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As filed with the U.S. Securities and Exchange Commission on April 23, 2020
Registration Nos. 333-147508
811-06025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-6
Registration Statement
Under
| the Securities Act of 1933 | ☐ | |||
| Pre-Effective Amendment No. | ☐ | |||
| Post-Effective Amendment No. 12 | ||||
| Registration Statement Under | ||||
| the Investment Company Act of 1940 | ☐ | |||
| Amendment No. 96 | ||||
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 depositor’s principal executive offices)
Depositor’s Telephone Number, including Area Code: (212) 578-9500
Stephen 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, Esquire
Vedder Price P.C.
1401 I Street, N.W.
Suite 1100
Washington, D.C. 20005
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: Flexible Premium Variable Universal Life Insurance Policies. |
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EQUITY ADVANTAGE VUL
Flexible Premium
Variable Life Insurance Policies
Issued by
Metropolitan Life Separate Account UL of
Metropolitan Life Insurance Company
May 1, 2020
This prospectus describes individual flexible premium variable life insurance policies (the “Policies”) issued by Metropolitan Life Insurance Company (“MetLife”). The Policies are no longer offered for sale.
You allocate net premiums among the Divisions of Metropolitan Life Separate Account UL (the “Separate Account”). Each Division of the Separate Account invests in shares of one of the following “Portfolios” (Divisions may be referred to as “Investment Divisions” in your Policy):
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You may also allocate net Premiums to our Fixed Account. Special limits may apply to Fixed Account transfers and withdrawals.
You receive Fixed Account performance until 20 days after we apply your initial premium payment to the Policy. Thereafter, we invest the Policy’s Cash Value according to your instructions.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these policies or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
We do not guarantee how any of the Divisions or Portfolios will perform. The Policies and the Portfolios are not deposits or obligations of, or guaranteed or endorsed by, any financial institution and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
IMPORTANT INFORMATION
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of a Portfolio’s 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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| RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE’S DESIGNATED OFFICE |
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| Charges Against the Portfolios and the Divisions of the Separate Account |
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| APPENDIX A: GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST |
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This summary describes the Policy’s important benefits and risks. The sections in the prospectus following this summary discuss the Policy in more detail. The Glossary at the end of the prospectus defines certain words and phrases used in this prospectus.
Death Proceeds. The Policy is designed to provide insurance protection. Upon receipt of satisfactory proof of the death of the insured, we pay death proceeds to the beneficiary of the Policy. Death proceeds generally equal the death benefit on the date of the insured’s death plus any additional insurance provided by rider, less any outstanding loan and accrued loan interest.
Choice of Death Benefit Option. You may choose among three death benefit options:
| — | a level death benefit that equals the Policy’s face amount; |
| — | a variable death benefit that equals the Policy’s face amount plus the Policy’s cash value; and |
| — | a combination variable and level death benefit that equals the Policy’s face amount plus the Policy’s cash value until the insured attains age 65 and equals the Policy’s face amount thereafter. |
The death benefit under any option could increase to satisfy Federal tax law requirements if the cash value reaches certain levels. After the first Policy year you may change your death benefit option, subject to our underwriting rules. A change in death benefit option may have tax consequences.
Premium Flexibility. You can make premium payments based on a schedule you determine, subject to some limits. You may change your payment schedule at any time or make a payment that does not correspond to your schedule. We can, however, limit or prohibit payments in some situations.
Right to Examine the Policy. During the first ten days following your receipt of the Policy, you have the right to return the Policy to us. If you exercise this right, we will refund the premiums you paid.
Investment Options. You can allocate your net Premiums and Cash Value among your choice of Divisions available in the Separate Account, each of which corresponds to a mutual fund portfolio, or “Portfolio.” The Portfolios available under the Policy include several common stock funds, including funds which invest primarily in foreign securities, as well as bond funds, balanced funds, asset allocation funds and funds that invest in exchange-traded funds. You may also allocate Premiums and Cash Value to our Fixed Account which provides guarantees of interest and principal. You may change your allocation of future premiums at any time.
We currently limit the amount of Cash Value You may transfer to or from any one Division to a maximum of $2.5 million per day. If You own more than one Equity Advantage VUL Policy on the same insured, this limit will be applied to the cumulative transfers You make to or from the Division under all such Policies.
Partial Withdrawals. You may withdraw cash surrender value from your Policy at any time after the first Policy anniversary. The minimum amount you may withdraw is $500. We reserve the right to limit partial withdrawals to no more than 90% of the Policy’s cash surrender value. We may limit the number of partial withdrawals to 12 per Policy year or impose a processing charge of $25 for each partial withdrawal. Partial withdrawals may have tax consequences.
Transfers and Automated Investment Strategies. You may transfer your Policy’s Cash Value among the Divisions or between the Divisions and the Fixed Account. The minimum amount you may transfer is $50, or if less, the total amount in the Division or the Fixed Account. We may limit the number of transfers among the
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Divisions and the Fixed Account to no more than four per Policy year. We may impose a processing charge of $25 for each transfer. We may also impose restrictions on frequent transfers. (See “Transfers” for additional information on such restrictions.) We offer five automated investment strategies that allow you to periodically transfer or reallocate your cash value among the Divisions and the Fixed Account. (See “Automated Investment Strategies.”)
Loans. You may borrow from the Cash Value of your Policy. The minimum amount you may borrow is $500. The maximum amount you may borrow is an amount equal to the Policy’s Cash Value net of the Surrender Charge, reduced by Monthly Deductions and interest charges through the next Policy anniversary, increased by interest credits through the next Policy anniversary, less any existing Policy loans. We charge you a maximum annual interest rate of 4.0% for the first ten Policy years and 3.0% thereafter. We credit interest at an annual rate of at least 3.0% on amounts we hold as collateral to support your loan. Loans may have tax consequences. (See “Loans” for additional information.)
Surrenders. You may surrender the Policy for its cash surrender value at any time. Cash surrender value equals the Cash Value reduced by any Policy loan and accrued loan interest and by any applicable Surrender Charge. A surrender may have tax consequences.
Tax Benefits. We anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. Accordingly, undistributed increases in Cash Value should not be taxable to you. As long as your Policy is not a modified endowment contract, partial withdrawals should be non-taxable until you have withdrawn an amount equal to your total investment in the Policy. However, different rules apply in the first fifteen Policy years, as distributions accompanied by benefit reductions may be taxable prior to a complete withdrawal of your investment in the Policy. Always confirm in advance the tax consequences of a particular withdrawal with a qualified tax adviser. Death benefits paid to your beneficiary should generally be free of Federal income tax. Death benefits may be subject to estate taxes. Under current Federal income tax law, the taxable portion of distributions from variable life policies is taxed at ordinary income tax rates and does not qualify for the reduced tax rate applicable to long-term capital gains and dividends.
Conversion Right. During the first two Policy years, you may convert the Policy to fixed benefit coverage by exchanging the Policy for a fixed benefit life insurance policy that we agree to, and that is issued by us or an affiliate that we name. We will make the exchange without evidence of insurability.
Supplemental Benefits and Riders. We offer a variety of riders that provide supplemental benefits under the Policy. We generally deduct any monthly charges for these riders as part of the Monthly Deduction. Your registered representative can help you determine whether any of these riders are suitable for you.
Personalized Illustrations. You will receive personalized illustrations in connection with the purchase of this Policy that reflect your own particular circumstances. These hypothetical illustrations may help you to understand the long-term effects of different levels of investment performance, the possibility of lapse, and the charges and deductions under the Policy. They will also help you to compare this Policy to other life insurance policies. The personalized illustrations are based on hypothetical rates of return and are not a representation or guarantee of investment returns or Cash Value.
Investment Risk. If you invest your Policy’s Cash Value in one or more of the Divisions, then you will be subject to the risk that investment performance will be unfavorable and that your Cash Value will decrease. In addition, we deduct Policy fees and charges from your Policy’s Cash Value, which can significantly reduce your Policy’s Cash Value. During times of poor investment performance, this deduction will have an even greater impact on your Policy’s Cash Value. It is possible to lose your full investment and your Policy could lapse without value, unless you pay additional premium. If you allocate Cash Value to the Fixed Account, then we
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credit such Cash Value with a declared rate of interest. You assume the risk that the rate may decrease, although it will never be lower than the guaranteed minimum annual effective rate of 3%.
Surrender and Withdrawal Risks. The Policies are designed to provide lifetime insurance protection. They are not offered primarily as an investment, and should not be used as a short-term savings vehicle. If you surrender the Policy within the first ten (10) Policy years (or within the first ten (10) Policy years following a face amount increase), you will be subject to a Surrender Charge as well as income tax on any gain that is distributed or deemed to be distributed from the Policy. You will also be subject to a Surrender Charge if you make a partial withdrawal from the Policy within the first ten (10) Policy years (or the first ten (10) Policy years following the face amount increase) if the partial withdrawal reduces the face amount (or the face amount increase). If you surrender the Policy in the first Policy year (or in the first year following a face amount increase) we will also deduct an amount equal to the remaining first year Coverage Expense Charges.
You should purchase the Policy only if you have the financial ability to keep it in force for a substantial period of time. You should not purchase the Policy if you intend to surrender all or part of the Policy’s Cash Value in the near future. Even if you do not ask to surrender your Policy, surrender charges may play a role in determining whether your Policy will lapse (terminate without value), because surrender charges determine the cash surrender value, which is a measure we use to determine whether your Policy will enter the grace period (and possibly lapse).
Risk of Lapse. Your Policy may lapse if you have paid an insufficient amount of Premiums or if the investment experience of the Divisions is poor. If your cash surrender value is not enough to pay the Monthly Deduction, your Policy may enter a 62-day grace period. We will notify you that the Policy will lapse unless you make a sufficient payment of additional Premium during the grace period. Your Policy generally will not lapse if you pay certain required Premium amounts and you are therefore protected by a Guaranteed Minimum Death Benefit. If your Policy does lapse, your insurance coverage will terminate, although you will be given an opportunity to reinstate it. Lapse of a Policy on which there is an outstanding loan may have adverse tax consequences.
Tax Risks. We anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. However, the rules are not entirely clear in certain circumstances, for example, if your Policy is issued on a substandard basis. The death benefit under the Policy will never be less than the minimum amount required for the Policy to be treated as life insurance under section 7702 of the Internal Revenue Code, as in effect on the date the Policy was issued. If your Policy is not treated as a life insurance contract under Federal tax law, increases in the Policy’s Cash Value will be taxed currently.
Even if your Policy is treated as a life insurance contract for Federal tax purposes, it may become a modified endowment contract due to the payment of excess Premiums or unnecessary Premiums, due to a material change or due to a reduction in your death benefit. If your Policy becomes a modified endowment contract, surrenders, partial withdrawals, loans, and use of the Policy as collateral for a loan will be treated as a distribution of the earnings in the Policy and will be taxable as ordinary income to the extent thereof. In addition, if the Policy Owner is under age 591⁄2 at the time of the surrender, partial withdrawal or loan, the amount that is included in income will generally be subject to a 10% penalty tax.
If the Policy is not a modified endowment contract, distributions generally will be treated first as a return of basis or investment in the Policy and then as taxable income. However, different rules apply in the first fifteen Policy years, as distributions accompanied by benefit reductions may be taxable prior to a complete withdrawal of your investment in the Policy. Moreover, loans will generally not be treated as distributions prior to termination of your Policy, whether by lapse, surrender or exchange. Finally, neither distributions nor loans from a Policy that is not a modified endowment contract are subject to the 10% penalty tax.
See “Tax Considerations.” You should consult a qualified tax adviser for assistance in all Policy-related tax matters.
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Loan Risks. A Policy loan, whether or not repaid, will affect the Cash Value of your Policy over time because we subtract the amount of the loan from the Divisions and/or Fixed Account as collateral, and hold it in our Loan Account. This loan collateral does not participate in the investment experience of the Divisions or receive any higher current interest rate credited to the Fixed Account.
We also reduce the amount we pay on the insured’s death by the amount of any outstanding loan and accrued loan interest. Your Policy may lapse if your outstanding loan and accrued loan interest reduce the cash surrender value to zero.
If you surrender your Policy or your Policy lapses while there is an outstanding loan, there will generally be Federal income tax payable on the amount by which loans and partial withdrawals exceed the premiums paid. Since loans and partial withdrawals reduce your Policy’s Cash Value, any remaining Cash Value may be insufficient to pay the income tax due.
Limitations on Cash Value in the Fixed Account. Transfers to and from the Fixed Account must generally be in amounts of $50 or more. Partial withdrawals from the Fixed Account must be in amounts of $500 or more. The total amount of transfers and withdrawals from the Fixed Account in a Policy year may generally not exceed the greater of 25% of the Policy’s cash surrender value in the Fixed Account at the beginning of the year, or the maximum transfer amount for the preceding Policy year. We may also limit the number of transfers and partial withdrawals and may impose a processing charge for transfers and partial withdrawals. We are not currently imposing the maximum limit on transfers and withdrawals from the Fixed Account, but we reserve the right to do so. It is important to note that if we impose the maximum limit on transfers and withdrawals from the Fixed Account, it could take a number of years to fully transfer or withdraw a current balance from the Fixed Account. You should keep this in mind when considering whether an allocation of Cash Value to the Fixed Account is consistent with your risk tolerance and time horizon.
Tax Law Changes. Tax laws, regulations, and interpretations have often been changed in the past and such changes continue to be proposed. To the extent that you purchase a Policy based on expected tax benefits, relative to other financial or investment products or strategies, there is no certainty that such advantages will always continue to exist.
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 Company’s operations, business, financial results, or financial condition.
A comprehensive discussion of the risks associated with each of the Portfolios can be found in the Portfolio prospectuses, which you can obtain by calling 1-800-638-5000. There is no assurance that any of the Portfolios will achieve its stated investment objective.
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The following tables describe the fees and expenses that a Policy Owner will pay when buying, owning and surrendering the Policy. The first table describes the fees and expenses that a Policy Owner will pay at the time he or she buys the Policy, surrenders the Policy or transfers Cash Value among accounts.
| Charge |
When Charge is Deducted |
Current Amount Deducted |
Maximum Amount Deductible | |||
| Sales Charge Imposed on Premiums |
On payment of premium | 2.25% of premiums paid up to the Target Premium per Policy year1 | 2.25% of each premium paid | |||
| Premium Tax Imposed on Premiums |
On payment of premium | 2.0% in all Policy years | 2.0% in all Policy years | |||
| Federal Tax Imposed on Premiums |
On payment of premium | 1.25% in all Policy years | 1.25% in all Policy years | |||
| 1 | The target premium varies based on individual characteristics, including the insured’s issue age, risk class and (except for unisex Policies) sex. |
| Charge |
When Charge is Deducted |
Current Amount Deducted |
Maximum Amount Deductible | |||
| Surrender Charge1 |
On surrender, lapse, or face amount reduction in the first ten (10) Policy years (and, with respect to a face amount increase, in the first ten (10) Policy years after the increase) | |||||
| Minimum and Maximum Charge |
In Policy year 1, $3.75 to $38.25 per $1,000 of base Policy face amount2 |
In Policy year 1, $3.75 to $38.25 per $1,000 of base Policy face amount2 | ||||
| Charge in the first Policy year for a Representative Insured 3 |
$14.00 per $1,000 of base Policy face amount | $14.00 per $1,000 of base Policy face amount | ||||
| Transfer Charge4 |
On transfer of cash value among the Divisions and to and from the Fixed Account | Not currently charged | $25 for each transfer | |||
| Partial Withdrawal Charge |
On partial withdrawal of cash value | Not currently charged | $25 for each partial withdrawal5 | |||
| Illustration of Benefits Charge |
On provision of each illustration in excess of one per year | Not currently charged | $25 per illustration | |||
| 1 | The Surrender Charge varies based on individual characteristics, including the insured’s issue age, risk class, sex (except for unisex Policies), smoker status, and the Policy’s face amount. The Surrender Charge |
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| may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the Surrender Charge that would apply for a particular insured by contacting your registered representative. |
| 2 | No Surrender Charge will apply on up to 10% of cash surrender value withdrawn each year. The Surrender Charge will remain level for one to three Policy years, and will then begin to decline on a monthly basis until it reaches zero in the last month of the tenth Policy year. The Surrender Charge applies to requested face amount reductions as well as to face amount reductions resulting from a change in death benefit option. |
| 3 | The Representative Insured is a male, age 35, in the preferred nonsmoker risk class, under a Policy with a base Policy face amount of $375,000. |
| 4 | The Portfolios in which the Divisions invest may impose a redemption fee on shares held for a relatively short period. |
| 5 | If imposed, the partial withdrawal charge would be in addition to any Surrender Charge that is imposed. |
The next table describes the fees and expenses that a Policy Owner will pay periodically during the time that he or she owns the Policy, not including Portfolio fees and expenses.
Periodic Charges other than Portfolio Operating Expenses
| Charge |
When Charge is Deducted |
Current Amount Deducted |
Maximum Amount Deductible | |||
| Cost of Insurance1 |
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| Minimum and Maximum Charge |
Monthly | $.01 to $83.33 per $1,000 of net amount at risk2 | $.02 to $83.33 per $1,000 of net amount at risk2 | |||
| Charge in the first Policy year for a Representative Insured 3 |
Monthly | $.02 per $1,000 of net amount at risk | $.09 per $1,000 of net amount at risk | |||
| Policy Charge4 |
||||||
| Policy face amount less than $50,000 |
Monthly | $12 | $12 | |||
| Policy face amount between $50,000 and $249,999 |
Monthly | $15 | $15 | |||
| Mortality and Expense Risk Charge (annual rate imposed on Cash Value in the Separate Account)5 |
Monthly | .60% | .80% | |||
| Coverage Expense Charge6 |
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| Minimum and Maximum Charge |
Monthly | $.04 to $2.30 per $1,000 of base Policy face amount7 | $.04 to $2.30 per $1,000 of base Policy face amount | |||
| Charge for a Representative Insured 3 |
Monthly | $.16 per $1,000 of base Policy face amount7 | $.16 per $1,000 of base Policy face amount | |||
| Loan Interest Spread8 |
Annually (or on loan termination, if earlier) | 1.00% of loan collateral | 1.00% of loan collateral | |||
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| 1 | The cost of insurance charge varies based on individual characteristics, including the Policy’s face amount and the insured’s age, risk class, and (except for unisex Policies) sex. The cost of insurance charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the cost of insurance charge that would apply for a particular insured by contacting your registered representative. |
| 2 | The net amount at risk is the difference between the death benefit (generally discounted at the monthly equivalent of 3% per year) and the Policy’s Cash Value. |
| 3 | The Representative Insured is a male, age 35, in the preferred nonsmoker risk class, under a Policy with a base Policy face amount of $375,000. |
| 4 | After the first Policy Year, the Policy Charge declines to $9 for a Policy with a face amount of less than $50,000, and to $8 for a Policy with a face amount between $50,000 and $249,999. No Policy Charge applies if a Policy is issued with a face amount equal to or greater than $250,000. |
| 5 | The Mortality and Expense Risk Charge declines over time in accordance with the following schedule: |
| Current Charge | Maximum Charge | |||||||
| Policy years 1 - 10 |
.60 | % | .80 | % | ||||
| Policy years 11 - 19 |
.35 | % | .35 | % | ||||
| Policy years 20 - 29 |
.20 | % | .20 | % | ||||
| Policy years 30+ |
.05 | % | .05 | % | ||||
The Current Charge Percentages shown above apply if the Policy’s net Cash Value is less than the equivalent of five Target Premiums. The percentages decrease as the Policy’s net Cash Value, measured as a multiple of Target Premiums, increases, as shown below:
| Less than 5 target premiums |
At least 5 but less than 10 target premiums |
At least 10 but less than 20 target premiums |
20 or more target premiums |
|||||||||||||
| Policy years 1- 10 |
.60 | % | .55 | % | .30 | % | .15 | % | ||||||||
| Policy years 11- 19 |
.35 | % | .30 | % | .15 | % | .10 | % | ||||||||
| Policy years 20- 29 |
.20 | % | .15 | % | .10 | % | .05 | % | ||||||||
| Policy years 30+ |
.05 | % | .05 | % | .05 | % | .05 | % | ||||||||
| 6 | The Coverage Expense Charge varies based on individual characteristics, including the Policy’s face amount and the Insured’s age, risk class, and (except for unisex Policies) sex. The Coverage Expense Charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the Coverage Expense Charge that would apply to a particular insured by contacting your registered representative. |
| 7 | The Coverage Expense Charge is imposed in Policy years 1-8 and, with respect to a requested face amount increase, during the first eight years following the increase. If you surrender the Policy in the first Policy year (or in the first year following a face amount increase), we will deduct from the surrender proceeds an amount equal to the Coverage Expense Charges due for the remainder of the first Policy year (or the first year following the face amount increase). If the Policy’s face amount is reduced in the first year following a face amount increase, we will deduct from the Cash Value an amount equal to the Coverage Expense Charges due for the remainder of the first year following the face amount increase. |
| 8 | The loan interest spread is the difference between the interest rates we charge on Policy loans and the interest earned on Cash Value we hold as security for the loan (“loan collateral”). We charge interest on Policy loans at an effective rate of 4.0% per year in Policy years 1-10 and 3.0% thereafter. Loan collateral earns interest at an effective rate of not less than 3.0% per year. |
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Charges for Optional Features (Riders):
| Charge |
When Charge is Deducted | Current Amount Deducted |
Maximum Amount Deductible | |||||
| Guaranteed Survivor Income Benefit Rider1 |
||||||||
| Minimum and Maximum Charge |
Monthly | $.01 to $1.08 per $1,000 of Eligible Death Benefit | $.01 to $83.33 per $1,000 of Eligible Death Benefit | |||||
| Charge for a Representative Insured2 |
Monthly | $.02 per $1,000 of Eligible Death Benefit | $.02 per $1,000 of Eligible Death Benefit | |||||
| Children’s Term Insurance Rider |
Monthly | $.40 per $1,000 of rider face amount | $.40 per $1,000 of rider face amount | |||||
| Waiver of Monthly Deduction Rider3 |
||||||||
| Minimum and Maximum Charge |
Monthly | $.00 to $61.44 per $100 of Monthly Deduction | $.00 to $61.44 per $100 of Monthly Deduction | |||||
| Charge in the first Policy year for a Representative insured4 |
Monthly | $6.30 per $100 of Monthly Deduction | $6.30 per $100 of Monthly Deduction | |||||
| Waiver of Specified Premium Rider |
||||||||
| Minimum and Maximum Charge |
Monthly | $.00 to $21.75 per $100 of Specified Premium | $.00 to $21.75 per $100 of Specified Premium | |||||
| Charge in the first Policy year for a Representative Insured4 |
Monthly | $3.00 per $100 of Specified Premium | $3.00 per $100 of Specified Premium | |||||
| 1 | The charge for the Guaranteed Survivor Income Benefit Rider varies based on individual characteristics, including the rider’s Eligible Death Benefit and the insured’s age, risk class, and (except for unisex Policies) sex. The rider change may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the rider charge that would apply for a particular insured by contacting your registered representative. |
| 2 | The Representative Insured is a male, age 35, in the preferred nonsmoker risk class, under a Policy with an Eligible Death Benefit of $375,000. |
| 3 | The charge for this rider varies based on individual characteristics, including the insured’s age, risk class, and (except for unisex Policies) sex. The rider charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the rider charge that would apply for a particular insured by contacting your registered representative. |
| 4 | The Representative Insured is a male, age 35, in the preferred nonsmoker risk class. |
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| Charge |
When Charge is Deducted | Current Amount Deducted |
Maximum Amount Deductible | |||
| Options to Purchase Additional Insurance Coverage Rider1 |
||||||
| Minimum and Maximum Charge |
Monthly | $.02 to $.25 per $1,000 of Option amount | $.02 to $.25 per $1,000 of Option amount | |||
| Charge for a Representative Insured2 |
Monthly | $.03 per $1,000 of Option amount | $.03 per $1,000 of Option amount | |||
| Accidental Death Benefit Rider1 |
||||||
| Minimum and Maximum Charge |
Monthly | $.00 to $.34 per $1,000 of rider face amount | $.00 to $83.33 per $1,000 of rider face amount | |||
| Charge in the first Policy year for a Representative Insured2 |
Monthly | $.05 per $1,000 of rider face amount | $.08 per $1,000 of rider face amount | |||
| Guaranteed Minimum Death Benefit Rider1,3 |
||||||
| Minimum and Maximum Charge |
Monthly | $.03 to $.14 per $1,000 of net amount at risk | $.03 to $83.33 per $1,000 of net amount at risk | |||
| Charge for a Representative Insured4 |
Monthly | $.03 per $1,000 of net amount at risk | $.03 per $1,000 of net amount at risk | |||
| Acceleration of Death Benefit Rider |
At time of benefit payment | Not currently charged | One-time fee of $150 | |||
| Overloan Protection Rider |
At time of exercise | One-time fee of 3.5% of Policy cash value | One-time fee of 3.5% of Policy cash value | |||
| 1 | The charge for this rider varies based on individual characteristics, including the insured’s age, risk class, and (except for unisex Policies) sex. The rider charge may not be representative of the charge that a particular Policy Owner would pay. You can obtain more information about the rider charge that would apply for a particular insured by contacting your registered representative. |
| 2 | The Representative Insured is a male, age 35, in the preferred nonsmoker risk class. |
| 3 | The charge shown applicable to both the Guaranteed Minimum Death Benefit to Age 85 Rider and the Guaranteed Minimum Death Benefit to Age 121 Rider. |
| 4 | The Representative Insured is a female, age 45, in the preferred nonsmoker risk class. |
Annual Portfolio Operating Expenses
The next table describes the Portfolio fees and expenses that a Policy Owner may pay periodically during the time that he or she owns the Policy. The table shows the minimum and maximum total operating expenses charged by the Portfolios for the fiscal year ended December 31, 2019. Expenses of the Portfolios may be higher or lower in the future. More detail concerning each Portfolio’s fees and expenses is contained in the table that follows and in the prospectus for each Portfolio.
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Table of Contents
Annual Operating Expenses
(as a percentage of average net assets)
Minimum and Maximum Total Annual Portfolio Operating Expenses
| Minimum | Maximum | |||||||
| Total Annual Portfolio Operating Expenses |
||||||||
| (expenses that are deducted from Portfolio assets, including management fees, distribution and/or service (12b-1) fees, and other expenses) |
0.28 | % | 1.42 | % | ||||
Portfolio Fees and Expenses
(as a percentage of average daily net assets)
The following table is a summary. For more complete information on Portfolio fees and expenses, please refer to the prospectus for each Portfolio.
| Portfolio |
Management Fee |
Distribution and/or Service (12b-1) Fees |
Other Expenses |
Acquired Fund Fees and Expenses |
Total Annual Operating Expenses |
Fee Waiver and/or Expense Reimbursement |
Net Total Annual Operating Expenses |
|||||||||||||||||||||
| American Funds Insurance Series® — Class 2 |
||||||||||||||||||||||||||||
| American Funds Bond Fund |
0.36 | % | 0.25 | % | 0.04 | % | — | 0.65 | % | — | 0.65 | % | ||||||||||||||||
| American Funds Global Small Capitalization Fund |
0.70 | % | 0.25 | % | 0.06 | % | — | 1.01 | % | — | 1.01 | % | ||||||||||||||||
| American Funds Growth Fund |
0.32 | % | 0.25 | % | 0.04 | % | — | 0.61 | % | — | 0.61 | % | ||||||||||||||||
| American Funds Growth-Income Fund |
0.26 | % | 0.25 | % | 0.04 | % | — | 0.55 | % | — | 0.55 | % | ||||||||||||||||
| Brighthouse Funds Trust I |
||||||||||||||||||||||||||||
| AB Global Dynamic Allocation Portfolio — Class B |
0.61 | % | 0.25 | % | 0.04 | % | 0.01 | % | 0.91 | % | 0.02 | % | 0.89 | % | ||||||||||||||
| American Funds® Balanced Allocation Portfolio — Class B |
0.06 | % | 0.25 | % | 0.01 | % | 0.42 | % | 0.74 | % | — | 0.74 | % | |||||||||||||||
| American Funds® Growth Allocation Portfolio — Class B |
0.06 | % | 0.25 | % | 0.01 | % | 0.43 | % | 0.75 | % | — | 0.75 | % | |||||||||||||||
| American Funds® Moderate Allocation Portfolio — Class B |
0.06 | % | 0.25 | % | 0.02 | % | 0.41 | % | 0.74 | % | — | 0.74 | % | |||||||||||||||
| AQR Global Risk Balanced Portfolio — Class B |
0.62 | % | 0.25 | % | 0.03 | % | 0.05 | % | 0.95 | % | 0.01 | % | 0.94 | % | ||||||||||||||
| BlackRock Global Tactical Strategies Portfolio — Class B |
0.66 | % | 0.25 | % | 0.02 | % | 0.07 | % | 1.00 | % | 0.05 | % | 0.95 | % | ||||||||||||||
| Brighthouse Asset Allocation 100 Portfolio — Class A |
0.07 | % | — | 0.02 | % | 0.66 | % | 0.75 | % | — | 0.75 | % | ||||||||||||||||
| Brighthouse Balanced Plus Portfolio — Class B |
0.24 | % | 0.25 | % | 0.01 | % | 0.45 | % | 0.95 | % | 0.01 | % | 0.94 | % | ||||||||||||||
| Brighthouse/Aberdeen Emerging Markets Equity Portfolio — Class A |
0.92 | % | — | 0.09 | % | — | 1.01 | % | 0.10 | % | 0.91 | % | ||||||||||||||||
| Brighthouse/Templeton International Bond Portfolio — Class A |
0.60 | % | — | 0.08 | % | — | 0.68 | % | — | 0.68 | % | |||||||||||||||||
| Brighthouse/Wellington Large Cap Research Portfolio — Class A |
0.56 | % | — | 0.03 | % | — | 0.59 | % | 0.04 | % | 0.55 | % | ||||||||||||||||
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Table of Contents
| Portfolio |
Management Fee |
Distribution and/or Service (12b-1) Fees |
Other Expenses |
Acquired Fund Fees and Expenses |
Total Annual Operating Expenses |
Fee Waiver and/or Expense Reimbursement |
Net Total Annual Operating Expenses |
|||||||||||||||||||||
| Clarion Global Real Estate Portfolio — Class A |
0.62 | % | — | 0.05 | % | — | 0.67 | % | 0.04 | % | 0.63 | % | ||||||||||||||||
| Harris Oakmark International Portfolio — Class A |
0.77 | % | — | 0.05 | % | — | 0.82 | % | 0.03 | % | 0.79 | % | ||||||||||||||||
| Invesco Balanced-Risk Allocation Portfolio — Class B |
0.63 | % | 0.25 | % | 0.04 | % | 0.02 | % | 0.94 | % | 0.02 | % | 0.92 | % | ||||||||||||||
| Invesco Global Equity Portfolio — Class A |
0.66 | % | — | 0.04 | % | — | 0.70 | % | 0.11 | % | 0.59 | % | ||||||||||||||||
| Invesco Small Cap Growth Portfolio — Class A |
0.85 | % | — | 0.04 | % | — | 0.89 | % | 0.08 | % | 0.81 | % | ||||||||||||||||
| JPMorgan Global Active Allocation Portfolio — Class B |
0.72 | % | 0.25 | % | 0.05 | % | — | 1.02 | % | 0.06 | % | 0.96 | % | |||||||||||||||
| JPMorgan Small Cap Value Portfolio — Class A |
0.78 | % | — | 0.07 | % | — | 0.85 | % | 0.10 | % | 0.75 | % | ||||||||||||||||
| Loomis Sayles Global Allocation Portfolio — Class A |
0.70 | % | — | 0.08 | % | — | 0.78 | % | 0.01 | % | 0.77 | % | ||||||||||||||||
| Loomis Sayles Growth Portfolio — Class A |
0.57 | % | — | 0.02 | % | — | 0.59 | % | 0.02 | % | 0.57 | % | ||||||||||||||||
| MetLife Multi-Index Targeted Risk Portfolio — Class B |
0.17 | % | 0.25 | % | 0.01 | % | 0.22 | % | 0.65 | % | — | 0.65 | % | |||||||||||||||
| MFS® Research International Portfolio — Class A |
0.70 | % | — | 0.04 | % | — | 0.74 | % | 0.10 | % | 0.64 | % | ||||||||||||||||
| Morgan Stanley Discovery Portfolio — Class A |
0.64 | % | — | 0.04 | % | — | 0.68 | % | 0.02 | % | 0.66 | % | ||||||||||||||||
| PanAgora Global Diversified Risk Portfolio — Class B |
0.65 | % | 0.25 | % | 0.20 | % | 0.02 | % | 1.12 | % | — | 1.12 | % | |||||||||||||||
| PIMCO Inflation Protected Bond Portfolio — Class A |
0.48 | % | — | 0.94 | % | — | 1.42 | % | — | 1.42 | % | |||||||||||||||||
| PIMCO Total Return Portfolio — Class A |
0.48 | % | — | 0.38 | % | — | 0.86 | % | 0.03 | % | 0.83 | % | ||||||||||||||||
| Schroders Global Multi-Asset Portfolio — Class B |
0.63 | % | 0.25 | % | 0.04 | % | 0.02 | % | 0.94 | % | 0.01 | % | 0.93 | % | ||||||||||||||
| SSGA Growth and Income ETF Portfolio — Class A |
0.31 | % | — | 0.01 | % | 0.20 | % | 0.52 | % | — | 0.52 | % | ||||||||||||||||
| SSGA Growth ETF Portfolio — Class A |
0.32 | % | — | 0.03 | % | 0.21 | % | 0.56 | % | — | 0.56 | % | ||||||||||||||||
| T. Rowe Price Mid Cap Growth Portfolio — Class A |
0.75 | % | — | 0.03 | % | — | 0.78 | % | — | 0.78 | % | |||||||||||||||||
| Victory Sycamore Mid Cap Value Portfolio — Class A |
0.65 | % | — | 0.04 | % | — | 0.69 | % | 0.09 | % | 0.60 | % | ||||||||||||||||
| Brighthouse Funds Trust II — Class A |
||||||||||||||||||||||||||||
| Baillie Gifford International Stock Portfolio |
0.79 | % | — | 0.05 | % | — | 0.84 | % | 0.12 | % | 0.72 | % | ||||||||||||||||
| BlackRock Bond Income Portfolio |
0.34 | % | — | 0.05 | % | — | 0.39 | % | — | 0.39 | % | |||||||||||||||||
| BlackRock Capital Appreciation Portfolio |
0.70 | % | — | 0.02 | % | — | 0.72 | % | 0.09 | % | 0.63 | % | ||||||||||||||||
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Table of Contents
| Portfolio |
Management Fee |
Distribution and/or Service (12b-1) Fees |
Other Expenses |
Acquired Fund Fees and Expenses |
Total Annual Operating Expenses |
Fee Waiver and/or Expense Reimbursement |
Net Total Annual Operating Expenses |
|||||||||||||||||||||
| Brighthouse Asset Allocation 20 Portfolio |
0.10 | % | — | 0.03 | % | 0.63 | % | 0.76 | % | 0.03 | % | 0.73 | % | |||||||||||||||
| Brighthouse Asset Allocation 40 Portfolio |
0.06 | % | — | — | 0.63 | % | 0.69 | % | — | 0.69 | % | |||||||||||||||||
| Brighthouse Asset Allocation 60 Portfolio |
0.05 | % | — | — | 0.64 | % | 0.69 | % | — | 0.69 | % | |||||||||||||||||
| Brighthouse Asset Allocation 80 Portfolio |
0.05 | % | — | 0.01 | % | 0.65 | % | 0.71 | % | — | 0.71 | % | ||||||||||||||||
| Brighthouse/Artisan Mid Cap Value Portfolio |
0.82 | % | — | 0.04 | % | — | 0.86 | % | 0.08 | % | 0.78 | % | ||||||||||||||||
| Brighthouse/Wellington Balanced Portfolio |
0.46 | % | — | 0.07 | % | — | 0.53 | % | — | 0.53 | % | |||||||||||||||||
| Brighthouse/Wellington Core Equity Opportunities Portfolio |
0.70 | % | — | 0.02 | % | — | 0.72 | % | 0.12 | % | 0.60 | % | ||||||||||||||||
| Frontier Mid Cap Growth Portfolio |
0.71 | % | — | 0.04 | % | — | 0.75 | % | 0.02 | % | 0.73 | % | ||||||||||||||||
| Jennison Growth Portfolio |
0.60 | % | — | 0.02 | % | — | 0.62 | % | 0.08 | % | 0.54 | % | ||||||||||||||||
| Loomis Sayles Small Cap Core Portfolio |
0.90 | % | — | 0.07 | % | 0.01 | % | 0.98 | % | 0.09 | % | 0.89 | % | |||||||||||||||
| Loomis Sayles Small Cap Growth Portfolio |
0.90 | % | — | 0.08 | % | — | 0.98 | % | 0.09 | % | 0.89 | % | ||||||||||||||||
| MetLife Aggregate Bond Index Portfolio |
0.25 | % | — | 0.03 | % | — | 0.28 | % | 0.01 | % | 0.27 | % | ||||||||||||||||
| MetLife Mid Cap Stock Index Portfolio |
0.25 | % | — | 0.05 | % | 0.01 | % | 0.31 | % | — | 0.31 | % | ||||||||||||||||
| MetLife MSCI EAFE® Index Portfolio |
0.30 | % | — | 0.07 | % | 0.01 | % | 0.38 | % | — | 0.38 | % | ||||||||||||||||
| MetLife Russell 2000® Index Portfolio |
0.25 | % | — | 0.06 | % | — | 0.31 | % | — | 0.31 | % | |||||||||||||||||
| MetLife Stock Index Portfolio |
0.25 | % | — | 0.03 | % | — | 0.28 | % | 0.01 | % | 0.27 | % | ||||||||||||||||
| MFS® Total Return Portfolio |
0.57 | % | — | 0.06 | % | — | 0.63 | % | — | 0.63 | % | |||||||||||||||||
| MFS® Value Portfolio |
0.61 | % | — | 0.02 | % | — | 0.63 | % | 0.06 | % | 0.57 | % | ||||||||||||||||
| Neuberger Berman Genesis Portfolio |
0.82 | % | — | 0.04 | % | — | 0.86 | % | 0.01 | % | 0.85 | % | ||||||||||||||||
| T. Rowe Price Large Cap Growth Portfolio |
0.60 | % | — | 0.03 | % | — | 0.63 | % | 0.05 | % | 0.58 | % | ||||||||||||||||
| T. Rowe Price Small Cap Growth Portfolio |
0.47 | % | — | 0.03 | % | — | 0.50 | % | — | 0.50 | % | |||||||||||||||||
| VanEck Global Natural Resources Portfolio |
0.78 | % | — | 0.03 | % | 0.01 | % | 0.82 | % | 0.06 | % | 0.76 | % | |||||||||||||||
| Western Asset Management Strategic Bond Opportunities Portfolio |
|
0.57 |
% |
|
— |
|
|
0.03 |
% |
|
— |
|
|
0.60 |
% |
|
0.06 |
% |
|
0.54 |
% | |||||||
| Western Asset Management U.S. Government Portfolio |
0.48 | % | — | 0.02 | % | — | 0.50 | % | 0.03 | % | 0.47 | % | ||||||||||||||||
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 these Portfolios only with the approval of the Portfolio’s board of directors or trustees. Please see the Portfolios’ prospectuses for additional information regarding these arrangements.
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Table of Contents
Certain Portfolios that have “Acquired Fund Fees and Expenses” may be “funds of funds.” A fund of funds invests substantially all of its assets in other underlying funds. Because the Portfolio invests in other funds, it will bear its pro rata portion of the operating expenses of those underlying funds, including the management fee.
None of the Portfolios are affiliated with Metropolitan Life Insurance Company, however, Metropolitan Life Investors (MLI) serves as a sub-adviser to some of the Portfolios available in the Brighthouse Funds Trust I and the Brighthouse Funds Trust II. MLI receives an advisory fee for those Portfolios for which it serves as a sub-adviser. For information concerning compensation paid for the sale of the Policies, see “Distribution of the Policies.”
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Table of Contents
THE COMPANY, THE SEPARATE ACCOUNT AND THE PORTFOLIOS
Metropolitan Life Insurance 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 Company’s office is located at 200 Park Avenue, New York, New York 10166-0188. The Company is a wholly-owned subsidiary of MetLife, Inc.. We are obligated to pay all benefits under the Policies.
Metropolitan Life Separate Account UL is the funding vehicle for the Policies and other variable life insurance policies that we issue. Income and realized and unrealized capital gains and losses of the Separate Account are credited to the Separate Account without regard to any of our other income or capital gains or losses. Although we own the assets of the Separate Account, applicable law provides that the portion of the Separate Account assets equal to the reserves and other liabilities of the Separate Account may not be charged with liabilities that arise out of any other business we conduct. This means that the assets of the Separate Account are not available to meet the claims of our general creditors, and may only be used to support the Cash Values of the variable life insurance policies issued by the Separate Account.
We are obligated to pay the death benefit under the Policy even if that amount exceeds the Policy’s Cash Value in the Separate Account. The amount of the death benefit that exceeds the Policy’s Cash Value in the Separate Account is paid from our general account. Death benefits paid from the general account are subject to the financial strength and claims-paying ability of the Company. For other life insurance policies and annuity contracts that we issue, we pay all amounts owed under the policies and contracts from the general account. MetLife is regulated as an insurance company under state law. State law generally imposes restrictions on the amount and type of investments in the general account. However, there is no guarantee that we will be able to meet our claims-paying obligations. There are risks to purchasing any insurance product.
The investment adviser to certain of the Portfolios offered with the Policy or with other variable life insurance policies issued through the Separate Account may be regulated as a Commodity Pool Operator. While it does not concede that the Separate Account is a commodity pool, MetLife has claimed an exclusion from the definition of the term “commodity pool operator” under the Commodities Exchange Act (“CEA”), and is not subject to registration or regulation as a pool operator under the CEA.
Each Division of the Separate Account invests in a corresponding Portfolio. Each Portfolio is part of an open-end management investment company, more commonly known as a mutual fund, that serves as an investment vehicle for variable life insurance and variable annuity separate accounts of various insurance companies. The Trusts that offer the Portfolios are the American Funds Insurance Series®, Brighthouse Funds Trust I, Brighthouse Funds Trust II and the Franklin Templeton Variable Insurance Products Trust. Each of these Trusts has an investment adviser responsible for overall management of each portfolio available in the Trust. Some investment advisers have contracted with sub-advisers to make the day-to-day investment decisions for the Portfolios.
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Table of Contents
The adviser, sub-adviser and investment objective of each Portfolio are as follows:
| Portfolio |
Investment Objective |
Investment Adviser/Subadviser | ||
| American Funds Insurance Series® — Class 2 |
||||
| American Funds Bond Fund |
Seeks as high a level of current income as is consistent with the preservation of capital. | Capital Research and Management CompanySM | ||
| American Funds Global Small Capitalization Fund |
Seeks long-term growth of capital. | Capital Research and Management CompanySM | ||
| American Funds Growth Fund |
Seeks growth of capital. | Capital Research and Management CompanySM | ||
| American Funds Growth-Income Fund |
Seeks long-term growth of capital and income. | Capital Research and Management CompanySM | ||
| Brighthouse Funds Trust I |
||||
| AB Global Dynamic Allocation Portfolio — Class B |
Seeks capital appreciation and current income. | Brighthouse Investment Advisers, LLC Subadviser: AllianceBernstein L.P. | ||
| American Funds® Balanced Allocation Portfolio — Class B |
Seeks a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. | Brighthouse Investment Advisers, LLC | ||
| American Funds® Growth Allocation Portfolio — Class B |
Seeks growth of capital. | Brighthouse Investment Advisers, LLC | ||
| American Funds® Moderate Allocation Portfolio — Class B |
Seeks a high total return in the form of income and growth of capital, with a greater emphasis on income. | Brighthouse Investment Advisers, LLC | ||
| AQR Global Risk Balanced Portfolio — Class B |
Seeks total return. | Brighthouse Investment Advisers, LLC Subadviser: AQR Capital Management, LLC | ||
| BlackRock Global Tactical Strategies Portfolio — Class B |
Seeks capital appreciation and current income. | Brighthouse Investment Advisers, LLC Subadviser: BlackRock Financial Management, Inc. | ||
| Brighthouse Asset Allocation 100 Portfolio — Class A |
Seeks growth of capital. | Brighthouse Investment Advisers, LLC | ||
| Brighthouse Balanced Plus Portfolio — Class B |
Seeks a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: Overlay Portion: Pacific Investment Management Company LLC | ||
| Brighthouse/Aberdeen Emerging Markets Equity Portfolio — Class A |
Seeks capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Aberdeen Asset Managers Limited | ||
| Brighthouse/Templeton International Bond Portfolio — Class A |
Seeks current income with capital appreciation and growth of income. | Brighthouse Investment Advisers, LLC Subadviser: Franklin Advisers, Inc. | ||
| Brighthouse/Wellington Large Cap Research Portfolio — Class A |
Seeks long-term capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Wellington Management Company LLP | ||
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Table of Contents
| Portfolio |
Investment Objective |
Investment Adviser/Subadviser | ||
| Clarion Global Real Estate Portfolio — Class A |
Seeks total return through investment in real estate securities, emphasizing both capital appreciation and current income. | Brighthouse Investment Advisers, LLC Subadviser: CBRE Clarion Securities LLC | ||
| Harris Oakmark International Portfolio — Class A |
Seeks long-term capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Harris Associates L.P. | ||
| Invesco Balanced-Risk Allocation Portfolio — Class B |
Seeks total return. | Brighthouse Investment Advisers, LLC Subadviser: Invesco Advisers, Inc. | ||
| Invesco Global Equity Portfolio — Class A (formerly Oppenheimer Global Equity Portfolio) |
Seeks capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Invesco Advisers, Inc. | ||
| Invesco Small Cap Growth Portfolio — Class A |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: Invesco Advisers, Inc. | ||
| JPMorgan Global Active Allocation Portfolio — Class B |
Seeks capital appreciation and current income. | Brighthouse Investment Advisers, LLC Subadviser: J.P. Morgan Investment Management Inc. | ||
| JPMorgan Small Cap Value Portfolio — Class A |
Seeks long-term capital growth. | Brighthouse Investment Advisers, LLC Subadviser: J.P. Morgan Investment Management Inc. | ||
| Loomis Sayles Global Allocation Portfolio — Class A |
Seeks high total investment return through a combination of capital appreciation and income. | Brighthouse Investment Advisers, LLC Subadviser: Loomis, Sayles & Company, L.P. | ||
| Loomis Sayles Growth Portfolio — Class A (formerly ClearBridge Aggressive Growth Portfolio) |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: Loomis, Sayles & Company, L.P. | ||
| MetLife Multi-Index Targeted Risk Portfolio — Class B |
Seeks a balance between growth of capital and current income, with a greater emphasis on growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: Overlay Portion: MetLife Investment Advisors, LLC | ||
| MFS® Research International Portfolio — Class A |
Seeks capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Massachusetts Financial Services Company | ||
| Morgan Stanley Discovery Portfolio — Class A |
Seeks capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Morgan Stanley Investment Management Inc. | ||
| PanAgora Global Diversified Risk Portfolio — Class B |
Seeks total return. | Brighthouse Investment Advisers, LLC Subadviser: PanAgora Asset Management, Inc. | ||
| PIMCO Inflation Protected Bond Portfolio — Class A |
Seeks maximum real return, consistent with preservation of capital and prudent investment management. | Brighthouse Investment Advisers, LLC Subadviser: Pacific Investment Management Company LLC | ||
| PIMCO Total Return Portfolio — Class A |
Seeks maximum total return, consistent with the preservation of capital and prudent investment management. | Brighthouse Investment Advisers, LLC Subadviser: Pacific Investment Management Company LLC | ||
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Table of Contents
| Portfolio |
Investment Objective |
Investment Adviser/Subadviser | ||
| Schroders Global Multi-Asset Portfolio — Class B |
Seeks capital appreciation and current income. | Brighthouse Investment Advisers, LLC Subadvisers: Schroder Investment Management North America Inc.; Schroder Investment Management North America Limited | ||
| SSGA Growth and Income ETF Portfolio — Class A |
Seeks growth of capital and income. | Brighthouse Investment Advisers, LLC Subadviser: SSGA Funds Management, Inc. | ||
| SSGA Growth ETF Portfolio — Class A |
Seeks growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: SSGA Funds Management, Inc. | ||
| T. Rowe Price Mid Cap Growth Portfolio — Class A |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: T. Rowe Price Associates, Inc. | ||
| Victory Sycamore Mid Cap Value Portfolio — Class A |
Seeks high total return by investing in equity securities of mid-sized companies. | Brighthouse Investment Advisers, LLC Subadviser: Victory Capital Management Inc. | ||
| Brighthouse Funds Trust II — Class A |
||||
| Baillie Gifford International Stock Portfolio |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: Baillie Gifford Overseas Limited | ||
| BlackRock Bond Income Portfolio |
Seeks a competitive total return primarily from investing in fixed-income securities. | Brighthouse Investment Advisers, LLC Subadviser: BlackRock Advisors, LLC | ||
| BlackRock Capital Appreciation Portfolio |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: BlackRock Advisors, LLC | ||
| Brighthouse Asset Allocation 20 Portfolio |
Seeks a high level of current income, with growth of capital as a secondary objective. | Brighthouse Investment Advisers, LLC | ||
| Brighthouse Asset Allocation 40 Portfolio |
Seeks high total return in the form of income and growth of capital, with a greater emphasis on income. | Brighthouse Investment Advisers, LLC | ||
| Brighthouse Asset Allocation 60 Portfolio |
Seeks a balance between a high level of current income and growth of capital, with a greater emphasis on growth of capital. | Brighthouse Investment Advisers, LLC | ||
| Brighthouse Asset Allocation 80 Portfolio |
Seeks growth of capital. | Brighthouse Investment Advisers, LLC | ||
| Brighthouse/Artisan Mid Cap Value Portfolio |
Seeks long-term capital growth. | Brighthouse Investment Advisers, LLC Subadviser: Artisan Partners Limited Partnership | ||
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| Portfolio |
Investment Objective |
Investment Adviser/Subadviser | ||
| Brighthouse/Wellington Balanced Portfolio |
Seeks long-term capital appreciation with some current income. | Brighthouse Investment Advisers, LLC Subadviser: Wellington Management Company LLP | ||
| Brighthouse/Wellington Core Equity Opportunities Portfolio |
Seeks to provide a growing stream of income over time and, secondarily, long-term capital appreciation and current income. | Brighthouse Investment Advisers, LLC Subadviser: Wellington Management Company LLP | ||
| Frontier Mid Cap Growth Portfolio |
Seeks maximum capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Frontier Capital Management Company, LLC | ||
| Jennison Growth Portfolio |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: Jennison Associates LLC | ||
| Loomis Sayles Small Cap Core Portfolio |
Seeks long-term capital growth from investments in common stocks or other equity securities. | Brighthouse Investment Advisers, LLC Subadviser: Loomis, Sayles & Company, L.P. | ||
| Loomis Sayles Small Cap Growth Portfolio |
Seeks long-term capital growth. | Brighthouse Investment Advisers, LLC Subadviser: Loomis, Sayles & Company, L.P. | ||
| MetLife Aggregate Bond Index Portfolio |
Seeks to track the performance of the Bloomberg Barclays U.S. Aggregate Bond Index. | Brighthouse Investment Advisers, LLC Subadviser: MetLife Investment Advisors, LLC | ||
| MetLife Mid Cap Stock Index Portfolio |
Seeks to track the performance of the Standard & Poor’s MidCap 400® Composite Stock Price Index. | Brighthouse Investment Advisers, LLC Subadviser: MetLife Investment Advisors, LLC | ||
| MetLife MSCI EAFE® Index Portfolio |
Seeks to track the performance of the MSCI EAFE® Index. | Brighthouse Investment Advisers, LLC Subadviser: MetLife Investment Advisors, LLC | ||
| MetLife Russell 2000® Index Portfolio |
Seeks to track the performance of the Russell 2000® Index. | Brighthouse Investment Advisers, LLC Subadviser: MetLife Investment Advisors, LLC | ||
| MetLife Stock Index Portfolio |
Seeks to track the performance of the Standard & Poor’s 500® Composite Stock Price Index. | Brighthouse Investment Advisers, LLC Subadviser: MetLife Investment Advisors, LLC | ||
| MFS® Total Return Portfolio |
Seeks a favorable total return through investment in a diversified portfolio. | Brighthouse Investment Advisers, LLC Subadviser: Massachusetts Financial Services Company | ||
| MFS® Value Portfolio |
Seeks capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Massachusetts Financial Services Company | ||
| Neuberger Berman Genesis Portfolio |
Seeks high total return, consisting principally of capital appreciation. | Brighthouse Investment Advisers, LLC Subadviser: Neuberger Berman Investment Advisers LLC | ||
| T. Rowe Price Large Cap Growth Portfolio |
Seeks long-term growth of capital. | Brighthouse Investment Advisers, LLC Subadviser: T. Rowe Price Associates, Inc. | ||
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| Portfolio |
Investment Objective |
Investment Adviser/Subadviser | ||
| T. Rowe Price Small Cap Growth Portfolio |
Seeks long-term capital growth. | Brighthouse Investment Advisers, LLC Subadviser: T. Rowe Price Associates, Inc. | ||
| VanEck Global Natural Resources Portfolio |
Seeks long-term capital appreciation with income as a secondary consideration. | Brighthouse Investment Advisers, LLC Subadviser: VanEck Associates Corporation | ||
| Western Asset Management Strategic Bond Opportunities Portfolio |
Seeks to maximize total return consistent with preservation of capital. | Brighthouse Investment Advisers, LLC Subadviser: Western Asset Management Company | ||
| Western Asset Management U.S. Government Portfolio |
Seeks to maximize total return consistent with preservation of capital and maintenance of liquidity. | Brighthouse Investment Advisers, LLC Subadviser: Western Asset Management Company | ||
For more information regarding the Portfolios and their investment advisers and subadvisers, see the Portfolio prospectuses and their Statements of Additional Information, which you can obtain by calling 1-800-638-5000.
The Portfolios’ investment objectives may not be met. The investment objectives and policies of certain Portfolios are similar to the investment objectives and policies of other funds that may be managed by the same investment adviser or sub-adviser. The investment results of the Portfolios may be higher or lower than the results of these funds. There is no assurance, and no representation is made, that the investment results of any of the Portfolios will be comparable to the investment results of any other fund.
The Portfolios listed below are managed in a way that is intended to minimize volatility of returns (referred to as a “managed volatility strategy”):
| • | AB Global Dynamic Allocation Portfolio |
| • | AQR Global Risk Balanced Portfolio |
| • | BlackRock Global Tactical Strategies Portfolio |
| • | Invesco Balanced-Risk Allocation Portfolio |
| • | JPMorgan Global Active Allocation Portfolio |
| • | Brighthouse Balanced Plus Portfolio |
| • | MetLife Multi-Index Targeted Risk Portfolio |
| • | PanAgora Global Diversified Risk Portfolio |
| • | Schroders Global Multi-Asset Portfolio |
Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors or general market conditions. Bond prices may fluctuate because they move in the opposite direction of interest rates. Foreign investing carries additional risks such as currency and market volatility. A managed volatility strategy is designed to reduce volatility of returns to the above Portfolios from investing in stocks and bonds. This strategy seeks to reduce such volatility by “smoothing” returns, which may result in a Portfolio outperforming the general securities market during periods of flat or negative market performance, and underperforming the general securities market during periods of positive market performance.
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This means that in periods of high market volatility, this managed volatility strategy could limit your participation in market gains; this may conflict with your investment objectives by limiting your ability to maximize potential growth of your Policy’s Cash Value and, in turn, the value of any guaranteed benefit that is tied to investment performance. Other Portfolios may offer the potential for higher returns.
Share Classes of the Portfolios
The Portfolios offer various classes of shares, each of which has a different level of expenses. The prospectuses for the Portfolios may provide information for share classes that are not available through the Policy. When you consult the prospectus for any Portfolio, you should be careful to refer to only the information regarding the class of shares that is available through the Policy. For the American Funds Insurance Series and the Franklin Templeton Variable Insurance Products Trust, we offer Class 2 shares only; for Brighthouse Funds Trust I, we offer Class A and Class B shares; and for Brighthouse Funds Trust II, we offer Class A shares only.
Certain Payments We Receive with Regard to the Portfolios
An investment adviser or subadviser of a Portfolio, or its affiliates, may make payments to us and/or certain of our affiliates. These payments may be used for a variety of purposes, including payment for expenses for certain administrative, marketing and support services with respect to the Policies and, in our role as intermediary, with respect to the Portfolios. We and our affiliates may profit from these payments. These payments may be derived, in whole or in part, from fees deducted from Portfolio assets. Policy Owners, through their indirect investment in the Portfolios, bear the costs of these fees (see the Portfolio prospectuses for more information). The amount of the payments we receive is based on a percentage of assets of the Portfolio attributable to the Policies and certain other variable insurance products that we and our affiliates issue. These percentages differ and some advisers or subadvisers (or other affiliates) may pay us more than others. These percentages currently range up to 0.50%. Additionally, an investment adviser or subadviser of a Portfolio or its affiliates may provide us with wholesaling services that assist in the distribution of the Policies and may pay us and/or certain of our affiliates amounts to participate in sales meetings. These amounts may be significant and may provide the adviser or subadviser (or their affiliates) with increased access to persons involved in the distribution of the Policies.
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 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 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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Certain Portfolios have adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. A Portfolio’s 12b-1 Plan, if any, is described in more detail in the Portfolio’s prospectus. (See “Fee Tables—Annual Portfolio Expenses” and “Distribution of the Policies.”) Any payments we receive pursuant to those 12b-1 Plans are paid to us or our Distributor MetLife Investors Distribution Company (MLIDC). Payments under a Portfolio’s 12b-1 Plan decrease the Portfolio’s investment return.
For more specific information on the amounts we may receive on account of your investment in the Portfolios, you may call us toll free at 1-800-638-5000.
We select the Portfolios offered through the Policy based on a number of criteria, including asset class coverage, the strength of the adviser’s or subadviser’s reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor we consider during the selection process is whether the Portfolio’s adviser or subadviser is one of our affiliates or whether the Portfolio, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates. For additional information on these arrangements, see “Certain Payments We Receive with Regard to the Portfolios” above. In this regard, the profit distributions we receive from our affiliated investment advisers are a component of the total revenue that we consider in configuring the features and investment choices available in the variable insurance products that we and our affiliated insurance companies issue. Since we and our affiliated insurance companies may benefit more from the allocation of assets to Portfolios advised by our affiliates than those that are not, we may be more inclined to offer Portfolios advised by our affiliates in the variable insurance products we issue. We review the Portfolios periodically and may remove a Portfolio or limit its availability to new premium payments and/or transfers of Cash Value if we determine that the Portfolio no longer meets one or more of the selection criteria, and/or if the Portfolio has not attracted significant allocations from Policy Owners. We may include Portfolios based on recommendations from selling firms. In some cases, the selling firms may receive payments from the Portfolios they recommend and may benefit accordingly from the allocation of Cash Value to such Portfolios.
We do not provide any investment advice and do not recommend or endorse any particular Portfolio. You bear the risk of any decline in the Cash Value of your Policy resulting from the performance of the Portfolios you have chosen.
We own the Portfolio shares held in the Separate Account and have the right to vote those shares at meetings of the Portfolio shareholders. However, to the extent required by Federal securities law, we will give you, as Policy Owner, the right to instruct us how to vote the shares that are attributable to your Policy.
We will determine, as of the record date, if you are entitled to give voting instructions and the number of shares to which you have a right of instruction. If we do not receive timely instructions from you, we will vote your shares for, against, or withhold from voting on, any proposition in the same proportion as the shares held in that Division for all Policies for which we have received voting instructions. The effect of this proportional voting is that a small number of Policy Owners may control the outcome of a vote.
We will vote Portfolio shares held by our general account (or any unregistered separate account for which voting privileges were not extended) in the same proportion as the total of (i) shares for which voting instructions were received and (ii) shares that are voted in proportion to such voting instructions.
We may disregard voting instructions for changes in the investment policy, investment adviser or principal underwriter of a Portfolio if required by state insurance law, or if we (i) reasonably disapprove of the changes and (ii) in the case of a change in investment policy or investment adviser, make a good faith determination that the proposed change is prohibited by state authorities or inconsistent with a Division’s investment objectives. If we do disregard voting instructions, the next semi-annual report to Policy Owners will include a summary of that action and the reasons for it.
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We and our affiliates may change the voting procedures and vote Portfolio shares without Policy Owner instructions, if the securities laws change. We also reserve the right: (1) to add Divisions; (2) to combine Divisions; (3) to substitute shares of another registered open-end management investment company, which may have different fees and expenses, for shares of a Portfolio; (4) to substitute or close a Division to allocations of Premium payments or Cash Value or both, and to existing investments or the investment of future Premiums, or both, for any class of Policy or Policy Owner, at any time in our sole discretion; (5) to operate the Separate Account as a management investment company under the Investment Company Act of 1940 or in any other form; (6) to deregister the Separate Account under the Investment Company Act of 1940; (7) to combine it with other Separate Accounts; and (8) to transfer assets supporting the Policies from one Division to another or from the Separate Account to other Separate Accounts, or to transfer assets to our general account as permitted by applicable law. We will exercise these rights in accordance with applicable law, including approval of Policy Owners if required. We will notify you if exercise of any of these rights would result in a material change in the Separate Account or its investments.
We will not make any changes without receiving any necessary approval of the SEC and applicable state insurance departments. We will notify you of any changes.
To purchase a Policy, you must submit a completed application and an initial Premium to us at our Designated Office. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”) The minimum face amount for the base Policy is $50,000 unless we consent to a lower amount. For Policies acquired through a pension or profit sharing plan qualified under Section 401 of the Internal Revenue Code of 1986, the minimum face amount is $25,000.
The Policies are available for insureds age 85 or younger. We can provide you with details as to our underwriting standards when you apply for a Policy. We reserve the right to modify our minimum face amount and underwriting requirements at any time. We must receive evidence of insurability that satisfies our underwriting standards before we will issue a Policy. We reserve the right to reject an application for any reason permitted by law.
We offer other variable life insurance policies that have different death benefits, policy features, and optional programs. However, these other policies also have different charges that would affect your Division performance and Cash Values. To obtain more information about these other policies, including their eligibility requirements, contact our Designated Office or your registered representative.
It may not be in your best interest to surrender, lapse, change, or borrow from existing life insurance policies or annuity contracts in connection with the purchase of the Policy. You should compare your existing insurance and the Policy carefully. You should replace your existing insurance only when you determine that the Policy is better for you. You may have to pay a surrender charge on your existing insurance, and the Policy will impose a new surrender charge period. You should talk to your financial professional or tax adviser to make sure the exchange will be tax-free. If you surrender your existing policy for cash and then buy the Policy, you may have to pay a tax, including possibly a penalty tax, on the surrendered Policy. Because we may not issue the Policy until we have received an initial premium from your existing insurance company, the issuance of the Policy may be delayed.
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The Policy Owner is named in the application but may be changed from time to time. While the insured is living and the Policy is in force, the Policy Owner may exercise all the rights and options described in the Policy, subject to the terms of any beneficiary designation or assignment of the Policy. These rights include selecting and changing the beneficiary, changing the owner, changing the face amount of the Policy and assigning the Policy. At the death of the Policy Owner who is not the insured, his or her estate will become the Policy Owner unless a successor Policy Owner has been named. The Policy Owner’s rights (except for rights to payment of benefits) terminate at the death of the insured.
The beneficiary is also named in the application. You may change the beneficiary at any time before the death of the insured, unless the beneficiary designation is irrevocable. The beneficiary has no rights under the Policy until the death of the insured and must survive the insured in order to receive the death proceeds. If no named beneficiary survives the insured, we pay proceeds to the Policy Owner.
A change of Policy Owner or beneficiary is subject to all payments made and actions taken by us under the Policy before we receive a signed change form. You can contact your registered representative or our Designated Office for the procedure to follow.
You may assign (transfer) your rights in the Policy to someone else. An absolute assignment of the Policy is a change of Policy Owner and beneficiary to the assignee. A collateral assignment of the Policy does not change the Policy Owner or beneficiary, but their rights will be subject to the terms of the assignment. Assignments are subject to all payments made and actions taken by us under the Policy before we receive a signed copy of the assignment form. We are not responsible for determining whether or not an assignment is valid. Changing the Policy Owner or assigning the Policy may have tax consequences. (See “Tax Considerations” below.)
General Right. Generally, during the first two Policy years, or in the event of a material change in the investment policy of the Separate Account, you may convert the Policy to a fixed benefit coverage by exchanging the Policy for a fixed benefit life insurance policy agreed to by us and issued by us or an affiliate that we name, provided that you repay any Policy loans and loan interest, and the Policy has not lapsed. We make the exchange without evidence of insurability. The new policy will have the same base Policy face amount as that being exchanged. The new policy will have the same issue age, risk class and Policy Date as the variable life Policy had.
Contact our Designated Office or your registered representative for more specific information about the 24 Month Conversion Right. The exchange may result in a cost or credit to you. On the exchange, you may need to make an immediate premium payment on the new policy in order to keep it in force.
At least once each year you have the option to transfer all of your Cash Value to the Fixed Account and apply the cash surrender value to a new policy issued by us or an affiliate which provides paid-up insurance. Paid-up insurance is permanent insurance with no further premiums due. The face amount of the new Policy of paid-up insurance may be less than the face amount of the Policy.
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Subject to the limits described below, you choose the amount and frequency of Premium payments. You select a Planned Premium schedule, which consists of a first-year Premium amount and an amount for subsequent Premium payments. This schedule appears in your Policy. Your Planned Premiums will not necessarily keep your Policy in force. You may skip Planned Premium payments or make additional payments. Additional payments could be subject to underwriting. No payment can be less than $50, except with our consent.
You can pay Planned Premiums on an annual, semi-annual or quarterly schedule, or on a monthly schedule if payments are drawn directly from your checking account under our pre-authorized checking arrangement. We will send Premium notices for annual, semi-annual or quarterly Planned Premiums. You may make payments by check or through our pre-authorized checking arrangement. You can change your Planned Premium schedule by sending your request to us at our Designated Office. You may not make Premium payments on or after the Policy anniversary when the insured reaches age 121, except for Premiums required during the grace period.
If any payments under the Policy exceed the “7-pay limit” under Federal tax law, your Policy will become a modified endowment contract and you may have more adverse tax consequences with respect to certain distributions than would otherwise be the case if Premium payments did not exceed the “7-pay limit.” Information about your “7-pay limit” is found in your Policy illustration. If we receive a Premium payment 30 days or less before the anniversary of the 7-pay testing period that exceeds the “7-pay limit” and would cause the Policy to become a modified endowment contract, and waiting until the anniversary to apply that payment would prevent the Policy from becoming a modified endowment contract, we may retain the Premium payment in a non-interest bearing account and apply the payment to the Policy on the anniversary. If we follow this procedure, we will notify you and give you the option of having the Premium payment applied to the Policy before the anniversary. Otherwise, if you make a Premium payment that exceeds the “7-pay limit,” we will apply the payment to the Policy according to our standard procedures described below and notify you that the Policy has become a modified endowment contract. In addition, if you have selected the guideline Premium test, Federal tax law limits the amount of Premiums that you can pay under the Policy. You need our consent if, because of tax law requirements, a payment would increase the Policy’s death benefit by more than it would increase cash value. We may require evidence of insurability before accepting the payment.
We allocate net Premiums to your Policy’s Divisions as of the date we receive the payments at our Designated Office (or at our Administrative Office in Tampa, Florida), if they are received before the close of regular trading on the New York Stock Exchange. Payments received after that time, or on a day that the New York Stock Exchange is not open, will be allocated to your Policy’s Divisions on the next day that the New York Stock Exchange is open. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”)
Under our current processing, we treat any payment received by us as a Premium payment unless it is clearly marked as a loan repayment.
Amount Provided for Investment under the Policy
Investment Start Date. Your initial net Premium is credited with Fixed Account interest as of the investment start date. The investment start date is the later of the Policy Date and the date we first receive a Premium payment for the Policy at our Designated Office. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”)
Premium with Application. If you make a Premium payment with the application, unless you request otherwise, the Policy Date is the date the policy application is approved. Monthly Deductions begin on the Policy
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Date. You may only make one Premium payment with the application. The minimum amount you must pay is set forth in the application. If we decline an application, we refund the Premium payment made.
If you make a Premium payment with the application, we will cover the insured under a temporary insurance agreement beginning on the later of the date the application is signed or on the date of any required medical examination. (See “Death Benefits.”)
Premium on Delivery. If you pay the initial Premium upon delivery of the Policy, unless you request otherwise, the Policy Date and the investment start date are the date your Premium payment is received at our Designated Office. Monthly Deductions begin on the Policy Date.
Backdating. We may sometimes backdate a Policy, if you request, by assigning a Policy Date earlier than the date the Policy application is approved. You may wish to backdate so that you can obtain lower cost of insurance rates, based on a younger insurance age. For a backdated Policy, you must also pay the minimum Premiums due for the period between the Policy Date and the investment start date. As of the investment start date, we allocate the net Premiums to the Policy, adjusted for monthly Policy charges. For a backdated Policy, the investment start date is the later of the date the Policy application is approved and the date your Premium is received at our Designated Office.
You may cancel the Policy within ten (10) days after you receive it. You may return the Policy to our Designated Office (see “Receipt of Communications and Payments at MetLife’s Designated Office”) or your registered representative. Insurance coverage ends as soon as you return the Policy (determined by Postmark, if the Policy is mailed). If you cancel the Policy, we refund any premiums paid.
We allocate your initial net Premium to the Fixed Account as of the investment start date. We will hold your initial net Premium in the Fixed Account for twenty (20) days, and then we make the allocation among the Divisions as you choose. You may allocate any whole percentage to a Division.
You make the initial Premium allocation when you apply for a Policy. You can change the allocation of future Premiums at any time thereafter. The change will be effective for Premiums applied on or after the date when we receive your request. You may request the change by telephone, by written request (which may be telecopied to us) or over the Internet. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”)
When we allocate net Premiums to your Policy’s Divisions, we convert them into units of the Divisions. We determine the number of units by dividing the dollar amount of the net Premium by the unit value. For your initial Premium, we use the unit value on the investment start date. For subsequent Premiums, we use the unit value next determined after receipt of the payment. (See “Cash Value.”)
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT METLIFE’S DESIGNATED OFFICE
We will treat your request for a Policy transaction, or your submission of a payment, as received by us if we receive a request conforming to our administrative procedures or a payment at our Designated Office before the close of regular trading on the New York Stock Exchange on that day (usually 4:00 p.m. Eastern Time). If we receive it after that time, or if the New York Stock Exchange is not open that day, then we will treat it as received on the next day when the New York Stock Exchange is open. These rules apply regardless of the reason we did not receive your request by the close of regular trading on the New York Stock Exchange—even if due to our delay (such as a delay in answering your telephone call).
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The Designated Office for Premium payments is printed on the billing statement we mail to you. If you do not have your billing statement you may call us at 1-800-638-5000 to obtain the address. The address to use depends on whether you purchased the Policy through a registered representative of our former affiliates MetLife Securities, Inc. or New England Securities Corporation, or through another registered representative. If you purchased the Policy through a registered representative of MetLife Securities, Inc. or New England Securities Corporation, Premium payments should be mailed to MetLife, P.O. Box 371351, Pittsburgh, PA 15250-7351. If your representative was not registered with one of these two former affiliates, Premium payments should be mailed to MetLife, P.O. Box 371862, Pittsburgh, PA 15250-7862. The Designated Office for other transactions is as follows:
| Payment Inquiries and Correspondence |
MetLife P.O. Box 354 Warwick, RI 02887-0354 | |
| Beneficiary and Ownership Changes |
MetLife P.O. Box 313 Warwick, RI 02887-0313 | |
| Surrenders, Loans, Withdrawals and Division Transfers |
MetLife P.O. Box 543 Warwick, RI 02887-0543 | |
| Cancellations (Right to Examine Policy Period) |
MetLife Free Look Unit 500 Schoolhouse Road Johnstown, PA 15904 | |
| Death Claims |
MetLife P.O. Box 353 Warwick, RI 02887-0353 | |
| Division Transfers and Other Telephone Transactions and Inquiries |
(800) 638-5000 | |
You may request a Cash Value transfer or reallocation of future Premiums by written request (which may be telecopied) to us, by telephoning us or over the Internet (subject to our restrictions on frequent transfers). To request a transfer or reallocation by telephone, you should contact your registered representative or contact us at 1-800-638-5000. To request a transfer over the Internet, you may log on to our website at www.metlife.com. We use reasonable procedures to confirm that instructions communicated by telephone, facsimile or Internet are genuine. Any telephone, facsimile or Internet instructions that we reasonably believe to be genuine are your responsibility, including losses arising from any errors in the communication of instructions. However, because telephone and Internet transactions may be available to anyone who provides certain information about you and your Policy, you should protect that information. We may not be able to verify that you are the person providing telephone or Internet instructions, or that you have authorized any such person to act for you.
Telephone, facsimile, and computer systems (including the Internet) may not always be available. Any telephone, facsimile or computer system, whether it is yours, your service provider’s, your registered representative’s, or ours, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you are experiencing problems, you should make your request by writing to our Designated Office.
If you send your Premium payments or transaction requests to an address other than the one we have designated for receipt of such 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.
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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 Policy 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 Policy 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 Portfolios; impact our ability to calculate unit values; cause the release and possible destruction of confidential Policy 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.
We ordinarily pay any cash surrender value, loan value or death benefit proceeds from the Divisions within seven days after we receive a request, or satisfactory proof of death of the insured (and any other information we need to pay the death proceeds). (See “Receipt of Communications and Payments at MetLife’s Designated Office.”) However, we may delay payment (except when a loan is made to pay a Premium to us) or transfers from the Divisions: (i) if the New York Stock Exchange is closed (other than customary weekend and holiday closing), or if trading on the New York Stock Exchange is restricted as determined by the SEC; or (ii) if an emergency exists as determined by the SEC, as a result of which disposal of securities is not reasonably practicable or it is not reasonably practicable to determine the value of the net assets of the Separate Account.
We may withhold payment of surrender, withdrawal or loan proceeds if any portion of those proceeds would be derived from a Policy Owner’s check that has not yet cleared (i.e., that could still be dishonored by your banking institution). We may use telephone, facsimile, Internet or other means of communications to verify that payment from the Policy Owner’s check has been or will be collected. We will not delay payment longer than necessary for us to verify that payment has been or will be collected. Policy Owners may avoid the possibility of delay in the disbursement of proceeds coming from a check that has not yet cleared by providing us with a certified check.
We will pay the proceeds in one sum, including either by check, by placing the amount in an account that earns interest, by any other method of payment that provides the beneficiary with immediate and full access to the proceeds, or under other settlement options that we may make available. None of these options vary with the investment performance of the Separate Account. More detailed information concerning settlement options is available in the Statement of Information and on request from our Designated Office. We will pay interest on the proceeds as required by applicable state law.
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Unless otherwise requested and subject to state law, the Policy’s death proceeds will generally be paid to the beneficiary through a settlement option called the Total Control Account. The Total Control Account is an interest-bearing account through which the beneficiary has immediate and full access to the proceeds, with unlimited draft writing privileges. We credit interest to the account at a rate that will not be less than a guaranteed minimum annual effective rate. You may also elect to have any Policy surrender proceeds paid into a Total Control Account established for you.
Assets backing the Total Control Account are maintained in our general account and are subject to the claims of our creditors. We will bear the investment experience of such assets; however, regardless of the investment experience of such assets, the interest credited to the Total Control Account will never fall below the applicable guaranteed minimum annual effective rate. Because we bear the investment experience of the assets backing the Total Control Account, we may receive a profit from these assets. The Total Control Account is not insured by the FDIC or any other governmental agency.
Every state has unclaimed property laws which generally declare life insurance policies to be abandoned after a period of inactivity of three to five years from the date any death benefit is due and payable. For example, if the payment of a death benefit has been triggered, and after a thorough search, we are still unable to locate the beneficiary of the death benefit, the death benefit will be paid to the abandoned property division or unclaimed property office of the state in which the beneficiary or the Policy Owner last resided, as shown on our books and records. (“Escheatment” is the formal, legal name for this process.) However, the state is obligated to pay the death benefit (without interest) if your beneficiary steps forward to claim it with the proper documentation and within certain mandated time periods. To prevent your Policy’s death benefit from
being paid to the state’s abandoned or unclaimed property office, it is important that you update your beneficiary designation—including complete names and complete address—if and as they change. You should contact our Designated Office in order to make a change to your beneficiary designation. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”)
Your Policy’s total Cash Value includes its Cash Value in the Separate Account and in the Fixed Account. If you have a Policy loan, the Cash Value also includes the amount we hold in the Loan Account as a result of the loan. The Cash Value reflects:
| — | net Premium payments |
| — | the net investment experience of the Policy’s Divisions |
| — | interest credited to Cash Value in the Fixed Account |
| — | interest credited to amounts held in the Loan Account for a Policy loan |
| — | the death benefit option you choose |
| — | Policy charges |
| — | partial withdrawals |
| — | transfers among the Divisions and the Fixed Account. |
The Policy’s total Cash Value in the Separate Account equals the number of units credited in each Division multiplied by that Division’s unit value. We convert any Premium, interest earned on loan Cash Value, or Cash Value allocated to a Division into units of the Division. Surrenders, partial withdrawals, Policy loans, transfers and charges deducted from the Cash Value reduce the number of units credited in a Division. We determine the number of units by dividing the dollar amount of the transaction by the Division’s unit value next determined following the transaction. (In the case of an initial Premium, we use the unit value on the investment start date.)
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The unit value of a Division depends on the net investment experience of its corresponding Portfolio and reflects fees and expenses of the Portfolio. We determine the unit value as of the close of regular trading on the New York Stock Exchange on each day that the Exchange is open for trading by multiplying the most recent unit value by the net investment factor (“NIF”) for that day (see below).
The NIF for a Division reflects:
| — | the change in net asset value per share of the corresponding Portfolio (as of the close of regular trading on the Exchange) from its last value, |
| — | the amount of dividends or other distributions from the Portfolio since the last determination of net asset value per share, and |
| — | any deductions for taxes that we make from the Separate Account. |
The NIF can be greater or less than one.
If the insured dies while the Policy is in force, we pay a death benefit to the beneficiary. Coverage under the Policy generally begins when you pay the initial Premium. If you make a Premium payment with the application, we will cover the insured under a temporary insurance agreement for a limited time that begins on the later of the date we receive the Premium payment or the date of any required medical examination. Temporary coverage is not available for proposed insureds who have received medical treatment for, or been diagnosed as having, certain conditions or diseases specified in the temporary insurance agreement. The maximum temporary coverage is the lesser of the amount of insurance applied for and $1,000,000.
Death Benefit Options. When you apply for a Policy, you must choose among three death benefit options. If you fail to select a death benefit option in the application, we will seek the required information from you.
The Option A death benefit is equal to the face amount of the Policy. The Option A death benefit is fixed, subject to increases required by the Internal Revenue Code of 1986 (the “Code”).
The Option B death benefit is equal to the face amount of the Policy, plus the Policy’s Cash Value, if any. The Option B death benefit is also subject to increases required by the Code.
The Option C death benefit (available if the insured is age 60 or younger) is equal to the face amount of the Policy plus the Policy’s Cash Value until the insured attains age 65, at which time we will increase the Policy’s face amount by the amount of the Policy’s Cash Value and thereafter the death benefit will remain level, at the increased face amount, subject to increases required by the Code.
Choice of Tax Test. The Internal Revenue Code requires the Policy’s death benefit to be not less than an amount defined in the Code. As a result, if the Cash Value grows to certain levels, the death benefit increases to satisfy tax law requirements.
When you apply for your Policy, you select which tax test will apply to the death benefit. You will choose between: (1) the guideline Premium test, and (2) the Cash Value accumulation test. In general, the test you choose at issue cannot be changed.
Under the guideline premium test, the amount of Premium that can be paid is subject to tax law limits. Additionally, the death benefit will not be less than the Cash Value times the guideline Premium factor. See Appendix A.
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Under the Cash Value accumulation test, the death benefit will not be less than the Cash Value times the net single Premium factor set by the Code. Net single Premium factors are based on the age, smoking status, and sex (if not unisex) of the insured at the time of the calculation. Sample net single Premium factors appear in Appendix A.
If Cash Value growth in the later Policy years is your main objective, the guideline Premium test may be the appropriate choice because it does not require as high a death benefit as the Cash Value accumulation test, and therefore cost of insurance charges may be lower, once the Policy’s death benefit is subject to increases required by the Code. If you select the Cash Value accumulation test, you can generally make a higher amount of Premium payments for any given face amount, and a higher death benefit may result in the long term. If Cash Value growth in the early Policy years is your main objective, the Cash Value accumulation test may be the appropriate choice because it allows you to invest more Premiums in the Policy for each dollar of death benefit.
Age 121. The death benefit payable under Option A or Option C on or after the insured’s attained age 121 will be the greater of:
| — | 101% of the Cash Value on the date of death, or |
| — | the face amount of the base Policy on the Policy anniversary at the insured’s attained age 121. |
The death benefit payable under Option B on or after the insured’s attained age 121 will be the face amount of the base Policy on the Policy anniversary at the insured’s attained age 121, plus the Cash Value on the date of death.
The tax consequences of keeping the Policy in force beyond the insured’s attained age 121 are unclear.
The death proceeds we pay are equal to the death benefit on the date of the insured’s death, reduced by any outstanding loan and accrued loan interest on that date. If death occurs during the grace period, we reduce the proceeds by the amount of unpaid Monthly Deductions. (See “Lapse and Reinstatement.”) We increase the death proceeds (1) by any rider benefits payable and (2) by any cost of insurance charge made for a period beyond the date of death. Riders that can have an effect on the amount of death proceeds payable are the Accelerated Death Benefit Rider, the Accidental Death Benefit Rider and the Options to Purchase Additional Insurance Coverage Rider. (See “Additional Benefits by Rider.”)
We may adjust the death proceeds if the insured’s age or sex was misstated in the application, if death results from the insured’s suicide within two years from the Policy’s date of issue, or if a rider limits the death benefit.
Suicide. If the insured commits suicide within two years from the date of issue, the death benefit will be limited to Premium payments paid, less any partial withdrawals, less any loan and loan interest outstanding on the date of death. If the insured commits suicide within two years after the effective date of an increase in face amount, the death benefit for such increase may be limited to the Monthly Deductions for the increase.
Change in Death Benefit Option
After the first Policy year you may change your death benefit option, subject to our underwriting rules, by written request to our Designated Office. The change will be effective on the monthly anniversary on or following the date we approve your request. We may require proof of insurability. A change in death benefit option may have tax consequences.
If you change from Option A (or from Option C after the insured’s attained age 65) to Option B (or to Option C on or before the insured’s attained age 60), we reduce the Policy’s face amount if necessary so that the
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death benefit is the same immediately before and after the change. A face amount reduction below $50,000 requires our consent. If we reduce the face amount, we will first reduce any prior increases in face amount that you applied for, in the reverse order in which the increases occurred, then any remaining initial face amount, and then any increase in face amount from a prior change in death benefit option, but not below the Policy minimum. A partial withdrawal of Cash Value may be necessary to meet Federal tax law limits on the amount of Premiums that you can pay into the Policy. A Surrender Charge may apply to a Policy face amount reduction or partial withdrawal that reduces the face amount on a change from Option A (or from Option C after the insured’s attained age 65) to Option B (or to Option C on or before the insured’s attained age 60). (See “Surrender Charge.”) In addition, if the face amount reduction occurs within 12 months after a face amount increase, we will deduct a proportionate part of the Coverage Expense Charges due with respect to the face amount increase for the remainder of the 12-month period.
If you change from Option B (or from Option C on or before the insured’s attained age 65) to Option A, we increase the Policy’s face amount, if necessary, so that the death benefit is the same immediately before and after the change. This increase in face amount is not subject to the Coverage Expense Charge and will not be subject to any Surrender Charge.
You may increase the Policy’s face amount. We require satisfactory evidence of insurability, and the insured’s attained age must be 85 or less. The minimum amount of increase permitted is $5,000. The increase is effective on the monthly anniversary on or next following our approval of your request. Requests for face amount increases should be submitted to our Designated Office. An increase in face amount may have tax consequences.
The face amount increase will have its own Target Premium, as well as its own Surrender Charge, current cost of insurance rates, Coverage Expense Charge and Right to Examine Policy and suicide and contestability periods as if it were a new Policy. (See “Surrender Charge”, “Monthly Deduction from Cash Value”, “Partial Withdrawal” and “Reduction in Face Amount.”) When calculating the monthly cost of insurance charge, we attribute the Policy’s Cash Value first to any remaining initial face amount (including any increase in face amount from a prior change in death benefit option), then to any face amount increases in the order in which they were issued, for purposes of determining the net amount at risk.
We reserve the right to (i) restrict certain Policy changes, such as death benefit increases, or (ii) require the issuance of a new Policy in connection with such Policy changes if we deem it administratively necessary or prudent to do so in order to comply with applicable law, including applicable Federal income tax law.
After the first Policy year, you may reduce the face amount of your Policy without receiving a distribution of any Policy Cash Value. If you reduce the face amount of your Policy, we deduct any Surrender Charge that applies from the Policy’s Cash Value in proportion to the amount of the face amount reduction. If the face amount of your Policy is reduced in the first year following a face amount increase, we will also deduct a proportionate part of the Coverage Expense Charges due for the remainder of the first year following the face amount increase.
A face amount reduction will decrease the Policy’s death benefit unless we are increasing the death benefit to satisfy Federal income tax laws, in which case a face amount reduction will not decrease the death benefit unless we deduct a Surrender Charge from the Cash Value. A reduction in face amount in this situation may not be advisable. The amount of any face reduction must be at least $5,000, and the face amount remaining after a reduction must meet our minimum face amount requirements for issue, except with our consent.
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If you choose to reduce your Policy’s face amount, unless you request otherwise, we will first decrease any prior increases in base Policy face amount that you applied for, in the reverse order in which the increases occurred, then any remaining initial base Policy face amount, and then any increase in face amount from a prior change in death benefit option.
A reduction in face amount reduces the Federal tax law limits on the amount of Premiums that you can pay under the Policy under the guideline Premium test. In these cases, a portion of the Policy’s Cash Value may have to be paid to you to comply with Federal tax law.
A face amount reduction takes effect on the monthly anniversary on or next following the date we receive your request. You can contact your registered representative or the Designated Office for information on face amount reduction procedures.
A reduction in the face amount of a Policy may create a modified endowment contract or have other adverse tax consequences. If you are contemplating a reduction in face amount, you should consult your tax adviser regarding the tax consequences of the transaction. (See “Tax Considerations.”)
SURRENDERS AND PARTIAL WITHDRAWALS
You may surrender the Policy for its cash surrender value at any time while the insured is living. We determine the cash surrender value as of the date when we receive the surrender request. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”) The cash surrender value equals the Cash Value reduced by any Policy loan and accrued interest and by any applicable Surrender Charge. (See “Surrender Charge.”) If you surrender the Policy in the first Policy year (or in the first year following a face amount increase), we will also deduct an amount equal to the remaining first year Coverage Expense Charges. We reserve the right to also deduct an amount equal to the remaining first year Policy Charges.
If you surrender the Policy, coverage will terminate on the monthly anniversary on or next following the date of surrender. If the insured dies on or after the surrender date, but before the termination date, we will reverse the surrender and will pay the Policy’s death benefit to the beneficiary, but we will deduct from the death proceeds an amount equal to the cash surrender value paid to you.
You may apply all or part of the surrender proceeds to a payment option. Once a Policy is surrendered, all coverage and benefits cease and cannot be reinstated. A surrender may result in adverse tax consequences. (See “Tax Considerations” below.)
The Policies are designed to be long-term investments. As a result, you should be aware that if you surrender your Policy in the first Policy year, the Surrender Charge is likely to exceed the Cash Value of your Policy and you will receive no proceeds upon surrender.
After the first Policy anniversary you may withdraw a portion of the Policy’s cash surrender value. A partial withdrawal reduces the Policy’s death benefit and may reduce the Policy’s face amount if necessary so that the amount at risk under the Policy will not increase. A partial withdrawal may also reduce rider benefits. The minimum amount of a partial withdrawal request must be $500.
We have the right to limit partial withdrawals to no more than 90% of the cash surrender value. In addition, a partial withdrawal will be limited by any restriction that we currently impose on withdrawals from the Fixed
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Account. (See “The Fixed Account.”) Currently, we permit partial withdrawals equal to the lesser of 100% of the Policy’s cash surrender value in the Separate Account as of the beginning of the year, or the maximum amount that can be withdrawn without causing the Policy’s face amount to fall below the minimum permitted. However, we may allow the face amount to fall below the minimum if the Policy has been in force for at least 15 years and the insured’s attained age is greater than 55. You may not make a partial withdrawal that would reduce your cash surrender value to less than the amount of two Monthly Deductions.
We have the right to limit partial withdrawals to 12 per Policy year. Currently we do not limit the number of partial withdrawals. We reserve the right to impose a charge of $25 on each partial withdrawal.
If a partial withdrawal reduces your Policy’s face amount, the amount of the Surrender Charge that will be deducted from your Cash Value is an amount that is proportional to the amount of the face reduction. The amount deducted will reduce the remaining Surrender Charge payable under the Policy. No Surrender Charge will apply on up to 10% of the cash surrender value withdrawn each year, measured as a percentage of each withdrawal.
Example. The following example assumes that a Policy Owner withdraws, in the first month of the second Policy year, 20% of the cash surrender value of a Policy. The insured under the Policy is assumed to be the Representative Insured shown in the fee table on page A-8 of the prospectus. As shown in the fee table, the Surrender Charge for that insured is $14.00 per $1,000 of Policy face amount. The Policy is assumed to have the other characteristics shown below:
| Face Amount: |
$ | 375,000 | ||||||
| Death Benefit Option: |
Option A — Level | |||||||
| Cash Value: |
$ | 12,000 | ||||||
| Surrender Charge: |
$ | –5,250 | ($ | 14.00 x $375,000/1,000 | ) | |||
|
|
|
|||||||
| Cash Surrender Value: |
$ | 6,750 | ||||||
| x 20 | % | |||||||
|
|
|
|||||||
| Withdrawal Amount: |
$ | 1,350 | ||||||
The first 10% of cash surrender value, or $675, can be withdrawn free of Surrender Charge. The remaining $675 withdrawn is subject to a portion of the Policy’s Surrender Charge — based on the ratio that such excess withdrawal amount bears to the Policy’s face amount less the Surrender Charge, as shown in the formula below:
| Withdrawal Amount in Excess of Free Withdrawal |
||||||
| Surrender Charge |
x | Face Amount less Surrender Charge | = Surrender Charge On Withdrawal | |||
| $5,250 |
x | $675 |
= $10 | |||
| $375,000 – $5,250 | ||||||
Because the Policy has a level death benefit, the withdrawal will cause a dollar for dollar reduction in the Policy’s face amount, so that the Cash Value and the face amount will both be reduced by the $1,350 withdrawal and by the $10 Surrender Charge.
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The effect of the withdrawal on the Policy would be as follows:
| Face Amount before Withdrawal |
$ | 375,000 | ||
| Withdrawal |
–1,350 | |||
| Surrender Charge on Withdrawal |
–10 | |||
|
|
|
|||
| Face Amount after Withdrawal |
$ | 373,640 | ||
| Surrender Charge before Withdrawal |
$ | 5,250 | ||
| Surrender Charge on Withdrawal |
–10 | |||
|
|
|
|||
| Surrender Charge after Withdrawal |
$ | 5,240 | ||
| Cash Value before Withdrawal |
$ | 12,000 | ||
| Withdrawal |
–1,350 | |||
| Surrender Charge on Withdrawal |
–10 | |||
|
|
|
|||
| Cash Value after Withdrawal |
$ | 10,640 | ||
| Surrender Charge after Withdrawal |
–5,240 | |||
|
|
|
|||
| Cash Surrender Value after Withdrawal |
$ | 5,400 |
Any face amount reduction resulting from a partial withdrawal will reduce the face amount in the following order: any prior increases in base Policy face amount that you applied for, in the reverse order in which the increases occurred; any remaining initial face amount; and then any face amount increases resulting from a change in death benefit option, down to the required minimum.
A partial withdrawal reduces the Cash Value in the Divisions of the Separate Account and the Fixed Account in the same proportion that the Cash Value in each bears to the Policy’s total unloaned Cash Value. We determine the amount of cash surrender value paid upon a partial withdrawal as of the date when we receive a request. You can contact your registered representative or our Designated Office for information on partial withdrawal procedures. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”)
A reduction in the death benefit as a result of a partial withdrawal may create a modified endowment contract or have other adverse tax consequences. If you are contemplating a partial withdrawal, you should consult your tax adviser regarding the tax consequences. (See “Tax Considerations.”)
You may transfer your Policy’s Cash Value between and among the Divisions and the Fixed Account. Your right to transfer begins twenty (20) days after we apply your initial Premium to the Policy. We reserve the right to limit transfers to four (4) per Policy year and to impose a charge of $25 per transfer. Currently we do not limit the number of transfers per Policy year or impose a charge on transfers. We treat all transfer requests made at the same time as a single request. The transfer is effective as of the date we receive the transfer request, if the request is received before the close of regular trading on the New York Stock Exchange. Transfer requests received after that time, or on a day that the New York Stock Exchange is not open, will be effective on the next day that the New York Stock Exchange is open. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”) For special rules regarding transfers involving the Fixed Account, see “The Fixed Account”.
We currently limit the amount of Cash Value You may transfer to or from any one Division to a maximum of $2.5 million per day. If You own more than one Equity Advantage VUL Policy on the same insured, this limit will be applied to the cumulative transfers You make to or from the Division under all such Policies.
Restrictions on Frequent Transfers. Frequent requests from Policy Owners to transfer Cash Value may dilute the value of a Portfolio’s shares if the frequent trading involves an attempt to take advantage of pricing inefficiencies created by a lag between a change in the value of the securities held by the Portfolio and the
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reflection of that change in the Portfolio’s share price (“arbitrage trading”). Frequent transfers involving arbitrage trading may adversely affect the long-term performance of the Portfolios, which may in turn adversely affect Policy Owners and other persons who may have an interest in the Policies (e.g., beneficiaries).
We have policies and procedures that attempt to detect and deter frequent transfers in situations where we determine there is a potential for arbitrage trading. Currently, we believe that such situations may be presented in the international, small-cap, and high-yield Portfolios. In addition, as described below, we treat all American Funds Insurance Series portfolios (“American Funds portfolios”) as Monitored Portfolios. We monitor the following portfolios:
American Funds Global Small Capitalization Fund
Baillie Gifford International Stock Portfolio
Brighthouse/Aberdeen Emerging Markets Equity Portfolio
Brighthouse/Templeton International Bond Portfolio
Clarion Global Real Estate Portfolio
Harris Oakmark International Portfolio
Invesco Global Equity Portfolio
Invesco Small Cap Growth Portfolio
JPMorgan Small Cap Value Portfolio
Loomis Sayles Global Allocation Portfolio
Loomis Sayles Small Cap Core Portfolio
Loomis Sayles Small Cap Growth Portfolio
MetLife MSCI EAFE® Index Portfolio
MetLife Russell 2000® Index Portfolio
MFS® Research International Portfolio
Neuberger Berman Genesis Portfolio
T. Rowe Price Small Cap Growth Portfolio
VanEck Global Natural Resources Portfolio
Western Asset Management Strategic Bond Opportunities Portfolio
We employ various means to monitor transfer activity, such as examining the frequency and size of transfers into and out of the Monitored Portfolios within given periods of time. For example, we currently monitor transfer activity to determine if, for each category of international, small-cap, and high-yield Portfolios, in a 12-month period there were, (1) six or more transfers involving the given category; (2) cumulative gross transfers involving the given category that exceed the current cash value; and (3) two or more “round-trips” involving any Portfolio in the given category. A round-trip generally is defined as a transfer in followed by a transfer out within the next seven calendar days or a transfer out followed by a transfer in within the next seven calendar days, in either case subject to certain other criteria. We do not believe that other Portfolios present a significant opportunity to engage in arbitrage trading and therefore do not monitor transfer activity in those Portfolios. We may change the Monitored Portfolios at any time without notice in our sole discretion.
As a condition to making their Portfolios available in our products, American Funds requires us to treat all American Funds Portfolios as Monitored Portfolios under our current frequent transfer policies and procedures. Further, American Funds requires us to impose additional specified monitoring criteria for all American Funds Portfolios available under the Policy, regardless of the potential for arbitrage trading. We are required to monitor transfer activity in American Funds Portfolios to determine if there were two or more transfers in followed by transfers out, in each case of a certain dollar amount or greater, in any 30-day period. A first violation of the American Funds monitoring policy will result in a written notice of violation; each additional violation will result in the imposition of a six-month restriction, during which period we will require all transfer requests to or from an American Funds Portfolio to be submitted with an original signature. Further, as Monitored Portfolios, all American Funds Portfolios also will be subject to our current frequent transfer policies, procedures and restrictions (described below), and transfer restrictions may be imposed upon a violation of either monitoring policy.
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Our policies and procedures may result in transfer restrictions being applied to deter frequent transfers. Currently, when we detect transfer activity in the Monitored Portfolios that exceeds our current transfer limits, we require future transfer requests to or from any Monitored Portfolios or other identified Portfolios under that Policy to be submitted either (i) in writing with an original signature or (ii) by telephone prior to 10:00 a.m. A first occurrence will result in a warning letter; a second occurrence will result in the imposition of the restriction for a six-month period; a third occurrence will result in the permanent imposition of the restriction. Transfers made under an Automated Investment Strategy are not treated as transfers when we monitor the frequency of transfers.
The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective, such as the decision to monitor only those Portfolios that we believe are susceptible to arbitrage trading or the determination of the transfer limits. Our ability to detect and/or restrict such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by Policy Owners to avoid such detection. Our ability to restrict such transfer activity also may be limited by provisions of the Policy. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect Policy Owners and other persons with interests in the Policies. We do not accommodate frequent transfers in any Portfolio and there are no arrangements in place to permit any Policy Owner to engage in frequent transfers; we apply our policies and procedures without exception, waiver, or special arrangement.
The Portfolios may have adopted their own policies and procedures with respect to frequent transfers in their respective shares, and we reserve the right to enforce these policies and procedures. For example, Portfolios may assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period. The prospectuses for the Portfolios describe any such policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. Although we may not have the contractual authority or the operational capacity to apply the frequent transfer policies and procedures of the Portfolios, we have entered into a written agreement, as required by SEC regulation, with each Portfolio or its principal underwriter that obligates us to provide to the Portfolio promptly upon request certain information about the trading activity of individual Policy Owners, and to execute instructions from the Portfolio to restrict or prohibit further purchases or transfers by specific Policy Owners who violate the frequent transfer policies established by the Portfolio.
In addition, Policy Owners and other persons with interests in the Policies should be aware that the purchase and redemption orders received by the Portfolios generally are “omnibus” orders from intermediaries such as retirement plans or separate accounts funding variable insurance products. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance products and/or individual retirement plan participants. The omnibus nature of these orders may limit the Portfolios in their ability to apply their frequent transfer policies and procedures. In addition, the other insurance companies and/or retirement plans may have different policies and procedures or may not have any such policies and procedures because of contractual limitations. For these reasons, we cannot guarantee that the Portfolios (and thus Policy Owners) will not be harmed by transfer activity relating to other insurance companies and/or retirement plans that may invest in the Portfolios. If a Portfolio believes that an omnibus order reflects one or more transfer requests from Policy Owners engaged in frequent trading, the Portfolio may reject the entire omnibus order.
In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we are unable to purchase or redeem shares of any of the Portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on frequent transfers (even if an entire omnibus order is rejected due to the frequent transfers of a single Policy Owner). You should read the Portfolio prospectuses for more details.
Restrictions on Large Transfers. Large transfers may increase brokerage and administrative costs of the underlying Portfolios and may disrupt portfolio management strategy, requiring a Portfolio to maintain a high
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cash position and possibly resulting in lost investment opportunities and forced liquidations. We do not monitor for large transfers to or from Portfolios except where the portfolio manager of a particular underlying Portfolio has brought large transfer activity to our attention for investigation on a case-by-case basis. For example, some portfolio managers have asked us to monitor for “block transfers” where transfer requests have been submitted on behalf of multiple Policy Owners by a third party such as an investment adviser. When we detect such large trades, we may impose restrictions similar to those described above where future transfer requests from that third party must be submitted either (i) in writing with an original signature or (ii) by telephone prior to 10:00 a.m. A first occurrence will result in a warning letter; a second occurrence will result in the imposition of the restriction for a six-month period; a third occurrence will result in the permanent imposition of the restriction.
In addition to the foregoing, your right to make transfers is subject to limitations or modifications by us if we determine, in our sole opinion, that the exercise of the right by one or more Owners with interests in the Divisions is, or would be, to the disadvantage of other Owners. Restrictions may be applied in any manner reasonably designed to prevent any use of the transfer right that we consider to be to the disadvantage of other Owners. A limitation or modification could be applied to transfers to and from one or more of the Divisions and could include, but is not limited to: (1) the requirement of a minimum time period between each transfer; (2) not accepting a transfer request from a third party acting under authorization on behalf of more than one Owner; (3) limiting the dollar amount that may be transferred by an Owner between Divisions at any one time; or (4) requiring that a transfer request be provided in writing and signed by the Owner.
AUTOMATED INVESTMENT STRATEGIES
You can choose one of five automated investment strategies. You can change or cancel your choice at any time.
Equity GeneratorSM. The Equity Generator allows you to transfer the interest earned in the Fixed Account to any one of the Divisions on each monthly anniversary. The interest earned in the month must be at least $20 in order for the transfer to take place. If less than $20 is earned, no transfer will occur, and the interest not transferred cannot be counted towards the next month’s minimum.
AllocatorSM. The Allocator allows you to systematically transfer Cash Value from the Fixed Account or any one Division (the “source fund”) to any number of Divisions. The transfers will take place on each monthly anniversary. You can choose to transfer a specified dollar amount (1) for a specified number of months, or (2) until the source fund is depleted. In either case, you must select a dollar amount that would allow transfers to continue for at least three months.
Enhanced Dollar Cost Averager. With the Enhanced Dollar Cost Averager, Cash Value is transferred from the EDCA fixed account to the Divisions monthly. You elect the EDCA at issue and select the total dollar amount of Cash Value to be transferred. The Cash Value earmarked for the strategy is held in the EDCA fixed account where it may be credited with a rate of interest that is higher than the Fixed Account’s current crediting rate. The amount transferred each month to the Divisions equals the total amount earmarked for the strategy divided by 12.
RebalancerSM. The Rebalancer allows your Policy’s Cash Value to be automatically redistributed on a quarterly basis among the Divisions and the Fixed Account in accordance with the allocation percentages you have selected.
Index SelectorSM. The Index Selector allows you to choose one of five asset allocation models which are designed to correlate to various risk tolerance levels. Based on your selection, we allocate 100% of your Cash Value among the five Divisions that invest in the five index Portfolios available under the Policy (the MetLife Aggregate Bond Index, MetLife MSCI EAFE Index, MetLife Stock Index, MetLife Mid Cap Stock Index and
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MetLife Russell 2000 Index Portfolios) and the Fixed Account. On a quarterly basis, we will redistribute your Cash Value among these Divisions and the Fixed Account in order to return your Cash Value to the original allocation percentages. If you change your allocation of net Premiums the Index Selector strategy, including the rebalancing feature, will be terminated.
We will continue to implement the Index Selector strategy using the percentage allocations of the model that was in effect when you elected the Index Selector strategy. You should consider whether it is appropriate for you to continue using this strategy over time if your risk tolerance, time horizon or financial situation changes. The asset allocation models used in Index Selector may change from time to time. If you are interested in an updated model, please contact your registered representative.
You may not elect Index Selector unless you purchased the Policy prior to July 1, 2016 through a registered representative of one of our formerly affiliated broker-dealers MetLife Securities, Inc. or New England Securities Corporation. However, ask your registered representative how you might design a similar investment strategy using Rebalancer.
These automated investment strategies allow you to take advantage of investment fluctuations, but none assures a profit nor protects against a loss. Because certain strategies involve continuous investment in securities regardless of fluctuating price levels of such securities, you should consider your financial ability to continue purchases through periods of fluctuating price levels.
We reserve the right to modify or terminate any of the automated investment strategies for any reason, including, without limitation, a change in regulatory requirements applicable to such programs. For more information about the automated investment strategies, please contact your registered representative.
You may borrow from your Policy at any time. The maximum amount you may borrow, calculated as of the date of the loan, is the greater of 75% of the Policy’s cash surrender value or:
| — | the Policy’s Cash Value, less |
| — | any Policy loan balance, less |
| — | loan interest due to the next Policy anniversary, less |
| — | the most recent Monthly Deduction times the number of months to the next Policy anniversary, less |
| — | any Surrender Charge, plus |
| — | interest credited on the Cash Value at the guaranteed interest rate to the next Policy anniversary. |
The minimum loan amount is $500. We make the loan as of the date when we receive a loan request. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”) You may increase your risk of lapse if you take a loan. You should contact our Designated Office or your registered representative for information on loan procedures.
A Policy loan reduces the Policy’s Cash Value in the Divisions and the Fixed Account by the amount of the loan. A loan repayment increases the Cash Value in the Divisions and the Fixed Account by the amount of the repayment. We attribute Policy loans to the Divisions and the Fixed Account in proportion to the Cash Value in each. We transfer Cash Value equal to the amount of the loan from the Divisions and the Fixed Account to the Loan Account (which is part of our general account).
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You may repay all or part of your loan at any time while the insured is still alive. When you make a loan repayment, we transfer an amount of Cash Value equal to the repayment from the Loan Account to the Divisions of the Separate Account and to the Fixed Account in proportion to the Cash Value in each. (See “Receipt of Communications and Payments at MetLife’s Designated Office.”)
We guarantee that the interest rate charged on Policy loans will not be more than 4.0% per year in Policy years 1-10 and 3.0% per year thereafter.
Policy loan interest is due and payable annually on each Policy anniversary. If not paid when due, we add the interest accrued to the loan amount, and we transfer an amount of Cash Value equal to the unpaid interest from the Divisions and the Fixed Account to the Loan Account in the same manner as a new loan.
Cash Value in the Loan Account earns interest at not less than 3.0% per year and is transferred on each Policy anniversary to the Divisions and to the Fixed Account in proportion to the Cash Value in each. The interest credited will also be transferred: (1) when you take a new loan; (2) when you make a full or partial loan repayment; and (3) when the Policy enters the grace period.
The amount taken from the Policy’s Divisions as a result of a loan does not participate in the investment experience of the Divisions. Therefore, loans can permanently affect the death benefit and Cash Value of the Policy, even if repaid. In addition, we reduce any proceeds payable under a Policy by the amount of any outstanding loan plus accrued interest.
If a Policy loan is outstanding, it may be better to repay the loan than to pay a Premium, because the payment is subject to sales and Premium tax charges, and the loan repayment is not subject to charges. (See “Deductions from Premiums.”) If you want us to treat a payment as a loan repayment, it should be clearly marked as such.
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 as long as the Policy stays in force. A tax adviser should be consulted when considering a loan.
In general, in any month that your Policy’s cash surrender value is not large enough to cover a Monthly Deduction, your Policy will be in default, and may lapse. However, you can prevent your Policy from lapsing, regardless of the amount of your cash surrender value, if the Premiums you pay are sufficient to keep the Guaranteed Minimum Death Benefit (“GMDB”) in effect.
The base Policy offers, at no additional charge, a five-year GMDB, a 20-year GMDB and a GMDB that lasts until the insured’s age 65. For an additional charge, you can add a Policy rider at issue that provides a GMDB to age 85 or a GMDB to age 121. All Policies are issued with a GMDB, which guarantees that the Policy will remain in force for at least five years if the required Guaranteed Minimum Death Benefit Monthly Premiums (“GMDB Monthly Premiums”) are paid when due. The five-year GMDB Monthly Premium is set forth in your Policy. It is the minimum initial periodic Premium you can pay into the Policy. Policies will be issued with the 20-year GMDB or the GMDB to age 65 to eligible Policy Owners who elect either of these GMDBs at issue.
The GMDB Monthly Premium varies depending on the guarantee period, the insured’s age, sex (except for unisex Policies), smoking status and risk class, the Policy’s face amount and the death benefit option chosen. The GMDB Monthly Premium may change in the event that any of the following events occur: an increase or decrease
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in the base Policy face amount; adding, deleting or changing a rider; a change in death benefit option or the insured’s risk class; or a misstatement of the insured’s age or sex in the Policy application.
On each monthly anniversary we test the Policy to determine if the cumulative Premiums you have paid, less any partial withdrawals or outstanding loans you have taken, equal or exceed the sum of the GMDB Monthly Premiums due to date for the GMDB you selected. If you meet this test, the GMDB you selected will be in effect. However, even if you have not elected the 20-year GMDB or the GMDB to age 65, if the amount of Premiums you pay into the Policy for each Policy month since the Policy Date is sufficient to meet the requirements of the 20-year GMDB or the GMDB to age 65, in your third annual statement we will notify you that the applicable GMDB is in effect. Conversely, if you have elected the 20-year GMDB or the GMDB to age 65 and your Premium payments are insufficient to satisfy the GMDB Monthly Premium requirements, we will notify you that your GMDB will be reduced to the five-year GMDB, the GMDB to age 65, or the 20-year GMDB, as applicable, unless you pay sufficient Premiums within 62 days to meet the requirements of the GMDB you originally selected. If, during the first five Policy years, you fail to pay sufficient Premiums to keep the five-year GMDB in effect, we will notify you that the GMDB will terminate within 62 days if you fail to pay the required Monthly Premiums. If the guarantee provided by the GMDB terminates, the Policy will continue in force for as long as there is cash surrender value sufficient to pay the Monthly Deduction. If the GMDB terminates, you may reinstate it within nine months provided the Policy remains in force. In order to reinstate the GMDB, you must pay sufficient Premiums to satisfy the cumulative Premium requirement for the applicable GMDB (five-year, 20-year or to age 65) at the time of reinstatement.
If the GMDB is in effect and the Policy’s cash surrender value is insufficient to cover the Monthly Deduction, the Policy will not lapse. We will take the Monthly Deduction from the Policy’s Cash Value until the Cash Value has been reduced to zero. At that point, future Monthly Deductions will be waived for as long as the GMDB is in effect.
If the GMDB is not in effect and the cash surrender value is insufficient to pay the Monthly Deduction, the Policy will enter a 62-day grace period during which you will have an opportunity to pay a Premium sufficient to keep the Policy in force. The minimum amount you must pay is the lesser of three Monthly Deductions or, if applicable, the amount necessary to reinstate the GMDB. We will tell you the amount due. If you fail to pay this amount before the end of the grace period, the Policy will terminate.
Your Policy may also lapse if Policy loans plus accrued interest exceed the Policy’s Cash Value less the Surrender Charge. Your Policy may be protected against lapse in these circumstances if it has been in force for 15 years, the insured has attained age 75, and the other requirements for coverage under the Overloan Protection Rider are met. If your Policy is not so protected, we will notify you that the Policy is going to terminate. The Policy terminates without value unless you make a sufficient payment within the later of 62 days from the monthly anniversary immediately before the date when the excess loan occurs or 31 days after we mail the notice. If the Policy lapses with a loan outstanding, adverse tax consequences may result. (See “Tax Considerations” below.)
If your Policy has lapsed, you may reinstate it within three years after the date of lapse if the insured has not attained age 121. If more than three years have passed, you need our consent to reinstate. Reinstatement in all cases requires payment of certain charges described in the Policy and usually requires evidence of insurability that is satisfactory to us. If the Policy lapses and is reinstated during the first five Policy years, only the five-year GMDB will be reinstated. If the Policy lapses after the first five Policy years, the GMDB will terminate and cannot be reinstated. Under no circumstances can the GMDB provided by Policy rider be reinstated following a Policy lapse.
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If we deducted a Surrender Charge on lapse, we credit it back to the Policy’s Cash Value on reinstatement. The Surrender Charge on the date of reinstatement is the same as it was on the date of lapse. When we determine the Surrender Charge and other charges except cost of insurance and the Policy loan interest rate, we do not count the amount of time that a Policy was lapsed.
You can add additional benefits to the Policy by rider, subject to our underwriting and issuance standards. These additional benefits usually require an additional charge as part of the Monthly Deduction from Cash Value. The rider benefits available with the Policy provide fixed benefits that do not vary with the investment experience of the Separate Account.
There is no limit on the number of riders you can elect to add to your Policy at issue. However, you may not elect both the Waiver of Monthly Deduction Rider and the Waiver of Specified Premium Rider.
The following riders, some of which have been described previously, are available:
Children’s Term Insurance Rider, which provides term insurance on the lives of children of the insured.
Waiver of Monthly Deduction Rider, which provides for waiver of Monthly Deductions in the event of the disability of the insured.
Waiver of Specified Premium Rider, which provides for waiver of a specified amount of monthly Premium in the event of the disability of the insured.
Options to Purchase Additional Insurance Coverage Rider, which allows the Owner to purchase additional coverage on the insured without providing evidence of insurability.
Acceleration of Death Benefit Rider, which allows a Policy Owner to accelerate payment of all or part of the Policy’s death benefit if the insured is terminally ill. In calculating the Accelerated Death Benefit, we assume that death occurs one year from the date of claim and we discount the future death benefit using an interest rate not to exceed the greater of (1) the current yield on 90-day Treasury bills, and (2) the maximum Policy loan interest rate under the Policy. The Policy Owner must accelerate at least $50,000 (or 25% of the death benefit, if less), but not more than the greater of $250,000 or 10% of the death benefit. As an example, if a Policy Owner accelerated the death benefit of a Policy with a face amount of $1,000,000, the maximum amount that could be accelerated would be $250,000. Assuming an interest rate of 6%, the present value of the benefit would be $235,849. If we exercised our reserved right to impose a $150 processing fee, the benefit payable would be $235,849 less $150, or $235,699.
Guaranteed Survivor Income Benefit Rider, which provides the beneficiary with the option of exchanging the Policy’s death benefit for enhanced monthly income payments for life.
Accidental Death Benefit Rider, which provides for the payment of an additional death benefit in the event of the insured’s death by accident.
Guaranteed Minimum Death Benefit Rider, which provides for a guaranteed death benefit until the insured’s age 85 or the insured’s age 121.
Overloan Protection Rider, which provides protection from Policy lapse due to an excess Policy loan.
Riders in addition to those listed above may be made available. You should consult your registered representative regarding the availability of riders.
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You may allocate net Premiums and transfer Cash Value to the Fixed Account, which is part of MetLife’s general account. Because of exemptive and exclusionary provisions in the Federal securities laws, interests in the Fixed Account are not registered under the Securities Act of 1933. Neither the Fixed Account nor the general account is registered as an investment company under the Investment Company Act of 1940. Therefore, neither the Fixed Account, the general account nor any interests therein are generally subject to the provisions of these Acts, and the SEC does not review Fixed Account disclosure. This disclosure may, however, be subject to certain provisions of the Federal securities laws on the accuracy and completeness of prospectuses.
Our general account includes all of our assets except assets in the Separate Account or in our other separate accounts. We decide how to invest our general account assets. Fixed Account allocations do not share in the actual investment experience of the general account. Instead, we guarantee that the Fixed Account will credit interest at an annual effective rate of at least 3%. We may or may not credit interest at a higher rate. We declare the current interest rate for the Fixed Account periodically. The Fixed Account earns interest daily.
Cash Value in the Fixed Account increases from net Premiums allocated and transfers to the Fixed Account and Fixed Account interest, and decreases from loans, partial withdrawals made from the Fixed Account, charges and transfers from the Fixed Account. We deduct charges from the Fixed Account and the Policy’s Divisions in proportion to the amount of Cash Value in each. (See “Monthly Deduction from Cash Value.”) A Policy’s total Cash Value includes Cash Value in the Separate Account, the Fixed Account, and any Cash Value held in the Loan Account due to a Policy loan.
Cash Value in the Fixed Account is included in the calculation of the Policy’s death benefit in the same manner as the Cash Value in the Separate Account. (See “Death Benefits.”)
Except as described below, the Fixed Account has the same rights and limitations regarding Premium allocations, transfers, loans, surrenders and partial withdrawals as the Separate Account. The following special rules apply to the Fixed Account.
Twenty days after we apply the initial Premium to the Policy you may transfer Cash Value from the Fixed Account to the Separate Account. The amount of any transfer must be at least $50, unless the balance remaining would be less than $50, in which case you may withdraw or transfer the entire Fixed Account Cash Value. After the first Policy year you may withdraw Cash Value from the Fixed Account. The amount of any partial withdrawal, net of applicable Surrender Charges, must be at least $500. No amount may be withdrawn from the Fixed Account that would result in there being insufficient Cash Value to meet any Surrender Charges that would be payable immediately following the withdrawal upon the surrender of the remaining Cash Value in the Policy. We reserve the right to only allow transfers and withdrawals from the Fixed Account during the 30-day period that follows the Policy anniversary. The total amount of transfers and withdrawals in a Policy year may not exceed the greater of (a) 25% of the Policy’s Cash Surrender Value in the Fixed Account at the beginning of the Policy year, (b) the previous Policy year’s maximum allowable withdrawal amount, and (c) 100% of the Cash Surrender Value in the Fixed Account if withdrawing the greater of (a) and (b) would result in a Fixed Account balance of $50 or less. We are not currently imposing the maximum limit on transfers and withdrawals from the Fixed Account, but we reserve the right to do so.
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There is currently no transaction charge for partial withdrawals or transfers. We reserve the right to limit partial withdrawals to 12 and transfers to four in a Policy year and to impose a charge of $25 for each partial withdrawal or transfer. We may revoke or modify the privilege of transferring amounts to the Fixed Account at any time. We may also modify the privilege of transferring amounts from the Fixed Account at any time. Partial withdrawals will result in the imposition of any applicable Surrender Charges.
Unless you request otherwise, a Policy loan reduces the Policy’s Cash Value in the Divisions and the Fixed Account proportionately. We allocate all loan repayments in the same proportion that the Cash Value in each Division and the Fixed Account bears to the Policy’s total unloaned Cash Value. The amount transferred from the Policy’s Divisions and the Fixed Account as a result of a loan earns interest at an effective rate of at least 3% per year, which we credit to the Policy’s Cash Value in the Divisions and the Fixed Account in proportion to the Policy’s Cash Value in each on the day it is credited.
We take partial withdrawals from the Policy’s Divisions and the Fixed Account in the same proportion that the Cash Value in each account bears to the Policy’s total unloaned Cash Value.
We can delay transfers, surrenders, withdrawals and Policy loans from the Fixed Account for up to six months. We will not delay loans to pay Premiums on policies issued by us.
We make certain charges and deductions under the Policy. These charges and deductions compensate us for: (1) services and benefits we provide; (2) costs and expenses we incur; and (3) risks we assume.
Services and benefits we provide:
| • | the death benefit, cash, and loan benefits under the Policy |
| • | investment options, including Premium allocations |
| • | administration of elective options |
| • | the distribution of reports to Policy Owners |
Costs and expenses we incur:
| • | costs associated with processing and underwriting applications, and with issuing and administering the Policy (including any riders) |
| • | overhead and other expenses for providing services and benefits |
| • | sales and marketing expenses |
| • | other costs of doing business, such as collecting Premiums, maintaining records, processing claims, effecting transactions, and paying federal, state, and local Premium and other taxes and fees |
Risks we assume:
| • | that the cost of insurance charges we may deduct are insufficient to meet our actual claims because the insureds die sooner than we estimate |
| • | that the cost of providing the services and benefits under the Policies exceed the charges we deduct |
The amount of a charge may not necessarily correspond to the costs of the services or benefits that are implied by the name of the charge or that are associated with the particular Policy. For example, the sales charge and Surrender Charge may not fully cover all of our sales and distribution expenses, and we may use proceeds from other charges, including the Mortality and Expense Risk Charge and the cost of insurance charge, to help cover those expenses. We may profit from certain Policy charges.
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Prior to the allocation of a Premium, we deduct a percentage of your Premium payment. We credit the remaining amount (the net Premium) to the Divisions and the Fixed Account according to your allocation instructions. The deductions we make from each Premium payment are the sales charge, the Premium tax charge, and the federal tax charge.
Sales Charge. We deduct a 2.25% sales charge from each Premium payment.
Currently, the sales charge is only deducted from Premium payments that are less than or equal to the Target Premium.
Premium Tax Charge. We deduct 2.0% from each Premium for Premium taxes and administrative expenses. Premium taxes vary from state to state, but we deduct a flat 2.0%, which is based on an average of such taxes. Administrative expenses covered by this charge include those related to Premium tax and certain other state filings.
Federal Tax Charge. We deduct 1.25% from each Premium for our Federal income tax liability related to Premiums.
| |
Example: The following chart shows the net amount that we would allocate to the Policy assuming
a | |||||||
| Premium |
Net Premium |
|||||||
| $4,000 | $ | 4,000 | ||||||
| –175 | (2.25% x $2,000) + (3.25% x $4,000) = total sales, Premium tax and Federal tax charges | |||||||
|
|
|
|||||||
| $ | 3,825 | Net Premium | ||||||
If, during the first ten Policy years, or during the first ten Policy years following a face amount increase, you surrender or lapse your Policy, reduce the face amount, or make a partial withdrawal or change in death benefit option that reduces the face amount, then we will deduct a Surrender Charge from the cash value. The maximum Surrender Charge is shown in your Policy.
No Surrender Charge will apply on up to 10% of the cash surrender value withdrawn each year.
The Surrender Charge depends on the face amount of your Policy and the Issue Age, sex (except for unisex policies), risk class and smoker status of the insured. The Surrender Charge remains level for an initial period following Policy issue (or following an increase in face amount), and then declines proportionately, on a monthly basis, until the last month of the tenth
Policy year (or the tenth year following the face amount increase). The initial period during which the Surrender Charge remains level before it begins to decline will be at least one year, but no more than three years, and will be specified in your Policy.
The table below shows the maximum Surrender Charge that could apply under any Policy during the first Policy year (or the first year following a face amount increase) and in the last month of each Policy year thereafter. If your Policy is subject to the maximum Surrender Charge shown in the table for Policy Year 1, your Surrender Charge will begin to decline in the second Policy year (or the second year following the face amount increase), so that it will not exceed, in the last month of the second Policy year, the amount shown in the table for Policy Year 2. If your Policy is not subject to the maximum Surrender Charge in the first Policy year, then your
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Surrender Charge will remain level beyond the first Policy year (or the first year following a face amount increase), but in no event for more than three years.
| For Policies which are Surrendered, Lapsed or Reduced During |
The Maximum Surrender Charge per $1,000 of Base Policy Face Amount |
|||||||
| Entire Policy Year |
1 | $ | 38.25 | |||||
| Last Month of Policy Year |
2 | 35.81 | ||||||
| 3 | 32.56 | |||||||
| 4 | 31.74 | |||||||
| 5 | 29.84 | |||||||
| 6 | 27.13 | |||||||
| 7 | 24.42 | |||||||
| 8 | 18.99 | |||||||
| 9 | 9.50 | |||||||
| 10 | 0.00 | |||||||
In the case of a face amount reduction or a partial withdrawal or change in death benefit option that results in a face amount reduction, we deduct any Surrender Charge that applies from the Policy’s remaining Cash Value in an amount that is proportional to the amount of the Policy’s face amount surrendered. (See “Reduction in Face Amount,” “Partial Withdrawal” and “Change in Death Benefit Option.”)
If you surrender the Policy (or a face amount increase) in the first Policy year (or in the first year following the face amount increase) we will deduct from the surrender proceeds an amount equal to the remaining first year Coverage Expense Charges. We reserve the right to also deduct an amount equal to the remaining first year Policy Charges. If you reduce the face amount of your Policy in the first year following a face amount increase, we will deduct from your Cash Value a proportionate amount of the remaining first year Coverage Expense Charges, based on the ratio of the face amount reduction to the Policy’s original face amount.
The Surrender Charge reduces the Policy’s Cash Value in the Divisions and the Fixed Account in proportion to the amount of the Policy’s Cash Value in each. However, if you designate the accounts from which a partial withdrawal is to be taken, the charge will be deducted proportionately from the Cash Value of the designated accounts.
We reserve the right to impose a $25 processing charge on each partial withdrawal. If imposed, this charge would compensate us for administrative costs in generating the withdrawn payment and in making all calculations that may be required because of the partial withdrawal. We are currently waiving this charge.
We reserve the right to impose a $25 processing charge on each transfer between Divisions or between a Division and the Fixed Account to compensate us for the costs of processing these transfers. If imposed, transfers under one of our Automated Investment Strategies would not count as transfers for the purpose of assessing this charge. We are currently waiving this charge.
Illustration of Benefits Charge
We reserve the right to impose a $25 charge for each illustration of Policy benefits that you request in excess of one per year. If imposed, this charge would compensate us for the cost of preparing and delivering the illustration to you. We are currently waiving this charge.
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Monthly Deduction from Cash Value
On the first day of each Policy month, starting with the Policy Date, we deduct the “Monthly Deduction” from your Cash Value.
| — | If your Policy is protected against lapse by a Guaranteed Minimum Death Benefit, we make the Monthly Deduction each month regardless of the amount of your cash surrender value. If your cash surrender value is insufficient to pay the Monthly Deduction in any month, your Policy will not lapse, but the shortfall will, in effect, cause your cash surrender value to have a negative balance. (See “Lapse and Reinstatement.”) |
| — | If a Guaranteed Minimum Death Benefit is not in effect, and the cash surrender value is not large enough to cover the entire Monthly Deduction, we will make the deduction to the extent Cash Value is available, but the Policy will be in default, and it may lapse. (See “Lapse and Reinstatement.”) |
There is no Monthly Deduction on or after the Policy anniversary when the insured attains age 121.
The Monthly Deduction reduces the Cash Value in each Division and in the Fixed Account (and, if applicable, in the EDCA account) in proportion to the Cash Value in each. However, you may request that we charge the Monthly Deduction to a specific Division or to the Fixed Account. If, in any month, the designated account has insufficient Cash Value to cover the Monthly Deduction, we will first reduce the designated account Cash Value to zero and then charge the remaining Monthly Deduction to all Divisions and, if applicable, the Fixed Account, in proportion to the Cash Value in each.
The Monthly Deduction includes the following charges:
Policy Charge. The Policy Charge is equal to $15.00 per month in the first Policy year and $8.00 per month thereafter. The Policy Charge is $12 per month in the first Policy year and $9 per month thereafter for Policies issued with face amounts of less than $50,000. No Policy Charge applies to Policies issued with face amounts equal to or greater than $250,000. The Policy Charge compensates us for administrative costs such as record keeping, processing death benefit claims and Policy changes, preparing and mailing reports, and overhead costs.
Coverage Expense Charge. We impose a monthly charge for the costs of underwriting, issuing (including sales commissions), and administering the Policy or the face amount increase. The monthly charge is imposed on the base Policy face amount and varies by the base Policy’s face amount and duration, and by the insured’s issue age, smoking status, risk class (at the time the Policy or a face amount increase is issued), and, except for unisex Policies, the insured’s sex. Currently, we only impose the Coverage Expense Charge during the first eight Policy years, and during the first eight years following a requested face amount increase.
Monthly Charges for the Cost of Insurance. This charge covers the cost of providing insurance protection under your Policy. The cost of insurance charge for a Policy month is equal to the “amount at risk” under the Policy, multiplied by the cost of insurance rate for that Policy month. We determine the amount at risk on the first day of the Policy month. The amount at risk is the amount by which the death benefit (generally discounted at the monthly equivalent of 3% per year) exceeds the Policy’s Cash Value. The amount at risk is affected by investment performance, loans, Premium payments, fees and charges, partial withdrawals and face amount reductions.
The guaranteed cost of insurance rates for a Policy depend on the insured’s
| — | smoking status |
| — | risk class |
| — | attained age |
| — | sex (if the Policy is sex-based). |
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The current cost of insurance rates will depend on the above factors, plus
| — | the insured’s age at issue (and at the time of any face amount increase) |
| — | the Policy year (and the year of any face amount increase) |
| — | the Policy’s face amount. |
We guarantee that the rates for underwritten Policies will not be higher than rates based on
| — | the 2001 Commissioners Standard Ordinary Mortality Tables (the “2001 CSO Tables”) with smoker/ nonsmoker modifications, for Policies issued on non-juvenile insureds (age 18 and above at issue), adjusted for substandard ratings or flat extras, if applicable |
| — | the 2001 CSO Aggregate Tables (Nonsmoker Tables for attained age 16 and older), for Policies issued on juvenile insureds (below age 18 at issue). |
The actual rates we use may be lower than the maximum rates, depending on our expectations about our future mortality and expense experience, lapse rates, taxes and investment earnings. We review the adequacy of our cost of insurance rates and other non-guaranteed charges periodically and may adjust them. Any change will apply prospectively.
The risk classes we use are
| — | for Policies issued on non-juvenile insureds: preferred smoker, standard smoker, rated smoker, elite nonsmoker, preferred nonsmoker, standard nonsmoker, and rated nonsmoker. |
| — | for Policies issued on juvenile insureds: standard and rated (with our consent). |
Rated Policies have higher cost of insurance deductions. We base the guaranteed maximum mortality charges for substandard ratings on multiples of the 2001 CSO Tables.
The following standard or better smoker and non-smoker classes are available for underwritten Policies:
| — | elite nonsmoker for Policies with face amounts of $250,000 or more where the issue age is 18 through 80; |
| — | preferred smoker and preferred nonsmoker for Policies with face amounts of $100,000 or more where the issue age is 18 through 80; |
| — | standard smoker and standard nonsmoker for Policies with face amounts of $50,000 or more ($25,000 for pension plans) where the issue age is 18 through 85. |
The elite nonsmoker class generally offers the best current cost of insurance rates, and the preferred classes generally offer better current cost of insurance rates than the standard classes.
Cost of insurance rates are generally lower for nonsmokers than for smokers and generally lower for females than for males. Within a given risk class, cost of insurance rates are generally lower for insureds with lower issue ages. For Policies sold in connection with some employee benefit plans, cost of insurance rates (and Policy values and benefits) do not vary based on the sex of the insured.
We may offer Policies on a guaranteed issue basis to certain group or sponsored arrangements. We issue these Policies up to predetermined face amount limits. Because we issue these Policies based on minimal underwriting information, they may present a greater mortality cost to us than Policies issued in a standard class. Therefore, these Policies will be issued with a risk class of standard smoker or standard nonsmoker, but will be subject to an additional flat extra charge. However, the overall cost of insurance deduction for a Policy issued on a guaranteed issue basis will not exceed the maximum cost of insurance deduction imposed under fully underwritten Policies.
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Charges for Additional Benefits. We charge monthly for the cost of any additional rider benefits (other than for the Acceleration of Death Benefit and the Overloan Protection Riders, for which we deduct a one-time fee at the time of exercise) as described in the rider form.
Mortality and Expense Risk Charge. We impose a monthly charge for our mortality and expense risks.
The mortality risk we assume is that insureds may live for shorter periods of time than we estimated. The expense risk is that our costs of issuing and administering the Policies may be more than we estimated. The charge is imposed on the Cash Value in the Separate Account, but the rate we charge is determined by the Cash Value in the Separate Account and the Fixed Account. The rate is determined on each monthly anniversary and varies based on the Policy year and the Policy’s net Cash Value in relation to the Policy’s Target Premium. As shown in the table below, the rate declines as the Policy’s net Cash Value and the Policy years increase. The charge is guaranteed not to exceed 0.80% in Policy years 1-10, 0.35% in Policy years 11-19, 0.20% in Policy years 20-29 and 0.05% thereafter.
| Policy Year |
Net Cash Value |
Charge Applied to Cash Value in Separate Account |
||||
| 1 – 10 | < 5 target premiums | 0.60 | % | |||
| 5 but < 10 target premiums | 0.55 | % | ||||
| 10 but < 20 target premiums | 0.30 | % | ||||
| 20 target premiums or more | 0.15 | % | ||||
| 11 – 19 | < 5 target premiums | 0.35 | % | |||
| 5 but < 10 target premiums | 0.30 | % | ||||
| 10 but < 20 target premiums | 0.15 | % | ||||
| 20 target premiums or more | 0.10 | % | ||||
| 20 – 29 | < 5 target premiums | 0.20 | % | |||
| 5 but < 10 target premiums | 0.15 | % | ||||
| 10 but < 20 target premiums | 0.10 | % | ||||
| 20 target premiums or more | 0.05 | % | ||||
| 30+ | 0.05 | % | ||||
We charge you interest on a loan at a maximum effective rate of 4.0% per year in Policy years 1-10 and 3.0% per year thereafter, compounded daily. We also credit interest on the amount we take from the Policy’s accounts as a result of the loan at a minimum annual effective rate of 3% per year, compounded daily. As a result, the loan interest spread will never be more than 1.00%.
Charges Against the Portfolios and the Divisions of the Separate Account
Charges for Income Taxes. We currently do not charge the Separate Account for income taxes, but in the future we may make such a charge, if appropriate. We have the right to make a charge for any taxes imposed on the Policies in the future. (See “MetLife’s Income Taxes”.)
Portfolio Expenses. There are daily charges against the Portfolio assets for investment advisory services and fund operating expenses. These are described in the Fee Table as well as in the Portfolio prospectuses.
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The following summary provides a general description of the Federal income tax considerations associated with the Policy and does not purport to be complete or to cover all tax situations. The summary does not address state, local or foreign tax issues related to the Policy. This discussion is not intended as tax advice. Counsel or other competent tax advisers should be consulted for more complete information. This discussion is based upon our understanding of the present Federal income tax laws. No representation is made as to the likelihood of continuation of the present Federal income tax laws or as to how they may be interpreted by the Internal Revenue Service. It should be further understood that the following discussion is not exhaustive and that special rules not described herein may be applicable in certain situations.
In order to qualify as a life insurance contract for Federal income tax purposes and to receive the tax treatment normally accorded life insurance contracts under Federal tax law, a Policy must satisfy certain requirements which are set forth in the Internal Revenue Code. Guidance as to how these requirements are to be applied is limited. Nevertheless, we anticipate that the Policy should be deemed to be a life insurance contract under Federal tax law. However, if your Policy is issued on a substandard basis, there is additional uncertainty. Moreover, if you elect the Acceleration of Death Benefit Rider, the tax qualification consequences associated with continuing the Policy after a distribution is made under the rider are unclear. We may take appropriate steps to bring the Policy into compliance with applicable requirements, and we reserve the right to restrict Policy transactions in order to do so. The insurance proceeds payable on the 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 Internal Revenue Code, as in effect on the date the Policy was issued.
In some circumstances, Owners of variable contracts who retain excessive control over the investment of the underlying separate account assets may be treated as the Owners of those assets. 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 the Owner of the Separate Account assets. 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.
In addition, the Code requires that the investments of the Separate Account be “adequately diversified” in order for the Policies to be treated as life insurance contracts for Federal income tax purposes. It is intended that the Separate Account, through the Portfolios, will satisfy these diversification requirements. If Portfolio shares are sold directly to either non-qualified plans or to tax-qualified retirement plans that later lose their tax qualified status, there could be adverse consequences under the diversification rules.
The following discussion assumes that the Policy will qualify as a life insurance contract for Federal income tax purposes.
Tax Treatment of Policy Benefits
In General. The death benefit under a Policy should generally be excludible from the gross income of the beneficiary for Federal income tax purposes.
In the case of employer-owned life insurance as defined in Section 101(j), 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
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are also exceptions for Policy proceeds paid to an employee’s 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.
Federal, state and local estate, inheritance and other tax consequences of ownership, or receipt of Policy proceeds, depend on the circumstances of each Policy Owner or beneficiary. A tax adviser should be consulted on these circumstances.
Generally, the Policy Owner will not be deemed to be in constructive receipt of the Policy Cash Value until there is a distribution or a deemed distribution. When distributions from a Policy occur, or when loans are taken from or secured by a Policy, the tax consequences depend on whether the Policy is classified as a modified endowment contract (“MEC”).
Modified Endowment Contracts. Under the Internal Revenue Code, certain life insurance contracts are classified as modified endowment contracts, with less favorable income tax treatment than other life insurance contracts. Due to the Policy’s flexibility with respect to Premium payments and benefits, each Policy’s circumstances will determine whether the Policy is a MEC. In general a Policy will be classified as a modified endowment contract if the amount of Premiums paid into the Policy causes the Policy to fail the “7-pay test.” A Policy will fail the 7-pay test if at any time in the first seven Policy years, or seven years after a material change, the amount paid into the Policy exceeds the sum of the level Premiums that would have been paid at that point under a Policy that provided for paid-up future benefits after the payment of seven level annual payments.
If there is a reduction in the benefits under the Policy during a 7-pay testing period, for example, as a result of a partial withdrawal, the 7-pay test will have to be reapplied as if the Policy had originally been issued at the reduced face amount. If there is a “material change” in the Policy’s benefits or other terms, even after the first seven Policy years, the Policy may have to be retested as if it were a newly issued Policy. A material change can occur, for example, when there is an increase in the death benefit or the receipt of an unnecessary Premium. 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. To prevent your Policy from becoming a modified endowment contract, it may be necessary to limit Premium payments or to limit reductions in benefits. A current or prospective Policy Owner should consult a tax adviser to determine whether a Policy transaction will cause the Policy to be classified as a modified endowment contract. The IRS has promulgated a procedure for the correction of inadvertent modified endowment contracts that may provide relief in limited circumstances.
Distributions Other Than Death Benefits from Modified Endowment Contracts. Policies classified as modified endowment contracts are subject to the following tax rules:
(1) All distributions other than death benefits, including distributions upon surrender and withdrawals, from a modified endowment contract will be treated first as distributions of gain taxable as ordinary income and as tax-free recovery of the Policy Owner’s investment in the Policy only after all gain has been distributed.
(2) Loans taken from or secured by a Policy classified as a modified endowment contract are treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount subject to tax except where the distribution or loan is made when the Policy Owner has attained age 591/2 or is disabled, or where the
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distribution is part of a series of substantially equal periodic payments for the life (or life expectancy) of the Policy Owner or the joint lives (or joint life expectancies) of the Policy Owner and the Policy Owner’s beneficiary. The foregoing exceptions generally do not apply to a Policy Owner which is a non-natural person, such as a corporation.
If a Policy becomes a modified endowment contract, distributions 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.
Distributions Other Than Death Benefits from Policies that are not Modified Endowment Contracts. Distributions other than death benefits from a Policy that is not classified as a modified endowment contract are generally treated first as a non-taxable recovery of the Policy Owner’s investment in the Policy, and only after the recovery of all investment in the Policy as gain taxable as ordinary income. However, 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.
Loans from or secured by a Policy that is not a modified endowment contract are generally not treated as distributions.
Finally, neither distributions from nor loans from or secured by a Policy that is not a modified endowment contract are subject to the 10 percent additional income tax.
Investment in the Policy. Your investment in the Policy is generally your aggregate Premiums. When a distribution is taken from the Policy, your investment in the Policy is reduced by the amount of the distribution that is tax-free.
Policy Loans. In general, interest on a Policy loan will not be deductible. If a Policy loan is outstanding when a Policy is canceled or lapses, the amount of the outstanding indebtedness will be added to the amount distributed and will be taxed accordingly. A loan may also be taxed when a Policy is exchanged. Before taking out a Policy loan, you should consult a tax adviser as to the tax consequences.
Multiple Policies. All modified endowment contracts that are issued by MetLife (or its affiliates) to the same Policy Owner during any calendar year are treated as one modified endowment contract for purposes of determining the amount includible in the Policy Owner’s income when a taxable distribution occurs.
Withholding. To the extent that Policy distributions are taxable, they are generally subject to withholding for the recipient’s Federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions.
Life Insurance Purchases by Residents of Puerto Rico. In Rev. Rul. 2004-75, 2004-31 I.R.B. 109, the Internal Revenue Service 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. Policy Owners 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, Policy Owners may be subject to state and/or municipal taxes and taxes that may be imposed by the Policy Owner’s country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding taxation with respect to a purchase of the Policy.
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Acceleration of Death Benefit Rider. Payments received under the Acceleration of Death Benefit Rider should be excludable from the gross income of the Policy Owner except in certain business contexts. However, you should consult a qualified tax adviser about the consequences of adding this rider to a Policy or requesting payment under this rider.
Overloan Protection Rider. If you are contemplating the purchase of the Policy with the Overloan Protection Rider, you should be aware that the tax consequences of the Overloan Protection Rider have not been ruled on by the IRS or the courts. It is possible that the IRS could assert that the outstanding loan balance should be treated as a taxable distribution when the Overloan Protection Rider causes the Policy to be converted into a fixed Policy. You should consult a tax adviser as to the tax risks associated with the Overloan Protection Rider.
Estate, Gift and Generation-Skipping Transfer Taxes. The transfer of the Policy or the designation of a beneficiary may have Federal, state, and/or local transfer and inheritance tax consequences, including the imposition of gift, estate, and generation-skipping transfer taxes. When the insured dies, the death proceeds will generally be includable in the Policy Owner’s estate for purposes of the Federal estate tax if the Policy Owner was the insured, if the insured possessed incidents of ownership in the Policy at the time of death, or if 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 Owner’s estate upon the Policy Owner’s death.
Moreover, under certain circumstances, the Internal Revenue Code may impose a “generation-skipping transfer tax” when all or part of a life insurance policy is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Policy Owner. Regulations issued under the Internal Revenue Code may require us to deduct the tax from your Policy, or from any applicable payment, and pay it directly to the IRS.
Qualified tax advisers should be consulted concerning the estate and gift tax consequences of Policy ownership and distributions under Federal, state and local law. The individual situation of each Policy Owner or beneficiary will determine the extent, if any, to which Federal, state, and local transfer and inheritance taxes may be imposed and how ownership or receipt of Policy proceeds will be treated for purposes of Federal, state and local estate, inheritance, generation-skipping 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.
Other Policy Owner Tax Matters. The application of certain tax rules after age 100 is not entirely clear. The tax consequences of continuing the Policy beyond the insured’s attained age 121 are also unclear. You should consult a tax adviser if you intend to keep the Policy in force beyond the insured’s attained age 121.
If a trustee under a pension or profit-sharing plan, or similar deferred compensation arrangement, owns a Policy, the Federal, state and estate tax consequences could differ. The amounts of life insurance that may be purchased on behalf of a participant in a pension or profit-sharing plan are limited. Providing excessive life insurance coverage in a retirement plan will have adverse tax consequences. The inclusion of riders, such as waiver of Premium riders, may also have adverse tax consequences. Therefore, it is important to discuss with your tax adviser the suitability of the Policy, including the suitability of coverage amounts and Policy riders, before any purchase by a retirement plan. Any proposed distribution or sale of a Policy by a retirement plan will also need to be discussed with a tax adviser. The current cost of insurance for the net amount at risk is treated as a “current fringe benefit” and must be included annually in the plan participant’s gross income. If the plan participant dies while covered by the plan and the Policy proceeds are paid to the participant’s beneficiary, then the excess of the death benefit over the Cash Value is not income taxable. However, the Cash Value will
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generally be taxable to the extent it exceeds the participant’s cost basis in the Policy. Policies owned under these types of plans may be subject to restrictions under the Employee Retirement Income Security Act of 1974 (“ERISA”). You should consult a qualified adviser regarding ERISA.
Department of Labor (“DOL”) regulations impose requirements for participant loans under retirement plans covered by ERISA. Plan loans must also satisfy tax requirements to be treated as nontaxable. Plan loan requirements and provisions may differ from the Policy loan provisions. Failure of plan loans to comply with the requirements and provisions of the DOL regulations and of tax law may result in adverse tax consequences and/or adverse consequences under ERISA. Plan fiduciaries and participants should consult a qualified adviser before requesting a loan under a Policy held in connection with a retirement plan.
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. If you are contemplating a change to an existing Policy or purchasing the Policy for any arrangement the value of which depends in part on its tax consequences, you should consult a qualified tax adviser.
Ownership of the Policy by a corporation, trust or other non-natural person could jeopardize some (or all) of such entity’s interest deduction under Internal Revenue Code Section 264, even where such entity’s indebtedness is in no way connected to the Policy. In addition, under Section 264(f)(5), if a business (other than a sole proprietorship) is directly or indirectly a beneficiary of the Policy, the Policy could be treated as held by the business for purposes of the Section 264(f) entity-holder rules. Therefore, it would be advisable to consult with a qualified tax adviser before any non-natural person is made an owner or holder of the Policy, or before a business (other than a sole proprietorship) is made a beneficiary of the Policy.
Guidance on Split Dollar 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 Policy is part of an equity split dollar arrangement taxed under the economic benefit regime, there is a risk that some portion of the Policy Cash Value may be taxed prior to any Policy distribution. 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.
In addition, 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 split-dollar life insurance arrangements for directors and executive officers of such companies, since 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.
Possible Tax Law Changes. Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Policy could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the Policy.
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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Under current Federal income tax law, MetLife is not taxed on the Separate Account’s operations. Thus, currently we do not deduct a charge from the Separate Account for company Federal income taxes. (We do deduct a charge for Federal taxes from Premiums.) We reserve the right to charge the Separate Account for any future Federal income taxes we may incur.
Under current laws in several states, 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.
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.
We have entered into a distribution agreement with our affiliate, MetLife Investors Distribution Company (“Distributor”), for the distribution of the Policies. The Distributor’s principal executive offices are located at 200 Park Avenue, New York, New York 10166. The Distributor is registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority (“FINRA”). FINRA provides background information about broker-dealers and their registered representatives through FINRA BrokerCheck. You may contact the FINRA BrokerCheck Hotline at 1-800-289-9999, or log on to www.finra.org. An investor brochure that includes information describing FINRA BrokerCheck is available through the Hotline or on-line.
The Policies are no longer offered for sale.
Commissions and Other Cash Compensation
All selling firms receive commissions. The portion of the commission payments that selling firms pass on to their sales representatives is determined in accordance with their internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. A selling firm or a sales representative of a selling firm may receive different compensation for selling one product over another and/or may be inclined to favor one product provider over another due to differing compensation rates.
The maximum commissions paid for sale of the Policies are as follows: 110% of Premiums paid up to the Commissionable Target Premium, and 4.5% of Premiums paid in excess of Commissionable Target Premium in Policy year 1; and 13.0% of all Premiums paid in Policy years 2 through 10; and 2.0% of all Premiums paid thereafter. In addition, commissions are payable based on the Cash Value of the Policies in the following amounts: 0.10% in Policy years 2 through 10; 0.08% in Policy years 11 through 20; and 0.06% thereafter. Commissionable Target Premium is generally the Target Premium as defined in the Glossary, excluding the portions associated with flat extras and certain riders, and is generally equal to or less than the Target Premium. We and/or the Distributor may also make bonus payments to selling firms. The maximum amount of these bonus payments are as follows: 9.0% of Premiums paid up to the Commissionable Target Premium and 2.0% of Premiums paid in excess of the Commissionable Target Premium in Policy year 1; 19.75% of Premiums paid up to the Commissionable Target Premium and 0.25% of Premiums paid in excess of the Commissionable Target Premium paid in Policy year 2; and 0.25% of all Premiums paid thereafter.
For Policies sold prior to July 1, 2016, our formerly affiliated sales representatives received cash payments for the products they sold and serviced based on a “gross dealer concession” model. The percentage of the gross dealer concession to which the representative was entitled was based on a sliding-scale formula that took into account the total amount of proprietary and non-proprietary products sold and serviced by the representative. The
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gross dealer concession amount in the first Policy year was 117% of Premiums paid up to the Commissionable Target Premium, and 5.0% of Premiums paid in excess of the Commissionable Target Premium. In Policy years 2 through 10, the gross dealer concession amount is 8.0% of all Premiums paid, and in Policy years 11 and thereafter the gross dealer concession amount is 2.0% of all Premiums.
Other Payments
We and Distributor may enter into preferred distribution arrangements with selected selling firms under which we pay additional compensation, including marketing allowances, introduction fees, persistency payments, preferred status fees and industry conference fees. Marketing allowances are periodic payments to certain selling firms, the amount of which depends on cumulative periodic (usually quarterly) sales of our insurance products (including the Policies) and may also depend on meeting thresholds in the sale of certain of our insurance products. They may also include payments we make to cover the cost of marketing or other support services provided for or by registered representatives who may sell our products. Introduction fees are payments to selling firms in connection with the addition of these variable products to the selling firm’s line of investment products, including expenses relating to establishing the data communications systems necessary for the selling firm to offer, sell and administer these products. Persistency payments are periodic payments based on account and/ or Cash Values of these variable insurance products. Preferred status fees are paid to obtain preferred treatment of these products in selling firms’ marketing programs, which may include marketing services, participation in marketing meetings, listings in data resources and increased access to their sales representatives. Industry conference fees are amounts paid to cover in part the costs associated with sales conferences and educational seminars for selling firms’ sales representatives.
These preferred distribution arrangements are not offered to all selling firms. The terms of any particular agreement governing compensation may vary among selling firms and the amounts may be significant. We and Distributor have entered into preferred distribution arrangements with the selling firms listed in the Statement of Additional Information. The prospect of receiving, or the receipt of, additional compensation as described above may provide selling firms or their representatives with an incentive to favor sales of the Policies over other variable insurance policies (or other investments) with respect to which the selling firm does not receive additional compensation, or lower levels of additional compensation. You may wish to take such payment arrangements into account when considering and evaluating any recommendation relating to the Policies. For more information about any such arrangements, ask your sales representative for further information about what your sales representative and the selling firm for which he or she works may receive in connection with your purchase of a Policy.
Commissions and other incentives or payments described above are not charged directly to Policy Owners or the Separate Account. We intend to recoup commissions and other sales expenses through fees and charges deducted under the Policy.
The Statement of Additional Information contains additional information about the compensation paid for the sale of the Policies.
In the ordinary course of business, MetLife, similar to other life insurance companies, is involved in lawsuits (including class action lawsuits), arbitrations and other legal proceedings. Also, from time to time, state and federal regulators or other officials conduct formal and informal examinations or undertake other actions dealing with various aspects of the financial services and insurance industries. In some legal proceedings involving insurers, substantial damages have been sought and/ or material settlement payments have been made. It is not possible to predict with certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MetLife does not believe any such action or proceeding will have a material adverse effect upon the Separate Account or upon the ability of MetLife Investors Distribution Company to perform its contract with the Separate Account or of MetLife to meet its obligations under the Policies.
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RESTRICTIONS ON FINANCIAL TRANSACTIONS
Applicable laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to reject a Premium payment and/or block or “freeze” your Policy. If these laws apply in a particular situation, we would not be allowed to process any request for withdrawals, surrenders, loans or death benefits, make transfers, or continue making payments under your death benefit option until instructions are received from the appropriate regulator. We also may be required to provide additional information about you or your Policy to government regulators.
You may find the financial statements of the Separate Account and the financial statements of MetLife in the Statement of Additional Information. MetLife’s financial statements should be considered only as bearing on our ability to meet our obligations under the Policies. They should not be considered as bearing on the investment performance of the assets held in the Separate Account.
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Age. The age of an insured refers to the insured’s age at his or her nearest birthday.
Attained Age. The insured’s issue age plus the number of completed Policy years.
Base Policy. The Policy without riders.
Cash Surrender Value. The amount you receive if you surrender the Policy. It is equal to the Policy’s Cash Value reduced by any Surrender Charge that would apply on surrender and by any outstanding Policy loan and accrued interest.
Cash Value. A Policy’s Cash Value includes the amount of its Cash Value held in the Separate Account, the amount held in the Fixed Account, if there is an outstanding Policy loan, the amount of its cash value held in the Loan Account, and any amount held in the EDCA account.
Division. A sub-account of the Separate Account that invests in shares of an open-ended management investment company or other pools of investment assets.
Fixed Account. The Fixed Account is a part of our general account to which you may allocate Net Premiums. It provides guarantees of principal and interest.
Investment Start Date. This is the later of the Policy Date and the date we first receive a Premium payment for the Policy.
Issue Age. The age of the insured as of his or her birthday nearest to the Policy Date.
Loan Account. The account to which Cash Value from the Separate and/or Fixed Accounts is transferred when a Policy loan is taken.
Net Cash Value. The Policy’s Cash Value less any outstanding loans and accrued loan interest.
Net Premium. The Net Premium is equal to the Premium payment minus the sales charge, the Premium tax charge, and the federal tax charge.
Planned Premium. The Planned Premium is the Premium payment schedule you choose to help meet your future goals under the Policy. The Planned Premium consists of a first-year Premium amount and an amount for Premium payments in subsequent Policy years. It is subject to certain limits under the Policy.
Policy Date. The date on which coverage under the Policy and Monthly Deductions begin. If you make a Premium payment with the application, unless you request otherwise, the Policy Date is generally the date the Policy application is approved. If you choose to pay the initial Premium upon delivery of the Policy, unless you request otherwise, the Policy Date is generally the date on which we receive your initial payment. The Policy Date is used to measure Policy years, Policy months, and Policy anniversaries.
Premiums. Premiums include all payments under the Policy, whether a Planned Premium or an unscheduled payment.
Separate Account. Metropolitan Life Separate Account UL, a separate account established by MetLife to receive and invest Premiums paid under the Policies and certain other variable life insurance policies, and to provide variable benefits.
Target Premium. We use the Target Premium to determine the amount of Mortality and Expense Risk Charge imposed on the Separate Account and the amount of Sales Charge imposed on Premium payments. The Target Premium varies by issue age, sex (except for unisex Policies), smoking status and any flat extras and substandard rating of the insured, and the Policy’s base face amount, with additional amounts for most riders.
You. “You” refers to the Policy Owner.
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GUIDELINE PREMIUM TEST AND CASH VALUE ACCUMULATION TEST
In order to meet the Internal Revenue Code’s definition of life insurance, the Policies provide that the death benefit will not be less than what is required by the “guideline premium test” under Section 7702(a)(2) of the Internal Revenue Code, or the “cash value accumulation test” under Section 7702(a)(1) of the Internal Revenue Code, as selected by you when the Policy is issued. In general, the test you choose at issue will be used for the life of the Policy. (See “Death Benefits.”)
For the guideline premium test, the table below shows the percentage of the Policy’s Cash Value that is used to determine the death benefit.
| Age of the Policy Year |
Percentage of Cash Value |
Age of Insured at Start of the Policy Year |
Percentage of Cash Value | |||
| 0 through 40 |
250 | 61 | 128 | |||
| 41 |
243 | 62 | 126 | |||
| 42 |
236 | 63 | 124 | |||
| 43 |
229 | 64 | 122 | |||
| 44 |
222 | 65 | 120 | |||
| 45 |
215 | 66 | 119 | |||
| 46 |
209 | 67 | 118 | |||
| 47 |
203 | 68 | 117 | |||
| 48 |
197 | 69 | 116 | |||
| 49 |
191 | 70 | 115 | |||
| 50 |
185 | 71 | 113 | |||
| 51 |
178 | 72 | 111 | |||
| 52 |
171 | 73 | 109 | |||
| 53 |
164 | 74 | 107 | |||
| 54 |
157 | 75 through 90 | 105 | |||
| 55 |
150 | 91 | 104 | |||
| 56 |
146 | 92 | 103 | |||
| 57 |
142 | 93 | 102 | |||
| 58 |
138 | 94 through 121 | 101 | |||
| 59 |
134 | |||||
| 60 |
130 |
For the cash value accumulation test, sample net single premium factors for selected ages of male and female insureds, in a standard or better nonsmoker risk class, are listed below.
| Net Single Premium Factor |
||||||||
| Age | Male | Female | ||||||
| 30 |
5.82979 | 6.59918 | ||||||
| 40 |
4.11359 | 4.63373 | ||||||
| 50 |
2.93292 | 3.28706 | ||||||
| 60 |
2.14246 | 2.40697 | ||||||
| 70 |
1.64028 | 1.82665 | ||||||
| 80 |
1.32530 | 1.44515 | ||||||
| 90 |
1.15724 | 1.22113 | ||||||
| 100 |
1.08417 | 1.10646 | ||||||
| 120 |
1.02597 | 1.02597 | ||||||
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Additional information about the Policy and the Separate Account can be found in the Statement of Additional Information, which you can obtain, without charge, by calling our TeleService Center at 1-800-638-5000. You may also obtain, without charge, a personalized illustration of death benefits, Cash Surrender Values and Cash Values by calling your registered representative.
For Division transfers and Premium reallocations, for current information about your Policy values, to change or update Policy information such as your billing address, billing mode, beneficiary or ownership, for information about other Policy transactions, and to ask questions about your Policy, you may call us at 1-800-638-5000.
This prospectus incorporates by reference all of the information contained in the Statement of Additional Information, which is legally part of this prospectus.
Information about the Policy and the Separate Account, including the Statement of Additional Information, is available for viewing and copying at the SEC’s Public Reference Room in Washington, D.C. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 202-551-8090. The Statement of Additional Information, reports and other information about the Separate Account are available on the SEC Internet site at www.sec.gov. Copies of this information may be obtained upon payment of a duplicating fee, by writing to the SEC’s Public Reference Section at 100 F Street, NE, Washington, DC 20549-0102.
File No. 811-06025
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EQUITY ADVANTAGE VUL
FLEXIBLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
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 May 1, 2020 and should be read in conjunction therewith. A copy of the Prospectus may be obtained by writing to Metropolitan Life Insurance Company, P.O. Box 543, Warwick, RI 02887-0543.
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GENERAL INFORMATION AND HISTORY
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 Company’s home office is located at 200 Park Avenue, New York, New York 10166-0188. The Company is a wholly-owned subsidiary of MetLife, Inc.
We established the Separate Account as a separate investment account on December 13, 1988. The Separate Account is the funding vehicle for the Policies, and other variable life insurance policies that we issue. These other polices impose different costs, and provide different benefits, from the Policies. The Separate Account meets the definition of a “separate account” under Federal securities laws, and is registered with the U.S. Securities and Exchange Commission (the “SEC”) as a unit investment trust under the Investment Company Act of 1940 (the “1940 Act”). Registration with the SEC does not involve SEC supervision of the Separate Account’s management or investments. However, the New York Insurance Commissioner regulates MetLife and the Separate Account.
Our affiliate, MetLife Investors Distribution Company, 200 Park Avenue, New York, NY 10166 (“Distributor”), serves as principal underwriter for the Policies. The Distributor is a Missouri corporation organized in 2000. The Distributor is registered as a broker-dealer with the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934, as well as with the securities commissions in the states in which it operates, and is a member of the Financial Industry Regulatory Authority. The Distributor may enter into selling agreements with other broker- dealers (“selling firms”) and compensate them for their services. The Distributor passes through commissions it receives to selling firms for their sales and does not retain any portion of them in return for its services as distributor for the Policies.
The Policies are no longer offered for sale.
The Distributor received sales compensation with respect to the Policies in the following amounts in the periods indicated:
| Fiscal |
Aggregate Amount of Commissions Paid to Distributor |
Aggregate Amount of Commissions Retained by Distributor After Payments to Selling Firms |
||||
| 2019 |
$997,625 | $ | 0 | |||
| 2018 |
$1,291,354 | $0 | ||||
| 2017 |
$2,017,364 | $0 | ||||
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ADDITIONAL INFORMATION ABOUT THE OPERATION OF THE POLICIES
We may withhold payment of surrender or loan proceeds if those proceeds are coming from a Policy Owner’s check, or from a Premium transaction under our pre-authorized checking arrangement, which has not yet cleared. We may also delay payment while we consider whether to contest the Policy. We pay interest on the death benefit proceeds from the date to the date we pay them.
Normally we promptly make payments of Cash Value, or of any loan value available, from Cash Value in the Fixed Account. However, we may delay those payments for up to six months. We pay interest in accordance with state insurance law requirements on delayed payments.
We pay the Policy’s death benefit and Cash Surrender Value in one sum unless you or the payee choose a payment option for all or part of the proceeds. You can choose a combination of payment options. You can make, change or revoke the selection of payee or payment option before the death of the insured. You can contact your registered representative or our Designated Office for the procedure to follow. (See “Receipt of Communications and Payments at MetLife’s Designated Office” in the prospectus.) The payment options available are fixed benefit options only and are not affected by the investment experience of the Separate Account. Once payments under an option begin, withdrawal rights may be restricted. Even if the death benefit under the Policy is excludible from income, payments under Payment Options may not be excludible in full. This is because earnings on the death benefit after the insured’s death are taxable and payments under the Payment Options generally include such earnings. You should consult a tax adviser as to the tax treatment of payments under Payment Options.
The following payment options are available:
| (i) | Single Life Income. We pay proceeds in equal monthly installments for the life of the payee. |
| (ii) | Single Life Income—10-Year Guaranteed Payment Period. We pay proceeds in equal monthly installments during the life of the payee, with a guaranteed payment period of 10 years. |
| (iii) | Joint and Survivor Life Income —10-Year Guaranteed Payment Period. We pay proceeds in equal monthly installments (a) while either of two payees is living, or (b) while either of the two payees is living, but for at least 10 years. |
ADDITIONAL INFORMATION ABOUT CHARGES
Group or Sponsored Arrangements
We may issue the Policies to group or sponsored arrangements, as well as on an individual basis. A “group arrangement” includes a situation where a trustee, employer or similar entity purchases individual Policies covering a group of individuals. Examples of such arrangements are non-qualified deferred compensation plans. A “sponsored arrangement” includes a situation where an employer or an association permits group solicitation of its employees or members for the purchase of individual Policies.
We may waive, reduce or vary any Policy charges under Policies sold to a group or sponsored arrangement. We may also raise the interest rate credited to loaned amounts under these Policies. The amount of the variations and our eligibility rules may change from time to time. In general, they reflect cost savings over time that we anticipate for Policies sold to the eligible group or sponsored arrangements and relate to objective factors such as the size of the group, its stability, the purpose of the funding arrangement and characteristics of the group members. Consult your registered representative for any variations that may be available and appropriate for your case.
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The United States Supreme Court has ruled that insurance policies with values and benefits that vary with the sex of the insured may not be used to fund certain employee benefit programs. Therefore, we offer Policies that do not vary based on the sex of the insured to certain employee benefit programs. We recommend that employers consult an attorney before offering or purchasing the Policies in connection with an employee benefit program.
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 Portfolios from the Separate Account, 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 METLIFE’S RIGHT TO CHALLENGE THE POLICY
Generally, we can challenge the validity of your Policy or a rider during the insured’s lifetime for two years (or less, if required by state law) from the date of issue, based on misrepresentations made in the application. We can challenge the portion of the death benefit resulting from an underwritten Premium payment for two years during the insured’s lifetime from receipt of the Premium payment. However, if the insured dies within two years of the date of issue, we can challenge all or part of the Policy at any time based on misrepresentations in the application. We can challenge an increase in face amount, with regard to material misstatements concerning such increase, for two years during the insured’s lifetime from its effective date.
If we determine, while the insured is still living, that there was a misstatement of age or (if the Policy is not unisex) sex in the application, the Policy values and charges will be recalculated from the issue date based on the correct information. If, after the death of the insured, we determine that the application misstates the insured’s age or sex, the Policy’s death benefit will be the amount which would be bought by the most recent Monthly Cost of Insurance, based on the insured’s correct age and, if the Policy is not unisex, correct sex.
We will send you an annual statement showing your Policy’s death benefit, Cash Value and any outstanding Policy loan principal. We will also confirm Policy loans, account transfers, lapses, surrenders and other Policy transactions when they occur.
You will be sent periodic reports containing the financial statements of the Portfolios.
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We may provide personalized illustrations showing how the Policies work based on assumptions about investment returns and the Policy Owner’s and/or insured’s characteristics. The illustrations are intended to show how the death benefit, Cash Surrender Value, and Cash Value 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, risk 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 illustrated may be necessary to maintain the Policy in force for the period 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 Cash Surrender Value of the Policy. The internal rate of return on the death benefit 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.
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. Insurance, sales, Premium tax, mortality and expense risk and coverage expense charges, which can significantly reduce the return to the Policy 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.
This Statement of Additional Information and the prospectus omit certain information contained in the Registration Statement which has been filed with the SEC. Copies of such additional information may be obtained from the SEC upon payment of the prescribed fee.
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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.
MetLife’s financial statements should be distinguished from the financial statements and financial highlights comprising each of the Divisions of the Separate Account, and should be considered only as bearing on MetLife’s ability to meet its obligations under the Policies. They should not be considered as bearing on the investment performance of the assets held in the Separate Account.
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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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Table of Contents
Part C. Other Information
Item 26. Exhibits
Table of Contents
Table of Contents
Item 27. Directors and Officers of Depositor
| Name and Principal Business Address |
Position and Offices with Depositor | |
| R. Glenn Hubbard | Chairman of the Board and Director | |
| 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 |
Table of Contents
| Michel A. Khalaf | President and Chief Executive Officer and Director | |
| President and Chief Executive Officer | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
| Cheryl W. Grise | Director | |
| Former Executive Vice President, Northeast | ||
| Utilities | ||
| 200 Park Avenue | ||
| New York, NY 10166 |
||
| Carlos M. Gutierrez | Director | |
| Co-Chair Albright Stonebridge Group | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
| Gerald L. Hassell | Director | |
| Former Chairman of the Board and Chief | ||
| Executive Officer, The Bank of New York | ||
| Mellon Corporation | ||
| 200 Park Avenue |
||
| New York, NY 10166 |
||
| David L Herzog | Director | |
| Former Chief Financial Officer and Executive | ||
| Vice President of American International Group | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
| Edward J. Kelly, III | Director | |
| Former Chairman, Institutional Clients Group, | ||
| Citigroup, Inc. | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
| William E. Kennard | Director | |
| Former U.S. Ambassador to the European | ||
| Union | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
| James M. Kilts | Director | |
| Founding Partner | ||
| Centerview Capital | ||
| 3 Greenwich Office Park, 2nd Floor | ||
| Greenwich CT 06831 | ||
| Catherine R. Kinney | Director | |
| Former President and Co-Chief Operating Officer, | ||
| New York Stock Exchange, Inc. | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
Table of Contents
| Diana McKenzie | Director | |
| Former Chief Information Officer Workday, Inc. | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
| Denise M. Morrison | Director | |
| Former President and Chief Executive Officer | ||
| Campbell Soup Company | ||
| 1 Campbell Place | ||
| Camden, NJ 08103 | ||
| Mark A. Weinberger | Director | |
| Former Global Chairman and Chief Executive | ||
| Office of EY Company | ||
| 200 Park Avenue | ||
| New York, NY 10166 | ||
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 indicated.
| 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 Sloan’s 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) |
2
| 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, LLC’s 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) |
3
| 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) |
4
| 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. |
5
| 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
Table of Contents
Item 29. Indemnification
As described in their respective governing documents, MetLife, Inc. (the ultimate parent of the Depositor and MetLife Investors Distribution Company, the Registrant’s 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 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) | MetLife Investors Distribution Company is the principal underwriter for the Policies. 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 |
Director and Chairman of the Board, President and Chief Executive | |
| 200 Park Avenue |
Officer | |
| New York, NY 10166 |
||
| Elisabeth Bedore |
Vice President, Chief Compliance Officer | |
| One MetLife Way |
||
| Whippany, NJ 07981 |
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| Kelli Buford |
Secretary | |
| 200 Park Avenue |
||
| New York, NY 10166 |
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| Frank Cassandra |
Director, Senior Vice President | |
| 501 Route 22 |
||
| Bridgewater, NJ 08807 |
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| Bradd Chignoli |
Director, Senior Vice President | |
| 501 Route 22 |
||
| Bridgewater, NJ 08807 |
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| Charles Connery |
Vice President and Treasurer | |
| One MetLife Way |
||
| Whippany, NJ 07981 |
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| Dina Lumerman |
Director, Senior Vice President | |
| 501 Route 22 |
||
| Bridgewater, NJ 08807 |
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| Justin Saudo |
Vice President and Chief Information Security Officer | |
| 200 Park Avenue |
||
| New York, NY 10166 |
||
| Thomas Schuster |
Director, Senior Vice President | |
| 200 Park Avenue |
||
| New York, NY 10166 |
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| Stuart Turetsky |
Chief Financial Officer | |
| 18210 Crane Nest Dr |
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| Tampa FL, 33647 |
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| Robin Wagner |
Legal Officer | |
| 200 Park Avenue |
||
| New York, NY 10166 |
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| (c) | Compensation from the Registrant. |
| (1) Name of Principal Underwriter |
(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 Insurance Company |
$997,625 | $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
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| (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 Policy described in 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.
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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 the 23 day of April, 2020.
| Metropolitan Life Separate Account UL | ||
| By: Metropolitan Life Insurance Company | ||
| /s/ Dina Lumerman | ||
| By: |
| |
| Dina Lumerman | ||
| Senior Vice President | ||
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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 the 23 day of April, 2020.
| METROPOLITAN LIFE INSURANCE COMPANY | ||
| /s/ Dina Lumerman | ||
| By: |
| |
| 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 the 23 day of April, 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 and Treasurer | |||
| John Dennis McCallion | ||||
| * |
Executive Vice President and Chief Accounting Officer | |||
| Tamara Schock | ||||
| * |
Director | |||
| Cheryl W. Grise | ||||
| * |
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 | ||||
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| By: | ||
| /S/ ROBIN WAGNER | ||
| Robin Wagner | ||
| Attorney-in-fact |
| * | Executed by Robin Wagner on behalf of those indicated pursuant to powers of attorney . |
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Exhibit Index
| (n) | Consent of Independent Registered Public Accounting Firm |