quality indicator is whether the lease receivable is performing or nonperforming, which is assessed monthly. The Company generally defines nonperforming lease receivables as those that are 90 days or more past due. At both December 31, 2019 and 2018 all lease receivables were performing. MLIC-62
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) The Company's deferred income tax liability related to leveraged leases was $425 million and $465 million at December 31, 2019 and 2018, respectively. The components of income from investment in leveraged and direct financing leases, excluding net investment gains (losses), were as follows: Years Ended December 31, ----------------------------------------------------------- 2019 2018 2017 ------------------- ------------------- ------------------- Direct Direct Direct Leveraged Financing Leveraged Financing Leveraged Financing Leases Leases Leases Leases Leases Leases --------- --------- --------- --------- --------- --------- (In millions) Lease investment income.......................... $ 37 $ 12 $ 37 $ 13 $ 11 $ 15 Less: Income tax expense......................... 8 3 8 3 4 5 --------- -------- --------- --------- -------- --------- Lease investment income, net of income tax... $ 29 $ 9 $ 29 $ 10 $ 7 $ 10 ========= ======== ========= ========= ======== ========= Other Invested Assets Other invested assets is comprised primarily of freestanding derivatives with positive estimated fair values (see Note 8), affiliated investments, tax credit and renewable energy partnerships, annuities funding structured settlement claims, leveraged and direct financing leases, FHLB common stock, equity securities and FVO Securities. See "-- Related Party Investment Transactions" for information regarding affiliated investments. Tax Credit Partnerships The carrying value of tax credit partnerships was $1.3 billion and $1.7 billion at December 31, 2019 and 2018, respectively. Losses from tax credit partnerships included within net investment income were $240 million, $257 million and $259 million for the years ended December 31, 2019, 2018 and 2017, respectively. 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 $5.5 billion and $5.0 billion at December 31, 2019 and 2018, respectively. Net Unrealized Investment Gains (Losses) Unrealized investment gains (losses) on fixed maturity securities AFS, equity securities and derivatives and the effect on DAC, VOBA, DSI, future policy benefits and the policyholder dividend obligation, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI. MLIC-63
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) The components of net unrealized investment gains (losses), included in AOCI, were as follows: Years Ended December 31, ------------------------------------------- 2019 2018 2017 ------------- ------------- ------------- (In millions) Fixed maturity securities AFS.......................................... $ 15,145 $ 3,890 $ 12,349 Fixed maturity securities AFS with noncredit OTTI losses included in AOCI.................................................................. 32 25 40 ------------- ------------- ------------- Total fixed maturity securities AFS.................................. 15,177 3,915 12,389 Equity securities...................................................... -- -- 119 Derivatives............................................................ 2,043 1,742 1,396 Other.................................................................. 210 231 1 ------------- ------------- ------------- Subtotal............................................................. 17,430 5,888 13,905 ------------- ------------- ------------- Amounts allocated from: Future policy benefits................................................. (1,121) (5) (19) DAC and VOBA related to noncredit OTTI losses recognized in AOCI....... -- -- -- DAC, VOBA and DSI...................................................... (1,051) (571) (790) Policyholder dividend obligation....................................... (2,020) (428) (2,121) ------------- ------------- ------------- Subtotal............................................................. (4,192) (1,004) (2,930) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI.................................................... (7) (5) (14) Deferred income tax benefit (expense).................................. (2,735) (982) (3,704) ------------- ------------- ------------- Net unrealized investment gains (losses)............................. $ 10,496 $ 3,897 $ 7,257 ============= ============= ============= The changes in net unrealized investment gains (losses) were as follows: Years Ended December 31, ------------------------------------------- 2019 2018 2017 ------------- ------------- ------------- (In millions) Balance at January 1,..................................................... $ 3,897 $ 7,257 $ 5,051 Cumulative effects of changes in accounting principles, net of income tax (Note 1)................................................................. 17 1,310 -- Fixed maturity securities AFS on which noncredit OTTI losses have been recognized............................................................... 7 (15) 30 Unrealized investment gains (losses) during the year...................... 11,513 (7,883) 3,621 Unrealized investment gains (losses) relating to: Future policy benefits.................................................... (1,116) 14 (10) DAC and VOBA related to noncredit OTTI losses recognized in AOCI.......... -- -- 1 DAC, VOBA and DSI......................................................... (480) 219 (221) Policyholder dividend obligation.......................................... (1,592) 1,693 (190) Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI....................................................... (2) 9 (11) Deferred income tax benefit (expense)..................................... (1,748) 1,293 (1,014) ------------- ------------- ------------- Balance at December 31,................................................... $ 10,496 $ 3,897 $ 7,257 ============= ============= ============= Change in net unrealized investment gains (losses)........................ $ 6,599 $ (3,360) $ 2,206 ============= ============= ============= Concentrations of Credit Risk There were no investments in any counterparty that were greater than 10% of the Company's equity, other than the U.S. government and its agencies, at both December 31, 2019 and 2018. MLIC-64
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Securities Lending and Repurchase Agreements Securities, Collateral and Reinvestment Portfolio A summary of the outstanding securities lending and repurchase agreements transactions is as follows: December 31, ------------------------------------------------------------------------------ 2019 2018 --------------------------------------- -------------------------------------- Securities Securities (1) (1) ---------- ---------- Cash Cash Collateral Reinvestment Collateral Reinvestment Received from Portfolio at Received from Portfolio at Estimated Counterparties Estimated Estimated Counterparties Estimated Fair Value (2), (3) Fair Value Fair Value (2), (3) Fair Value ---------- -------------- ------------- ---------- -------------- ------------ (In millions) Securities lending............ $ 12,455 $ 12,791 $ 12,847 $ 13,138 $ 13,351 $ 13,376 Repurchase agreements......... $ 2,333 $ 2,310 $ 2,320 $ 1,020 $ 1,000 $ 1,001 ------------- (1) Securities on loan or securities pledged in connection with these programs are included within fixed maturities securities AFS, short-term investments and cash equivalents. (2) In connection with securities lending, in addition to cash collateral received, the Company received from counterparties security collateral of $0 and $64 million at December 31, 2019 and 2018, respectively, which may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements. (3) The liability for cash collateral for these programs is included within payables for collateral under securities loaned, other transactions and other liabilities. Contractual Maturities A summary of the remaining contractual maturities of securities lending agreements and repurchase agreements is as follows: December 31, ------------------------------------------------------------------------- 2019 2018 ------------------------------------ ------------------------------------ Remaining Maturities Remaining Maturities ------------------------------------ ------------------------------------ Over Over 1 Month 1 to 6 1 Month 1 to 6 Open (1) or Less Months Total Open (1) or Less Months Total -------- -------- -------- --------- -------- -------- -------- --------- (In millions) Cash collateral liability by loaned security type: Securities lending: U.S. government and agency.................. $ 2,260 $ 5,040 $ 5,491 $ 12,791 $ 1,970 $ 7,426 $ 3,955 $ 13,351 Repurchase agreements: U.S. government and agency.................. $ -- $ 2,310 $ -- $ 2,310 $ -- $ 1,000 $ -- $ 1,000 ------------- (1) The related loaned security could be returned to the Company on the next business day, which would require the Company to immediately return the cash collateral. (2) The Company is permitted to withdraw any portion of the pledged collateral over the minimum collateral requirement at any time, other than in the event of a default by the Company. MLIC-65
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The securities lending and repurchase agreements reinvestment portfolios consist principally of high quality, liquid, publicly-traded fixed maturity securities AFS, short-term investments, cash equivalents or cash. If the securities on loan, securities pledged or the reinvestment portfolio become less liquid, liquidity resources within the general account are available to meet any potential cash demands when securities on loan or securities pledged are put back by the counterparty. Invested Assets on Deposit and Pledged as Collateral Invested assets on deposit and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans, which are presented at carrying value at: December 31, ----------------------------- 2019 2018 -------------- -------------- (In millions) Invested assets on deposit (regulatory deposits)................. $ 62 $ 47 Invested assets pledged as collateral (1)........................ 20,659 20,207 -------------- -------------- Total invested assets on deposit and pledged as collateral... $ 20,721 $ 20,254 ============== ============== ------------- (1) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 3), derivative transactions (see Note 8) and secured debt (See Note 11). See "-- Securities Lending and Repurchase Agreements" for information regarding securities supporting securities lending and repurchase agreement transactions and Note 6 for information regarding investments designated to the closed block. In addition, the Company's investment in FHLB common stock, which is considered restricted until redeemed by the issuers, was $737 million and $724 million, at redemption value, at December 31, 2019 and 2018, 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 ("PCI") 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 in 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 (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 in net investment income. Decreases in cash flows expected to be collected can result in OTTI. The Company's PCI investments had an outstanding principal balance of $3.2 billion and $3.9 billion at December 31, 2019 and 2018, respectively, which represents the contractually required principal and accrued interest payments whether or not currently due and a carrying value (estimated fair value of the investments plus accrued interest) of $2.7 billion and $3.2 billion at December 31, 2019 and 2018, respectively. Accretion of accretable yield on PCI investments recognized in earnings in net investment income was $170 million and $266 million for the years ended December 31, 2019 and 2018, respectively. Purchases of PCI investments were insignificant in both of the years ended December 31, 2019 and 2018. MLIC-66
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) 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 and other funds. The portion of these investments accounted for under the equity method had a carrying value of $11.5 billion at December 31, 2019. 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 $3.3 billion at December 31, 2019. Except for certain real estate joint ventures and certain funds, the Company's investments in its remaining 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 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. Aggregate net investment income from these equity method investments exceeded 10% of the Company's consolidated pre-tax income (loss) for two of the three most recent annual periods: 2019 and 2017. The Company is providing the following aggregated summarized financial data for such equity method investments, for the most recent annual periods, in order to provide comparative information. This aggregated summarized financial data does not represent the Company's proportionate share of the assets, liabilities, or earnings of such entities. The aggregated summarized financial data presented below reflects the latest available financial information and is as of, and for, the years ended December 31, 2019, 2018 and 2017. Aggregate total assets of these entities totaled $527.8 billion and $466.8 billion at December 31, 2019 and 2018, respectively. Aggregate total liabilities of these entities totaled $77.6 billion and $56.3 billion at December 31, 2019 and 2018, respectively. Aggregate net income (loss) of these entities totaled $40.9 billion, $42.7 billion and $35.0 billion for the years ended December 31, 2019, 2018 and 2017, respectively. Aggregate net income (loss) from the underlying entities in which the Company invests is primarily comprised of investment income, including recurring investment income and realized and unrealized investment gains (losses). Variable Interest Entities The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity. The determination of the VIE's primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party's relationship with or involvement in the entity, 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. Consolidated VIEs Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company's obligation to the VIEs is limited to the amount of its committed investment. The following table presents the total assets and total liabilities relating to investment related VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at: December 31, ------------------------------------------------- 2019 2018 ------------------------ ------------------------ Total Total Total Total Assets Liabilities Assets Liabilities ------------ ----------- ------------ ----------- (In millions) Real estate joint ventures (1).......... $ 1,378 $ -- $ 1,394 $ -- Renewable energy partnership (2)........ 94 -- 102 -- Investment fund (primarily mortgage loans) (3)............................. 211 -- 219 -- Other investments (2)................... 10 5 21 5 ------------ --------- ------------ --------- Total.................................. $ 1,693 $ 5 $ 1,736 $ 5 ============ ========= ============ ========= ------------- MLIC-67
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) (1) The Company's investment in these affiliated real estate joint ventures was $1.2 billion and $1.3 billion at December 31, 2019 and 2018, respectively. Other affiliates' investments in these affiliated real estate joint ventures were $129 million and $123 million at December 31, 2019 and 2018, respectively. (2) Assets of the renewable energy partnership and other investments are primarily consisted of other invested assets. (3) The Company's investment in this affiliated investment fund was $172 million and $178 million, at December 31, 2019 and 2018, respectively. An affiliate had an investment in this affiliated investment fund of $39 million and $41 million at December 31, 2019 and 2018, respectively. Unconsolidated VIEs The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at: December 31, ------------------------------------------------------- 2019 2018 --------------------------- --------------------------- Maximum Maximum Carrying Exposure Carrying Exposure Amount to Loss (1) Amount to Loss (1) ------------- ------------- ------------- ------------- (In millions) Fixed maturity securities AFS: Structured Products (2)................ $ 37,119 $ 37,119 $ 35,112 $ 35,112 U.S. and foreign corporate............. 1,098 1,098 669 669 Other limited partnership interests..... 4,461 7,423 3,979 6,405 Other invested assets................... 1,554 1,677 1,914 2,066 Real estate joint ventures.............. 25 28 33 37 ------------- ------------- ------------- ------------- Total.................................. $ 44,257 $ 47,345 $ 41,707 $ 44,289 ============= ============= ============= ============= ------------- (1) The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets, the Company's return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $6 million and $93 million at December 31, 2019 and 2018, respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. (2) For these variable interests, the Company's involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity. As described in Note 16, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs for each of the years ended December 31, 2019, 2018 and 2017. The Company securitizes certain residential mortgage loans and acquires an interest in the related RMBS issued. While the Company has a variable interest in the issuer of the securities, it is not the primary beneficiary of the issuer of the securities since it does not have any rights to remove the servicer or veto rights over the servicer's actions. The resulting gain (loss) from the securitization is included within net investment gains (losses). The estimated fair value of the related RMBS acquired in connection with the securitizations is included in the carrying amount and maximum exposure to loss for Structured Products presented in the table above. The carrying value and the estimated fair value of mortgage loans were $443 million and $467 million, respectively, for loans sold during 2019, and $451 million and $478 million, respectively, for loans sold during 2018. Gains on securitizations MLIC-68
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) of $24 million and $27 million for the years ended December 31, 2019 and 2018, respectively, were included within net investment gains (losses). The estimated fair value of RMBS acquired in connection with the securitizations was $131 million and $98 million at December 31, 2019 and 2018, respectively. See Note 9 for information on how the estimated fair value of mortgage loans and RMBS is determined, the valuation approaches and key inputs, their placement in the fair value hierarchy, and for certain RMBS, quantitative information about the significant unobservable inputs and the sensitivity of their estimated fair value to changes in those inputs. Net Investment Income The components of net investment income were as follows: Years Ended December 31, ----------------------------------------- 2019 2018 2017 ------------- ------------- ------------- (In millions) Investment income: Fixed maturity securities AFS........... $ 7,015 $ 7,268 $ 7,057 Mortgage loans.......................... 3,147 2,822 2,647 Policy loans............................ 307 297 310 Real estate and real estate joint ventures............................... 401 472 446 Other limited partnership interests..... 545 519 625 Cash, cash equivalents and short-term investments............................ 183 121 74 Equity securities....................... 35 42 97 FVO Securities (1)...................... 74 22 -- Operating joint venture................. 69 37 19 Other................................... 221 261 133 ------------- ------------- ------------- Subtotal............................... 11,997 11,861 11,408 Less: Investment expenses............... 1,024 942 895 ------------- ------------- ------------- Net investment income.................. $ 10,973 $ 10,919 $ 10,513 ============= ============= ============= ------------- (1) Changes in estimated fair value subsequent to purchase for FVO Securities still held as of the end of the respective periods included in net investment income were $74 million and $22 million for the years ended December 31, 2019 and 2018, respectively. There were no changes in estimated fair value subsequent to purchase for FVO Securities still held as of December 31, 2017 included in net investment income for the year ended December 31, 2017. See "-- Related Party Investment Transactions" for discussion of affiliated net investment income and investment expenses. The Company invests in real estate joint ventures, other limited partnership interests and tax credit and renewable energy partnerships, and also does business through an operating joint venture, the majority of which are accounted for under the equity method. Net investment income from other limited partnership interests and the operating joint venture, accounted for under the equity method; and real estate joint ventures and tax credit and renewable energy partnerships, primarily accounted for under the equity method, totaled $458 million, $344 million and $300 million for the years ended December 31, 2019, 2018, and 2017, respectively. MLIC-69
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Net Investment Gains (Losses) Components of Net Investment Gains (Losses) The components of net investment gains (losses) were as follows: Years Ended December 31, ------------------------------------- 2019 2018 2017 ----------- ----------- ----------- (In millions) Total gains (losses) on fixed maturity securities AFS: Total OTTI losses recognized -- by sector and industry: U.S. and foreign corporate securities -- by industry: Consumer.................................. $ (16) $ (19) $ (5) Industrial................................ (19) (2) -- Finance................................... -- (2) -- ----------- ----------- ----------- Total U.S. and foreign corporate securities............................. (35) (23) (5) RMBS...................................... (2) -- -- Foreign Government........................ (2) -- -- Municipals................................ -- -- (1) ----------- ----------- ----------- OTTI losses on fixed maturity securities AFS recognized in earnings............. (39) (23) (6) Fixed maturity securities AFS -- net gains (losses) on sales and disposals.... 51 107 23 ----------- ----------- ----------- Total gains (losses) on fixed maturity securities AFS......................... 12 84 17 ----------- ----------- ----------- Total gains (losses) on equity securities: Total OTTI losses recognized -- by security type: Common stock.............................. -- -- (23) Non-redeemable preferred stock............ -- -- (1) ----------- ----------- ----------- OTTI losses on equity securities recognized in earnings................. -- -- (24) Equity securities -- net gains (losses) on sales and disposals................... 12 17 7 Change in estimated fair value of equity securities (1)........................... 38 (101) -- ----------- ----------- ----------- Total gains (losses) on equity securities 50 (84) (17) Mortgage loans............................ (13) (50) (34) Real estate and real estate joint ventures 396 311 607 Other limited partnership interests....... 3 8 (52) Other (2)................................. (46) (162) (115) ----------- ----------- ----------- Subtotal................................. 402 107 406 ----------- ----------- ----------- Change in estimated fair value of other limited partnership interests............ (15) 11 -- Non-investment portfolio gains (losses)... (41) 35 (72) ----------- ----------- ----------- Total net investment gains (losses)...... $ 346 $ 153 $ 334 =========== =========== =========== -------- (1)Changes in estimated fair value subsequent to purchase for equity securities still held as of the end of the period included in net investment gains (losses) were $31 million and ($82) million for the years ended December 31, 2019 and 2018, respectively. (2)Other gains (losses) included tax credit partnership impairment losses of $92 million, and a renewable energy partnership disposal gain of $46 million for the year ended December 31, 2019. Other gains (losses) included renewable energy partnership disposal losses of $83 million and leveraged lease impairment losses of $105 million for the year ended December 31, 2018. Other gains (losses) included renewable energy partnership disposal losses of $6 million and leveraged lease impairment losses of $79 million for the year ended December 31, 2017. See "-- Related Party Investment Transactions" for discussion of affiliated net investment gains (losses) related to transfers of invested assets to affiliates. MLIC-70
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Gains (losses) from foreign currency transactions included within net investment gains (losses) were ($57) million, $21 million and ($142) million for the years ended December 31, 2019, 2018 and 2017, respectively. Sales or Disposals and Impairments of Fixed Maturity Securities AFS Sales of securities are determined on a specific identification basis. Proceeds from sales or disposals and the components of net investment gains (losses) were as shown in the table below: Years Ended December 31, ------------------------------------- 2019 2018 2017 ----------- ----------- ----------- (In millions) Proceeds........................... $ 32,175 $ 53,042 $ 34,483 =========== =========== =========== Gross investment gains............. $ 392 $ 604 $ 278 Gross investment losses............ (341) (497) (255) OTTI losses........................ (39) (23) (6) ----------- ----------- ----------- Net investment gains (losses)..... $ 12 $ 84 $ 17 =========== =========== =========== Credit Loss Rollforward of Fixed Maturity Securities AFS The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities AFS still held for which a portion of the OTTI loss was recognized in OCI: Years Ended December 31, --------------------------- 2019 2018 ---------- ---------- (In millions) Balance at January 1,................... $ 70 $ 110 Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI................................. (16) (38) Increase in cash flows -- accretion of previous credit loss OTTI............ (1) (2) ---------- ---------- Balance at December 31,................. $ 53 $ 70 ========== ========== Related Party Investment Transactions The Company transfers invested assets primarily consisting of fixed maturity securities AFS and mortgage loans to and from affiliates. Invested assets transferred to and from affiliates were as follows: Years Ended December 31, ------------------------------ 2019 2018 2017 ------- ------- -------- (In millions) Estimated fair value of invested assets transferred to affiliates.............. $ -- $ -- $ 453 Amortized cost of invested assets transferred to affiliates.............. $ -- $ -- $ 416 Net investment gains (losses) recognized on transfers................ $ -- $ -- $ 37 Estimated fair value of invested assets transferred from affiliates............ $ 46 $ 77 $ 306 MLIC-71
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 7. Investments (continued) Recurring related party investments and related net investment income were as follows at and for the periods ended: December 31, Years Ended December 31, ----------------- ------------------------ 2019 2018 2019 2018 2017 -------- -------- ----- ----- ----- Investment Type/Balance Sheet Category Related Party Carrying Value Net Investment Income -------------------------------------- ----------------------------------- ----------------- ------------------------ (In millions) Affiliated investments (1)......... MetLife, Inc. $ 1,810 $ 1,798 $ 34 $ 31 $ 78 Affiliated investments (2)......... American Life Insurance Company 100 100 3 3 3 Affiliated investments (3)......... Metropolitan Property and Casualty Insurance Company 315 315 11 10 6 -------- -------- ----- ----- ----- Other invested assets.............. $ 2,225 $ 2,213 $ 48 $ 44 $ 87 ======== ======== ===== ===== ===== Money market pool (4).............. Metropolitan Money Market Pool $ -- $ 52 $ 1 $ 1 $ 1 -------- -------- ----- ----- ----- Short-term investments............. $ -- $ 52 $ 1 $ 1 $ 1 ======== ======== ===== ===== ===== -------- (1)Represents an investment in affiliated senior notes. The affiliated senior notes have maturity dates from September 2020 to October 2029 and bear interest, payable semi-annually, at a rate per annum ranging from 0.82% to 3.14%. In July 2019, a (Yen)53.3 billion 1.45% affiliated senior note matured and was refinanced with a (Yen)37.3 billion 1.60% affiliated senior note due July 2023 and a (Yen)16.0 billion 1.64% affiliated senior note due July 2026. In October 2019, a (Yen)26.5 billion 1.72% affiliated senior note matured and was refinanced with a (Yen)26.5 billion 1.81% affiliated senior note due October 2029. (2)Represents an investment in an affiliated surplus note. The surplus note, which bears interest at a fixed rate of 3.17%, payable semiannually, is due June 2020. (3)Represents an investment in affiliated preferred stock. Dividends are payable quarterly at a variable rate. (4)The investment has a variable rate of return. Through March 31, 2018, the Company provided investment administrative services to certain affiliates. The related investment administrative service charges to these affiliates were $19 million and $73 million for the years ended December 31, 2018 and 2017, respectively. Effective April 1, 2018, the Company receives investment advisory services from an affiliate. The related affiliated investment advisory charges to the Company were $299 million and $198 million for the years ended December 31, 2019 and 2018, respectively. See "-- Mortgage Loans by Portfolio Segment" for discussion of mortgage loan participation agreements with affiliates. See "-- Variable Interest Entities" for information on investments in affiliated real estate joint ventures and affiliated investment fund. 8. Derivatives Accounting for Derivatives See Note 1 for a description of the Company's accounting policies for derivatives and Note 9 for information about the fair value hierarchy for derivatives. Derivative Strategies The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives. Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter ("OTC") market. Certain of the Company's OTC derivatives are cleared and settled through central clearing counterparties ("OTC-cleared"), while others are bilateral contracts between two counterparties ("OTC-bilateral"). The types of derivatives the Company uses MLIC-72
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets. Interest Rate Derivatives The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards. Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships. The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. government and agency, or other fixed maturity securities AFS. Structured interest rate swaps are included in interest rate swaps and are not designated as hedging instruments. Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships. The Company purchases interest rate caps primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, and interest rate floors primarily to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships. In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships. Swaptions are used by the Company to hedge interest rate risk associated with the Company's long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options. The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow and nonqualifying hedging relationships. MLIC-73
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) A synthetic GIC is a contract that simulates the performance of a traditional GIC through the use of financial instruments. The policyholder owns the underlying assets, and the Company provides a guarantee (or "wrap") on the participant funds for an annual risk charge. The Company's maximum exposure to loss on synthetic GICs is the notional amount, in the event the values of all of the underlying assets were reduced to zero. The Company's risk is substantially lower due to contractual provisions that limit the portfolio to high quality assets, which are pre-approved and monitored for compliance, as well as the collection of risk charges. In addition, the crediting rates reset periodically to amortize market value gains and losses over a period equal to the duration of the wrapped portfolio, subject to a 0% floor. While plan participants may transact at book value, contract holder withdrawals may only occur immediately at market value, or at book value paid over a period of time per contract provisions. Synthetic GICs are not designated as hedging instruments. Foreign Currency Exchange Rate Derivatives The Company uses foreign currency exchange rate derivatives, including foreign currency swaps and foreign currency forwards, to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow and nonqualifying hedging relationships. In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company utilizes foreign currency forwards in nonqualifying hedging relationships. Credit Derivatives The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations and involuntary restructuring for corporate obligors, as well as repudiation, moratorium or governmental intervention for sovereign obligors. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. ("ISDA") deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships. The Company enters into written credit default swaps to synthetically create credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency, or other fixed maturity securities AFS. These credit default swaps are not designated as hedging instruments. The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these transactions as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships. Equity Derivatives The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps. MLIC-74
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the underlying equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships. Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships. In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships. In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to synthetically create investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships. MLIC-75
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) Primary Risks Managed by Derivatives The following table presents the primary underlying risk exposure, gross notional amount and estimated fair value of the Company's derivatives, excluding embedded derivatives, held at: December 31, -------------------------------------------------------------------- 2019 2018 --------------------------------- ---------------------------------- Estimated Fair Value Estimated Fair Value ---------------------- ---------------------- Gross Gross Primary Underlying Notional Notional Risk Exposure Amount Assets Liabilities Amount Assets Liabilities ------------------ ---------- --------- ------------ ----------- --------- ------------ (In millions) Derivatives Designated as Hedging Instruments: Fair value hedges: Interest rate swaps. Interest rate $ 2,370 $ 2,668 $ 2 $ 2,446 $ 2,197 $ 2 Foreign currency Foreign currency swaps.............. exchange rate 1,250 12 17 1,191 49 -- ---------- --------- ---------- ----------- --------- ---------- Subtotal........... 3,620 2,680 19 3,637 2,246 2 ---------- --------- ---------- ----------- --------- ---------- Cash flow hedges: Interest rate swaps. Interest rate 3,324 125 27 3,181 139 1 Interest rate forwards........... Interest rate 6,793 75 142 3,023 -- 216 Foreign currency Foreign currency swaps.............. exchange rate 27,240 1,199 1,103 26,239 1,218 1,318 ---------- --------- ---------- ----------- --------- ---------- Subtotal........... 37,357 1,399 1,272 32,443 1,357 1,535 ---------- --------- ---------- ----------- --------- ---------- Total qualifying hedges........... 40,977 4,079 1,291 36,080 3,603 1,537 ---------- --------- ---------- ----------- --------- ---------- Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate swaps. Interest rate 38,820 2,296 133 36,238 1,507 85 Interest rate floors Interest rate 12,701 156 -- 12,701 102 -- Interest rate caps.. Interest rate 42,622 18 5 54,576 154 1 Interest rate futures............ Interest rate 745 -- -- 794 -- 1 Interest rate options............ Interest rate 24,944 427 -- 24,340 185 -- Interest rate total return swaps....... Interest rate 1,048 5 49 1,048 33 2 Synthetic GICs...... Interest rate 16,498 -- -- 18,006 -- -- Foreign currency Foreign currency swaps.............. exchange rate 6,124 419 97 5,986 700 79 Foreign currency Foreign currency forwards........... exchange rate 1,001 12 8 943 15 14 Credit default swaps -- purchased. Credit 888 4 11 858 24 4 Credit default swaps -- written... Credit 8,711 200 1 7,864 67 13 Equity futures...... Equity market 2,039 -- 5 1,006 1 6 Equity index options Equity market 23,104 447 417 23,162 706 396 Equity variance swaps.............. Equity market 637 17 17 1,946 32 81 Equity total return swaps.............. Equity market 716 -- 68 886 89 -- ---------- --------- ---------- --------------------- ---------- Total non-designated or nonqualifying derivatives......................... 180,598 4,001 811 190,354 3,615 682 ---------- --------- ---------- --------------------- ---------- Total................................. $ 221,575 $ 8,080 $ 2,102 $ 226,434 $ 7,218 $ 2,219 ========== ========= ========== =========== ========= ========== Based on gross notional amounts, a substantial portion of the Company's derivatives was not designated or did not qualify as part of a hedging relationship at both December 31, 2019 and 2018. The Company's use of derivatives includes (i) derivatives that serve as macro hedges of the Company's exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules; (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship; (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income; and (iv) written credit default swaps and interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged. MLIC-76
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) The Effects of Derivatives on the Consolidated Statements of Operations and Comprehensive Income (Loss) The following table presents the consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow, nonqualifying hedging relationships and embedded derivatives: Year Ended December 31, 2019 ---------------------------------------------------------------------------- Interest Net Net Credited to Net Investment Derivative Policyholder Policyholder Investment Gains Gains Benefits and Account Other Income (Losses) (Losses) Claims Balances Expenses OCI ---------- ---------- ---------- ------------ ------------ -------- -------- (In millions) Gain (Loss) on Fair Value Hedges: Interest rate derivatives: Derivatives designated as hedging instruments (1)................................. $ (2) $ -- $ -- $ 339 $ 1 $ -- N/A Hedged items..................................... 4 -- -- (369) -- -- N/A Foreign currency exchange rate derivatives: Derivatives designated as hedging instruments (1)................................. (54) -- -- -- -- -- N/A Hedged items..................................... 54 -- -- -- -- -- N/A -------- ------- --------- -------- --------- -------- -------- Amount excluded from the assessment of hedge effectiveness................................... -- -- -- -- -- -- N/A -------- ------- --------- -------- --------- -------- -------- Subtotal....................................... 2 -- -- (30) 1 -- N/A Gain (Loss) on Cash Flow Hedges: Interest rate derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A $ 605 Amount of gains (losses) reclassified from AOCI into income..................................... 23 4 -- -- -- -- (27) Foreign currency exchange rate derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A (67) Amount of gains (losses) reclassified from AOCI into income..................................... (3) 212 -- -- -- -- (209) Foreign currency transaction gains (losses) on hedged items.................................... -- (211) -- -- -- -- -- Credit derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A -- Amount of gains (losses) reclassified from AOCI into income..................................... 1 -- -- -- -- -- (1) -------- ------- --------- -------- --------- -------- -------- Subtotal....................................... 21 5 -- -- -- -- 301 Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (1).................... (3) -- 720 -- -- -- N/A Foreign currency exchange rate derivatives (1)... -- -- (49) -- -- -- N/A Credit derivatives -- purchased (1).............. -- -- (25) -- -- -- N/A Credit derivatives -- written (1)................ -- -- 172 -- -- -- N/A Equity derivatives (1)........................... -- -- (944) (150) -- -- N/A Foreign currency transaction gains (losses) on hedged items.................................... -- -- (4) -- -- -- N/A -------- ------- --------- -------- --------- -------- -------- Subtotal....................................... (3) -- (130) (150) -- -- N/A Earned income on derivatives..................... 270 -- 272 135 (147) -- -- Embedded derivatives (2)......................... N/A N/A (430) -- N/A N/A N/A -------- ------- --------- -------- --------- -------- -------- Total.......................................... $ 290 $ 5 $ (288) $ (45) $ (146) $ -- $ 301 ======== ======= ========= ======== ========= ======== ======== MLIC-77
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) Year Ended December 31, 2018 ---------------------------------------------------------------------------- Interest Net Net Credited to Net Investment Derivative Policyholder Policyholder Investment Gains Gains Benefits and Account Other Income (Losses) (Losses) Claims Balances Expenses OCI ---------- ---------- ---------- ------------ ------------ -------- -------- (In millions) Gain (Loss) on Fair Value Hedges: Interest rate derivatives: Derivatives designated as hedging instruments (1)................................. $ -- $ -- $ (220) $ -- $ -- $ -- N/A Hedged items..................................... -- -- 226 -- -- -- N/A Foreign currency exchange rate derivatives: Derivatives designated as hedging instruments (1)................................. -- -- 75 -- -- -- N/A Hedged items..................................... -- -- (78) -- -- -- N/A Amount excluded from the assessment of hedge effectiveness................................... -- -- -- -- -- -- N/A -------- -------- -------- -------- --------- -------- -------- Subtotal....................................... -- -- 3 -- -- -- N/A Gain (Loss) on Cash Flow Hedges: Interest rate derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A $ (262) Amount of gains (losses) reclassified from AOCI into income..................................... 20 -- 22 -- -- -- (42) Foreign currency exchange rate derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A 180 Amount of gains (losses) reclassified from AOCI into income..................................... (3) -- (469) -- -- -- 472 Foreign currency transaction gains (losses) on hedged items.................................... -- -- 475 -- -- -- -- Credit derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A -- Amount of gains (losses) reclassified from AOCI into income..................................... 1 -- 1 -- -- -- (2) -------- -------- -------- -------- --------- -------- -------- Subtotal....................................... 18 -- 29 -- -- -- 346 Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (1).................... 4 -- (340) -- -- -- N/A Foreign currency exchange rate derivatives (1)... -- -- 429 -- -- -- N/A Credit derivatives -- purchased (1).............. -- -- 9 -- -- -- N/A Credit derivatives -- written (1)................ -- -- (90) -- -- -- N/A Equity derivatives (1)........................... 1 -- 166 45 -- -- N/A Foreign currency transaction gains (losses) on hedged items.................................... -- -- (155) -- -- -- N/A -------- -------- -------- -------- --------- -------- -------- Subtotal....................................... 5 -- 19 45 -- -- N/A Earned income on derivatives..................... 371 -- 339 8 (113) -- -- Embedded derivatives (2)......................... N/A N/A 376 -- N/A N/A N/A -------- -------- -------- -------- --------- -------- -------- Total.......................................... $ 394 $ -- $ 766 $ 53 $ (113) $ -- $ 346 ======== ======== ======== ======== ========= ======== ======== MLIC-78
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) Year Ended December 31, 2017 ----------------------------------------------------------------------------- Interest Net Net Credited to Net Investment Derivative Policyholder Policyholder Investment Gains Gains Benefits and Account Other Income (Losses) (Losses) Claims Balances Expenses OCI ---------- ---------- ---------- ------------ ------------ -------- --------- (In millions) Gain (Loss) on Fair Value Hedges: Interest rate derivatives: Derivatives designated as hedging instruments (1)................................. $ -- $ -- $ (65) $ -- $ -- $ -- N/A Hedged items..................................... -- -- 129 -- -- -- N/A Foreign currency exchange rate derivatives: Derivatives designated as hedging instruments (1)................................. -- -- 41 -- -- -- N/A Hedged items..................................... -- -- (16) -- -- -- N/A Amount excluded from the assessment of hedge effectiveness................................... -- -- -- -- -- -- N/A -------- -------- --------- --------- --------- -------- --------- Subtotal....................................... -- -- 89 -- -- -- N/A Gain (Loss) on Cash Flow Hedges: Interest rate derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A $ 283 Amount of gains (losses) reclassified from AOCI into income..................................... 18 -- 13 -- -- -- (31) Foreign currency exchange rate derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A (161) Amount of gains (losses) reclassified from AOCI into income..................................... (1) -- 938 -- -- -- (937) Foreign currency transaction gains (losses) on hedged items.................................... -- -- (920) -- -- -- -- Credit derivatives: (1) Amount of gains (losses) deferred in AOCI........ N/A N/A N/A N/A N/A N/A -- Amount of gains (losses) reclassified from AOCI into income..................................... 1 -- 1 -- -- -- (2) -------- -------- --------- --------- --------- -------- --------- Subtotal....................................... 18 -- 32 -- -- -- (848) Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments: Interest rate derivatives (1).................... 1 -- (343) -- -- -- N/A Foreign currency exchange rate derivatives (1)... -- -- (746) -- -- -- N/A Credit derivatives -- purchased (1).............. -- -- (16) -- -- -- N/A Credit derivatives -- written (1)................ -- -- 102 -- -- -- N/A Equity derivatives (1)........................... (6) -- (536) (216) -- -- N/A Foreign currency transaction gains (losses) on hedged items.................................... -- -- 241 -- -- -- N/A -------- -------- --------- --------- --------- -------- --------- Subtotal....................................... (5) -- (1,298) (216) -- -- N/A Earned income on derivatives..................... 302 -- 406 5 (64) -- -- Embedded derivatives (2)......................... N/A N/A 427 -- N/A N/A N/A -------- -------- --------- --------- --------- -------- --------- Total.......................................... $ 315 $ -- $ (344) $ (211) $ (64) $ -- $ (848) ======== ======== ========= ========= ========= ======== ========= -------- (1)Excludes earned income on derivatives. (2)The valuation of guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were ($16) million, $51 million and ($65) million for the years ended December 31, 2019, 2018 and 2017, respectively. MLIC-79
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) Fair Value Hedges The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities; and (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities. The following table presents the balance sheet classification, carrying amount and cumulative fair value hedging adjustments for items designated and qualifying as hedged items in fair value hedges: December 31, 2019 -------------------------------------------------------------------------- Cumulative Amount Carrying Amount of the of Fair Value Hedging Adjustments Hedged Included in the Carrying Amount of Hedged Balance Sheet Line Item Assets (Liabilities) Assets (Liabilities) (1) ----------------------- ------------------------------ ------------------------------------------- (In millions) Fixed maturity securities AFS...... $ 404 $ (1) Mortgage loans..................... $ 1,127 $ 2 Future policy benefits............. $ (4,475) $ (908) -------- (1)Includes ($1) million of hedging adjustments on discontinued hedging relationships. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. Cash Flow Hedges The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities; (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and liabilities; (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments; and (iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed rate investments. In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into income. These amounts were $51 million, $0, and $20 million for the years ended December 31, 2019, 2018 and 2017, respectively. At December 31, 2019 and 2018, 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 eight years and four years, respectively. At December 31, 2019 and 2018, the balance in AOCI associated with cash flow hedges was $2.0 billion and $1.7 billion respectively. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. At December 31, 2019, the Company expected to reclassify $43 million of deferred net gains (losses) on derivatives in AOCI, to earnings within the next 12 months. Credit Derivatives In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying 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 $8.7 billion and $7.9 billion at December 31, 2019 and 2018, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps. At December 31, 2019 and 2018, the Company would have received $199 million and $54 million, respectively, to terminate all of these contracts. MLIC-80
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at: December 31, ----------------------------------------------------------------------------- 2019 2018 -------------------------------------- -------------------------------------- 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 Maturity (2) Swaps Swaps Maturity (2) --------------------------------------- ---------- -------------- ------------ ---------- -------------- ------------ (Dollars in millions) Aaa/Aa/A Single name credit default swaps (3)... $ 1 $ 94 1.7 $ 2 $ 154 2.0 Credit default swaps referencing indices............................... 34 2,099 2.3 27 2,079 2.5 --------- ------------- -------- ------------- Subtotal............................. 35 2,193 2.2 29 2,233 2.5 --------- ------------- -------- ------------- Baa Single name credit default swaps (3)... 2 124 1.6 1 277 1.6 Credit default swaps referencing indices............................... 141 6,165 5.0 20 5,124 5.2 --------- ------------- -------- ------------- Subtotal............................. 143 6,289 5.0 21 5,401 5.0 --------- ------------- -------- ------------- Ba Single name credit default swaps (3)... -- -- -- -- 10 1.5 Credit default swaps referencing indices............................... -- -- -- -- -- -- --------- ------------- -------- ------------- Subtotal............................. -- -- -- -- 10 1.5 --------- ------------- -------- ------------- B Single name credit default swaps (3)... -- 10 0.5 -- -- -- Credit default swaps referencing indices............................... 21 219 5.0 4 220 5.0 --------- ------------- -------- ------------- Subtotal............................. 21 229 4.8 4 220 5.0 --------- ------------- -------- ------------- Total................................ $ 199 $ 8,711 4.3 $ 54 $ 7,864 4.3 ========= ============= ======== ============= ------------- (1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody's Investors Service ("Moody's"), S&P and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used. (2)The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts. (3)Single name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals. Credit Risk on Freestanding Derivatives The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company's derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements. MLIC-81
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company's OTC-bilateral derivative transactions are governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. All of the Company's ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives. The Company's OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives. See Note 9 for a description of the impact of credit risk on the valuation of derivatives. The estimated fair values of the Company's net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at: December 31, -------------------------------------------------- 2019 2018 ------------------------ ------------------------ Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement Assets Liabilities Assets Liabilities ---------------------------------------------------------------------------- ----------- ----------- ----------- ----------- (In millions) Gross estimated fair value of derivatives: OTC-bilateral (1)........................................................ $ 7,974 $ 2,035 $ 7,255 $ 2,166 OTC-cleared (1).......................................................... 191 53 52 24 Exchange-traded.......................................................... -- 5 1 7 ----------- ----------- ----------- ----------- Total gross estimated fair value of derivatives presented on the consolidated balance sheets (1)....................................... 8,165 2,093 7,308 2,197 Gross amounts not offset on the consolidated balance sheets: Gross estimated fair value of derivatives: (2) OTC-bilateral............................................................ (1,915) (1,915) (1,988) (1,988) OTC-cleared.............................................................. (25) (25) (20) (20) Exchange-traded.......................................................... -- -- -- -- Cash collateral: (3), (4) OTC-bilateral............................................................ (4,808) -- (4,000) -- OTC-cleared.............................................................. (165) -- (26) -- Exchange-traded.......................................................... -- -- -- -- Securities collateral: (5) OTC-bilateral............................................................ (1,246) (114) (1,136) (178) OTC-cleared.............................................................. -- (28) -- (4) Exchange-traded.......................................................... -- (5) -- (7) ----------- ----------- ----------- ----------- Net amount after application of master netting agreements and collateral............................................................ $ 6 $ 6 $ 138 $ -- =========== =========== =========== =========== ------------- (1)At December 31, 2019 and 2018, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $85 million and $90 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($9) million and ($22) million, respectively. (2)Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals. MLIC-82
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) (3)Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives is included in cash and cash equivalents, short-term investments or in fixed maturity securities AFS, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet. (4)The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At December 31, 2019 and 2018, the Company received excess cash collateral of $290 million and $95 million, respectively, and provided excess cash collateral of $0 and $1 million, respectively, which is not included in the table above due to the foregoing limitation. (5)Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at December 31, 2019, none of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities AFS on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At December 31, 2019 and 2018, the Company received excess securities collateral with an estimated fair value of $97 million and $28 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At December 31, 2019 and 2018, the Company provided excess securities collateral with an estimated fair value of $48 million and $94 million, respectively, for its OTC-bilateral derivatives, and $462 million and $231 million, respectively, for its OTC-cleared derivatives, and $90 million and $52 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation. The Company's collateral arrangements for its OTC-bilateral derivatives require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches a minimum transfer amount. All of the Company's netting agreements for derivatives contain provisions that require both Metropolitan Life Insurance Company and the counterparty to maintain a specific investment grade financial strength or credit rating from each of Moody's and S&P. If a party's financial strength or credit ratings were to fall below that specific investment grade financial strength or credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party's reasonable valuation of the derivatives. The following table presents the estimated fair value of the Company's OTC-bilateral derivatives that were in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. December 31, ----------------------------------------------------------------- 2019 2018 -------------------------------- -------------------------------- Derivatives Derivatives Derivatives Derivatives Subject to Not Subject Subject to Not Subject Financial to Financial Financial to Financial Strength- Strength- Strength- Strength- Contingent Contingent Contingent Contingent Provisions Provisions Total Provisions Provisions Total ----------- ------------ ------- ----------- ------------ ------- (In millions) Estimated Fair Value of Derivatives in a Net Liability Position (1).......................................... $ 120 $ -- $ 120 $ 178 $ -- $ 178 Estimated Fair Value of Collateral Provided: Fixed maturity securities AFS.......................... $ 135 $ -- $ 135 $ 187 $ -- $ 187 Cash................................................... $ -- $ -- $ -- $ 1 $ -- $ 1 ------------- (1)After taking into consideration the existence of netting agreements. MLIC-83
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 8. Derivatives (continued) Embedded Derivatives The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. The following table presents the estimated fair value and balance sheet location of the Company's embedded derivatives that have been separated from their host contracts at: December 31, -------------------- Balance Sheet Location 2019 2018 ---------------------------------- ---------- --------- (In millions) Embedded derivatives within liability host contracts: Direct guaranteed minimum benefits.................... Policyholder account balances...... $ 175 $ 178 Assumed guaranteed minimum benefits................... Policyholder account balances...... 3 3 Funds withheld on ceded reinsurance (including affiliated).......................................... Other liabilities.................. 1,017 465 Fixed annuities with equity indexed returns........... Policyholder account balances...... 130 58 ---------- --------- Embedded derivatives within liability host contracts.................................... $ 1,325 $ 704 ========== ========= 9. Fair Value When developing estimated fair values, the Company considers three broad valuation approaches: (i) the market approach, (ii) the income approach, and (iii) the cost approach. The Company determines the most appropriate valuation approach to use, given what is being measured and the availability of sufficient inputs, giving priority to observable inputs. The Company categorizes its assets and liabilities measured at estimated fair value into a three-level hierarchy, based on the significant input with the lowest level in its valuation. The input levels are as follows: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities AFS. Level 2 Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. These inputs can include quoted prices for similar assets or liabilities other than quoted prices in Level 1, quoted prices in markets that are not active, or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Unobservable inputs that are supported by little or no market activity and are significant to the determination of estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity's own assumptions about the assumptions that market participants would use in pricing the asset or liability. Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. The Company's ability to sell securities, as well as the price ultimately realized for these securities, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain securities. Considerable judgment is often required in interpreting 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. MLIC-84
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) Recurring Fair Value Measurements The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at: December 31, 2019 --------------------------------------------------------------------- Fair Value Hierarchy --------------------------------------------------- Total Estimated Level 1 Level 2 Level 3 Fair Value ---------------- ----------------- ---------------- ----------------- (In millions) Assets Fixed maturity securities AFS: U.S. corporate............................. $ -- $ 53,975 $ 4,484 $ 58,459 Foreign corporate.......................... -- 25,403 4,898 30,301 U.S. government and agency................. 11,484 17,764 -- 29,248 RMBS....................................... 3 20,158 2,612 22,773 ABS........................................ -- 9,459 742 10,201 Municipals................................. -- 7,849 7 7,856 CMBS....................................... -- 5,679 41 5,720 Foreign government......................... -- 4,996 10 5,006 ---------------- ----------------- ---------------- ----------------- Total fixed maturity securities AFS...... 11,487 145,283 12,794 169,564 ---------------- ----------------- ---------------- ----------------- Short-term investments..................... 1,077 789 17 1,883 Residential mortgage loans -- FVO.......... -- -- 188 188 Other investments.......................... 396 56 799 1,251 Derivative assets: (1) Interest rate.............................. -- 5,690 80 5,770 Foreign currency exchange rate............. -- 1,642 -- 1,642 Credit..................................... -- 172 32 204 Equity market.............................. -- 439 25 464 ---------------- ----------------- ---------------- ----------------- Total derivative assets.................. -- 7,943 137 8,080 ---------------- ----------------- ---------------- ----------------- Separate account assets (2)................ 22,753 94,192 922 117,867 ---------------- ----------------- ---------------- ----------------- Total assets (3)......................... $ 35,713 $ 248,263 $ 14,857 $ 298,833 ================ ================= ================ ================= Liabilities Derivative liabilities: (1) Interest rate.............................. $ -- $ 167 $ 191 $ 358 Foreign currency exchange rate............. -- 1,225 -- 1,225 Credit..................................... -- 11 1 12 Equity market.............................. 5 485 17 507 ---------------- ----------------- ---------------- ----------------- Total derivative liabilities............. 5 1,888 209 2,102 ---------------- ----------------- ---------------- ----------------- Embedded derivatives within liability host contracts (4)............................. -- -- 1,325 1,325 Separate account liabilities (2)........... 1 14 7 22 ---------------- ----------------- ---------------- ----------------- Total liabilities........................ $ 6 $ 1,902 $ 1,541 $ 3,449 ================ ================= ================ ================= MLIC-85
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) December 31, 2018 --------------------------------------------------------------------- Fair Value Hierarchy --------------------------------------------------- Total Estimated Level 1 Level 2 Level 3 Fair Value ---------------- ----------------- ---------------- ----------------- (In millions) Assets Fixed maturity securities AFS: U.S. corporate............................. $ -- $ 51,676 $ 3,126 $ 54,802 Foreign corporate.......................... -- 21,988 3,975 25,963 U.S. government and agency................. 12,310 17,851 -- 30,161 RMBS....................................... -- 19,719 3,018 22,737 ABS........................................ -- 8,072 455 8,527 Municipals................................. -- 6,947 -- 6,947 CMBS....................................... -- 5,376 68 5,444 Foreign government......................... -- 4,482 10 4,492 ---------------- ----------------- ---------------- ----------------- Total fixed maturity securities AFS...... 12,310 136,111 10,652 159,073 ---------------- ----------------- ---------------- ----------------- Short-term investments..................... 698 783 25 1,506 Residential mortgage loans -- FVO.......... -- -- 299 299 Other investments.......................... 341 77 571 989 Derivative assets: (1) Interest rate.............................. -- 4,284 33 4,317 Foreign currency exchange rate............. -- 1,982 -- 1,982 Credit..................................... -- 62 29 91 Equity market.............................. 1 776 51 828 ---------------- ----------------- ---------------- ----------------- Total derivative assets.................. 1 7,104 113 7,218 ---------------- ----------------- ---------------- ----------------- Separate account assets (2)................ 20,558 89,348 944 110,850 ---------------- ----------------- ---------------- ----------------- Total assets (3)......................... $ 33,908 $ 233,423 $ 12,604 $ 279,935 ================ ================= ================ ================= Liabilities Derivative liabilities: (1) Interest rate.............................. $ 1 $ 89 $ 218 $ 308 Foreign currency exchange rate............. -- 1,410 1 1,411 Credit..................................... -- 13 4 17 Equity market.............................. 6 395 82 483 ---------------- ----------------- ---------------- ----------------- Total derivative liabilities............. 7 1,907 305 2,219 ---------------- ----------------- ---------------- ----------------- Embedded derivatives within liability host contracts (4)............................. -- -- 704 704 Separate account liabilities (2)........... 1 20 7 28 ---------------- ----------------- ---------------- ----------------- Total liabilities........................ $ 8 $ 1,927 $ 1,016 $ 2,951 ================ ================= ================ ================= ---------- (1)Derivative assets are presented within other invested assets on the consolidated balance sheets and derivative liabilities are presented within other liabilities on the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables. (2)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets. Separate account liabilities presented in the tables above represent derivative liabilities. MLIC-86
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) (3)Total assets included in the fair value hierarchy exclude other limited partnership interests that are measured at estimated fair value using the net asset value ("NAV") per share (or its equivalent) practical expedient. At December 31, 2019 and 2018, the estimated fair value of such investments was $90 million and $140 million, respectively. (4)Embedded derivatives within liability host contracts are presented within policyholder account balances and other liabilities on the consolidated balance sheets. The following describes the valuation methodologies used to measure assets and liabilities at fair value. Investments Securities, Short-term Investments and Other Investments When available, the estimated fair value of these financial instruments is based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company's securities holdings and valuation of these securities does not involve management's judgment. When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. When observable inputs are not available, the market standard valuation methodologies rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs can be based in large part on management's judgment or estimation and cannot be supported by reference to market activity. Even though these inputs are unobservable, management believes they are consistent with what other market participants would use when pricing such securities and are considered appropriate given the circumstances. The estimated fair value of other investments is determined on a basis consistent with the methodologies described herein for securities. The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below. The primary valuation approaches are the market approach, which considers recent prices from market transactions involving identical or similar assets or liabilities, and the income approach, which converts expected future amounts (e.g. cash flows) to a single current, discounted amount. The valuation of most instruments listed below is determined using independent pricing sources, matrix pricing, discounted cash flow methodologies or other similar techniques that use either observable market inputs or unobservable inputs. MLIC-87
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) ----------------------------------------------------------------------------- Level 3 Instrument Level 2 Observable Inputs Unobservable Inputs ----------------------------------------------------------------------------- Fixed maturity securities AFS ----------------------------------------------------------------------------- U.S. corporate and Foreign corporate securities ----------------------------------------------------------------------------- Valuation Approaches: Valuation Approaches: Principally the market and Principally the market approach. income approaches. Key Inputs: Key Inputs: . quoted prices in markets that . illiquidity premium are not active . benchmark yields; spreads off . delta spread adjustments to benchmark yields; new reflect specific issuances; issuer ratings credit-related issues . trades of identical or . credit spreads comparable securities; duration . privately-placed securities . quoted prices in markets that are valued using the are not active for identical additional key inputs: or similar securities that . market yield curve; call are less liquid and based on provisions lower levels of trading . observable prices and spreads activity than securities for similar public or private classified in Level 2 securities that incorporate . independent non-binding the credit quality and broker quotations industry sector of the issuer . delta spread adjustments to reflect specific credit-related issues ----------------------------------------------------------------------------- U.S. government and agency securities, Municipals and Foreign government securities ----------------------------------------------------------------------------- Valuation Approaches: Valuation Approaches: Principally the market approach. Principally the market approach. Key Inputs: Key Inputs: . quoted prices in markets that . independent non-binding are not active broker quotations . benchmark U.S. Treasury yield . quoted prices in markets that or other yields are not active for identical or similar securities that are less liquid and based on . the spread off the U.S. lower levels of trading Treasury yield curve for the activity than securities identical security classified in Level 2 . issuer ratings and issuer spreads; broker-dealer quotes . credit spreads . comparable securities that are actively traded ----------------------------------------------------------------------------- Structured Products ----------------------------------------------------------------------------- Valuation Approaches: Valuation Approaches: Principally the market and Principally the market and income approaches. income approaches. Key Inputs: Key Inputs: . quoted prices in markets that are not active . credit spreads . spreads for actively traded . quoted prices in markets that securities; spreads off are not active for identical benchmark yields or similar securities that . expected prepayment speeds are less liquid and based on and volumes lower levels of trading . current and forecasted loss activity than securities severity; ratings; geographic classified in Level 2 region . independent non-binding . weighted average coupon and broker quotations weighted average maturity . credit ratings . average delinquency rates; debt-service coverage ratios . credit ratings . issuance-specific information, including, but not limited to: . collateral type; structure of the security; vintage of the loans . payment terms of the underlying assets . payment priority within the tranche; deal performance ----------------------------------------------------------------------------- MLIC-88
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) ----------------------------------------------------------------------------- Level 2 Level 3 Instrument Observable Inputs Unobservable Inputs ----------------------------------------------------------------------------- Short-term investments and Other investments ----------------------------------------------------------------------------- . Certain short-term . Certain short-term investments and other investments and other investments are of a similar investments are of a similar nature and class to the nature and class to the fixed maturity securities fixed maturity securities AFS described above; while AFS described above. The certain other investments valuation approaches and are similar to equity unobservable inputs used in securities. The valuation their valuation are also approaches and observable similar to those described inputs used in their above. Other investments valuation are also similar contain equity securities to those described above. with key unobservable inputs such as credit ratings; issuance structures, in addition to those described above for fixed maturities AFS. . ----------------------------------------------------------------------------- Residential mortgage loans -- FVO ----------------------------------------------------------------------------- . N/A Valuation Approaches: Principally the market approach. Valuation Techniques and Key Inputs: These investments are based primarily on matrix pricing or other similar techniques that utilize inputs from mortgage servicers that are unobservable or cannot be derived principally from, or corroborated by, observable market data. ----------------------------------------------------------------------------- Separate account assets and Separate account liabilities (1) ----------------------------------------------------------------------------- Mutual funds and hedge funds without readily determinable fair values as prices are not published publicly ----------------------------------------------------------------------------- Key Input: . N/A . quoted prices or reported NAV provided by the fund managers ----------------------------------------------------------------------------- Other limited partnership interests ----------------------------------------------------------------------------- . N/A Valued giving consideration to the underlying holdings of the partnerships and adjusting, if appropriate. Key Inputs: . liquidity; bid/ask spreads; performance record of the fund manager . other relevant variables that may impact the exit value of the particular partnership interest ----------------------------------------------------------------------------- ------------- (1)Estimated fair value equals carrying value, based on the value of the underlying assets, including: mutual fund interests, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. Fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents are similar in nature to the instruments described under "-- Securities, Short-term Investments and Other Investments" and "-- Derivatives -- Freestanding Derivatives." Derivatives The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives, or through the use of pricing models for OTC-bilateral and OTC-cleared derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models. The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral and OTC-cleared 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. 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. Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company's derivatives and could materially affect net income. MLIC-89
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company's ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period. Freestanding Derivatives Level 2 Valuation Approaches and Key Inputs: This level includes all types of derivatives utilized by the Company with the exception of exchange-traded derivatives included within Level 1 and those derivatives with unobservable inputs as described in Level 3. Level 3 Valuation Approaches and Key Inputs: These valuation methodologies generally use the same inputs as described in the corresponding sections for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Freestanding derivatives are principally valued using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. Key inputs are as follows: Foreign Instrument Interest Rate Currency Exchange Rate Credit Equity Market --------------------------------------------------------------------------------------------------------------------------------- Inputs common to . swap yield curves .swap yield curves .swap yield curves .swap yield curves Level 2 and Level 3 . basis curves .basis curves .credit curves .spot equity index levels by instrument type . interest rate .currency spot rates .recovery rates .dividend yield curves volatility (1) .cross currency basis .equity volatility (1) curves --------------------------------------------------------------------------------------------------------------------------------- Level 3 . swap yield curves (2) .swap yield curves (2) .swap yield curves (2) .dividend yield curves . basis curves (2) .basis curves (2) .credit curves (2) (2) . repurchase rates .cross currency basis .credit spreads .equity volatility (1), curves (2) .repurchase rates (2) .currency correlation .independent non-binding .correlation between broker quotations model inputs (1) ------------- (1)Option-based only. (2)Extrapolation beyond the observable limits of the curve(s). MLIC-90
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) Embedded Derivatives Embedded derivatives principally include certain direct and assumed variable annuity guarantees, annuity contracts, and investment risk within funds withheld related to certain reinsurance agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain 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 policyholder account balances on the consolidated balance sheets. The Company calculates the fair value of these embedded derivatives, which are estimated as 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. The calculation is based on in-force business, projecting future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates. Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience. The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.'s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries as compared to MetLife, Inc. Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions 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 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 described in "-- Investments -- Securities, Short-term Investments and Other Investments." The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income. Embedded Derivatives Within Asset and Liability Host Contracts Level 3 Valuation Approaches and Key Inputs: Direct and assumed guaranteed minimum benefits These embedded derivatives are principally valued using the income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curves, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant MLIC-91
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) 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 curves 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. Embedded derivatives within funds withheld related to certain ceded reinsurance These embedded derivatives are principally valued using the income approach. The valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curves 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. Transfers between Levels Overall, transfers between levels occur when there are changes in the observability of inputs and market activity. Transfers into or out of Level 3: Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. MLIC-92
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3) The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at: December 31, 2019 ----------------------------- Significant Weighted Valuation Techniques Unobservable Inputs Range Average (1) ------------------------ ------------------------ ---------------- ----------- Fixed maturity securities AFS (3) U.S. corporate and foreign corporate.. . Matrix pricing . Offered quotes (4) 5 - 145 110 . Market pricing . Quoted prices (4) 25 - 131 101 --------------------------------------------------------------------------------------- RMBS................ . Market pricing . Quoted prices (4) -- - 119 95 --------------------------------------------------------------------------------------- ABS................. . Market pricing . Quoted prices (4) 8 - 101 98 --------------------------------------------------------------------------------------- Derivatives Interest rate....... . Present value . Swap yield (6) 190 - 251 techniques . Repurchase rates (8) (6) - 6 --------------------------------------------------------------------------------------- Foreign currency . Present . Swap yield (6) (22) - (5) exchange rate...... value techniques --------------------------------------------------------------------------------------- Credit.............. . Present . Credit spreads (9) 96 - 100 value techniques . Consensus pricing . Offered quotes (10) --------------------------------------------------------------------------------------- Equity market....... . Present . Volatility (11) 14% - 23% value techniques or option pricing models . Correlation (12) 10% - 30% --------------------------------------------------------------------------------------- Embedded derivatives Direct and assumed . Option . Mortality rates: guaranteed minimum pricing techniques benefits........... Ages 0 - 40 0.01% - 0.18% Ages 41 - 60 0.04% - 0.57% Ages 61 - 115 0.26% - 100% . Lapse rates: Durations 1 - 10 0.25% - 100% Durations 11 - 20 3% - 100% Durations 21 - 116 2% - 100% . Utilization rates 0% - 22% . Withdrawal rates 0.25% - 10% . Long-term equity 16.24% - 21.65% volatilities . Nonperformance 0.03% - 0.43% risk spread December 31, 2018 Impact of ---------------------------- Increase in Input Significant Weighted on Estimated Valuation Techniques Unobservable Inputs Range Average (1) Fair Value (2) ------------------------ ------------------------ --------------- ----------- ----------------- Fixed maturity securities AFS (3) U.S. corporate and foreign corporate.. . Matrix pricing . Offered quotes (4) 85 - 134 105 Increase . Market pricing . Quoted prices (4) 25 - 638 107 Increase ------------------------------------------------------------------------------------------------------ RMBS................ . Market pricing . Quoted prices (4) -- - 106 94 Increase (5) ------------------------------------------------------------------------------------------------------ ABS................. . Market pricing . Quoted prices (4) 10 - 101 97 Increase (5) ------------------------------------------------------------------------------------------------------ Derivatives Interest rate....... . Present value . Swap yield (6) 268 - 317 Increase (7) techniques . Repurchase rates (8) (5) - 6 Decrease (7) ------------------------------------------------------------------------------------------------------ Foreign currency . Present . Swap yield (6) (20) - (5) Increase (7) exchange rate...... value techniques ------------------------------------------------------------------------------------------------------ Credit.............. . Present . Credit spreads (9) 97 - 103 Decrease (7) value techniques . Consensus pricing . Offered quotes (10) ------------------------------------------------------------------------------------------------------ Equity market....... . Present . Volatility (11) 21% - 26% Increase (7) value techniques or option pricing models . Correlation (12) 10% - 30% ------------------------------------------------------------------------------------------------------ Embedded derivatives Direct and assumed . Option . Mortality rates: guaranteed minimum pricing techniques benefits........... Ages 0 - 40 0.01% - 0.18% Decrease (13) Ages 41 - 60 0.04% - 0.57% Decrease (13) Ages 61 - 115 0.26% - 100% Decrease (13) . Lapse rates: Durations 1 - 10 0.25% - 100% Decrease (14) Durations 11 - 20 3% - 100% Decrease (14) Durations 21 - 116 2.5% - 100% Decrease (14) . Utilization rates 0% - 25% Increase (15) . Withdrawal rates 0.25% - 10% (16) . Long-term equity 16.50% - 22% Increase (17) volatilities . Nonperformance 0.05% - 0.59% Decrease (18) risk spread -------- (1) The weighted average for fixed maturity securities AFS is determined based on the estimated fair value of the securities. (2) The impact of a decrease in input would have resulted in the opposite impact on estimated fair value. For embedded derivatives, changes to direct and assumed guaranteed minimum benefits are based on liability positions. (3) Significant increases (decreases) in expected default rates in isolation would have resulted in substantially lower (higher) valuations. (4) Range and weighted average are presented in accordance with the market convention for fixed maturity securities AFS of dollars per hundred dollars of par. (5) Changes in the assumptions used for the probability of default would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates. (6) Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation. MLIC-93
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) (7) Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions. (8) Ranges represent different repurchase rates utilized as components within the valuation methodology and are presented in basis points. (9) Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps. (10)At both December 31, 2019 and 2018, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value. (11)Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of the unobservable input used in the valuation. (12)Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting a range of correlation factors is more representative of the unobservable input used in the valuation. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations. (13)Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (14)Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (15)The utilization rate assumption estimates the percentage of contractholders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract's withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (16)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value. (17)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. (18)Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative. Generally, all other classes of assets and liabilities classified within Level 3 that are not included in the preceding table use the same valuation techniques and significant unobservable inputs as previously described for Level 3. The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in nature to that described in the preceding table. The valuation techniques and significant unobservable inputs used in the fair value measurement for the more significant assets measured at estimated fair value on a nonrecurring basis and determined using significant unobservable inputs (Level 3) are summarized in "-- Nonrecurring Fair Value Measurements." MLIC-94
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) The following tables summarize the change of all assets (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) ---------------------------------------------------------------------- Fixed Maturity Securities AFS -------------------------------------------------------- Structured Foreign Short-term Corporate (1) Products Municipals Government Investments -------------- ------------ ----------- ----------- ------------ (In millions) Balance, January 1, 2018................ $ 7,586 $ 4,076 $ -- $ 31 $ 7 Total realized/unrealized gains (losses) included in net income (loss) (2) (3)................................ 2 79 -- 1 -- Total realized/unrealized gains (losses) included in AOCI.............. (463) (31) -- (1) -- Purchases (4)........................... 1,377 752 -- -- 24 Sales (4)............................... (1,241) (755) -- (21) (1) Issuances (4)........................... -- -- -- -- -- Settlements (4)......................... -- -- -- -- -- Transfers into Level 3 (5).............. 151 58 -- -- -- Transfers out of Level 3 (5)............ (311) (638) -- -- (5) ------------ ------------ -------- --------- --------- Balance, December 31, 2018.............. 7,101 3,541 -- 10 25 Total realized/unrealized gains (losses) included in net income (loss) (2) (3)................................ (41) 43 -- -- -- Total realized/unrealized gains (losses) included in AOCI.............. 564 30 -- -- -- Purchases (4)........................... 2,335 703 7 1 17 Sales (4)............................... (699) (538) -- (2) (25) Issuances (4)........................... -- -- -- -- -- Settlements (4)......................... -- -- -- -- -- Transfers into Level 3 (5).............. 504 -- -- 1 -- Transfers out of Level 3 (5)............ (382) (384) -- -- -- ------------ ------------ -------- --------- --------- Balance, December 31, 2019.............. $ 9,382 $ 3,395 $ 7 $ 10 $ 17 ============ ============ ======== ========= ========= Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2017: (6).............................. $ (7) $ 83 $ -- $ -- $ -- ============ ============ ======== ========= ========= Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2018: (6).............................. $ (5) $ 68 $ -- $ -- $ -- ============ ============ ======== ========= ========= Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2019: (6).............................. $ (34) $ 42 $ -- $ -- $ -- ============ ============ ======== ========= ========= Gains (Losses) Data for the year ended December 31, 2017 Total realized/unrealized gains (losses) included in net income (loss) (2) (3)................................ $ (2) $ 95 $ -- $ -- $ -- Total realized/unrealized gains (losses) included in AOCI.............. $ 416 $ 109 $ -- $ -- $ -- MLIC-95
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) Fair Value Measurements Using Significant Unobservable Inputs (Level 3) ---------------------------------------------------------------------- Net Residential Net Embedded Separate Mortgage Other Derivatives Derivatives Accounts Loans - FVO Investments (7) (8) (9) ----------- ----------- ----------- ----------- ---------- (In millions) Balance, January 1, 2018...... $ 520 $ 366 $ (191) $ (876) $ 958 Total realized/unrealized gains (losses) included in net income (loss) (2) (3).... 7 (8) (69) 376 7 Total realized/unrealized gains (losses) included in AOCI......................... -- -- (110) -- -- Purchases (4)................. -- 199 4 -- 198 Sales (4)..................... (162) (28) -- -- (168) Issuances (4)................. -- -- (1) -- (3) Settlements (4)............... (66) -- 175 (204) (1) Transfers into Level 3 (5).... -- 52 -- -- 53 Transfers out of Level 3 (5).. -- (10) -- -- (107) ---------- ---------- ---------- ----------- ---------- Balance, December 31, 2018.... 299 571 (192) (704) 937 Total realized/unrealized gains (losses) included in net income (loss) (2) (3).... 7 94 (36) (429) 7 Total realized/unrealized gains (losses) included in AOCI......................... -- -- 161 -- -- Purchases (4)................. -- 232 4 -- 126 Sales (4)..................... (87) (98) -- -- (151) Issuances (4)................. -- -- (1) -- (3) Settlements (4)............... (31) -- (8) (192) 2 Transfers into Level 3 (5).... -- -- -- -- -- Transfers out of Level 3 (5).. -- -- -- -- (3) ---------- ---------- ---------- ----------- ---------- Balance, December 31, 2019.... $ 188 $ 799 $ (72) $ (1,325) $ 915 ========== ========== ========== =========== ========== Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2017: (6)....... $ 27 $ (17) $ (18) $ 452 $ -- ========== ========== ========== =========== ========== Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2018: (6)....... $ (15) $ 1 $ 18 $ 387 $ -- ========== ========== ========== =========== ========== Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at December 31, 2019: (6)....... $ (14) $ 86 $ (44) $ (422) $ -- ========== ========== ========== =========== ========== Gains (Losses) Data for the year ended December 31, 2017 Total realized/unrealized gains (losses) included in net income (loss) (2) (3).... $ 40 $ -- $ 21 $ 450 $ (8) Total realized/unrealized gains (losses) included in AOCI......................... $ -- $ 17 $ 207 $ -- $ -- -------- (1) Comprised of U.S. and foreign corporate securities. (2) Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses), while changes in estimated fair value of residential mortgage loans -- FVO are included in net investment income. Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses). (3) Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. (4) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements. (5) Items transferred into and then out of Level 3 in the same period are excluded from the rollforward. (6) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses). (7) Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. MLIC-96
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) (8) Embedded derivative assets and liabilities are presented net for purposes of the rollforward. (9) Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure, these changes are presented within net investment gains (losses). Separate account assets and liabilities are presented net for the purposes of the rollforward. Fair Value Option The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. The following table presents information for residential mortgage loans which are accounted for under the FVO and were initially measured at fair value. December 31, ------------------------ 2019 2018 ---------- ------------ (In millions) Unpaid principal balance................................................................ $ 209 $ 344 Difference between estimated fair value and unpaid principal balance.................... (21) (45) ---------- ------------ Carrying value at estimated fair value.................................................. $ 188 $ 299 ========== ============ Loans in nonaccrual status.............................................................. $ 47 $ 89 Loans more than 90 days past due........................................................ $ 18 $ 41 Loans in nonaccrual status or more than 90 days past due, or both -- difference between aggregate estimated fair value and unpaid principal balance............................ $ (19) $ (36) Nonrecurring Fair Value Measurements The following table presents information for assets measured at estimated fair value on a nonrecurring basis during the periods and still held at the reporting dates (for example, when there is evidence of impairment). The estimated fair values for these assets were determined using significant unobservable inputs (Level 3). At December 31, Years Ended December 31, ---------------------------- ----------------------------------- 2019 2018 2019 2018 2017 ------- ------- ------- ------- ----------- Carrying Value After Measurement Gains (Losses) ---------------------------- ----------------------------------- (In millions) Other limited partnership interests (1)...... N/A (2) N/A (2) N/A (2) N/A (2) $ (65) Other assets........ $ -- $ -- $ -- $ -- $ 4 -------- (1)Estimated fair value is determined from information provided on the financial statements of the underlying entities including NAV data. These investments include private equity and debt funds that typically invest primarily in various strategies including leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; and below investment grade debt and mezzanine debt funds. In the future, distributions 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, the exact timing of which is uncertain. (2)In connection with the 2018 adoption of guidance related to the recognition and measurement of financial instruments, other limited partnership interests for which the Company has virtually no influence over the investee's operations are measured at estimated fair value on a recurring basis effective January 1, 2018. Fair Value of Financial Instruments Carried at Other Than Fair Value The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities, such as time deposits, and therefore are not included in the three-level hierarchy table disclosed in the "-- Recurring Fair Value Measurements" section. The estimated fair value of the excluded financial MLIC-97
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 9. Fair Value (continued) instruments, which are primarily classified in Level 2, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure. The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at: December 31, 2019 ------------------------------------------------ Fair Value Hierarchy --------------------------- Total Carrying Estimated Value Level 1 Level 2 Level 3 Fair Value --------- ------- --------- --------- ---------- (In millions) Assets Mortgage loans..................... $ 65,361 $ -- $ -- $ 67,680 $ 67,680 Policy loans....................... $ 6,100 $ -- $ 263 $ 6,935 $ 7,198 Other invested assets.............. $ 2,964 $ -- $ 2,708 $ 158 $ 2,866 Premiums, reinsurance and other receivables....................... $ 14,042 $ -- $ 367 $ 14,488 $ 14,855 Liabilities Policyholder account balances...... $ 73,693 $ -- $ -- $ 75,885 $ 75,885 Long-term debt..................... $ 1,543 $ -- $ 1,888 $ -- $ 1,888 Other liabilities.................. $ 12,789 $ -- $ 113 $ 12,819 $ 12,932 Separate account liabilities....... $ 52,830 $ -- $ 52,830 $ -- $ 52,830 December 31, 2018 ------------------------------------------------ Fair Value Hierarchy --------------------------- Total Carrying Estimated Value Level 1 Level 2 Level 3 Fair Value --------- ------- --------- --------- ---------- (In millions) Assets Mortgage loans..................... $ 63,388 $ -- $ -- $ 64,409 $ 64,409 Policy loans....................... $ 6,061 $ -- $ 269 $ 6,712 $ 6,981 Other invested assets.............. $ 2,940 $ -- $ 2,673 $ 146 $ 2,819 Premiums, reinsurance and other receivables....................... $ 14,228 $ -- $ 113 $ 14,673 $ 14,786 Liabilities Policyholder account balances...... $ 72,194 $ -- $ -- $ 72,689 $ 72,689 Long-term debt..................... $ 1,562 $ -- $ 1,746 $ -- $ 1,746 Other liabilities.................. $ 13,593 $ -- $ 448 $ 13,189 $ 13,637 Separate account liabilities....... $ 50,578 $ -- $ 50,578 $ -- $ 50,578 MLIC-98
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 10. Leases The Company, as lessee, has entered into various lease and sublease agreements primarily for office space. The Company has operating leases with remaining lease terms of less than one year to 11 years. The remaining lease terms for the subleases are less than one year to 9 years. ROU Asset and Lease Liability ROU assets and lease liabilities for operating leases were: December 31, 2019 ----------------- (In millions) ROU asset (1)................. $ 819 Lease liability (1)........... $ 895 -------- (1) Assets and liabilities include amounts recognized upon adoption of ASU 2016-02. See Note 1. Lease Costs The components of operating lease costs were as follows: For the Year Ended December 31, ------------------ 2019 ------------------ (In millions) Operating lease cost.......... $ 109 Variable lease cost........... 20 Sublease income............... (80) ---------------- Net lease cost............... $ 49 ================ Operating lease expense was $116 million and $187 million for the years ended December 31, 2018 and 2017, respectively. Non-cancelable sublease income was $66 million and $40 million for the years ended December 31, 2018 and 2017, respectively. Other Information Supplemental other information related to operating leases was as follows: December 31, 2019 --------------------- (Dollars in millions) Cash paid for amounts included in the measurement of lease liability - operating cash flows.. $ 110 ROU assets obtained in exchange for new lease liabilities......... $ 152 Weighted-average remaining lease term.............................. 9 years Weighted-average discount rate..... 3.9% Maturities of Lease Liabilities Maturities of operating lease liabilities were as follows: December 31, 2019 ----------------- (In millions) 2020.......................... $ 126 2021.......................... 132 2022.......................... 128 2023.......................... 116 2024.......................... 107 Thereafter.................... 458 ------------- Total undiscounted cash flows 1,067 Less: interest................ 172 ------------- Present value of lease liability.................. $ 895 ============= MLIC-99
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 10. Leases (continued) Future minimum gross rental payments relating to lease arrangements in effect as determined prior to the adoption of ASU 2016-02 were as follows: December 31, 2018 ----------------- (In millions) 2019................ $ 125 2020................ 137 2021................ 136 2022................ 134 2023................ 122 Thereafter.......... 567 --------------- Total.............. $ 1,221 =============== See Note 7 for information about the Company's investments in leased real estate and leveraged and direct financing leases. 11. Long-term and Short-term Debt Long-term and short-term debt outstanding, excluding debt relating to consolidated securitization entities, was as follows: December 31, ----------------------------------------------------------------- Interest Rates (1) 2019 2018 ---------------------- -------------------------------- -------------------------------- Unamortized Unamortized Weighted Face Discount and Carrying Face Discount and Carrying Range Average Maturity Value Issuance Costs Value Value Issuance Costs Value ------------- -------- ----------- -------- -------------- -------- -------- -------------- -------- (In millions) Surplus notes - affiliated........ 7.38% - 7.38% 7.38% 2037 $ 700 $ (9) $ 691 $ 700 $ (9) $ 691 Surplus notes...... 7.80% - 7.88% 7.83% 2024 - 2025 400 (2) 398 400 (2) 398 Other notes........ 1.76% - 6.50% 4.62% 2020 - 2058 457 (3) 454 477 (4) 473 -------- ------- -------- -------- ------- -------- Total long-term debt............. 1,557 (14) 1,543 1,577 (15) 1,562 -------- ------- -------- -------- ------- -------- Total short-term debt.............. 128 -- 128 129 -- 129 -------- ------- -------- -------- ------- -------- Total............ $ 1,685 $ (14) $ 1,671 $ 1,706 $ (15) $ 1,691 ======== ======= ======== ======== ======= ======== -------- (1) Range of interest rates and weighted average interest rates are for the year ended December 31, 2019. The aggregate maturities of long-term debt at December 31, 2019 for the next five years and thereafter are $11 million in 2020, $0 in 2021, $0 in 2022, $0 in 2023, $445 million in 2024 and $1.1 billion thereafter. Unsecured senior debt which consists of senior notes and other notes rank highest in priority. Payments of interest and principal on Metropolitan Life Insurance Company's surplus notes are subordinate to all other obligations and may be made only with the prior approval of the New York State Department of Financial Services ("NYDFS"). Term Loans MetLife Private Equity Holdings, LLC ("MPEH"), a wholly-owned indirect investment subsidiary, borrowed $350 million in December 2015 under a five-year credit agreement included within other notes in the table above. MPEH has pledged invested assets to secure the loans; however, these loans are non-recourse to Metropolitan Life Insurance Company. In November 2017, this agreement was amended to extend the maturity to November 2022, change the amount MPEH may borrow on a revolving basis to $75 million from $100 million, and change the interest rate to a variable rate of three-month London Interbank Offered Rate ("LIBOR") plus 3.25%, payable quarterly, from a variable rate of three-month LIBOR plus 3.70%. In December 2018, this agreement was further amended to change the interest rate to a variable rate of three-month LIBOR plus 3.10%. In December 2018, MPEH repaid $50 million of the initial borrowing. In November 2019, this agreement was further amended to extend the maturity to November 2024 and change the interest rate to a variable rate of three-month LIBOR plus 2.75%. MLIC-100
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 11. Long-term and Short-term Debt (continued) Short-term Debt Short-term debt with maturities of one year or less was as follows: December 31, --------------------- 2019 2018 ---------- ---------- (Dollars in millions) Commercial paper.............. $ 99 $ 99 Short-term borrowings (1)..... 29 30 ---------- ---------- Total short-term debt......... $ 128 $ 129 ========== ========== Average daily balance......... $ 128 $ 213 Average days outstanding...... 43 days 42 days -------- (1) Represents short-term debt related to repurchase agreements, secured by assets of a subsidiary. For the years ended December 31, 2019, 2018 and 2017, the weighted average interest rate on short-term debt was 2.74%, 3.03% and 1.63%, respectively. Interest Expense Interest expense included in other expenses was $105 million, $108 million and $106 million for the years ended December 31, 2019, 2018 and 2017, respectively. These amounts include $52 million of interest expense related to affiliated debt for each of the three years ended December 31, 2019, 2018 and 2017. Credit Facility At December 31, 2019, MetLife, Inc. and MetLife Funding, Inc., a wholly-owned subsidiary of Metropolitan Life Insurance Company ("MetLife Funding"), maintained a $3.0 billion unsecured revolving credit facility (the "Credit Facility"). When drawn upon, this facility bears interest at varying rates in accordance with the agreement. The Company's Credit Facility is used for general corporate purposes, to support the borrowers' commercial paper programs and for the issuance of letters of credit. Total fees associated with the Credit Facility were $7 million, $6 million and $5 million for the years ended December 31, 2019, 2018 and 2017, respectively, and were included in other expenses. Information on the Credit Facility at December 31, 2019 was as follows: Letters of Credit Maximum Used by the Letters of Credit Unused Borrower(s) Expiration Capacity Company (1) Used by Affiliates (1) Drawdowns Commitments ------------------- ------------------ ---------------- ----------------- ---------------------- --------- ----------- (In millions) MetLife, Inc. and MetLife Funding, Inc................ December 2021 (2) $ 3,000 (2) $ 412 $ 334 $ -- $ 2,254 -------- (1) MetLife, Inc. and MetLife Funding are severally liable for their respective obligations under the Credit Facility. MetLife Funding was not an applicant under letters of credit outstanding as of December 31, 2019 and is not responsible for any reimbursement obligations under such letters of credit. (2) All borrowings under the Credit Facility must be repaid by December 20, 2021, except that letters of credit outstanding upon termination may remain outstanding until December 20, 2022. Debt and Facility Covenants Certain of the Company's debt instruments and the Credit Facility contain various administrative, reporting, legal and financial covenants. The Company believes it was in compliance with all applicable financial covenants at December 31, 2019. MLIC-101
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 12. Equity Stock-Based Compensation Plans The Company does not issue any awards payable in its common stock or options to purchase its common stock. An affiliate employs the personnel who conduct most of the Company's business. In accordance with a services agreement with that affiliate, the Company bears a proportionate share of stock-based compensation expense for those employees. Stock-based compensation expense principally relates to Stock Options, Performance Shares and Restricted Stock Units under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan and the MetLife, Inc. 2015 Stock and Incentive Compensation Plan, most of which MetLife, Inc. granted in the first quarter of each year. The Company's expense related to stock-based compensation included in other expenses was $57 million, $35 million and $74 million for the years ended December 31, 2019, 2018 and 2017, respectively. Statutory Equity and Income Metropolitan Life Insurance Company prepares statutory-basis financial statements in accordance with statutory accounting practices prescribed or permitted by the NYDFS. The 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 state insurance department may impact the effect of Statutory Codification on the statutory capital and surplus of Metropolitan Life Insurance Company. The state of domicile of Metropolitan Life Insurance Company imposes risk-based capital ("RBC") requirements that were developed by the National Association of Insurance Commissioners ("NAIC"). Regulatory compliance is determined by a ratio of a company's total adjusted capital, calculated in the manner prescribed by the NAIC ("TAC"), with modifications by the state insurance department, to its authorized control level RBC, calculated in the manner prescribed by the NAIC ("ACL RBC"), based on the statutory-based filed financial statements. Companies below specific trigger levels or ratios are classified by their respective levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences is twice ACL RBC ("CAL RBC"). The CAL RBC ratios for Metropolitan Life Insurance Company were in excess of 350% at both December 31, 2019 and 2018. Metropolitan Life Insurance Company's foreign insurance operations are regulated by applicable authorities of the jurisdictions in which each entity operates and are subject to minimum capital and solvency requirements in those jurisdictions before corrective action commences. The aggregate required capital and surplus of Metropolitan Life Insurance Company's foreign insurance operations was $370 million and the aggregate actual regulatory capital and surplus of such operations was $580 million as of the date of the most recent required capital adequacy calculation for each jurisdiction. The Company's foreign insurance operations exceeded the minimum capital and solvency requirements as of the date of the most recent fiscal year-end capital adequacy calculation for each jurisdiction. Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant assets not admitted by Metropolitan Life Insurance Company are net deferred income tax assets resulting from temporary differences between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within three years. Further, statutory accounting principles do not give recognition to purchase accounting adjustments. New York has adopted certain prescribed accounting practices, primarily consisting of the continuous Commissioners' Annuity Reserve Valuation Method, which impacts deferred annuities, and the New York Special Consideration Letter, which mandates certain assumptions in asset adequacy testing. The collective impact of these prescribed accounting practices decreased the statutory capital and surplus of Metropolitan Life Insurance Company by $1.2 billion at both December 31, 2019 and 2018, compared to what capital and surplus would have been had it been measured under NAIC guidance. MLIC-102
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 12. Equity (continued) The tables below present amounts from Metropolitan Life Insurance Company, which are derived from the statutory-basis financial statements as filed with the NYDFS. Statutory net income (loss) was as follows: Years Ended December 31, ----------------------------------- Company State of Domicile 2019 2018 2017 ----------------------------- ----------------- ----------- ----------- ----------- (In millions) Metropolitan Life Insurance Company...................... New York $ 3,859 $ 3,656 $ 1,982 Statutory capital and surplus was as follows at: December 31, ------------------------------ Company 2019 2018 ----------------------------- -------------- --------------- (In millions) Metropolitan Life Insurance Company...................... $ 10,915 $ 11,098 Dividend Restrictions Under the New York State Insurance Law, Metropolitan Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay stockholder dividends to MetLife, Inc. in any calendar year based on either of two standards. Under one standard, Metropolitan Life Insurance Company is permitted, without prior insurance regulatory clearance, to pay dividends out of earned surplus (defined as positive unassigned funds (surplus), excluding 85% of the change in net unrealized capital gains or losses (less capital gains tax), for the immediately preceding calendar year), in an amount up to the greater of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains), not to exceed 30% of surplus to policyholders as of the end of the immediately preceding calendar year. In addition, under this standard, Metropolitan Life Insurance Company may not, without prior insurance regulatory clearance, pay any dividends in any calendar year immediately following a calendar year for which its net gain from operations, excluding realized capital gains, was negative. Under the second standard, if dividends are paid out of other than earned surplus, Metropolitan Life Insurance Company may, without prior insurance regulatory clearance, pay an amount up to the lesser of: (i) 10% of its surplus to policyholders as of the end of the immediately preceding calendar year, or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized capital gains). In addition, Metropolitan Life Insurance Company will be permitted to pay a dividend to MetLife, Inc. in excess of the amounts allowed under both standards only if it files notice of its intention to declare such a dividend and the amount thereof with the New York Superintendent of Financial Services (the "Superintendent") and the Superintendent either approves the distribution of the dividend or does not disapprove the dividend within 30 days of its filing. Under the New York State Insurance Law, the Superintendent has broad discretion in determining whether the financial condition of a stock life insurance company would support the payment of such dividends to its stockholder. Metropolitan Life Insurance Company paid $3.1 billion and $3.7 billion in dividends to MetLife, Inc. for the years ended December 31, 2019 and 2018, respectively, including amounts where regulatory approval was obtained as required. Under New York State Insurance Law, Metropolitan Life Insurance Company has calculated that it may pay approximately $3.2 billion to MetLife, Inc. without prior regulatory approval by the end of 2020. MLIC-103
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 12. Equity (continued) Accumulated Other Comprehensive Income (Loss) Information regarding changes in the balances of each component of AOCI attributable to Metropolitan Life Insurance Company was as follows: Unrealized Foreign Defined Investment Gains Unrealized Currency Benefit (Losses), Net of Gains (Losses) Translation Plans Related Offsets (1) on Derivatives Adjustments Adjustment Total -------------------- -------------- ------------- ------------ -------------- (In millions) Balance at December 31, 2016....... $ 3,592 $ 1,459 $ (67) $ (1,865) $ 3,119 OCI before reclassifications....... 3,977 122 26 (30) 4,095 Deferred income tax benefit (expense)......................... (1,287) (43) (6) 11 (1,325) ------------- ------------- ----------- ------------ -------------- AOCI before reclassifications, net of income tax............... 6,282 1,538 (47) (1,884) 5,889 Amounts reclassified from AOCI..... 102 (970) -- 159 (709) Deferred income tax benefit (expense)......................... (33) 338 -- (57) 248 ------------- ------------- ----------- ------------ -------------- Amounts reclassified from AOCI, net of income tax............... 69 (632) -- 102 (461) ------------- ------------- ----------- ------------ -------------- Balance at December 31, 2017....... 6,351 906 (47) (1,782) 5,428 OCI before reclassifications....... (6,326) (82) (20) 67 (6,361) Deferred income tax benefit (expense)......................... 1,381 19 -- (45) 1,355 ------------- ------------- ----------- ------------ -------------- AOCI before reclassifications, net of income tax............... 1,406 843 (67) (1,760) 422 Amounts reclassified from AOCI..... 8 428 -- 34 470 Deferred income tax benefit (expense)......................... (2) (96) -- (13) (111) ------------- ------------- ----------- ------------ -------------- Amounts reclassified from AOCI, net of income tax............... 6 332 -- 21 359 ------------- ------------- ----------- ------------ -------------- Cumulative effects of changes in accounting principles............. (119) -- -- -- (119) Deferred income tax benefit (expense), cumulative effects of changes in accounting principles.. 1,222 207 (7) (379) 1,043 ------------- ------------- ----------- ------------ -------------- Cumulative effects of changes in accounting principles, net of income tax........................ 1,103 207 (7) (379) 924 ------------- ------------- ----------- ------------ -------------- Transfer to affiliate, net of tax (2)........................... -- -- -- 1,857 1,857 ------------- ------------- ----------- ------------ -------------- Balance at December 31, 2018....... 2,515 1,382 (74) (261) 3,562 OCI before reclassifications....... 7,993 516 (32) (167) 8,310 Deferred income tax benefit (expense)......................... (1,678) (109) 9 35 (1,743) ------------- ------------- ----------- ------------ -------------- AOCI before reclassifications, net of income tax............... 8,830 1,789 (97) (393) 10,129 Amounts reclassified from AOCI..... 60 (237) -- 24 (153) Deferred income tax benefit (expense)......................... (13) 50 -- (5) 32 ------------- ------------- ----------- ------------ -------------- Amounts reclassified from AOCI, net of income tax............... 47 (187) -- 19 (121) ------------- ------------- ----------- ------------ -------------- Cumulative effects of changes in accounting principles............. (1) 22 -- -- 21 Deferred income tax benefit (expense), cumulative effects of changes in accounting principles.. -- (4) -- -- (4) ------------- ------------- ----------- ------------ -------------- Cumulative effects of changes in accounting principles, net of income tax (3).................. (1) 18 -- -- 17 ------------- ------------- ----------- ------------ -------------- Balance at December 31, 2019....... $ 8,876 $ 1,620 $ (97) $ (374) $ 10,025 ============= ============= =========== ============ ============== ------------- (1) See Note 7 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI, and the policyholder dividend obligation. MLIC-104
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 12. Equity (continued) (2) See Note 14. (3) See Note 1 for further information on adoption of new accounting pronouncements. Information regarding amounts reclassified out of each component of AOCI was as follows: Years Ended December 31, --------------------------------------- 2019 2018 2017 ----------- ------------ ------------ Consolidated Statements of AOCI Components Amounts Reclassified from AOCI Operations Locations ----------------------------- --------------------------------------- ------------------------------ (In millions) Net unrealized investment gains (losses): Net unrealized investment gains (losses)............... $ 17 $ 89 $ 12 Net investment gains (losses) Net unrealized investment gains (losses)............... (16) 18 3 Net investment income Net unrealized investment gains (losses)............... (61) (115) (117) Net derivative gains (losses) ----------- ------------ ------------ Net unrealized investment gains (losses), before income tax................. (60) (8) (102) Income tax (expense) benefit.. 13 2 33 ----------- ------------ ------------ Net unrealized investment gains (losses), net of income tax................. (47) (6) (69) ----------- ------------ ------------ Unrealized gains (losses) on derivatives -- cash flow hedges: Interest rate derivatives..... 23 20 18 Net investment income Interest rate derivatives..... 4 -- -- Net investment gains (losses) Interest rate derivatives..... -- 22 13 Net derivative gains (losses) Foreign currency exchange rate derivatives............. (3) (3) (1) Net investment income Foreign currency exchange rate derivatives............. 212 -- -- Net investment gains (losses) Foreign currency exchange rate derivatives............. -- (469) 938 Net derivative gains (losses) Credit derivatives............ 1 1 1 Net investment income Credit derivatives............ -- 1 1 Net derivative gains (losses) ----------- ------------ ------------ Gains (losses) on cash flow hedges, before income tax.. 237 (428) 970 Income tax (expense) benefit.. (50) 96 (338) ----------- ------------ ------------ Gains (losses) on cash flow hedges, net of income tax.. 187 (332) 632 ----------- ------------ ------------ Defined benefit plans adjustment: (1) Amortization of net actuarial gains (losses)............... (27) (35) (179) Amortization of prior service (costs) credit............... 3 1 20 ----------- ------------ ------------ Amortization of defined benefit plan items, before income tax................. (24) (34) (159) Income tax (expense) benefit.. 5 13 57 ----------- ------------ ------------ Amortization of defined benefit plan items, net of income tax................. (19) (21) (102) ----------- ------------ ------------ Total reclassifications, net of income tax.............. $ 121 $ (359) $ 461 =========== ============ ============ ------------- (1)These AOCI components are included in the computation of net periodic benefit costs. See Note 14. MLIC-105
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 13. Other Revenues and Other Expenses Other Revenues Information on other revenues, which primarily includes fees related to service contracts from customers, was as follows: Years Ended December 31, --------------------------- 2019 2018 ------------- ------------- (In millions) Prepaid legal plans........... $ 329 $ 286 Recordkeeping and administrative services (1).. 204 220 Administrative services-only contracts.................... 210 205 Other revenue from service contracts from customers..... 39 38 ------------- ------------- Total revenues from service contracts from customers... $ 782 $ 749 Other (2)..................... 791 837 ------------- ------------- Total other revenues......... $ 1,573 $ 1,586 ============= ============= -------- (1)Related to products and businesses no longer actively marketed by the Company. (2)Other primarily includes reinsurance ceded. See Note 5. Other Expenses Information on other expenses was as follows: Years Ended December 31, ---------------------- 2019 2018 2017 ------ ------ ------ (In millions) General and administrative expenses (1)...................... $2,480 $2,458 $2,608 Pension, postretirement and postemployment benefit costs...... 107 66 167 Premium taxes, other taxes, and licenses & fees................... 274 366 273 Commissions and other variable expenses.......................... 1,814 1,757 1,801 Capitalization of DAC.............. (43) (34) (61) Amortization of DAC and VOBA....... 239 470 241 Interest expense on debt........... 105 108 106 ------ ------ ------ Total other expenses.............. $4,976 $5,191 $5,135 ====== ====== ====== -------- (1)Includes ($165) million, ($6) million and ($104) million for the years ended December 31, 2019, 2018 and 2017, respectively, for the net change in cash surrender value of investments in certain life insurance policies, net of premiums paid. Capitalization of DAC and Amortization of DAC and VOBA See Note 4 for additional information on DAC and VOBA including impacts of capitalization and amortization. See also Note 6 for a description of the DAC amortization impact associated with the closed block. Expenses related to Debt See Note 11 for additional information on interest expense on debt. Affiliated Expenses Commissions and other variable expenses, capitalization of DAC and amortization of DAC and VOBA include the impact of affiliated reinsurance transactions. See Notes 5, 11 and 18 for a discussion of affiliated expenses included in the table above. MLIC-106
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans Pension and Other Postretirement Benefit Plans Through September 30, 2018, the Company sponsored various qualified and nonqualified defined benefit pension plans covering employees who meet specified eligibility requirements. Pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits that are primarily based upon years of credited service and final average earnings. The cash balance formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as interest credits, determined annually based upon the annual rate of interest on 30-year U.S. Treasury securities, for each account balance. In September 2018, the qualified and nonqualified defined benefit pension plans were amended, effective January 1, 2023, to provide benefits accruals for all active participants under the cash balance formula and to cease future accruals under the traditional formula. The nonqualified pension plans provide supplemental benefits in excess of limits applicable to a qualified plan. Participating affiliates are allocated an equitable share of net expense related to the plans, proportionate to other expenses being allocated to these affiliates. Through September 30, 2018, the Company also provided certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. Employees of MetLife 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 of MetLife 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. In September 2018, the postretirement medical and life insurance benefit plans were amended, effective January 1, 2023, to discontinue the accrual of the employer subsidy credits for eligible employees. As of October 1, 2018, except for the nonqualified defined benefit pension plan, the plan sponsor was changed from the Company to an affiliate (the "Transferred Plans"). The Company transferred the net benefit obligation and plan assets at book value as of September 30, 2018 as an additional paid-in-capital transaction, including the related unrecognized AOCI. The Company remains a participating affiliate of the Transferred Plans. MLIC-107
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans (continued) Obligations and Funded Status December 31, ----------------------------------------------------------------- 2019 2018 -------------------------------- ------------------------------- Other Other Pension Postretirement Pension Postretirement Benefits (1) Benefits Benefits (1) Benefits ---------------- ---------------- -------------- ---------------- (In millions) Change in benefit obligations: Benefit obligations at January 1,................... $ 1,080 $ 19 $ 10,479 $ 1,656 Transfer to affiliate (2)..... -- -- (9,316) (1,648) Service costs................. 17 -- 18 -- Interest costs................ 46 1 42 1 Plan participants' contributions................ -- -- -- -- Plan amendments............... 3 -- (20) -- Net actuarial (gains) losses (3).......................... 162 2 (40) (2) Divestitures, settlements and curtailments................. -- -- -- 15 Benefits paid................. (98) (2) (83) (1) Effect of foreign currency translation.................. -- -- -- (2) -------------- ---------- -------------- ------------- Benefit obligations at December 31,............... 1,210 20 1,080 19 -------------- ---------- -------------- ------------- Change in plan assets: Estimated fair value of plan assets at January 1,......... -- 18 9,371 1,426 Transfer to affiliate (2)..... -- -- (9,371) (1,426) Actual return on plan assets.. -- -- -- 2 Divestitures, settlements and curtailments................. -- -- -- 18 Plan participants' contributions................ -- -- -- -- Employer contributions........ 98 -- 83 -- Benefits paid................. (98) (2) (83) (1) Foreign exchange impact....... -- 1 -- (1) -------------- ---------- -------------- ------------- Estimated fair value of plan assets at December 31,..... -- 17 -- 18 -------------- ---------- -------------- ------------- Over (under) funded status at December 31,............ $ (1,210) $ (3) $ (1,080) $ (1) ============== ========== ============== ============= Amounts recognized on the consolidated balance sheets: Other assets.................. $ -- $ 3 $ -- $ 5 Other liabilities............. (1,210) (6) (1,080) (6) -------------- ---------- -------------- ------------- Net amount recognized........ $ (1,210) $ (3) $ (1,080) $ (1) ============== ========== ============== ============= AOCI: Net actuarial (gains) losses.. $ 494 $ (3) $ 360 $ (5) Prior service costs (credit).. (16) -- (22) 1 -------------- ---------- -------------- ------------- AOCI, before income tax...... $ 478 $ (3) $ 338 $ (4) ============== ========== ============== ============= Accumulated benefit obligation................. $ 1,143 N/A $ 1,040 N/A ============== ============== -------- (1) Includes nonqualified unfunded plans, for which the aggregate PBO was $1.2 billion and $1.1 billion at December 31, 2019 and 2018, respectively. (2) Transfer to affiliate represents the Transferred Plans' book value as of September 30, 2018, net of the related 2018 net periodic benefit costs. See "-- Net Periodic Benefit Costs." MLIC-108
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans (continued) (3) Significant sources of actuarial (gains) losses for pension and other postretirement benefits during 2019 include the impact of changes to the financial assumptions of $137 million and $2 million, respectively, and plan experience of $25 million and $0, respectively. Significant sources of actuarial (gains) losses for pension and other postretirement benefits during 2018 include the impact of changes to the financial assumptions of ($87) million and ($2) million, respectively, and plan experience of $47 million and $0, respectively. Information for pension plans and other postretirement benefit plans with PBOs and/or accumulated benefit obligations ("ABO") or APBO in excess of plan assets was as follows at: December 31, ------------------------------------------------------------------ 2019 2018 2019 2018 2019 2018 ---------- ---------- ---------- ---------- ------- ------- PBO Exceeds Estimated ABO Exceeds Estimated APBO Exceeds Estimated Fair Value Fair Value Fair Value of Plan Assets of Plan Assets of Plan Assets --------------------- --------------------- ---------------------- (In millions) Projected benefit obligations........... $ 1,210 $ 1,080 $ 1,210 $ 1,080 N/A N/A Accumulated benefit obligations......... $ 1,143 $ 1,040 $ 1,143 $ 1,040 N/A N/A Accumulated postretirement benefit obligations............................ N/A N/A N/A N/A $ 6 $ 6 Estimated fair value of plan assets..... N/A N/A N/A N/A $ -- $ -- Net Periodic Benefit Costs The components of net periodic benefit costs and other changes in plan assets and benefit obligations recognized in OCI were as follows: Years Ended December 31, ------------------------------------------------------------------------------------- 2019 2018 2017 -------------------------- ----------------------------- -------------------------- Other Other Other Pension Postretirement Pension Postretirement Pension Postretirement Benefits Benefits Benefits Benefits Benefits Benefits --------- ---------------- ------------ ---------------- --------- ---------------- (In millions) Net periodic benefit costs: Service costs............................ $ 17 $ -- $ 123 $ 4 $ 169 $ 6 Interest costs........................... 46 1 290 41 415 75 Settlement and curtailment costs......... -- -- -- -- 3 2 Expected return on plan assets........... -- (1) (394) (54) (509) (72) Amortization of net actuarial (gains) losses.................................. 27 -- 142 (26) 189 -- Amortization of prior service costs (credit)................................ (3) -- (1) (14) (1) (22) Allocated to affiliates.................. (22) -- (66) 19 (48) 1 --------- --------- ------------ ---------- --------- ------------ Total net periodic benefit costs (credit) (1).......................... 65 -- 94 (30) 218 (10) --------- --------- ------------ ---------- --------- ------------ Other changes in plan assets and benefit obligations recognized in OCI: Net actuarial (gains) losses............. 161 3 (40) (4) 181 (148) Prior service costs (credit)............. 3 -- (20) -- -- -- Amortization of net actuarial (gains) losses.................................. (27) -- (35) -- (189) -- Amortization of prior service (costs) credit.................................. 3 -- 1 -- 1 22 Transfer to affiliate (2)................ -- -- (2,389) 81 -- -- --------- --------- ------------ ---------- --------- ------------ Total recognized in OCI................ 140 3 (2,483) 77 (7) (126) --------- --------- ------------ ---------- --------- ------------ Total recognized in net periodic benefit costs and OCI................. $ 205 $ 3 $ (2,389) $ 47 $ 211 $ (136) ========= ========= ============ ========== ========= ============ -------- MLIC-109
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans (continued) (1) Includes costs (credit) related to Transferred Plans of $65 million and ($49) million for pension benefits and other postretirement benefits, respectively, for the year ended December 31, 2018. (2) Transfer to affiliate represents the Transferred Plans' book value as of September 30, 2018, net of the related 2018 other changes in plan assets and benefit obligations recognized in OCI. Assumptions Assumptions used in determining benefit obligations were as follows: Pension Benefits Other Postretirement Benefits -------------------- ------------------------------- December 31, 2019 Weighted average discount rate..... 3.30% 3.00% Weighted average interest crediting rate.................... 3.99% N/A Rate of compensation increase...... 2.25% - 8.50% N/A December 31, 2018 Weighted average discount rate..... 4.35% 3.75% Weighted average interest crediting rate.................... 4.09% N/A Rate of compensation increase...... 2.25% - 8.50% N/A Assumptions used in determining net periodic benefit costs for the U.S. plans were as follows: Pension Benefits Other Postretirement Benefits -------------------- ------------------------------- Year Ended December 31, 2019 Weighted average discount rate..... 4.35% 3.75% Weighted average interest crediting rate.................... 4.01% N/A Weighted average expected rate of return on plan assets............. N/A 4.00% Rate of compensation increase...... 2.25% - 8.50% N/A Year Ended December 31, 2018 Weighted average discount rate..... 3.65% 3.70% Weighted average interest crediting rate.................... 4.13% N/A Weighted average expected rate of return on plan assets............. 5.75% 5.11% Rate of compensation increase...... 2.25% - 8.50% N/A Year Ended December 31, 2017 Weighted average discount rate..... 4.30% 4.45% Weighted average interest crediting rate.................... 5.46% N/A Weighted average expected rate of return on plan assets............. 6.00% 5.36% Rate of compensation increase...... 2.25% - 8.50% 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 measurement date, which would provide the necessary future cash flows to pay the aggregate PBO 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 the plan valuation in 2020 is currently anticipated to be 3.00% for other postretirement benefits. The weighted average interest crediting rate is determined annually based on the plan selected rate, long-term financial forecasts of that rate and the demographics of the plan participants. MLIC-110
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans (continued) The assumed healthcare costs trend rates used in measuring the APBO and net periodic benefit costs were as follows: December 31, --------------------------------------------- 2019 2018 ---------------------- ---------------------- Before Age 65 and Before Age 65 and Age 65 older Age 65 older --------- ------------ --------- ------------ Following year.................................... 6.5% 6.5% 6.6% 6.6% Ultimate rate to which cost increase is assumed to decline....................................... 4.0% 4.0% 4.0% 4.0% Year in which the ultimate trend rate is reached.. 2040 2040 2040 2040 Plan Assets Through September 30, 2018, the Company provided MetLife employees with benefits under various Employee Retirement Income Security Act of 1974 ("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 an insurance group annuity contract, and the vast majority of the assets of the postretirement medical plan are held in a trust which largely utilizes insurance contracts to hold the assets. 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 underlying assets of the separate accounts are principally comprised of cash and cash equivalents, short-term investments, fixed maturity securities AFS, equity securities, derivatives, real estate and private equity investments. The assets backing the retiree life coverage also utilize insurance contracts issued by the Company's insurance affiliate and are held in a general account Life Insurance Funding Agreement. 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 of the given Managers. 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 the Invested Plan's assets relative to liabilities, analyze the economic and portfolio impact of various asset allocations and management strategies and recommend asset allocations. 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 is otherwise restricted. Estimated Fair Value The pension and other postretirement benefit plan assets are categorized into a three-level fair value hierarchy, as described in Note 9, based upon the significant input with the lowest level in its valuation. The Level 2 asset category includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair value of such separate accounts is based upon reported NAV provided by fund managers and this value represents the MLIC-111
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans (continued) 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. Directly held investments are primarily invested in U.S. and foreign government and corporate securities. The Level 3 asset category includes separate accounts that are invested in 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. At December 31, 2019 and 2018, other postretirement plan assets measured at estimated fair value on a recurring basis were $17 million and $18 million, respectively, and were classified as short-term investments Level 2. A rollforward of all pension 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 ---------------------------------------------------------------------- Fixed Maturity Securities AFS: -------------------------- Equity Other Derivative Corporate Other (1) Securities Investments Assets ---------- ---------- ----------- ------------ ----------- (In millions) Balance, January 1, 2018...... $ 1 $ 9 $ 3 $ 622 $ 1 Realized gains (losses)....... -- -- -- -- -- Unrealized gains (losses)..... -- -- -- -- -- Purchases, sales, issuances and settlements, net......... -- -- -- -- -- Transfers into and/or out of Level 3...................... -- -- -- -- -- Transfer to affiliate......... (1) (9) (3) (622) (1) ---------- ---------- ----------- ------------ ----------- Balance, December 31, 2018.... $ -- $ -- $ -- $ -- $ -- ========== ========== =========== ============ =========== -------- (1) Other includes ABS and collateralized mortgage obligations. For the year ended December 31, 2019, there were no pension benefits measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs. For the years ended December 31, 2019 and 2018, there were no other postretirement benefit plan assets measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs. Expected Future Contributions and Benefit Payments Benefit payments due under the nonqualified pension plans are primarily funded from the Company's general assets as they become due under the provisions of the plans, and therefore benefit payments equal employer contributions. The Company expects to make contributions of $70 million to fund the benefit payments in 2020. 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. As permitted under the terms of the governing trust document, the Company may be reimbursed from plan assets for postretirement medical claims paid from their general assets. MLIC-112
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 14. Employee Benefit Plans (continued) Gross benefit payments for the next 10 years, which reflect expected future service where appropriate, are expected to be as follows: Pension Benefits Other Postretirement Benefits -------------------- ------------------------------- (In millions) 2020..................... $ 74 $ 2 2021..................... $ 71 $ 1 2022..................... $ 70 $ 1 2023..................... $ 73 $ 1 2024..................... $ 77 $ 1 2025-2029................ $ 403 $ 6 Defined Contribution Plans Through September 30, 2018, the Company sponsored defined contribution plans for substantially all MetLife employees under which a portion of employee contributions are matched. As of October 1, 2018, except for the nonqualified defined contribution plan, the plan sponsor was changed from the Company to an affiliate. The Company contributed $26 million, $42 million and $65 million for the years ended December 31, 2019, 2018 and 2017, respectively. 15. Income Tax The provision for income tax was as follows: Years Ended December 31, ----------------------- 2019 2018 2017 ------ ------ ------- (In millions) Current: U.S. federal.................. $ 280 $ 217 $ 1,511 U.S. state and local.......... 1 9 4 Non-U.S....................... 26 91 14 ------ ------ ------- Subtotal.................... 307 317 1,529 ------ ------ ------- Deferred: U.S. federal.................. (148) (88) (2,099) Non-U.S....................... (11) (56) 9 ------ ------ ------- Subtotal.................... (159) (144) (2,090) ------ ------ ------- Provision for income tax expense (benefit).......... $ 148 $ 173 $ (561) ====== ====== ======= The Company's income (loss) before income tax expense (benefit) was as follows: Years Ended December 31, ------------------------ 2019 2018 2017 ------- ------- -------- (In millions) Income (loss): U.S............ $3,454 $1,202 $ 4,045 Non-U.S........ 106 3,107 (1,079) ------- ------- -------- Total......... $3,560 $4,309 $ 2,966 ======= ======= ======== MLIC-113
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 15. Income Tax (continued) The reconciliation of the income tax provision at the U.S. statutory rate (21% in 2019 and 2018; 35% in 2017) to the provision for income tax as reported was as follows: Years Ended December 31, ------------------------ 2019 2018 2017 ------ ------ -------- (In millions) Tax provision at U.S. statutory rate................... $ 748 $ 905 $ 1,039 Tax effect of: Dividend received deduction............................ (36) (34) (65) Tax-exempt income...................................... (40) (13) (49) Prior year tax (1)..................................... (173) (175) (29) Low income housing tax credits......................... (254) (284) (278) Other tax credits...................................... (43) (77) (101) Foreign tax rate differential.......................... (7) (8) -- Change in valuation allowance.......................... (7) 1 -- U.S. Tax Reform impact (2) (3) (4)..................... (6) (139) (1,089) Other, net............................................. (34) (3) 11 ------ ------ -------- Provision for income tax expense (benefit)........... $ 148 $ 173 $ (561) ====== ====== ======== -------- (1) As discussed further below, prior year tax includes a non-cash benefit related to an uncertain tax position of $158 million and $168 million for the years ended December 31, 2019 and 2018, respectively. (2) For the year ended December 31, 2019, U.S. Tax Reform impact includes a $6 million tax benefit related to the effect of sequestration on the alternative minimum tax credit. (3) For the year ended December 31, 2018, U.S. Tax Reform impact includes a $139 million tax benefit related to the adjustment of deferred taxes due to the U.S. tax rate change. This excludes $12 million of tax provision at the U.S. statutory rate for a total tax reform benefit of $151 million. (4) For the year ended December 31, 2017, U.S. Tax Reform impact of ($1.1) billion excludes ($23) million of tax provision at the U.S. statutory rate for a total tax reform benefit of ($1.1) billion. On December 22, 2017, President Trump signed into law U.S. Tax Reform. U.S. Tax Reform includes numerous changes in tax law, including a permanent reduction in the U.S. federal corporate income tax rate from 35% to 21%, which took effect for taxable years beginning on or after January 1, 2018. U.S. Tax Reform moves the United States from a worldwide tax system to a participation exemption system by providing corporations a 100% dividends received deduction for dividends distributed by a controlled foreign corporation. To transition to that new system, U.S. Tax Reform imposed a one-time deemed repatriation tax on unremitted earnings and profits at a rate of 8.0% for illiquid assets and 15.5% for cash and cash equivalents. The Company recorded estimates of the impacts of U.S. Tax Reform in the period of enactment, the fourth quarter of 2017. In 2018, these estimates were updated in accordance with SAB 118. However, the impact of certain provisions of U.S. Tax Reform remains uncertain. For instance, many regulations under the new law have not been finalized or have only recently been finalized, including certain rules on international taxation. As a result, the Company continued to report additional revisions resulting from U.S. Tax Reform in 2019. MLIC-114
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 15. Income Tax (continued) The incremental financial statement impact related to U.S. Tax Reform was as follows: Years Ended December 31, ------------------------------------ 2019 2018 2017 ----------- ---------- ----------- (In millions) Income (loss) before provision for income tax........................ $ -- $ (58) $ (66) Provision for income tax expense (benefit): Deferred tax revaluation............................................. (6) (151) (1,112) ----------- ---------- ----------- Total provision for income tax expense (benefit).................... (6) (151) (1,112) ----------- ---------- ----------- Income (loss), net of income tax..................................... 6 93 1,046 Income tax (expense) benefit related to items of other comprehensive income (loss)...................................................... -- -- 133 ----------- ---------- ----------- Increase to net equity from U.S. Tax Reform.......................... $ 6 $ 93 $ 1,179 =========== ========== =========== In accordance with SAB 118 issued by the U.S. Securities and Exchange Commission ("SEC") in December 2017, the Company recorded provisional amounts for certain items for which the income tax accounting was not complete. For these items, the Company recorded a reasonable estimate of the tax effects of U.S. Tax Reform. The estimates were reported as provisional amounts during the measurement period, which did not exceed one year from the date of enactment of U.S. Tax Reform. In 2018, the Company reflected adjustments to its provisional amounts upon obtaining, preparing, or analyzing additional information about facts and circumstances that existed as of the enactment date that, if known, would have affected the income tax effects initially reported as provisional amounts. While the SAB 118 provisional measurement period ended December 31, 2018, the Company continued to revise certain U.S. Tax Reform amounts in 2019. As of December 31, 2017, the following items were considered provisional estimates due to complexities and ambiguities in U.S. Tax Reform which resulted in incomplete accounting for the tax effects of these provisions. Further guidance, either legislative or interpretive, and analysis were completed and updates were made to complete the accounting for these items during the measurement period as of December 31, 2018 and subsequent to the measurement period as of December 31, 2019: . Deemed Repatriation Transition Tax - The Company recorded a $1 million charge for this item for the year ended December 31, 2017. For the years ended December 31, 2019 and 2018, the Company did not record an additional tax charge. . Global Intangible Low-Tax Income ("GILTI") - U.S. Tax Reform imposes a minimum tax on GILTI, which is generally the excess income of foreign subsidiaries over a 10% rate of routine return on tangible business assets. For the year ended December 31, 2017, the Company did not record a tax charge for this item. In 2018, the Company established an accounting policy in which it treats taxes due on GILTI as a current-period expense when incurred. The Company did not record a tax charge for the years ended December 31, 2019 and 2018. . Compensation and Fringe Benefits - U.S. Tax Reform limits certain employer deductions for fringe benefit and related expenses and also repeals the exception allowing the deduction of certain performance-based compensation paid to certain senior executives. The Company recorded an $8 million tax charge, included within the deferred tax revaluation as of December 31, 2017. The Company determined that no additional adjustment was required for the years ended December 31, 2019 and 2018. . Alternative Minimum Tax Credits - U.S. Tax Reform eliminates the corporate alternative minimum tax and allows for minimum tax credit carryforwards to be used to offset future regular tax or to be refunded 50% each tax year beginning in 2018, with any remaining balance fully refunded in 2021. However, pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments issued for corporations claiming refundable prior year alternative minimum tax credits are subject to a sequestration rate of 6.2%. The application of this fee to refunds in future years is subject to further guidance. Additionally, the sequestration reduction rate in effect at the time is subject to uncertainty. For the year ended December 31, 2017, the Company MLIC-115
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 15. Income Tax (continued) recorded a $7 million tax charge, included within the deferred tax revaluation. For the year ended December 31, 2018, the Company determined that no additional adjustment was required. In early 2019, the Internal Revenue Service ("IRS") issued guidance indicating that for years beginning after December 31, 2017, refund payments and credit elect and refund offset transactions due to refundable alternative minimum tax credits will not be subject to the sequestration fee. Accordingly, to reflect this guidance the Company recorded a $6 million tax benefit in 2019. . Tax Credit Partnerships - The reduction in the federal corporate income tax rate due to U.S. Tax Reform required adjustments for multiple investment portfolios, including tax credit partnerships and tax-advantaged leveraged leases. Certain tax credit partnership investments derive returns in part from income tax credits. The Company recognizes changes in tax attributes at the partnership level when reported by the investee in its financial information. The Company did not receive the necessary investee financial information to determine the impact of U.S. Tax Reform on the tax attributes of its tax credit partnership investments until the third quarter of 2018. Accordingly, prior to the third quarter of 2018, the Company applied prior law to these equity method investments in accordance with SAB 118. For the year ended December 31, 2018, after receiving additional investee information, a reduction in tax credit partnerships' equity method income of $46 million, net of income tax, was included in net investment income. The tax-advantaged leveraged lease portfolio is valued on an after-tax yield basis. In 2018, the Company received third party data that was used to complete a comprehensive review of its portfolio to determine the full and complete impact of U.S. Tax Reform on these investments. As a result of this review, a tax benefit of $126 million was recorded for the year ended December 31, 2018. No additional adjustment was required for the year ended December 31, 2019. Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at: December 31, --------------- 2019 2018 ------- ------ (In millions) Deferred income tax assets: Policyholder liabilities and receivables..... $ 1,305 $1,182 Net operating loss carryforwards (1)......... 82 94 Employee benefits............................ 486 518 Tax credit carryforwards (2)................. 1,161 1,038 Litigation-related and government mandated... 119 131 Other........................................ 407 347 ------- ------ Total gross deferred income tax assets..... 3,560 3,310 Less: Valuation allowance.................... 80 93 ------- ------ Total net deferred income tax assets....... 3,480 3,217 ------- ------ Deferred income tax liabilities: Investments, including derivatives........... 1,796 1,597 Intangibles.................................. 33 32 DAC.......................................... 500 558 Net unrealized investment gains.............. 2,719 987 ------- ------ Total deferred income tax liabilities...... 5,048 3,174 ------- ------ Net deferred income tax asset (liability).. $(1,568) $ 43 ======= ====== -------- (1) The Company has recorded a deferred tax asset of $82 million primarily related to U.S. state net operating loss carryforwards and an offsetting valuation allowance for the year ended December 31, 2019. U.S. state net operating loss carryforwards will expire between 2020 and 2039, whereas others have an unlimited carryforward period. The valuation MLIC-116
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 15. Income Tax (continued) allowance reflects management's assessment, based on available information, that it is more likely than not that the deferred income tax asset for certain U.S. 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. (2) Tax credit carryforwards for the year ended December 31, 2019 primarily reflect general business credits expiring between 2036 and 2039 and are reduced by $194 million related to unrecognized tax benefits. Certain deferred income tax amounts at December 31, 2018 have been reclassified to conform to the 2019 presentation. The reclassification did not result in a change to the prior year net deferred income tax asset (liability) balance. The significant impacts related to deferred income tax assets were a $309 million decrease to Policyholder liabilities and receivables and a $347 million increase to Other. The significant impacts related to deferred income tax liabilities were a $81 million increase to Investments, including derivatives, and a $43 million decrease to Other. Additionally, the deferred income tax asset for Net operating loss carryforwards and offsetting Valuation allowance both increased by $72 million. The reclassifications resulted from a comprehensive review in 2019 of the tax effects between the book and tax bases of assets and liabilities, primarily with respect to the Company's U.S. businesses. The Company participates in a tax sharing agreement with MetLife, Inc., as described in Note 1. Pursuant to this tax sharing agreement, the amounts due from affiliates included $43 million and $27 million for the years ended December 31, 2019 and 2018, respectively. The Company files income tax returns with the U.S. federal government and various U.S. state and local jurisdictions, as well as non-U.S. jurisdictions. The Company is under continuous examination by the IRS and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to U.S. federal, state, or local income tax examinations for years prior to 2007, except for refund claims filed in 2017 with the IRS for 2000 through 2002 to recover tax and interest predominantly related to the disallowance of certain foreign tax credits for which the Company received a statutory notice of deficiency in 2015 and paid the tax thereon. The disallowed foreign tax credits relate to certain non-U.S. investments held by Metropolitan Life Insurance Company in support of its life insurance business through a United Kingdom investment subsidiary that was structured as a joint venture until early 2009. For tax years 2000 through 2002 and tax years 2007 through 2009, the Company entered into binding agreements with the IRS in 2019 under which all remaining issues regarding the foreign tax credit matter noted above were resolved. Accordingly, in 2019, the Company recorded a non-cash benefit to net income of $226 million, net of tax, comprised of a $158 million tax benefit recorded in provision for income tax expense (benefit) and a $86 million interest benefit ($68 million, net of tax) included in other expenses. For tax years 2003 through 2006, the Company entered into binding agreements with the IRS in 2018 under which all remaining issues, including the foreign tax credit matter noted above, were resolved. Accordingly, in 2018, the Company recorded a non-cash benefit to net income of $349 million, net of tax, comprised of a $168 million tax benefit recorded in provision for income tax expense (benefit) and a $229 million interest benefit ($181 million, net of tax) included in other expenses. For tax years 2007 through 2009 (which are the subject of the current IRS examination), the Company has established adequate reserves for tax liabilities. The Company's overall liability for unrecognized tax benefits may increase or decrease in the next 12 months. For example, U.S. federal tax legislation and regulation could impact unrecognized tax benefits. A reasonable estimate of the increase or decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a material change to its consolidated financial statements, although the resolution of income tax matters could impact the Company's effective tax rate for a particular future period. MLIC-117
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 15. Income Tax (continued) A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows: Years Ended December 31, --------------------- 2019 2018 2017 ------ ------ ----- (In millions) Balance at January 1,.................................. $ 442 $ 890 $931 Additions for tax positions of prior years............. -- 3 -- Reductions for tax positions of prior years (1)........ (158) (169) (38) Additions for tax positions of current year............ 3 3 4 Reductions for tax positions of current year........... -- -- (1) Settlements with tax authorities (2)................... (254) (285) (6) ------ ------ ----- Balance at December 31,................................ $ 33 $ 442 $890 ====== ====== ===== Unrecognized tax benefits that, if recognized, would impact the effective rate............................. $ 33 $ 442 $890 ====== ====== ===== -------- (1) The decreases are primarily related to non-cash benefits from tax audit settlements. (2) The decreases in 2019 and 2018 are primarily related to the tax audit settlement, of which $251 million and $284 million, respectively, was reclassified to the current income tax payable account. The Company classifies interest accrued related to unrecognized tax benefits in interest expense, included within other expenses. Interest was as follows: Years Ended December 31, ------------------------ 2019 2018 2017 ------ ----- ---- (In millions) Interest expense (benefit) recognized on the consolidated statements of operations (1)............ $(187) $(457) $ 47 December 31, --------------- 2019 2018 ----- ---- (In millions) Interest included in other liabilities on the consolidated balance sheets.......................... $ 9 $196 -------- (1) The decreases in 2019 and 2018 are primarily related to the tax audit settlement, of which $68 million and $184 million, respectively, was recorded in other expenses and $119 million and $273 million, respectively, was reclassified to the current income tax payable account. 16. Contingencies, Commitments and Guarantees Contingencies Litigation The Company is a defendant in a large number of litigation matters. Putative or certified class action litigation and other litigation and claims and assessments against the Company, in addition to those discussed below and those otherwise provided for in the Company's consolidated financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, mortgage lending bank, employer, investor, investment advisor, broker-dealer, and taxpayer. MLIC-118
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 16. Contingencies, Commitments and Guarantees (continued) The Company also receives and responds to subpoenas or other inquiries seeking a broad range of information from state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the SEC; federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority, as well as from local and national regulators and government authorities in jurisdictions outside the United States where the Company conducts business. The issues involved in information requests and regulatory matters vary widely, but can include inquiries or investigations concerning the Company's compliance with applicable insurance and other laws and regulations. The Company cooperates in these inquiries. 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. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. 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 reasonably estimated at December 31, 2019. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known to management, management does not believe any such charges are likely to have a material effect on the Company's financial position. Given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company's consolidated net income or cash flows in particular quarterly or annual periods. Matters as to Which an Estimate Can Be Made For some of the matters disclosed below, the Company is able to estimate a reasonably possible range of loss. For matters where a loss is believed to be reasonably possible, but not probable, the Company has not made an accrual. As of December 31, 2019, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued for these matters to be $0 to $175 million. 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 MLIC-119
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 16. Contingencies, Commitments and Guarantees (continued) 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. There can be no assurance that Metropolitan Life Insurance Company will receive favorable decisions on motions in the future. While most cases brought to date have settled, Metropolitan Life Insurance Company intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials. The approximate total number of asbestos personal injury claims pending against Metropolitan Life Insurance Company as of the dates indicated, the approximate number of new claims during the years ended on those dates and the approximate total settlement payments made to resolve asbestos personal injury claims at or during those years are set forth in the following table: December 31, -------------------------------------- 2019 2018 2017 ------------ ------------ ------------ (In millions, except number of claims) Asbestos personal injury claims at year end........... 61,134 62,522 62,930 Number of new claims during the year..................... 3,187 3,359 3,514 Settlement payments during the year (1)................. $ 49.4 $ 51.4 $ 48.6 ------------- (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. 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. MLIC-120
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 16. Contingencies, Commitments and Guarantees (continued) The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company's judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company's total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary. 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. Based upon its regular reevaluation of its exposure from asbestos litigation, Metropolitan Life Insurance Company has updated its recorded liability for asbestos-related claims to $457 million at December 31, 2019. Sun Life Assurance Company of Canada Indemnity Claim In 2006, Sun Life Assurance Company of Canada ("Sun Life"), as successor to the purchaser of Metropolitan Life Insurance Company's Canadian operations, filed a lawsuit in Toronto, seeking a declaration that Metropolitan Life Insurance Company remains liable for "market conduct claims" related to certain individual life insurance policies sold by Metropolitan Life Insurance Company that were subsequently transferred to Sun Life. 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. In September 2010, Sun Life notified Metropolitan Life Insurance Company that a purported class action lawsuit was filed against Sun Life in Toronto alleging sales practices claims regarding the policies sold by Metropolitan Life Insurance Company and transferred to Sun Life (the "Ontario Litigation"). On August 30, 2011, Sun Life notified Metropolitan Life Insurance Company that another purported class action lawsuit was filed against Sun Life in Vancouver, BC 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. In September 2018, the Court of Appeal for Ontario affirmed the lower court's decision to not certify the sales practices claims in the Ontario Litigation. These sales practices cases against Sun Life are ongoing, and the Company is unable to estimate the reasonably possible loss or range of loss arising from this litigation. Owens v. Metropolitan Life Insurance Company (N.D. Ga., filed April 17, 2014) Plaintiff filed this class action lawsuit on behalf of persons for whom Metropolitan Life Insurance Company established a Total Control Account ("TCA") to pay death benefits under an ERISA plan. The action alleged that Metropolitan Life Insurance Company's use of the TCA as the settlement option for life insurance benefits under some group life insurance policies violated Metropolitan Life Insurance Company's fiduciary duties under ERISA. On September 27, 2016, the court denied Metropolitan Life Insurance Company's summary judgment motion in full and granted plaintiff's partial summary judgment motion. On September 29, 2017, the court certified a nationwide class. On MLIC-121
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 16. Contingencies, Commitments and Guarantees (continued) November 19, 2019, the court approved a settlement in which Metropolitan Life Insurance Company agreed to pay $80 million to resolve the claims of all class members. The settlement does not include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by Metropolitan Life Insurance Company. The Company accrued the full amount of the settlement payment in prior periods and the payment was made. Martin v. Metropolitan Life Insurance Company (Superior Court of the State of California, County of Contra Costa, filed December 17, 2015) Plaintiffs filed this putative class action lawsuit on behalf of themselves and all California persons who have been charged compound interest by Metropolitan Life Insurance Company in life insurance policy and/or premium loan balances within the last four years. Plaintiffs allege that Metropolitan Life Insurance Company has engaged in a pattern and practice of charging compound interest on life insurance policy and premium loans without the borrower authorizing such compounding, and that this constitutes an unlawful business practice under California law. Plaintiffs assert causes of action for declaratory relief, violation of California's Unfair Competition Law and Usury Law, and unjust enrichment. Plaintiffs seek declaratory and injunctive relief, restitution of interest, and damages in an unspecified amount. On April 12, 2016, the court granted Metropolitan Life Insurance Company's motion to dismiss. Plaintiffs appealed this ruling to the United States Court of Appeals for the Ninth Circuit. The Ninth Circuit dismissed the appeal on December 2, 2019. Newman v. Metropolitan Life Insurance Company (N.D. Ill., filed March 23, 2016) Plaintiff filed this putative class action alleging causes of action for breach of contract, fraud, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, on behalf of herself and all persons over age 65 who selected a Reduced Pay at Age 65 payment feature on their long-term care insurance policies and whose premium rates were increased after age 65. Plaintiff seeks unspecified compensatory, statutory and punitive damages, as well as recessionary and injunctive relief. On April 12, 2017, the court granted Metropolitan Life Insurance Company's motion to dismiss the action. Plaintiff appealed this ruling and the United States Court of Appeals for the Seventh Circuit reversed and remanded the case to the district court for further proceedings. On February 20, 2020, the district court approved a nationwide class settlement of the case. The Company accrued the full amount of the expected settlement payment in prior periods. Julian & McKinney v. Metropolitan Life Insurance Company (S.D.N.Y., filed February 9, 2017) Plaintiffs filed this putative class and collective action on behalf of themselves and all current and former long-term disability ("LTD") claims specialists between February 2011 and the present for alleged wage and hour violations under the Fair Labor Standards Act, the New York Labor Law, and the Connecticut Minimum Wage Act. The suit alleges that Metropolitan Life Insurance Company improperly reclassified the plaintiffs and similarly situated LTD claims specialists from non-exempt to exempt from overtime pay in November 2013. As a result, they and members of the putative class were no longer eligible for overtime pay even though they allege they continued to work more than 40 hours per week. Plaintiffs seek unspecified compensatory and punitive damages, as well as other relief. On March 22, 2018, the Court conditionally certified the case as a collective action, requiring that notice be mailed to LTD claims specialists who worked for the Company from February 8, 2014 to the present. The Company intends to defend this action vigorously. Total Asset Recovery Services, LLC. v. MetLife, Inc., et al. (Supreme Court of the State of New York, County of New York, filed December 27, 2017) Total Asset Recovery Services ("The Relator") brought an action under the qui tam provision of the New York False Claims Act (the "Act") on behalf of itself and the State of New York. The Relator originally filed this action under seal in 2010, and the complaint was unsealed on December 19, 2017. The Relator alleges that MetLife, Inc., Metropolitan Life Insurance Company, and several other insurance companies violated the Act by filing false unclaimed property reports with the State of New York from 1986 to 2017, to avoid having to escheat the proceeds of more than 25,000 life insurance policies, including policies for which the defendants escheated funds as part of their demutualizations in the late 1990s. The Relator seeks treble damages and other relief. On April 3, 2019, the court granted MetLife, Inc.'s and Metropolitan Life Insurance Company's motion to dismiss and dismissed the complaint in its entirety. The Relator filed an appeal with the Appellate Division of the New York State Supreme Court, First Division. MLIC-122
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 16. Contingencies, Commitments and Guarantees (continued) Miller, et al. v. Metropolitan Life Insurance Company (S.D.N.Y., filed January 4, 2019) Plaintiffs filed a second amended complaint in this putative class action, purporting to assert claims on behalf of all persons who replaced their MetLife Optional Term Life or Group Universal Life policy with a Group Variable Universal Life policy wherein Metropolitan Life Insurance Company allegedly charged smoker rates for certain non-smokers. Plaintiffs seek unspecified compensatory and punitive damages, as well as other relief. On September 17, 2019, the Court granted the Company's motion to dismiss plaintiffs' second amended complaint and dismissed the case in its entirety. Plaintiffs filed an appeal with the United States Court of Appeals for the Second Circuit. Regulatory and Litigation Matters Related to Group Annuity Benefits In 2018, the Company announced that it identified a material weakness in its internal control over financial reporting related to the practices and procedures for estimating reserves for certain group annuity benefits. Several regulators have made inquiries into this issue and it is possible that other jurisdictions may pursue similar investigations or inquiries. The Company is also exposed to lawsuits and could be exposed to additional legal actions relating to this issue. These may result in payments, including damages, fines, penalties, interest and other amounts assessed or awarded by courts or regulatory authorities under applicable escheat, tax, securities, ERISA, or other laws or regulations. The Company could incur significant costs in connection with these actions. Litigation Matters Atkins et. al. v. MetLife, Inc., et. al. (D.Nev., filed November 18, 2019) Plaintiffs filed this putative class action on behalf of all persons due benefits under group annuity contracts but who did not receive the entire amount to which they were entitled. Plaintiffs assert claims for breach of contract, breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, unjust enrichment, and conversion based on allegations that the defendants failed to timely pay annuity benefits to certain group annuitants. Plaintiffs seek declaratory and injunctive relief, as well as unspecified compensatory and punitive damages, and other relief. Defendants intend to defend this action vigorously. Insolvency Assessments Many jurisdictions in which the Company is admitted to transact business require insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers or those that may become impaired, insolvent or fail. These associations levy assessments, up to prescribed limits, on all member insurers in a particular jurisdiction on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. In addition, certain jurisdictions have government owned or controlled organizations providing life, health and property and casualty insurance to their citizens, whose activities could place additional stress on the adequacy of guaranty fund assessments. Many of these organizations have the power to levy assessments similar to those of the guaranty associations. Some jurisdictions permit member insurers to recover assessments paid through full or partial premium tax offsets. Assets and liabilities held for insolvency assessments were as follows: December 31, ------------------------- 2019 2018 ------------ ------------ (In millions) Other Assets: Premium tax offset for future discounted and undiscounted assessments.................... $ 38 $ 42 Premium tax offset currently available for paid assessments............................ 39 43 ------------ ------------ Total....................................... $ 77 $ 85 ============ ============ Other Liabilities: Insolvency assessments....................... $ 53 $ 57 ============ ============ MLIC-123
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 16. Contingencies, Commitments and Guarantees (continued) Mortgage Loan Commitments The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $3.7 billion and $3.6 billion at December 31, 2019 and 2018, respectively. Commitments to Fund Partnership Investments, Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments The Company commits to fund partnership investments and to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of these unfunded commitments were $4.6 billion at both December 31, 2019 and 2018. Guarantees In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from less than $1 million to $392 million, with a cumulative maximum of $534 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, 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. The Company's recorded liabilities were $3 million and $5 million at December 31, 2019 and 2018, respectively, for indemnities, guarantees and commitments. 17. Quarterly Results of Operations (Unaudited) The unaudited quarterly results of operations for 2019 and 2018 are summarized in the table below: Three Months Ended -------------------------------------------- March 31, June 30, September 30, December 31, --------- -------- ------------- ------------ (In millions) 2019 Total revenues................ $ 8,237 $ 9,146 $ 10,810 $ 8,056 Total expenses................ $ 7,729 $ 7,923 $ 9,238 $ 7,799 Net income (loss)............. $ 508 $ 1,067 $ 1,339 $ 498 Less: Net income (loss) attributable to noncontrolling interests..... $ 1 $ -- $ 1 $ (8) Net income (loss) attributable to Metropolitan Life Insurance Company....... $ 507 $ 1,067 $ 1,338 $ 506 2018 Total revenues................ $ 8,446 $ 14,809 $ 9,751 $ 9,155 Total expenses................ $ 7,711 $ 13,709 $ 8,847 $ 7,585 Net income (loss)............. $ 672 $ 1,007 $ 816 $ 1,641 Less: Net income (loss) attributable to noncontrolling interests..... $ 3 $ 5 $ 2 $ (4) Net income (loss) attributable to Metropolitan Life Insurance Company....... $ 669 $ 1,002 $ 814 $ 1,645 MLIC-124
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Notes to the Consolidated Financial Statements -- (continued) 18. Related Party Transactions Service Agreements The Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided under these agreements include personnel, policy administrative functions and distribution services. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual cost incurred by the Company and/or its affiliate. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $2.9 billion, $2.1 billion and $2.2 billion for the years ended December 31, 2019, 2018 and 2017, respectively. Total revenues received from affiliates related to these agreements were $29 million, $135 million and $234 million for the years ended December 31, 2019, 2018 and 2017, respectively. Prior to 2019, the Company also entered into agreements with affiliates to provide additional services necessary to conduct the affiliates' activities. Typical services provided under these agreements included management, policy administrative functions, investment advice and distribution services. Expenses incurred by the Company related to these agreements, included in other expenses, were $1.1 billion and $1.4 billion for the years ended December 31, 2018 and 2017, respectively, and were reimbursed to the Company by these affiliates. In 2018, the Company and the MetLife enterprise updated their shared facilities and services structure to more efficiently share enterprise assets and services. Effective as of October 1, 2018, the Company entered into new service agreements with its affiliates, which replaced existing agreements. Under the new agreements, the Company will no longer be the primary provider of services to affiliates and will receive further services from affiliates to conduct its activities. The Company had net payables to affiliates, related to the items discussed above, of $250 million and $181 million at December 31, 2019 and 2018, respectively. See Notes 1, 5, 7, 11, 12 and 14 for additional information on related party transactions. Also, see Note 5 for information related to the separation of Brighthouse. MLIC-125
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Schedule I Consolidated Summary of Investments -- Other Than Investments in Related Parties December 31, 2019 (In millions) Estimated Amount at Cost or Fair Which Shown on Amortized Cost (1) Value Balance Sheet Types of Investments ---------------------- ------------- ---------------------- Fixed maturity securities AFS: Bonds: U.S. government and agency.... $ 25,568 $ 29,248 $ 29,248 Public utilities.............. 6,497 7,517 7,517 Municipals.................... 6,419 7,856 7,856 Foreign government............ 4,329 5,006 5,006 All other corporate bonds..... 73,628 80,409 80,409 ---------------------- ------------- ---------------------- Total bonds.................. 116,441 130,036 130,036 Mortgage-backed and asset-backed securities...... 37,214 38,694 38,694 Redeemable preferred stock.... 742 834 834 ---------------------- ------------- ---------------------- Total fixed maturity securities AFS............. 154,397 169,564 169,564 ---------------------- ------------- ---------------------- Mortgage loans................ 65,549 65,549 Policy loans.................. 6,100 6,100 Real estate and real estate joint ventures............... 6,624 6,624 Real estate acquired in satisfaction of debt......... 35 35 Other limited partnership interests.................... 4,954 4,954 Short-term investments........ 1,883 1,883 Other invested assets......... 16,979 16,979 ---------------------- ---------------------- Total investments............ $ 256,521 $ 271,688 ====================== ====================== -------- (1) Amortized cost for fixed maturity securities AFS and mortgage loans represents original cost reduced by repayments, valuation allowances and impairments from other-than-temporary declines in estimated fair value that are charged to earnings and adjusted for amortization of premium or accretion of discount; for real estate, cost represents original cost reduced by impairments and depreciation; for real estate joint ventures and other limited partnership interests, cost represents original cost reduced for impairments or original cost adjusted for equity in earnings and distributions. MLIC-126
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Schedule III Consolidated Supplementary Insurance Information December 31, 2019 and 2018 (In millions) Future Policy Benefits, Other Policy-Related DAC Balances and Policyholder Policyholder and Policyholder Dividend Account Dividends Unearned Unearned Segment VOBA Obligation Balances Payable Premiums (1), (2) Revenue (1) ----------------------------- -------- ----------------------- ------------ ------------ ----------------- ------------ 2019 U.S........................... $ 405 $ 69,687 $ 69,394 $ -- $ 216 $ 24 MetLife Holdings.............. 3,048 68,125 22,346 495 160 163 Corporate & Other............. -- 244 (32) -- -- -- -------- ----------------------- ------------ ------------ ----------------- ------------ Total........................ $ 3,453 $ 138,056 $ 91,708 $ 495 $ 376 $ 187 ======== ======================= ============ ============ ================= ============ 2018 U.S........................... $ 403 $ 67,770 $ 67,233 $ -- $ 137 $ 26 MetLife Holdings.............. 3,709 65,730 23,423 494 159 167 Corporate & Other............. 5 291 -- -- -- -- -------- ----------------------- ------------ ------------ ----------------- ------------ Total........................ $ 4,117 $ 133,791 $ 90,656 $ 494 $ 296 $ 193 ======== ======================= ============ ============ ================= ============ -------- (1) Amounts are included within the future policy benefits, other policy-related balances and policyholder dividend obligation column. (2) Includes premiums received in advance. MLIC-127
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Schedule III Consolidated Supplementary Insurance Information -- (continued) For the Years Ended December 31, 2019, 2018 and 2017 (In millions) Policyholder Amortization of Benefits and DAC and Premiums and Claims and VOBA Universal Life Net Interest Credited Charged to and Investment-Type Investment to Policyholder Other Other Segment Product Policy Fees Income Account Balances Expenses Expenses (1) ----------------------------- ------------------- ----------- ----------------- --------------- ------------- 2019 U.S........................... $ 19,547 $ 6,481 $ 20,906 $ 55 $ 2,904 MetLife Holdings.............. 4,097 4,579 5,769 184 1,900 Corporate & Other............. 1 (87) -- -- 971 ------------------- ----------- ----------------- --------------- ------------- Total........................ $ 23,645 $ 10,973 $ 26,675 $ 239 $ 5,775 =================== =========== ================= =============== ============= 2018 U.S........................... $ 24,411 $ 6,429 $ 25,922 $ 75 $ 2,810 MetLife Holdings.............. 4,306 4,653 5,649 395 2,079 Corporate & Other............. 20 (163) 5 -- 917 ------------------- ----------- ----------------- --------------- ------------- Total........................ $ 28,737 $ 10,919 $ 31,576 $ 470 $ 5,806 =================== =========== ================= =============== ============= 2017 U.S........................... $ 20,500 $ 6,012 $ 22,019 $ 56 $ 2,680 MetLife Holdings.............. 4,643 4,758 6,004 185 2,293 Corporate & Other............. 9 (257) 4 -- 1,018 ------------------- ----------- ----------------- --------------- ------------- Total........................ $ 25,152 $ 10,513 $ 28,027 $ 241 $ 5,991 =================== =========== ================= =============== ============= -------- (1) Includes other expenses and policyholder dividends, excluding amortization of DAC and VOBA charged to other expenses. MLIC-128
Metropolitan Life Insurance Company (A Wholly-Owned Subsidiary of MetLife, Inc.) Schedule IV Consolidated Reinsurance December 31, 2019, 2018 and 2017 (Dollars in millions) % Amount Assumed Gross Amount Ceded Assumed Net Amount to Net ------------- ------------ ------------ ------------- ----------- 2019 Life insurance in-force....... $ 3,810,612 $ 257,882 $ 525,190 $ 4,077,920 12.9% ============= ============ ============ ============= Insurance premium Life insurance (1)............ $ 14,114 $ 879 $ 785 $ 14,020 5.6% Accident & health insurance... 7,690 128 26 7,588 0.3% ------------- ------------ ------------ ------------- Total insurance premium..... $ 21,804 $ 1,007 $ 811 $ 21,608 3.8% ============= ============ ============ ============= 2018 Life insurance in-force....... $ 3,736,612 $ 260,086 $ 453,560 $ 3,930,086 11.5% ============= ============ ============ ============= Insurance premium Life insurance (1)............ $ 19,673 $ 894 $ 725 $ 19,504 3.7% Accident & health insurance... 7,210 128 27 7,109 0.4% ------------- ------------ ------------ ------------- Total insurance premium..... $ 26,883 $ 1,022 $ 752 $ 26,613 2.8% ============= ============ ============ ============= 2017 Life insurance in-force....... $ 3,377,964 $ 266,895 $ 490,033 $ 3,601,102 13.6% ============= ============ ============ ============= Insurance premium Life insurance (1)............ $ 16,022 $ 1,132 $ 1,097 $ 15,987 6.9% Accident & health insurance... 7,040 121 19 6,938 0.3% ------------- ------------ ------------ ------------- Total insurance premium..... $ 23,062 $ 1,253 $ 1,116 $ 22,925 4.9% ============= ============ ============ ============= -------- (1) Includes annuities with life contingencies. For the year ended December 31, 2019, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $14.2 billion and $1.3 billion, respectively, and life insurance premiums of $115 million and $9 million, respectively. For the year ended December 31, 2018, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $14.7 billion and $1.2 billion, respectively, and life insurance premiums of $117 million and $9 million, respectively. For the year ended December 31, 2017, reinsurance ceded and assumed included affiliated transactions for life insurance in-force of $16.2 billion and $1.3 billion, respectively, and life insurance premiums of $132 million and $122 million, respectively. MLIC-129
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Item 26. Exhibits
Metropolitan Life Separate Account UL
Part C: Other Information
Item 27. Directors and Officers of Depositor
Name and Principal Business Address |
Positions and Offices with Depositor | |
R. Glenn Hubbard Chairman of the Board, MetLife, Inc. Dean Emeritus and Russell L. Carson Professor of Economics and Finance, Graduate School of Business, and Professor of Economics, Faculty of Arts and Sciences, Columbia University 200 Park Avenue New York, NY 10166 |
Chairman of the Board and Director | |
Michel A. Khalaf President and Chief Executive Officer MetLife, Inc. 200 Park Avenue New York, NY 10166 |
President and Chief Executive Officer and Director | |
Cheryl W. Grise Former Executive Vice President, Northeast Utilities 200 Park Avenue New York, NY 10166 |
Director | |
Carlos M. Gutierrez Co-Chair, The Albright Stonebridge Group 200 Park Avenue New York, NY 10166 |
Director | |
Gerald L. Hassell Former Chairman of the Board and Chief Executive Officer, The Bank of New York Mellon Corporation 200 Park Avenue New York, NY 10166 |
Director | |
David L. Herzog Former Chief Financial Officer and Executive Vice President of American International Group 200 Park Avenue New York, NY 10166 |
Director | |
Edward J. Kelly, III Former Chairman, Institutional Clients Group, Citigroup, Inc. 200 Park Avenue New York, NY 10166 |
Director |
William E. Kennard Former U.S. Ambassador to the European Union 200 Park Avenue New York, NY 10166 |
Director | |
James M. Kilts Founding Partner, Centerview Capital 3 Greenwich Office Park, 2nd Floor Greenwich CT 06831 |
Director | |
Catherine R. Kinney Former President and Co-Chief Operating Officer, New York Stock Exchange, Inc. 200 Park Avenue New York, NY 10166 |
Director | |
Diana McKenzie Former Chief Information Officer of Workday, Inc. 200 Park Avenue New York, NY 10166 |
Director | |
Denise M. Morrison Former President and Chief Executive Officer Campbell Soup Company 1 Campbell Place Camden, NJ 08103 |
Director | |
Mark A. Weinberger Former Global Chairman and Chief Executive Officer of EY Company 200 Park Avenue New York, NY 10166 |
Director |
Set forth below is a list of certain principal officers of Metropolitan Life Insurance Company. The principal business address of each principal officer is 200 Park Avenue, New York, NY 10166 unless otherwise noted below.
Name and Principal Business Address |
Positions with Depositor | |
Michel A. Khalaf |
President and Chief Executive Officer | |
Marlene Debel |
Executive Vice President and Chief Risk Officer | |
Karl R. Erhardt |
Executive Vice President and Chief Auditor | |
Stephen W. Gauster |
Executive Vice President and General Counsel | |
Esther Lee |
Executive Vice President, Global Chief Marketing Officer | |
John Dennis McCallion |
Executive Vice President and Chief Financial Officer and Treasurer | |
William Pappas |
Executive Vice President, Global Technology & Operations | |
Susan Podlogar |
Executive Vice President and Chief Human Resources Officer | |
Tamara Schock |
Executive Vice President and Chief Accounting Officer |
Rebecca Tadikonda |
Executive Vice President and Chief Strategy Officer | |
Ramy Tadros |
Executive Vice President | |
Michael Zarcone |
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, 2019
The following is a list of subsidiaries of MetLife, Inc. updated as of December 31, 2018. 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) |
1. | MetLife Services and Solutions, LLC (DE) |
a) | MetLife Solutions Pte. Ltd. (Singapore) |
i) | MetLife Services East Private Limited (India) - 99.99% is owned by MetLife Solutions Pte. Ltd. and .01% by Natiloportem Holdings, LLC |
ii) | 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, LLC. |
B. | MetLife Home Loans, LLC (DE) |
C. | Metropolitan Tower Life Insurance Company (NE) |
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 0.1% general partnership is held by 1320 GP LLC. |
e) | 1320 GP LLC (DE) |
4. | MetLife Assignment Company, Inc. (DE) |
PLAZA DRIVE PROPERTIES SUBLANDLORD, LLC (DE) |
D. | MetLife Chile Inversiones Limitada (Chile) - 72.35109659% is owned by MetLife, Inc., 24.8823628% by American Life Insurance Company (ALICO), 2.76654057% is owned by Inversiones MetLife Holdco Dos Limitada and 0.00000004% is owned by Natiloportem Holdings, LLC. |
1. | MetLife Chile Seguros de Vida S.A. (Chile) - 99.996% of MetLife Chile Seguros de Vida S.A. is held by MetLife Chile Inversiones Limitada and 0.003% by International Technical and Advisory Services Limited (ITAS) and the rest by third parties. |
a) | MetLife Chile Administradora de Mutuos Hipotecarios S.A. (Chile) - 99.9% of MetLife Chile Administradora de Mutuos Hipotecarios S.A. is held by MetLife Chile Seguros de Vida S.A. and 0.1% is held by MetLife Chile Inversiones Limitada. |
2. | Inversiones MetLife Holdco Tres Limitada (Chile) - 97.13% of Inversiones MetLife Holdco Tres Limitada is owned by MetLife Chile Inversiones Limitada and 2.87% is owned by Inversiones MetLife Holdco Dos Limitada. |
a) | AFP Provida S.A. (Chile) - 42.3815% of AFP Provida S.A. is owned by Inversiones MetLife Holdco Dos Limitada, 42.3815% is owned by Inversiones MetLife Holdco Tres Limitada, 10.9224% is owned by MetLife Chile Inversiones Limitada and the remainder is owned by the public. |
i) | Provida Internacional S.A. (Chile) - 99.99% of Provida Internacional S.A. is owned by AFP Provida S.A and 0.01% is owned by MetLife Chile Inversiones Limitada. |
1) | AFP Genesis Administradora de Fondos y Fidecomisos S.A. (Ecuador) - 99.9% of AFP Genesis Administradora de Fondos y Fidecomisos S.A. is owned by Provida Internacional S.A. and 0.1% by AFP Provida S.A. |
3. | MetLife Chile Seguros Generales S.A. (Chile) - 99.98% of MetLife Chile Seguros Generales S.A. is owned by MetLife Chile Inversiones Limitada and 0.02% is owned by Inversiones MetLife Holdco Dos Limitada. |
E. | MetLife Digital Ventures, Inc. (DE) |
F. | 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. | MetLife Auto & Home Insurance Agency, Inc. (RI) |
5. | Metropolitan Group Property and Casualty Insurance Company (RI) |
6. | 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. |
7. | Economy Fire & Casualty Company (IL) |
a) | Economy Preferred Insurance Company (IL) |
b) | Economy Premier Assurance Company (IL) |
G. | Newbury Insurance Company, Limited (DE) |
H. | MetLife Investors Group, LLC (DE) |
1. | MetLife Investors Distribution Company (MO) |
2. | MetLife Investments Securities, LLC (DE) |
1
I. | Metropolitan Life Insurance Company (MLIC) (NY) |
1. | ML Sloans Lake Member, LLC (DE) - Metropolitan Life Insurance Company owns 55% and 45% by Metropolitan Tower Life Insurance Company. |
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) |
b) | OMI MLIC Investments Limited (Cayman Islands) |
3. | Sandpiper Cove Associates II, LLC (DE) |
4. | MLIC Asset Holdings II LLC (DE) |
MCJV, LLC (DE) |
a) | El Conquistador MAH II LLC (DE) |
5. | CC Holdco Manager, LLC (DE) |
6. | Alternative Fuels I, LLC (DE) |
7. | Transmountain Land & Livestock Company (MT) |
8. | HPZ Assets LLC (DE) |
9. | Missouri Reinsurance, Inc. (Cayman Islands) |
10. | Metropolitan Tower Realty Company, Inc. (DE) |
a) | Midtown Heights, LLC (DE) |
11. | ML New River Village III, LLC (DE) |
12. | MetLife RC SF Member, LLC (DE) |
| METLIFE ASHTON AUSTIN OWNER, LLC (DE) |
| METLIFE ACOMA OWNER, LLC (DE) |
13. | 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. |
i) | Long Island Solar Farm LLC (LISF)(DE) - 9.61% membership interest is held by a third party and 90.39% membership interest is held by LISF Solar Trust in which MetLife Capital, Limited Partnership has 100% beneficial interest. |
ii) | Met Canada Solar ULC (Canada) |
14. | MetLife Holdings, Inc. (DE) |
a) | MetLife Credit Corp. (DE) |
b) | MetLife Funding, Inc. (DE) |
15. | 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 (FL) |
16. | ML Southlands Member, LLC (DE) - Metropolitan Life Insurance Company owns 60% and 40% by Metropolitan Tower Life Insurance Company. |
ML PORT CHESTER SC MEMBER, LLC (DE) - Metropolitan Life Insurance Company owns 60% and 40% is owned by Metropolitan Tower Life Insurance Company. |
17. | Corporate Real Estate Holdings, LLC (DE) |
18. | MetLife Tower Resources Group, Inc. (DE) |
19. | ML Sentinel Square Member, LLC (DE) |
20. | MetLife Securitization Depositor, LLC (DE) |
21. | WFP 1000 Holding Company GP, LLC (DE) |
22. | White Oak Royalty Company (OK) |
23. | 500 Grant Street GP LLC (DE) |
24. | 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. |
25. | MetLife Mall Ventures Limited Partnership (DE) - 99% LP interest of MetLife Mall Ventures Limited Partnership is owned by MLIC and 1% GP interest is owned by Metropolitan Tower Realty Company, Inc. |
26. | MetLife Retirement Services LLC (NJ) |
27. | Euro CL Investments, LLC (DE) |
28. | MEX DF Properties, LLC (DE) |
a) | MPLife, S. de R.L. de C.V. (Mexico) - 99.99% of MPLife, S. de R.L. de C.V. is owned by MEX DF Properties, LLC and 0.01% is owned by Euro CL Investments LLC. |
MET 1065 HOTEL, LLC (DE) |
29. | 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. |
30. | MetLife Properties Ventures, LLC (DE) |
31. | 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. |
32. | MLIC Asset Holdings LLC (DE) |
33. | 85 Broad Street Mezzanine LLC (DE) |
34. | The Building at 575 Fifth Avenue Mezzanine LLC (DE) |
a) | The Building at 575 Fifth Retail Holding LLC (DE) |
i) | The Building at 575 Fifth Retail Owner LLC (DE) |
35. | ML Bridgeside Apartments LLC (DE) |
36. | MetLife Chino Member, LLC (DE) |
37. | MLIC CB Holdings LLC (DE) |
38. | MetLife CC Member, LLC (DE) - 95.122% of MetLife CC Member, LLC is owned by Metropolitan Life Insurance Company and 4.878% is owned by Metropolitan Tower Life Insurance Company. |
ML MATSON MILLS MEMBER LLC (DE) |
39. | Oconee Hotel Company, LLC (DE) |
ML 300 THIRD MEMBER LLC (DE) |
40. | Oconee Land Company, LLC (DE) |
a) | Oconee Land Development Company, LLC (DE) |
b) | Oconee Golf Company, LLC (DE) |
c) | Oconee Marina Company, LLC (DE) |
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41. | 1201 TAB Manager, LLC (DE) |
42. | MetLife 1201 TAB Member, LLC (DE) - 96.9% of MetLife 1201 TAB Member, LLC is owned by Metropolitan Life Insurance Company and 3.1% is owned by Metropolitan Property and Casualty Insurance Company. |
43. | MetLife LHH Member, LLC (DE) - 99% of MetLife LHH Member, LLC is owned by Metropolitan Life Insurance Company, and 1% is owned by Metropolitan Tower Life Insurance Company. |
44. | 1001 Properties, LLC (DE) |
45. | 6104 Hollywood, LLC (DE) |
46. | Boulevard Residential, LLC (DE) |
47. | ML-AI MetLife Member 3, LLC (DE) |
| WHITE TRACT II, LLC (DE) |
| METLIFE JAPAN US EQUITY FUND LP (DE) |
| METLIFE JAPAN US EQUITY OWNERS LLC (DE) |
48. | Sandpiper Cove Associates, LLC (DE) - 90.59% membership interest of Sandpiper Cove Associates, LLC is owned by MLIC and 9.41% is owned by Metropolitan Tower Realty Company, Inc. |
49. | Marketplace Residences, LLC (DE) |
50. | ML Swan Mezz, LLC (DE) |
a) | ML Swan GP, LLC (DE) |
51. | ML Dolphin Mezz, LLC (DE) |
a) | ML Dolphin GP, LLC (DE) |
52. | Haskell East Village, LLC (DE) |
53. | MetLife Cabo Hilton Member, LLC (DE) - 83.1% of MetLife Cabo Hilton Member, LLC is owned by MLIC, 16.9% by Metropolitan Tower Life Insurance Company. |
54. | 150 North Riverside PE Member, LLC (DE) - MLIC owns an 81.45% membership interest and Metropolitan Tower Life Insurance Company owns a 18.55% membership interest |
55. | ML Terraces, LLC (DE) |
56. | Chestnut Flats Wind, LLC (DE) |
57. | MetLife 425 MKT Member, LLC (DE) |
58. | MetLife OFC Member, LLC (DE) |
59. | MetLife THR Investor, LLC (DE) |
60. | ML Southmore, LLC (DE) - 99% of ML Southmore, LLC is owned by MLIC and 1% by Metropolitan Tower Life Insurance Company. |
61. | ML - AI MetLife Member 1, LLC (DE) - 95.199% of the membership interest is owned by MLIC and 4.801% by Metropolitan Property and Casualty Insurance Company. |
62. | MetLife CB W/A, LLC (DE) |
63. | MetLife Camino Ramon Member, LLC (DE) - 99% of MetLife Camino Ramon Member, LLC is owned by MLIC and 1% by Metropolitan Tower Life Insurance Company. |
ML BLOCK 40, LLC (DE) |
64. | 10700 Wilshire, LLC (DE) |
65. | Viridian Miracle Mile, LLC (DE) |
66. | MetLife 555 12th Member, LLC (DE) - 94.6% is owned by MLIC and 5.4% by Metropolitan Tower Life Insurance Company. |
67. | MetLife OBS Member, LLC (DE) |
68. | MetLife 1007 Stewart, LLC (DE) |
69. | ML-AI MetLife Member 2, LLC (DE) - 98.97% of ML-AI MetLife Member 2, LLCs ownership interest is owned by MLIC and 1.03% by Metropolitan Tower Life Insurance Company. |
70. | MetLife Treat Towers Member, LLC (DE) |
71. | MetLife FM Hotel Member, LLC (DE) |
a) | LHCW Holdings (U.S.) LLC (DE) |
i) | LHC Holdings (U.S.) LLC (DE) |
1) | LHCW Hotel Holding LLC (DE) |
aa) | LHCW Hotel Holding (2002) LLC (DE) |
bb) | LHCW Hotel Operating Company (2002) LLC (DE) |
72. | ML Mililani Member, LLC (DE)- is owned at 95% by MLIC and 5% by Metropolitan Tower Life Insurance Company. |
73. | MetLife SP Holdings, LLC (DE) |
a) | MetLife Private Equity Holdings, LLC (DE) |
74. | Buford Logistics Center, LLC (DE) |
75. | MetLife Park Tower Member, LLC (DE) |
a) | Park Tower REIT, Inc. (DE) |
i) | Park Tower JV Member, LLC (DE) |
76. | MCPP Owners, LLC (DE) - 87.34% is owned by MLIC, 1.81% by Metropolitan Tower Life Insurance Company, and 10.85% by MTL Leasing, LLC. |
77. | MetLife HCMJV 1 GP, LLC (DE) |
METLIFE HCMJV 1 LP, LLC (DE) |
78. | MetLife ConSquare Member, LLC (DE) |
79. | MetLife Ontario Street Member, LLC (DE) |
80. | 1925 WJC Owner, LLC (DE) |
ML BELLEVUE MEMBER, LLC (DE) |
81. | MetLife Member Solaire, LLC (DE) |
82. | Sino-US United MetLife Insurance Company, Ltd. - 50% of Sino-US United MetLife Insurance Company, Ltd. Is owned by MLIC and 50% is owned by a third party. |
83. | MetLife Property Ventures Canada ULC (Canada) |
84. | MetLife Canadian Property Ventures, LLC (NY) |
METLIFE LEGAL PLANS, INC. (DE) |
a) | HYATT LEGAL PLANS OF FLORIDA, INC. (FL) |
b) | BEQUEST, INC. (DE) |
1. | WILLWISER LLC (FL) |
2. | THE INHERITANCE COMPANY (DE) |
85. | ML Cerritos TC Member, LLC (DE) - Metropolitan Life Insurance Company owns 60% and 40% by Metropolitan Tower Life Insurance Company. |
86. | MetLife Boro Station Member, LLC (DE) |
87. | MetLife 8280 Member, LLC (DE) |
88. | Southcreek Industrial Holdings, LLC (DE) |
89. | MMP Owners, LLC (DE) - 98.82% is owned by MLIC and 1.18% is owned by Metropolitan Property and Casualty Insurance Company. |
ML Armature Member, LLC (DE) |
90. | ML-AI MetLife Member 4, LLC (DE) - 60% owned by MLIC and 40% owned by Metropolitan Tower Life Insurance Company. |
MMP OWNERS III, LLC (DE) |
a) | METLIFE MULTI-FAMILY PARTNERS III, LLC (DE) |
b) | MMP HOLDINGS III, LLC (DE) |
1. | MMP CEDAR STREET REIT, LLC (DE) |
a. | MMP CEDAR STREET OWNER, LLC (DE) |
2. | MMP SOUTH PARK REIT, LLC (DE) |
a. | MMP SOUTH PARK OWNER, LLC (DE) |
3. | MMP OLIVIAN REIT, LLC (DE) |
a. | MMP OLIVIAN OWNER, LLC (DE) |
MC PORTFOLIO JV MEMBER, LLC (DE) |
J. | MetLife Capital Trust IV (DE) |
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K. | MetLife Investment Advisors, LLC (DE) |
1. | MetLife Alternatives GP, LLC (DE) |
a) | MetLife International PE Fund I, LP (Cayman Islands) - 92.593% of the Limited Partnership interests of this entity is owned by MetLife Insurance K.K., 4.115% is owned by MetLife Mexico S.A., 2.716% is owned by MetLife Limited (Hong Kong) and the remaining 0.576% is owned by Metropolitan Life Insurance Company of Hong Kong Limited. |
b) | MetLife International PE Fund II, LP (Cayman Islands) - 94.54% of the limited partnership interests of MetLife International PE Fund II, LP is owned by MetLife Insurance K.K., 2.77% is owned by MetLife Limited (Hong Kong), 2.1% by MetLife Mexico, S.A. and 0.59% is owned by Metropolitan Life Insurance Company of Hong Kong Limited. |
c) | MetLife International HF Partners, LP (Cayman Islands) - 88.22% of the Limited partnership interests of this entity is owned by MetLife Insurance K.K. and 9.47% is owned by MetLife Insurance Company of Korea Limited, 2.29% is owned by MetLife Limited (Hong Kong) and 0.02% is owned by MetLife Alternatives, GP |
d) | MetLife International PE Fund III, LP (Cayman Islands) - 88.93% of the limited partnership interests of MetLife International PE Fund III, LP is owned by MetLife Insurance K.K., 7.91% is owned by MetLife Insurance Company of Korea Limited, 2.61% is owned by MetLife Limited (Hong Kong), and 0.55% is owned by Metropolitan Life Insurance Company of Hong Kong Limited. |
e) | MetLife International PE Fund IV, LP (Cayman Islands) - 94.70% of the limited partnership interests of MetLife International PE Fund IV, LP is owned by MetLife Insurance K.K., 3.79% is owned by MetLife Insurance Company of Korea Limited, 1.51% is owned by Metlife Limited (Hong Kong). |
f) | MetLife International PE Fund V, LP (Cayman Islands) - 81.699% of the Limited partnership interests of this entity is owned by MetLife Insurance K.K., 15.033% is owned by MetLife Limited (Hong Kong) and the remaining 3.268% is owned by MetLife Insurance Company of Korea. |
g) | MetLife International PE Fund VI, LP (Cayman Islands) - 76.323% of the Limited partnership interests of this entity is owned by MetLife Insurance K.K., 20.208% is owned by MetLife Limited and the remaining 3.469% is owned by MetLife Insurance Company of Korea. |
2. | MetLife Loan Asset Management LLC (DE) |
3. | MLIA SBAF COLONY MANAGER LLC (DE), METLIFE JAPAN US EQUITY FUND GP LLC (DE) |
4. | MetLife Core Property Fund GP, LLC (DE) |
a) | MetLife Core Property Fund, LP (DE) - MetLife Core Property Fund GP, LLC is the general partner of MetLife Core Property Fund, LP (the Fund). A substantial majority of the limited partnership interests in the Fund are held by third parties. The following affiliates hold limited partnership interests in the Fund: Metropolitan Life Insurance Company owns 15.60%, Metropolitan Life Insurance Company (on behalf of Separate Account 746) owns 2.52%, MetLife Insurance Company of Korea Limited owns 2.04%, MetLife Insurance K.K. owns 6.94%, Metropolitan Property and Casualty Insurance Company owns 1.76% and Metropolitan Tower Life Insurance Company owns 0.05%. |
i) | MetLife Core Property REIT, LLC (DE) |
1) | MetLife Core Property Holdings, LLC (DE) - MetLife Core Property Holdings, LLC also holds, directly or indirectly, the following limited liability companies (indirect ownership indicated in parenthesis): MCP Alley24 East, LLC; MCP Property Management, LLC; MCP One Westside, LLC; MCP 7 Riverway, LLC; MCPF Acquisition, LLC; MCP SoCal Industrial - Springdale, LLC; MCP SoCal Industrial - Concourse, LLC; MCP SoCal Industrial - Kellwood, LLC; MCP SoCal Industrial - Redondo, LLC; MCP SoCal Industrial - Fullerton, LLC; MCP SoCal Industrial - Loker, LLC; MCP Paragon Point, LLC; MCP 4600 South Syracuse, LLC; MCP The Palms at Doral, LLC; MCP Waterford Atrium, LLC; MCP EnV Chicago, LLC; MCP 1900 McKinney, LLC; MCP 550 West Washington, LLC; MCP 3040 Post Oak, LLC; MCP Plaza at Legacy, LLC; MetLife Core Property TRS, LLC; MCP SoCal Industrial - LAX, LLC; MCP SoCal Industrial - Anaheim, LLC; MCP SoCal Industrial - Canyon, LLC; MCP SoCal Industrial - Bernardo, LLC; MCP Ashton South End, LLC; MCP Lodge At Lakecrest, LLC; MCP Main Street Village, LLC; MCP Trimble Campus, LLC; MCP Highland Park Lender, LLC; MCP Buford Logistics Center Bldg B, LLC; MCP 22745 & 22755 Relocation Drive, LLC; MCP 9020 Murphy Road, LLC; MCP Atlanta Gateway, LLC; MCP Northyards Holdco, LLC; MCP Northyards Owner, LLC (100%); MCP Northyards Master Lessee, LLC (100%); MCP VOA Holdings, LLC; MCP VOA I & III, LLC (100%); MCP VOA II, LLC (100%); MCP West Broad Marketplace, LLC; MCP Union Row, LLC; MCP Fife Enterprise Center, LLC; MCP 2 Ames, LLC; MCP 2 Ames Two, LLC (100%); MCP 2 Ames One, LLC (100%); MCP 2 Ames Owner, LLC (89%); MCP 350 Rohlwing, LLC; MCP - Wellington, LLC; MCP Onyx, LLC; MCP Valley Forge, LLC; MCP Valley Forge Two, LLC (100%); MCP Valley Forge One, LLC (100%); MCP Valley Forge Owner, LLC (89%); MCP MA Property REIT, LLC; MCPF - Needham, LLC (100%); MCP 60 11th Street Member, LLC; 60 11th Street, LLC (100%); MCP Fife Enterprise Member, LLC; Fife Enterprise Center Venture, LLC (100%); MCP-English Village, LLC; MCP 100 Congress Member, LLC; 100 Congress Venture, LLC (55%); 100 Congress REIT, LLC (55%); 100 Congress Owner, LLC (55%); MCP DMCBP Phase II Member, LLC; DMCBP Phase II Venture, LLC (95%); Des Moines Creek Business Park Phase II, LLC (95%); MCP Magnolia Park Member, LLC; Magnolia Park Greenville Venture, LLC (90%); Magnolia Park Greenville, LLC (90%); MCP Denver Pavilions Member, LLC; Denver Pavilions Venture, LLC (80%); Denver Pavilions OwnerCo, LLC (80%); MCP Buford Logistics Center 2 Member, LLC; Buford Logistics Center 2 Venture, LLC (95%); Buford Logistics Center Bldg A Venture, LLC (95%); MCP Seattle Gateway I Member, LLC; Seattle Gateway I Venture, LLC (95%); Seattle Gateway Industrial I, LLC (95%); MCP 249 Industrial Business Park Member, LLC; 249 Industrial Business Park Venture, LLC (95%); 249 Industrial Business Park, LLC (95%); MCP Seattle Gateway II Member, LLC; Seattle Gateway II Venture, LLC (95%); Seattle Gateway Industrial II, LLC (95%); MCP Seventh and Osborn Retail Member, LLC; Seventh and Osborn Retail Venture, LLC (92.5%); Seventh and Osborn Retail, LLC (92.5%); MCP Seventh and Osborn MF Member, LLC; Seventh and Osborn MF Venture, LLC (92.5%); High Street Seventh and Osborn Apartments, LLC (92.5%); MCP Block 23 Member, LLC; Block 23 Residential Investors, LLC (90%); SLR Block 23 Residential Owner, LLC (90%); MCP Burnside Member, LLC; Alta Burnside Venture, LLC (92.5%); Alta Burnside, LLC (92.5%); MCP Mountain Technology Center Member TRS, LLC; Mountain Technology Center Venture, LLC (95%); Mountain Technology Center Venture Sub A, LLC (95%); Mountain Technology Center Venture Sub B, LLC (95%); Mountain Technology Center Venture Sub C, LLC (95%); Mountain Technology Center Venture Sub D, LLC (95%); Mountain Technology Center Venture Sub E, LLC (95%). |
aa) | MCP Property Management, LLC (DE) |
bb) | MCP Core Property TRS, LLC (DE) |
MCP COMMON DESK TRS, LLC (DE) |
5. | MIM I LLC (PA), MIM EMD GP, LLC (DE) |
6. | MIM Property Management, LLC (DE) |
a) | MIM Property Management of Georgia 1, LLC (DE) |
7. | MetLife Commercial Mortgage Income Fund GP, LLC (DE) |
a) | MetLife Commercial Mortgage Income Fund, LP (DE) - MetLife Commercial Mortgage Income Fund GP, LLC is the general partner of MetLife Commercial Mortgage Income Fund, LP (the Fund). A majority of the limited partnership interests in the Fund are held by third parties. The following affiliates hold limited partnership interests in the Fund: Metropolitan Life Insurance Company owns 26.6%, MetLife Insurance Company of Korea Limited owns 2.1%, MetLife Limited owns 2.7%, Metropolitan Life Insurance Company of Hong Kong Limited owns 0.03% and Metropolitan Tower Life Insurance Company owns 2.7% (the remainder is held by third party investors). |
i) | MetLife Commercial Mortgage REIT, LLC (DE) |
1) | MetLife Commercial Mortgage Originator, LLC (DE) |
aa) | MCMIF Holdco I, LLC (DE) |
bb) | MCMIF Holdco II, LLC (DE) |
8. | MLIA SBAF Manager, LLC (DE) |
9. | MLIA Manager I, LLC (DE) |
10. | ML - URS PORT CHESTER SC MANAGER, LLC (DE), ML BELLEVUE MANAGER, LLC (DE) and MLIA Park Tower Manager, LLC (DE) |
11. | MetLife Middle Market Private Debt GP, LLC (DE) |
a. | MetLife Middle Market Private Debt Fund, LP (DE) - MetLife Middle Market Private Debt GP, LLC is the general partner of MetLife Middle Market Private Debt Fund, LP (the Fund). The following affiliates hold limited partnership interests in the Fund: MetLife Private Equity Holdings, LLC (31.15%) and Metropolitan Life Insurance Company (31.15%). The remainder is held by third party investors. |
12. | MetLife Middle Market Private Debt Parallel GP, LLC (DE) |
a. | MetLife Middle Market Private Debt Parallel Fund, LP (Cayman Islands) - MetLife Middle Market Private Debt Parallel GP, LLC is the general partner of MetLife Middle Market Private Debt Parallel Fund, LP. The following affiliate holds a limited partnership interest in the Fund: MetLife Insurance K.K. (100%). |
L. | 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. (TX) |
M. | Cova Life Management Company (DE) |
N. | MetLife Reinsurance Company of Charleston (SC) |
O. | MetLife Reinsurance Company of Vermont (VT) |
P. | Delaware American Life Insurance Company (DE) |
Q. | Federal Flood Certification LLC (TX) |
R. | MetLife Global Benefits, Ltd. (Cayman Islands) |
S. | Inversiones Metlife Holdco Dos Limitada (Chile) - 99.99946% of Inversiones MetLife Holdco Dos Limitada is owned by MetLife, Inc., 0.000535% is owned by MetLife International Holdings, LLC and 0.0000054% is owned by Natiloportem Holdings, LLC. |
T. | MetLife Consumer Services, Inc. (DE) |
U. | MetLife Global, Inc. (DE) |
V. | MetLife Insurance Brokerage, Inc. (NY) |
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W. | American Life Insurance Company (ALICO) (DE) |
1. | MetLife Insurance K.K. (Japan) |
a) | Communication One Kabushiki Kaisha (Japan) |
b) | FORTISSIMO CO., LTD (Japan) |
c) | METLIFE JAPAN US EQUITY OWNERS (BLOCKER) LLC (DE) |
2. | MetLife Global Holding Company I GmbH (SWISS I) (Switzerland) |
a) | MetLife, Life Insurance Company (Egypt) - 84.125% of MetLife, Life Insurance Company is owned by MetLife Global Holding Company I GmbH and the remaining interests are owned by third parties. |
b) | MetLife Global Holding Company II GmbH (Swiss II) (Switzerland) |
i) | MetLife Emeklilik ve Hayat A.S. (Turkey) - 99.98% of MetLife Emeklilik ve Hayat A.S. is owned by Metlife Global Holding Company II GmbH (Swiss II) and the remainder by third parties. |
ii) | ALICO European Holdings Limited (Ireland) |
1) | Closed Joint-stock Company Master-D (Russia) |
aa) | Joint-Stock Company MetLife Insurance Company (Russia) - 51% of Joint Stock Company MetLife Insurance Company is owned by Closed Joint-stock Company Master-D and 49% is owned by MetLife Global Holding Company II GmbH. |
iii) | MetLife Asia Holding Company Pte. Ltd. (Singapore) |
1) | MetLife Innovation Centre Pte. Ltd. (Singapore) |
2) | LumenLab Malaysia Sdn. Bhd. (Malaysia) |
iv) | MetLife Reinsurance Company of Bermuda Ltd. (Bermuda) |
v) | MetLife Investment Management Limited (United Kingdom) |
vi) | MM Global Operations Support Center, S.A. de C.V. (Mexico) - 99.999509% of MM Global Operations Support Center, S.A. de C.V. is held by MetLife Global Holding Company II GmbH (Swiss) and 0.00049095% is held by MetLife Global Holding Company I GmbH (Swiss). |
1. | Fundacion MetLife Mexico, A.C. (Mexico) |
vii) | MetLife Colombia Seguros de Vida S.A. (Colombia) - 89.999965713458300000% of MetLife Colombia Seguros de Vida S.A. is owned by MetLife Global Holding Company II GmbH , 10.000031593881300000000% is owned by MetLife Global Holding Company I GmbH, 0.000000897553447019009% is owned by International Technical and Advisory Services Limited, 0.000000897553447019009% is owned by Borderland Investments Limited and 0.000000897553447019009% by Natiloportem Holdings, LLC. |
viii) | PJSC MetLife (Ukraine) - 99.9988% of PJSC MetLife is owned by MetLife Global Holding Company II GmbH, .0006% is owned by ITAS and the remaining .0006% is owned by Borderland Investments Limited. |
ix) | MetLife Innovation Centre Limited (Ireland) |
x) | MetLife EU Holding Company Limited (Ireland) |
1) | MetLife Europe d.a.c (Ireland) |
1. | MetLife Pension Trustees Limited (United Kingdom) |
2) | Agenvita S.r.l. (Italy) |
3) | MetLife Europe Insurance d.a.c (Ireland) |
4) | MetLife Europe Services Limited (Ireland) |
5) | MetLife Services, Sociedad Limitada (Spain) |
6) | MetLife Slovakia S.r.o. (Slovakia) - 99.956% of MetLife Slovakia S.r.o. is owned by MetLife EU Holding Company Limited and 0.044% is owned by ITAS. |
7) | MetLife Solutions S.A.S. (France) |
8) | Metropolitan Life Societate de Administrare a unui Fond de Pensii Administrat Privat S.A. (Romania) - 99.9836% of Metropolitan Life Societate de Administrare a unui Fond de Pensii Administrat Privat S.A. is owned by MetLife EU Holding Company Limited and 0.0164% is owned by MetLife Services Sp z.o.o. |
9) | MetLife Towarzystwo Ubiezpieczen na Zycie I Reasekuracji S.A. (Poland) |
aa) | MetLife Services Sp z.o.o. (Poland) |
bb) | MetLife Towarzystwo Funduszy Inwestycyjnych, S.A. (Poland) |
cc) | MetLife Powszechne Towarzystwo Emerytalne S.A. (Poland) |
10) | MetLife Services Cyprus Limited (Cyprus) |
aa) | Hellenic Alico Life Insurance Company, Ltd. (Cyprus) - 27.5% of Hellenic Alico Life Insurance Company, Ltd. Is owned by MetLife Services Cyprus Limited and the remaining is owned by a third party. |
11) | MetLife Services EOOD (Bulgaria) |
12) | MetLife Life Insurance S.A. (Greece) |
aa) | MetLife Mutual Fund Company (Greece) - 90% of MetLife Mutual Fund Company is owned by MetLife Life Insurance S.A. (Greece) and the remaining by a third party. |
13) | First American-Hungarian Insurance Agency Limited (Hungary) |
xi) | MetLife Investment Management Holdings (Ireland)Limited (Ireland) |
1) | MetLife Investments Asia Limited (Hong Kong) |
2) | MetLife Syndicated Bank Loan Lux GP, S.a.r.l. (Luxembourg) |
aa) | MetLife BL Feeder (Cayman), LP (Cayman Islands) - MetLife BL (Cayman), LP is an investors in the Fund. The following affiliates hold limited partnership interest in the feeder: MetLife Limited (3.14%), MetLife Insurance K.K. (93.72%) and MetLife Insurance Company of Korea Limited (3.14%). |
bb) | MetLife BL Feeder, LP (DE) - MetLife BL Feeder, LP is an investor in the Fund. The following affiliate holds a limited partnership interest in the feeder: Metropolitan Life Insurance Company (49.26%). In addition, there is one third party investor (50.74%). |
cc) | MetLife Syndicated Bank Loan Fund, SCSp (Luxembourg) - MetLife Syndicated Bank Loan Lux GP, Sarl is the general partner of MetLife Syndicated Bank Loan Fund, SCSp (the Fund). The only investors in the Fund are MetLife BL Feeder (Cayman), LP and MetLife BL Feeder, LP. |
3) | MetLife Investments Limited (United Kingdom) - 99.9% of MetLife Investments Limited (UK) is MetLife Investment Management Holdings (Ireland) Limited and .01% by MetLife Global Holding Company II GmbH. |
4) | MetLife Latin America Asesorias e Inversiones Limitada (Chile) - 99.99% of MetLife Latin American Asesorias e Inversiones Limitada is owned by MetLife Investment Management Holdings (Ireland) Limited and .01% is owned by MetLife Global Holding Company II GmbH (Swiss). |
5) | MetLife Global Infrastructure LUX GP, S.a.r.l. (Luxembourg) |
xii) | MetLife Asia Services Sdn. Bhd (Malasya) |
1) | ALICO OPERATIONS, LLC (DE) |
2) | MetLife Asset Management Corp. (Japan) - The official entity name is MetLife Asset Management Corp. (Japan) and it is domiciled in Japan. |
3) | MetLife Seguros S.A. (Uruguay) |
xiii) | MetLife International Holdings, LLC (DE) |
1) | Natiloportem Holdings, LLC (DE) |
aa) | Excelencia Operativa y Tecnologica, S.A. de C.V. (Mexico) - 99% of Excelencia Operativa y Tecnologica, S.A. de C.V. is held by Natiloportem Holdings, LLC and 1% by MetLife Mexico Servicios, S.A. de C.V. |
i) | MLA Comercial, S.A. de C.V. (Mexico) 99% is owned by Excelencia Operativa y Tecnologica, S.A. de C.V. and 1% is owned by MetLife Mexico Servicios, S.A. de C.V. |
ii) | MLA Servicios, S.A. de C.V. (Mexico) 99% is owned by Excelencia Operativa y Tecnologica, S.A. de C.V. and 1% is owned by MetLife Mexico Servicios, S.A. de C.V. |
2) | PNB MetLife India Insurance Company Limited (India)- 32.05% is owned by MetLife International Holdings, LLC and the remainder is owned by third parties. |
3) | Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)- 99.99935% is owned by MetLife International Holdings, LLC and 0.00065% is owned by Natiloporterm Holdings, LLC. |
4) | MetLife Seguros S.A. (Argentina)- 95.5242% is owned by MetLife International Holdings, LLC, 2.6753% is owned by Natiloportem Holdings, LLC and 1.8005% by ITAS. |
5) | Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil)-66.662% is owned by MetLife International Holdings, LLC, 33.337% is owned by MetLife Worldwide Holdings, LLC and 0.001% is owned by Natiloportem Holdings, LLC. |
6) | MetLife Administradora de Fundos Multipatrocinados Ltda. (Brazil) - 99.99998% of MetLife Administradora de Fundos Multipatrocinados Ltda. is owned by MetLife International Holdings, LLC and 0.00002% by Natiloportem Holdings, LLC. |
7) | MetLife Seguros de Retiro S.A. (Argentina) - 96.8897% is owned by MetLife International Holdings, LLC, 3.1102% is owned by Natiloportem Holdings, LLC and 0.0001% by ITAS |
8) | Best Market S.A. (Argentina) - 5% of the shares are held by Natiloportem Holdings, LLC and 95% is owned by MetLife International Holdings, LLC. |
9) | Compania Inversora MetLife S.A. (Argentina) - 95.46% is owned by MetLife International Holdings, LLC and 4.54% is owned by Natiloportem Holdings, LLC. |
aa) | MetLife Servicios S.A. (Argentina) - 18.87% of the shares of MetLife Servicios S.A. is held by Compania Inversora MetLife S.A., 79.88% is owned by MetLife Seguros S.A., 0.99% is held by Natiloportem Holdings, LLC and 0.26% is held by MetLife Seguros de Retiro S.A. |
10) | MetLife Worldwide Holdings, LLC (DE) |
aa) | MetLife Limited (Hong Kong) |
i) | BIDV MetLife Life Insurance Limited Liability Company (Vietnam) - 60% of BIDV MetLife Life Insurance Limited Liability Company is held by MetLife Limited (Hong Kong) and the remainder by third parties |
11) | MetLife International Limited, LLC (DE) |
12) | MetLife Planos Odontologicos Ltda. (Brazil) - 99.999% is owned by MetLife International Holdings, LLC and 0.001% is owned by Natiloportem Holdings, LLC. |
13) | MetLife Asia Limited (Hong Kong) |
14) | AmMetLife Insurance Berhad (Malaysia) - 50.000002% of AmMetLife Insurance Berhad is owned by MetLife International Holdings, LLC and the remainder is owned by a third party. |
15) | AmMetLife Takaful Berhad (Malaysia) - 49.999997% of AmMetLife Takaful Berhad is owned by MetLife International Holdings, LLC and the remainder is owned by a third party. |
16) | MAXIS GBN S.A.S. (France) - 50% of MAXIS GBN S.A.S. is held by MetLife International Holdings, LLC and the remainder by third parties. |
17) | MetLife Mas, S.A. de C.V. (Mexico) - 99.99964399% MetLife Mas, SA de CV is owned by MetLife International Holdings, LLC and .00035601% is owned by International Technical and Advisory Services Limited. |
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18) | MetLife Ireland Holdings One Limited (Ireland) |
aa) | MetLife Global Holdings Corporation S.A. de C.V. (Mexico/Ireland) - 98.9% is owned by MetLife Ireland Holdings One Limited and 1.1% is owned by MetLife International Limited, LLC. |
i) | MetLife Ireland Treasury d.a.c (Ireland) |
1) | MetLife General Insurance Limited (Australia) |
2) | MetLife Insurance Limited (Australia) - 91.16468% of MetLife Insurance Limited (Australia) is owned by MetLife Ireland Treasury d.a.c and 8.83532% is owned by MetLife Global Holdings Corp. S.A. de C.V. |
aaa) | The Direct Call Centre PTY Limited (Australia) |
bbb) | MetLife Investments PTY Limited (Australia) |
i) | 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/Ireland) - 99.7% is owned by MetLife Global Holdings Corporation S.A. de C.V. and 0.3% is owned by MetLife International Holdings, LLC. |
1) | MetLife Mexico Holdings, S. de R.L. de C.V. (Mexico) - 99.99995% is owned by Metropolitan Global Management, LLC, and .00005% is owned by Excelencia Operativa y Tecnologica,S.A. de C.V. |
aaa) | MetLife Pensiones Mexico S.A. (Mexico)- 97.5125% is owned by MetLife Mexico Holdings, S. de R.L. de C.V. and 2.4875% is owned by MetLife International Holdings, LLC. |
bbb) | MetLife Mexico Servicios, S.A. de C.V. (Mexico) - 98% is owned by MetLife Mexico Holdings, S. de R.L. de C.V. and 2% is owned by MetLife International Holdings, LLC. |
ccc) | MetLife Mexico S.A. (Mexico)- 99.050271% is owned by MetLife Mexico Holdings, S. de R.L. de C.V. and 0.949729% is owned by MetLife International Holdings, LLC. |
i) | ML Capacitacion Comercial S.A. de C.V.(Mexico) - 99% is owned by MetLife Mexico S.A. and 1% is owned by MetLife Mexico Servicios, S.A. de C.V. |
2) | 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. |
aaa) | MetLife Financial Services, Co., Ltd. (South Korea) |
3. | International Investment Holding Company Limited (Russia) |
4. | Borderland Investments Limited (DE) |
a) | ALICO Hellas Single Member Limited Liability Company (Greece) |
5. | International Technical and Advisory Services Limited (ITAS) (DE) |
6. | ALICO Properties, Inc. (DE) - 51% of ALICO Properties, Inc. is owned by ALICO and the remaining interests are owned by third parties. |
a) | Global Properties, Inc. (DE) |
7. | MetLife American International Group and Arab National Bank Cooperative Insurance Company (Saudi Arabia) - 30% of MetLife American International Group and Arab National Bank Cooperative Insurance Company is owned by ALICO and the remaining interest by third parties. The Delaware Department of Insurance approved a disclaimer of affiliation and therefore, this company is not considered an affiliate under Delaware Law. |
X. | MetLife European Holdings, LLC (DE) |
Y. | MetLife Investment Management Holdings, LLC (DE) |
1) | Logan Circle Partners GP, LLC (PA) |
2) | Logan Circle Partners, L.P. (PA) |
a) | Logan Circle Partners I LLC (PA) |
b) | Logan Circle Partners Investment Management, LLC (DE) |
3) | MetLife Real Estate Lending Manager LLC (DE) |
4) | MetLife Real Estate Lending LLC (DE) |
5) | ML Venture 1 Manager, S. de R.L. de C.V. (Mexico) - 99.9% is owned by MetLife Investment Management Holdings, LLC and 0.1% is owned by MetLife Investment Management Holdings (Ireland) Limited. |
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
As described in their respective governing documents, MetLife, Inc. (the ultimate parent of the Depositor and MetLife Investors Distribution Company, the Registrants principal underwriter (the Underwriter)), which is incorporated in the state of Delaware, and the Depositor, which is incorporated in the state of New York, shall indemnify any person who is made or is threatened to be made a party to any civil or criminal suit, or any administrative or investigative proceeding, by reason of the fact that such person is or was a director or officer of the respective company, under certain circumstances, against liabilities and expenses incurred by such person.
MetLife, Inc. also has adopted a policy to indemnify employees (MetLife Employees) of MetLife, Inc. or its affiliates (MetLife), including any MetLife Employees serving as directors or officers of the Depositor or the Underwriter. Under the policy, MetLife, Inc. will, under certain circumstances, indemnify MetLife Employees for losses and expenses incurred in connection with legal actions threatened or brought against them as a result of their service to MetLife. The policy excludes MetLife directors and others who are not MetLife Employees, whose rights to indemnification, if any, are as described in the charter, bylaws or other arrangement of the relevant company.
MetLife, Inc. also maintains a Directors and Officers Liability and Corporate Reimbursement Insurance Policy under which the Depositor and the Underwriter, as well as certain other subsidiaries of MetLife, are covered. MetLife, Inc. also has secured a Financial Institutions Bond.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company, pursuant to the foregoing provisions, or otherwise, the 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 the Company of expenses incurred or paid by a director, officer or controlling person of the 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, the Company 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 the principal underwriter for the following investment companies: |
General American Separate Account Two
General American Separate Account Eleven
General American Separate Account Twenty-Eight
General American Separate Account Twenty-Nine
Metropolitan Life Separate Account E
Metropolitan Life Separate Account UL
Metropolitan Life Variable Annuity Separate Account II
Metropolitan Tower Separate Account One
Metropolitan Tower Separate Account Two
New England Life Retirement Investment Account
New England Variable Annuity Fund I
Paragon Separate Account A
Paragon Separate Account B
Paragon Separate Account C
Paragon Separate Account D
Security Equity Separate Account Twenty-Six
Security Equity Separate Account Twenty-Seven
Separate Account No. 13S
(b) | The following persons are the officers and directors of MetLife Investors Distribution Company. The principal business address for MetLife Investors Distribution Company is 200 Park Avenue, New York, NY 10166. |
Name and Principal Business Office |
Positions and Offices with Underwriter | |
Derrick Kelson 200 Park Avenue New York, NY 10166 |
Director, Chairman of the Board, President and Chief Executive Officer | |
Elisabeth Bedore One MetLife Way Whippany, NJ 07981 |
Vice President, Chief Compliance Officer | |
Kelli Buford 200 Park Avenue New York, NY 10166 |
Secretary | |
Frank Cassandra 501 Route 22 Bridgewater, NJ 08807 |
Director, Senior Vice President | |
Bradd Chignoli 501 Route 22 Bridgewater, NJ 08807 |
Director, Senior Vice President | |
Charles Connery One MetLife Way Whippany, NJ 07981 |
Vice President and Treasurer | |
Dina Lumerman 501 Route 22 Bridgewater, NJ 08807 |
Director, Senior Vice President | |
Justin Saudo 200 Park Avenue New York, NY 10166 |
Vice President and Chief Information Security Officer | |
Thomas Schuster 200 Park Avenue New York, NY 10166 |
Director, Senior Vice President | |
Stuart Turetsky 18210 Crane Nest Dr Tampa FL, 33647 |
Chief Financial Officer | |
Robin Wagner 200 Park Avenue New York, NY 10166 |
Legal Officer |
(c) | Compensation from the Registrant. |
(1) |
(2) Net Underwriting Discounts and Commissions |
(3) Compensation on Events Occasioning the Deduction of a Deferred Sales Load |
(4) Brokerage Commissions |
(5) Other Compensation | ||||
MetLife Investors Distribution Company |
$161,057 | $0 | $0 | $0 |
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 |
200 Park Avenue
New York, NY 10166
(d) | MetLife |
18210 Crane Nest Drive
Tampa, FL 33647
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 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 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 by the undersigned, in the township of Bergenfield and the State of New Jersey, on April 23, 2020.
Metropolitan Life Separate Account UL | ||
By: | Metropolitan Life Insurance Company | |
By: | /s/ Dina Lumerman | |
Dina Lumerman Senior Vice President |
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 township of Bergenfield and the State of New Jersey on April 23, 2020.
Metropolitan Life Insurance Company | ||
BY: | /s/ Dina Lumerman | |
Dina Lumerman Senior Vice President |
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed by the following persons, in the capacities indicated, on April 23, 2020.
SIGNATURE | TITLE | |
* | Chairman of the Board and Director | |
R. Glenn Hubbard | ||
* | President and Chief Executive Officer and Director | |
Michel A. Khalaf | ||
* | Executive Vice President and Chief Financial Officer | |
John Dennis McCallion | and Treasurer | |
* | Executive Vice President and Chief Accounting Officer | |
Tamara Schock | ||
* | Director | |
Cheryl W. Grisé | ||
* | Director | |
Carlos M. Gutierrez | ||
* | Director | |
Gerald L. Hassell | ||
* | Director | |
David L. Herzog | ||
* | Director | |
Edward J. Kelly, III | ||
* | Director | |
William E. Kennard | ||
* | Director | |
James M. Kilts | ||
* | Director | |
Catherine R. Kinney | ||
* | Director | |
Diana McKenzie | ||
* | Director | |
Denise M. Morrison | ||
* | Director | |
Mark A. Weinberger |
By: | /s/ Robin Wagner | |
Robin Wagner Attorney-in-fact |
*Executed by Robin Wagner on behalf of those indicated pursuant to powers of attorney.
Exhibit Index
(n) | Consent of Independent Registered Public Accounting Firm |
Exhibit (n)
Consent of Independent Registered Public Accounting Firm
We consent to the use in this Registration Statement File Nos. 333-40161/811-06025 on Form N-6 of our report dated March 27, 2020, relating to the financial statements comprising each of the Divisions of Metropolitan Life Separate Account UL, and our report dated March 9, 2020, relating to the financial statements of Metropolitan Life Insurance Company, both appearing in the Statement of Additional Information, which is part of such Registration Statement. We also consent to the reference to us under the heading Independent Registered Public Accounting Firm in such Statement of Additional Information.
/s/ DELOITTE & TOUCHE LLP
Tampa, Florida
April 23, 2020