Item 1. Financial Statements

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Item 1. Financial Statements

MetLife, Inc.

Interim Condensed Consolidated Balance Sheets

June 30, 2022 and December 31, 2021 (Unaudited)

(In millions, except share and per share data)


	June 30, 2022		December 31, 2021
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $299,532 and $310,884, respectively; allowance for credit loss of $261 and $91, respectively)	$	284,178	$	340,274
Equity securities, at estimated fair value	1,085		1,269
Contractholder-directed equity securities and fair value option securities, at estimated fair value	9,875		12,142
Mortgage loans (net of allowance for credit loss of $486 and $634, respectively; includes $109 and $127, respectively, under the fair value option and $24 and $0, respectively, of mortgage loans held-for-sale)	82,055		79,353
Policy loans	8,876		9,111
Real estate and real estate joint ventures (includes $309 and $240, respectively, under the fair value option and $0 and $175, respectively, of real estate held-for-sale)	12,376		12,216
Other limited partnership interests	14,636		14,625
Short-term investments, principally at estimated fair value	3,043		7,176
Other invested assets (includes $1,849 and $1,930, respectively, of leveraged and direct financing leases; $343 and $351, respectively, relating to variable interest entities and allowance for credit loss of $33 and $40, respectively)	19,901		18,655
Total investments	436,025		494,821
Cash and cash equivalents, principally at estimated fair value	20,548		20,047
Accrued investment income	3,154		3,185
Premiums, reinsurance and other receivables	17,769		17,149
Deferred policy acquisition costs and value of business acquired	20,248		16,061
Current income tax recoverable	274		184
Goodwill	9,151		9,535

Assets held-for-sale	—		7,238
Other assets	11,895		11,615
Separate account assets	143,829		179,873
Total assets	$	662,893	$	759,708
Liabilities and Equity
Liabilities
Future policy benefits	$	193,474	$	199,721
Policyholder account balances	200,580		203,473
Other policy-related balances	19,284		17,751
Policyholder dividends payable	457		478
Policyholder dividend obligation	—		1,682
Payables for collateral under securities loaned and other transactions	23,819		31,920
Short-term debt	196		341
Long-term debt	13,677		13,933
Collateral financing arrangement	741		766
Junior subordinated debt securities	3,157		3,156


Deferred income tax liability	1,301		9,693
Liabilities held-for-sale	—		6,634
Other liabilities	25,011		22,538
Separate account liabilities	143,829		179,873
Total liabilities	625,526		691,959
Contingencies, Commitments and Guarantees (Note 14)
Equity
MetLife, Inc.’s stockholders’ equity:
Preferred stock, par value $0.01 per share; $3,905 and $3,905 aggregate liquidation preference, respectively	—		—
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,189,520,578 and 1,186,540,473 shares issued, respectively; 797,580,831 and 825,540,267 shares outstanding, respectively	12		12
Additional paid-in capital	33,548		33,511
Retained earnings	41,101		41,197
Treasury stock, at cost; 391,939,747 and 361,000,206 shares, respectively	(20,188)		(18,157)
Accumulated other comprehensive income (loss)	(17,372)		10,919
Total MetLife, Inc.’s stockholders’ equity	37,101		67,482
Noncontrolling interests	266		267
Total equity	37,367		67,749
Total liabilities and equity	$	662,893	$	759,708

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the Three Months and Six Months Ended June 30, 2022 and 2021 (Unaudited)

(In millions, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues
Premiums	$	11,721	$	9,132	$	22,492	$	19,459
Universal life and investment-type product policy fees	1,516		1,422		2,934		2,813
Net investment income	3,583		5,280		7,867		10,594
Other revenues	616		664		1,276		1,295
Net investment gains (losses)	(685)		1,605		(1,203)		1,739
Net derivative gains (losses)	(1,195)		421		(2,054)		(1,814)
Total revenues	15,556		18,524		31,312		34,086
Expenses
Policyholder benefits and claims	11,790		9,405		22,983		19,928
Interest credited to policyholder account balances	492		1,515		1,122		2,866
Policyholder dividends	193		236		391		483
Other expenses	3,083		2,881		6,103		6,031
Total expenses	15,558		14,037		30,599		29,308
Income (loss) before provision for income tax	(2)		4,487		713		4,778
Provision for income tax expense (benefit)	(140)		1,075		(99)		1,003
Net income (loss)	138		3,412		812		3,775
Less: Net income (loss) attributable to noncontrolling interests	6		5		11		10
Net income (loss) attributable to MetLife, Inc.	132		3,407		801		3,765
Less: Preferred stock dividends	29		35		92		103
Preferred stock redemption premium	—		6		—		6
Net income (loss) available to MetLife, Inc.’s common shareholders	$	103	$	3,366	$	709	$	3,656
Comprehensive income (loss)	$	(15,323)	$	5,325	$	(27,482)	$	(1,987)
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax	5		6		8		11
Comprehensive income (loss) attributable to MetLife, Inc.	$	(15,328)	$	5,319	$	(27,490)	$	(1,998)





Net income (loss) available to MetLife, Inc.’s common shareholders per common share:
Basic	$	0.13	$	3.85	$	0.87	$	4.16
Diluted	$	0.13	$	3.83	$	0.86	$	4.13

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Interim Condensed Consolidated Statements of Equity

For the Six Months Ended June 30, 2022 and 2021 (Unaudited)

(In millions)


	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock at Cost		Accumulated Other Comprehensive Income (Loss)		Total MetLife, Inc.’s Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2021	$	—	$	12	$	33,511	$	41,197	$	(18,157)	$	10,919	$	67,482	$	267	$	67,749
Treasury stock acquired in connection with share repurchases									(915)				(915)				(915)
Stock-based compensation					20								20				20
Dividends on preferred stock							(63)						(63)				(63)
Dividends on common stock (declared per share of $0.480)							(397)						(397)				(397)
Change in equity of noncontrolling interests													—		2		2
Net income (loss)							669						669		5		674
Other comprehensive income (loss), net of income tax											(12,831)		(12,831)		(2)		(12,833)
Balance at March 31, 2022	—		12		33,531		41,406		(19,072)		(1,912)		53,965		272		54,237
Treasury stock acquired in connection with share repurchases									(1,116)				(1,116)				(1,116)
Stock-based compensation					17								17				17
Dividends on preferred stock							(29)						(29)				(29)
Dividends on common stock (declared per share of $0.500)							(408)						(408)				(408)
Change in equity of noncontrolling interests													—		(11)		(11)
Net income (loss)							132						132		6		138
Other comprehensive income (loss), net of income tax											(15,460)		(15,460)		(1)		(15,461)
Balance at June 30, 2022	$	—	$	12	$	33,548	$	41,101	$	(20,188)	$	(17,372)	$	37,101	$	266	$	37,367


	Preferred Stock		Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock at Cost		Accumulated Other Comprehensive Income (Loss)		Total MetLife, Inc.’s Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2020	$	—	$	12	$	33,812	$	36,491	$	(13,829)	$	18,072	$	74,558	$	259	$	74,817
Treasury stock acquired in connection with share repurchases									(999)				(999)				(999)
Stock-based compensation					98								98				98
Dividends on preferred stock							(68)						(68)				(68)
Dividends on common stock (declared per share of $0.460)							(408)						(408)				(408)
Change in equity of noncontrolling interests													—		9		9
Net income (loss)							358						358		5		363
Other comprehensive income (loss), net of income tax											(7,675)		(7,675)		—		(7,675)
Balance at March 31, 2021	—		12		33,910		36,373		(14,828)		10,397		65,864		273		66,137
Redemption of preferred stock					(494)								(494)				(494)
Preferred stock redemption premium							(6)						(6)				(6)
Treasury stock acquired in connection with share repurchases									(1,113)				(1,113)				(1,113)
Stock-based compensation					24								24				24
Dividends on preferred stock							(35)						(35)				(35)
Dividends on common stock (declared per share of $0.480)							(421)						(421)				(421)
Change in equity of noncontrolling interests													—		6		6
Net income (loss)							3,407						3,407		5		3,412
Other comprehensive income (loss), net of income tax											1,912		1,912		1		1,913
Balance at June 30, 2021	$	—	$	12	$	33,440	$	39,318	$	(15,941)	$	12,309	$	69,138	$	285	$	69,423

See accompanying notes to the interim condensed consolidated financial statements.

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MetLife, Inc.

Interim Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021 (Unaudited)

(In millions)


	Six Months Ended June 30,
	2022		2021
Net cash provided by (used in) operating activities	$	6,392	$	3,750
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities available-for-sale	48,015		44,199
Equity securities	473		335
Mortgage loans	6,685		8,626
Real estate and real estate joint ventures	438		736
Other limited partnership interests	1,227		332
Purchases and originations of:
Fixed maturity securities available-for-sale	(44,368)		(46,011)
Equity securities	(375)		(34)
Mortgage loans	(10,157)		(6,235)
Real estate and real estate joint ventures	(615)		(429)
Other limited partnership interests	(1,506)		(1,347)
Cash received in connection with freestanding derivatives	2,513		1,769
Cash paid in connection with freestanding derivatives	(4,518)		(5,602)

Sales of businesses, net of cash and cash equivalents disposed of $67 and $611, respectively	590		3,329

Purchases of investments in operating joint ventures	(240)		—
Net change in policy loans	79		137
Net change in short-term investments	4,219		116
Net change in other invested assets	(737)		40
Other, net	(34)		(6)
Net cash provided by (used in) investing activities	1,689		(45)
Cash flows from financing activities
Policyholder account balances:
Deposits	56,109		50,865
Withdrawals	(52,428)		(46,995)
Payables for collateral under securities loaned and other transactions:
Net change in payables for collateral under securities loaned and other transactions	(7,809)		506

Cash paid for other transactions with tenors greater than three months	—		(100)
Long-term debt issued	6		15
Long-term debt repaid	(23)		(28)
Collateral financing arrangement repaid	(25)		(27)

Financing element on certain derivative instruments and other derivative related transactions, net	121		318
Treasury stock acquired in connection with share repurchases	(2,056)		(2,112)

Redemption of preferred stock	—		(494)
Preferred stock redemption premium	—		(6)
Dividends on preferred stock	(92)		(103)
Dividends on common stock	(805)		(829)
Other, net	(180)		58
Net cash provided by (used in) financing activities	(7,182)		1,068
Effect of change in foreign currency exchange rates on cash and cash equivalents balances	(467)		(192)
Change in cash and cash equivalents	432		4,581
Cash and cash equivalents, including subsidiaries held-for-sale, beginning of period	20,116		20,560
Cash and cash equivalents, including subsidiaries held-for-sale, end of period	$	20,548	$	25,141
Cash and cash equivalents, subsidiaries held-for-sale, beginning of period	$	69	$	765
Cash and cash equivalents, subsidiaries held-for-sale, end of period	$	—	$	104
Cash and cash equivalents, beginning of period	$	20,047	$	19,795
Cash and cash equivalents, end of period	$	20,548	$	25,037


Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	435	$	440
Income tax	$	577	$	748
Non-cash transactions:
Fixed maturity securities available-for-sale received in connection with pension risk transfer transactions	$	1,258	$	—
Real estate and real estate joint ventures acquired in satisfaction of debt	$	187	$	171
Increase in equity securities due to in-kind distributions received from other limited partnership interests	$	63	$	151

Increase in policyholder account balances associated with funding agreement backed notes issued but not settled	$	184	$	—

See accompanying notes to the interim condensed consolidated financial statements**.**

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

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

Business

“MetLife” and the “Company” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. MetLife is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management. MetLife is organized into five segments: U.S.; Asia; Latin America; Europe, the Middle East and Africa (“EMEA”); and MetLife Holdings.

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 interim condensed 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, including uncertainties associated with the COVID-19 pandemic. 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.

The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2021 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2021 Annual Report.

Consolidation

The accompanying interim condensed consolidated financial statements include the accounts of MetLife, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has a controlling financial interest, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.

The Company uses the equity method of accounting or the fair value option (“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.

Held-for-Sale

The Company classifies a business as held-for-sale when management has approved or received approval to sell the business, the sale is probable to occur during the next 12 months at a price that is reasonable in relation to its current estimated fair value and certain other specified criteria are met. The business classified as held-for-sale is recorded at the lower of the carrying value and estimated fair value, less cost to sell. If the carrying value of the business exceeds its estimated fair value, less cost to sell, a loss is recognized and reported in net investment gains (losses). Assets and liabilities related to the business classified as held-for-sale are separately reported in the Company's consolidated balance sheets in the period in which the business is classified as held-for-sale. See Note 3. If a component of the Company has either been disposed of or is classified as held-for-sale and represents a strategic shift that has or will have a major effect on the Company’s operations and financial results, the results of the component are reported in discontinued operations.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued**)**

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

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 ASUs recently issued by the FASB and the impact of their adoption on the Company’s interim condensed consolidated financial statements.

Adopted Accounting Pronouncements

The table below describes the impacts of the ASUs recently adopted by the Company.


Standard	Description	Effective Date and Method of Adoption	Impact on Financial Statements
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting; as clarified and amended by ASU 2021-01, Reference Rate Reform (Topic 848): Scope	The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, with certain exceptions. ASU 2021-01 amends the scope of the recent reference rate reform guidance. New optional expedients allow derivative instruments impacted by changes in the interest rate used for margining, discounting, or contract price alignment to qualify for certain optional relief.	Effective for contract modifications made between March 12, 2020 and December 31, 2022.	The guidance has reduced the operational and financial impacts of contract modifications that replace a reference rate, such as London Interbank Offered Rate (“LIBOR”), affected by reference rate reform. Contract modifications for invested assets and derivative instruments occurred during 2021 and have continued into 2022. Based on actions taken to date, the adoption of the guidance has not had a material impact on the Company’s interim condensed consolidated financial statements. The Company does not expect the adoption of this guidance to have a material ongoing impact and will continue to evaluate the impacts of reference rate reform on contract modifications and hedging relationships through December 31, 2022.
ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance	The guidance requires entities to provide annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy and can include tax credits and other forms of government assistance. Entities are required to disclose information about (i) the nature of the transactions and the related accounting policy used to account for the transactions; (ii) the line items on the balance sheet and income statement that are affected by the transactions, including the associated amounts; and (iii) the significant terms and conditions of the transactions, including commitments and contingencies.	Effective for annual periods beginning January 1, 2022, to be applied prospectively.	The Company is in the process of evaluating and preparing the required annual disclosures, as applicable, to be included in its 2022 consolidated financial statements.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued**)**

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

Future Adoption of 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 interim condensed consolidated financial statements or disclosures. ASUs issued but not yet adopted as of June 30, 2022 that are currently being assessed and may or may not have a material impact on the Company’s interim condensed consolidated financial statements or disclosures are summarized in the table below.


Standard			Description			Effective Date and Method of Adoption			Impact on Financial Statements
ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, as amended by ASU 2019-09, Financial Services—Insurance (Topic 944): Effective Date, as amended by ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application			The guidance (i) prescribes the discount rate to be used in measuring the liability for future policy benefits for traditional and limited payment long-duration contracts, and requires assumptions for those liability valuations to be updated after contract inception, (ii) requires more market-based product guarantees (“market risk benefits”) on certain separate account and other account balance long-duration contracts to be accounted for at fair value, (iii) simplifies the amortization of deferred policy acquisition costs (“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 ASU 2018-12 to January 1, 2022 for all entities, and the amendments in ASU 2020-11 further defer the effective date of ASU 2018-12 for an additional year to January 1, 2023 for all entities.			January 1, 2023, to be applied retrospectively to January 1, 2021 (with early adoption permitted). Estimated impacts from adoption as of the transition date of January 1, 2021 are measured using market assumptions appropriate as of that date. Such estimates do not reflect changes in market assumptions subsequent to January 1, 2021.			The Company’s implementation efforts and the evaluation of the impacts of the guidance on its consolidated financial statements, as well as its systems, processes, and controls, continue to progress. Given the nature and extent of the required changes to a significant portion of the Company’s operations, the adoption of this guidance is expected to have a material impact on its financial position, results of operations, and disclosures. The Company will adopt the guidance effective January 1, 2023. The modified retrospective approach will be used, except in regard to market risk benefits where the Company will use the full retrospective approach. Based upon these transition methods, the Company currently estimates that the January 1, 2021 transition date impact from adoption is expected to result in a decrease to total equity in a range of approximately $21.5 billion to $24.0 billion, net of income tax. The expected decrease in total equity includes the estimated impact to Accumulated other comprehensive income (loss) (“AOCI”) which, as of the transition date, is expected to result in a decrease in a range of approximately $17.0 billion to $18.5 billion, net of income tax. The most significant drivers of the expected decrease in AOCI are the anticipated impacts of the changes in the discount rates as of the transition date to be used in measuring the liability for future policy benefits for traditional and limited payment contracts and the non-performance risk in the valuation of the Company’s market risk benefits. The expected decrease in AOCI is expected to be partially offset by the removal of loss recognition balances recorded in AOCI related to unrealized investment gains associated with certain long-duration products. The expected decrease in total equity also includes the estimated impact to retained earnings which, from adoption, is expected to result in a decrease in a range of approximately $4.5 billion to $5.5 billion, net of income tax. This decrease results from the requirement to account for variable annuity guarantees as market risk benefits measured at fair value (except for the changes in fair value already recognized under an existing accounting model) and other valuation impacts to the liability for future policy benefits.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued**)**

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


Standard	Description	Effective Date and Method of Adoption	Impact on Financial Statements
ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions	The amendments in this update clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. In addition, the amendments clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require entities that hold equity securities subject to contractual sale restrictions to make disclosures about the fair value of such equity securities, the nature and remaining duration of the restriction(s) and, the circumstances that could cause a lapse in the restriction(s).	January 1, 2024, to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption (with early adoption permitted).	The Company is currently evaluating the impact of the guidance on its interim condensed consolidated financial statements.
ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures	The amendments in the new ASU eliminate the accounting guidance for troubled debt restructurings (“TDRs”) by creditors that have adopted the current expected credit loss guidance while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. In addition, the amendments require that a public business entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases.	January 1, 2023, to be applied prospectively; however, for the transition method related to the recognition and measurement of TDRs, an entity can apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Entities are permitted to early adopt these amendments, including adoption in any interim period, provided that the amendments are adopted as of the beginning of the annual reporting period that includes the interim period of adoption. In addition, entities are permitted to elect to early adopt the amendments related to TDRs accounting and related disclosure enhancements separately from the amendments related to certain vintage disclosures.	The Company is currently evaluating the impact of the guidance on its interim condensed consolidated financial statements and the alternative methods of adoption.
ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers	The guidance indicates how to determine whether a contract liability is recognized by the acquirer in a business combination and provides specific guidance on how to recognize and measure acquired contract assets and contract liabilities from revenue contracts in a business combination.	January 1, 2023, to be applied prospectively (with early adoption permitted).	The Company is currently evaluating the impact of the guidance on its interim condensed consolidated financial statements.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information

MetLife is organized into five segments: U.S.; Asia; Latin America; EMEA; 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 products such as term, variable and universal life insurance, dental, group and individual disability, vision and accident & health insurance.
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, structured settlements, longevity reinsurance solutions, benefit funding solutions and capital markets investment products.

Asia

The Asia segment offers a broad range of products and services to both individuals and corporations, as well as to other institutions, and their respective employees, which include life insurance, accident & health insurance and retirement and savings.

Latin America

The Latin America segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include life insurance, retirement and savings, accident & health insurance and credit insurance.

EMEA

The EMEA segment offers products to individuals, corporations, other institutions, and their respective employees, which include life insurance, accident & health insurance, retirement and savings and credit insurance.

MetLife Holdings

The MetLife Holdings segment consists of operations relating to products and businesses that the Company no longer actively markets in the United States. These include 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 external integration and disposition costs, internal resource costs for associates committed to acquisitions and dispositions and enterprise-wide strategic initiative restructuring charges), interest expense related to the majority of the Company’s outstanding debt, expenses associated with certain legal proceedings and income tax audit issues, the elimination of intersegment amounts (which generally relate to affiliated reinsurance, investment expenses and intersegment loans bearing interest rates commensurate with related borrowings), and the Company’s investment management business (through which the Company provides public fixed income, private capital and real estate investment solutions to institutional investors worldwide).

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.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)

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 MetLife but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also include 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 MetLife 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). Adjusted expenses also excludes goodwill impairments.

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 guaranteed minimum income benefits (“GMIBs”) fees (“GMIB fees”);
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 contractholder-directed equity securities, (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (v) 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; and
Other revenues is adjusted for settlements of foreign currency earnings hedges and excludes fees received in association with services provided under transition service agreements (“TSA fees”).

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) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and 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 and excludes certain amounts related to net investment income earned on contractholder-directed equity securities;
Amortization of DAC and value of business acquired (“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;
Amortization of negative VOBA excludes amounts related to 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) implementation of new insurance regulatory requirements costs, and (iii) acquisition, integration and other costs. Other expenses includes TSA fees.

Adjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)

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 three months and six months ended June 30, 2022 and 2021. The segment accounting policies are the same as those used to prepare the Company’s interim condensed 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 the Company’s business.

The Company’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. The Company’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.

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.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)



Three Months Ended June 30, 2022	U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	8,254	$	1,395	$	826	$	492	$	760	$	(6)	$	11,721	$	—	$	11,721
Universal life and investment-type product policy fees	284		498		296		86		339		2		1,505		11		1,516
Net investment income	1,710		1,012		459		38		1,280		5		4,504		(921)		3,583
Other revenues	405		24		10		8		23		98		568		48		616
Net investment gains (losses)	—		—		—		—		—		—		—		(685)		(685)
Net derivative gains (losses)	—		—		—		—		—		—		—		(1,195)		(1,195)
Total revenues	10,653		2,929		1,591		624		2,402		99		18,298		(2,742)		15,556
Expenses
Policyholder benefits and claims and policyholder dividends	8,320		1,185		811		237		1,433		(2)		11,984		(1)		11,983
Interest credited to policyholder account balances	387		493		84		20		203		—		1,187		(695)		492
Capitalization of DAC	(14)		(370)		(120)		(108)		(8)		(2)		(622)		—		(622)
Amortization of DAC and VOBA	14		321		90		95		74		2		596		20		616
Amortization of negative VOBA	—		(8)		—		(2)		—		—		(10)		—		(10)
Interest expense on debt	1		—		4		—		2		219		226		—		226
Other expenses	949		763		370		298		242		184		2,806		67		2,873
Total expenses	9,657		2,384		1,239		540		1,946		401		16,167		(609)		15,558
Provision for income tax expense (benefit)	208		159		85		20		92		(88)		476		(616)		(140)
Adjusted earnings	$	788	$	386	$	267	$	64	$	364	$	(214)	1,655
Adjustments to:
Total revenues													(2,742)
Total expenses													609
Provision for income tax (expense) benefit													616
Net income (loss)													$	138			$	138

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)



Three Months Ended June 30, 2021	U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	5,474	$	1,582	$	636	$	621	$	839	$	(20)	$	9,132	$	—	$	9,132
Universal life and investment-type product policy fees	282		436		287		107		273		1		1,386		36		1,422
Net investment income	1,998		1,158		308		62		1,543		48		5,117		163		5,280
Other revenues	380		19		11		16		69		109		604		60		664
Net investment gains (losses)	—		—		—		—		—		—		—		1,605		1,605
Net derivative gains (losses)	—		—		—		—		—		—		—		421		421
Total revenues	8,134		3,195		1,242		806		2,724		138		16,239		2,285		18,524
Expenses
Policyholder benefits and claims and policyholder dividends	5,739		1,233		724		333		1,549		(13)		9,565		76		9,641
Interest credited to policyholder account balances	359		496		60		25		210		—		1,150		365		1,515
Capitalization of DAC	(13)		(395)		(100)		(122)		(9)		(3)		(642)		—		(642)
Amortization of DAC and VOBA	8		296		83		94		56		3		540		(3)		537
Amortization of negative VOBA	—		(8)		—		(2)		—		—		(10)		—		(10)
Interest expense on debt	2		—		1		—		2		223		228		—		228
Other expenses	898		832		343		349		244		34		2,700		68		2,768
Total expenses	6,993		2,454		1,111		677		2,052		244		13,531		506		14,037
Provision for income tax expense (benefit)	239		221		34		35		136		(81)		584		491		1,075
Adjusted earnings	$	902	$	520	$	97	$	94	$	536	$	(25)	2,124
Adjustments to:
Total revenues													2,285
Total expenses													(506)
Provision for income tax (expense) benefit													(491)
Net income (loss)													$	3,412			$	3,412

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)



Six Months Ended June 30, 2022	U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	15,418	$	2,948	$	1,558	$	1,001	$	1,536	$	(10)	$	22,451	$	41	$	22,492
Universal life and investment-type product policy fees	581		946		586		174		608		2		2,897		37		2,934
Net investment income	3,584		2,254		781		79		2,689		109		9,496		(1,629)		7,867
Other revenues	831		45		19		17		67		199		1,178		98		1,276
Net investment gains (losses)	—		—		—		—		—		—		—		(1,203)		(1,203)
Net derivative gains (losses)	—		—		—		—		—		—		—		(2,054)		(2,054)
Total revenues	20,414		6,193		2,944		1,271		4,900		300		36,022		(4,710)		31,312
Expenses
Policyholder benefits and claims and policyholder dividends	15,886		2,413		1,580		519		2,951		(9)		23,340		34		23,374
Interest credited to policyholder account balances	734		991		152		37		405		—		2,319		(1,197)		1,122
Capitalization of DAC	(37)		(762)		(233)		(209)		(15)		(5)		(1,261)		(11)		(1,272)
Amortization of DAC and VOBA	28		609		170		181		150		4		1,142		11		1,153
Amortization of negative VOBA	—		(16)		—		(3)		—		—		(19)		—		(19)
Interest expense on debt	3		—		7		—		3		438		451		—		451
Other expenses	1,928		1,600		724		594		478		320		5,644		146		5,790
Total expenses	18,542		4,835		2,400		1,119		3,972		748		31,616		(1,017)		30,599
Provision for income tax expense (benefit)	391		392		135		36		187		(180)		961		(1,060)		(99)
Adjusted earnings	$	1,481	$	966	$	409	$	116	$	741	$	(268)	3,445
Adjustments to:
Total revenues													(4,710)
Total expenses													1,017
Provision for income tax (expense) benefit													1,060
Net income (loss)													$	812			$	812

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)



Six Months Ended June 30, 2021	U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total		Adjustments		Total Consolidated
	(In millions)
Revenues
Premiums	$	11,173	$	3,267	$	1,231	$	1,219	$	1,666	$	38	$	18,594	$	865	$	19,459
Universal life and investment-type product policy fees	579		894		557		174		547		1		2,752		61		2,813
Net investment income	4,008		2,422		607		125		3,189		60		10,411		183		10,594
Other revenues	776		37		21		29		131		195		1,189		106		1,295
Net investment gains (losses)	—		—		—		—		—		—		—		1,739		1,739
Net derivative gains (losses)	—		—		—		—		—		—		—		(1,814)		(1,814)
Total revenues	16,536		6,620		2,416		1,547		5,533		294		32,946		1,140		34,086
Expenses
Policyholder benefits and claims and policyholder dividends	11,881		2,530		1,485		676		3,072		27		19,671		740		20,411
Interest credited to policyholder account balances	718		985		119		49		420		—		2,291		575		2,866
Capitalization of DAC	(31)		(830)		(195)		(249)		(17)		(6)		(1,328)		(89)		(1,417)
Amortization of DAC and VOBA	24		610		143		156		110		5		1,048		79		1,127
Amortization of negative VOBA	—		(15)		—		(4)		—		—		(19)		—		(19)
Interest expense on debt	3		—		2		—		3		447		455		1		456
Other expenses	1,809		1,731		678		698		497		141		5,554		330		5,884
Total expenses	14,404		5,011		2,232		1,326		4,085		614		27,672		1,636		29,308
Provision for income tax expense (benefit)	446		466		47		56		294		(192)		1,117		(114)		1,003
Adjusted earnings	$	1,686	$	1,143	$	137	$	165	$	1,154	$	(128)	4,157
Adjustments to:
Total revenues													1,140
Total expenses													(1,636)
Provision for income tax (expense) benefit													114
Net income (loss)													$	3,775			$	3,775

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

2. Segment Information (continued)

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


	June 30, 2022		December 31, 2021
	(In millions)
U.S.	$	251,436	$	282,741
Asia	148,549		169,291
Latin America	56,233		59,763
EMEA	16,907		27,038
MetLife Holdings	156,189		179,551
Corporate & Other	33,579		41,324
Total	$	662,893	$	759,708

3. Dispositions

Disposition of MetLife Poland and Greece

In July 2021, the Company entered into definitive agreements to sell its wholly-owned subsidiaries in Poland and Greece (collectively, “MetLife Poland and Greece”) to NN Group N.V. for $738 million in total consideration, including a pre-closing dividend of $43 million. In January 2022 and April 2022, the Company completed the sales of its wholly-owned subsidiaries in Greece and Poland, respectively. In connection with the sales, a loss of $25 million, net of income tax, was recorded for the six months ended June 30, 2022, which was reflected in net investment gains (losses) and resulted in a total loss on the sales of $239 million, net of income tax. MetLife Poland and Greece results of operations are reported in the EMEA segment adjusted earnings through June 30, 2021. See Note 2 for information on accounting for divested business.

MetLife Poland and Greece met the criteria in the second quarter of 2021 to be classified as held-for-sale but did not meet the criteria to be classified as discontinued operations. As a result, the related assets and liabilities are included in the separate held-for-sale line items of the asset and liability sections of the interim condensed consolidated balance sheet until the quarter in which the disposition is completed.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

3. Dispositions (continued)

The following table summarizes the assets and liabilities held-for-sale:


	December 31, 2021
	(In millions)
Assets:
Fixed maturity securities available-for-sale	$	2,043
Contractholder-directed equity securities	1,114
Other investments	118
Total investments	3,275
Cash and cash equivalents	69
Deferred policy acquisition costs and value of business acquired	138
Other	259
Separate account assets	3,497
Total assets held-for-sale	$	7,238

Liabilities:
Future policy benefits	$	916
Policyholder account balances	2,005
Other policy-related balances	103
Other	113
Separate account liabilities	3,497
Total liabilities held-for-sale	$	6,634

MetLife Poland and Greece income (loss) before provision for income tax as reflected in the interim condensed consolidated statements of operations was $0 and $19 million for the three months and six months ended June 30, 2022, respectively, and $13 million and $28 million for the three months and six months ended June 30, 2021, respectively.

4. Insurance

Guarantees

As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report, the Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMABs”), the non-life contingent portion of guaranteed minimum withdrawal benefits (“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 7.

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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

4. Insurance (continued)

Information regarding the Company’s guarantee exposure, which includes direct and assumed business, but excludes offsets from hedging or ceded reinsurance, if any, was as follows at:


	June 30, 2022						December 31, 2021
	In the Event of Death			At Annuitization			In the Event of Death			At Annuitization
	(Dollars in millions)
Annuity Contracts:
Variable Annuity Guarantees:
Total account value (1), (2), (3)	$	49,087		$	17,946		$	62,281		$	23,121
Separate account value (1)	$	31,724		$	16,516		$	42,043		$	21,508
Net amount at risk (2)	$	4,878	(4)	$	616	(5)	$	1,490	(4)	$	500	(5)
Average attained age of contractholders	69 years			68 years			68 years			66 years
Other Annuity Guarantees:
Total account value (1), (3)	N/A			$	4,150		N/A			$	5,002
Net amount at risk	N/A			$	188	(6)	N/A			$	196	(6)
Average attained age of contractholders	N/A			57 years			N/A			56 years


	June 30, 2022				December 31, 2021
	Secondary Guarantees		Paid-Up Guarantees		Secondary Guarantees		Paid-Up Guarantees
	(Dollars in millions)
Universal and Variable Life Contracts:
Total account value (1), (3)	$	11,889	$	2,633	$	13,678	$	2,694
Net amount at risk (7)	$	76,788	$	12,211	$	78,762	$	12,657
Average attained age of policyholders	55 years		66 years		55 years		66 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 amounts, which are not reported on the interim condensed consolidated balance sheets, from assumed variable annuity guarantees from the Company’s former operating joint venture in Japan.

(3)Includes the contractholders’ investments in the general account and separate account, if applicable.

(4)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.

(5)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.

(6)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.

(7)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.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

4. Insurance (continued)

Liabilities for Unpaid Claims and Claim Expenses

Rollforward of Claims and Claim Adjustment Expenses

Information regarding the liabilities for unpaid claims and claim adjustment expenses was as follows:


	Six Months Ended June 30,
	2022		2021
	(In millions)
Balance, beginning of period	$	20,013	$	18,591
Less: Reinsurance recoverables	3,121		2,417
Net balance, beginning of period	16,892		16,174
Incurred related to:
Current period	13,265		13,640
Prior periods (1)	683		802
Total incurred	13,948		14,442
Paid related to:
Current period	(8,347)		(8,806)
Prior periods	(5,241)		(5,408)
Total paid	(13,588)		(14,214)
Reclassified to liabilities held-for-sale (2)	—		(59)
Dispositions	—		(53)
Net balance, end of period	17,252		16,290
Add: Reinsurance recoverables	3,012		2,883
Balance, end of period (included in future policy benefits and other policy-related balances)	$	20,264	$	19,173

(1)The six months ended June 30, 2022 and 2021 include incurred claim activity and claim adjustment expenses associated with prior periods but reported in the respective current period, which contain impacts related to the COVID-19 pandemic, partially offset by additional premiums recorded for experience-rated contracts that are not reflected in the table above.

(2)See Note 3 for information on the Company’s business dispositions.

5. Closed Block

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

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.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

5. Closed Block (continued)

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


	June 30, 2022		December 31, 2021
	(In millions)
Closed Block Liabilities
Future policy benefits	$	37,593	$	38,046
Other policy-related balances	274		290
Policyholder dividends payable	250		253
Policyholder dividend obligation	—		1,682
Deferred income tax liability	—		210
Other liabilities	368		263
Total closed block liabilities	38,485		40,744
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	21,257		25,669
Equity securities, at estimated fair value	14		21
Mortgage loans	6,624		6,417
Policy loans	4,120		4,191
Real estate and real estate joint ventures	583		565
Other invested assets	712		535
Total investments	33,310		37,398
Cash and cash equivalents	201		126
Accrued investment income	379		384
Premiums, reinsurance and other receivables	43		50
Current income tax recoverable	91		81
Deferred income tax asset	196		—
Total assets designated to the closed block	34,220		38,039
Excess of closed block liabilities over assets designated to the closed block	4,265		2,705
AOCI:
Unrealized investment gains (losses), net of income tax	(460)		2,562
Unrealized gains (losses) on derivatives, net of income tax	257		107
Allocated to policyholder dividend obligation, net of income tax	—		(1,329)
Total amounts included in AOCI	(203)		1,340
Maximum future earnings to be recognized from closed block assets and liabilities	$	4,062	$	4,045

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


	Six Months Ended June 30, 2022		Year Ended December 31, 2021
	(In millions)
Balance, beginning of period	$	1,682	$	2,969
Change in unrealized investment and derivative gains (losses)	(1,682)		(1,287)
Balance, end of period	$	—	$	1,682

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

5. Closed Block (continued)

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Revenues
Premiums	$	274	$	325	$	549	$	645
Net investment income	352		382		713		775
Net investment gains (losses)	(16)		(11)		(48)		(5)
Net derivative gains (losses)	8		6		11		7
Total revenues	618		702		1,225		1,422
Expenses
Policyholder benefits and claims	462		520		945		1,066
Policyholder dividends	128		173		261		351
Other expenses	23		24		46		49
Total expenses	613		717		1,252		1,466
Revenues, net of expenses before provision for income tax expense (benefit)	5		(15)		(27)		(44)
Provision for income tax expense (benefit)	1		(3)		(6)		(9)
Revenues, net of expenses and provision for income tax expense (benefit)	$	4	$	(12)	$	(21)	$	(35)

MLIC 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. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments

Fixed Maturity Securities Available-for-Sale

Fixed Maturity Securities Available-for-Sale by Sector

The following table presents fixed maturity securities available-for-sale (“AFS”) by sector. U.S. corporate and foreign corporate sectors include redeemable preferred stock. Residential mortgage-backed securities (“RMBS”) includes agency, prime, alternative and sub-prime mortgage-backed securities. Asset-backed securities and collateralized loan obligations (“ABS & CLO”), previously disclosed as ABS in the 2021 Annual Report, includes securities collateralized by consumer loans, corporate loans and broadly syndicated bank 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 & CLO and CMBS are, collectively, “Structured Products.”


	June 30, 2022										December 31, 2021
	Amortized Cost				Gross Unrealized				Estimated Fair Value		Amortized Cost				Gross Unrealized (1)				Estimated Fair Value
Sector	Allowance for Credit Loss		Gains		Losses		Allowance for Credit Loss		Gains		Losses
	(In millions)
U.S. corporate	$	85,276	$	(28)	$	2,012	$	6,705	$	80,555	$	82,694	$	(30)	$	10,651	$	281	$	93,034
Foreign corporate	59,287		(53)		1,397		6,454		54,177		59,124		(28)		5,275		731		63,640
Foreign government	49,377		(166)		2,460		3,655		48,016		56,848		(19)		5,603		823		61,609
U.S. government and agency	34,314		—		1,583		2,207		33,690		41,068		—		5,807		276		46,599
RMBS	29,068		—		368		2,133		27,303		29,152		—		1,440		188		30,404
ABS & CLO	17,910		—		41		897		17,054		18,443		—		185		59		18,569
Municipals	12,881		—		672		1,040		12,513		11,761		—		2,464		13		14,212
CMBS	11,419		(14)		133		668		10,870		11,794		(14)		476		49		12,207
Total fixed maturity securities AFS	$	299,532	$	(261)	$	8,666	$	23,759	$	284,178	$	310,884	$	(91)	$	31,901	$	2,420	$	340,274

(1)Excludes gross unrealized gains (losses) related to assets held-for-sale; these unrealized gains (losses) are included in AOCI as no component of equity is held-for-sale. See Note 3 for information on the Company’s business dispositions.

The Company held non-income producing fixed maturity securities AFS with an estimated fair value of $134 million and $22 million at June 30, 2022 and December 31, 2021, respectively, with unrealized gains (losses) of ($26) million and $8 million at June 30, 2022 and December 31, 2021, respectively.

Maturities of Fixed Maturity Securities AFS

The amortized cost, net of allowance for credit loss (“ACL”) and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at June 30, 2022:


	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Products		Total Fixed Maturity Securities AFS
	(In millions)
Amortized cost, net of ACL	$	7,495	$	49,816	$	55,072	$	128,505	$	58,383	$	299,271
Estimated fair value	$	7,428	$	49,014	$	52,943	$	119,566	$	55,227	$	284,178

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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. 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 without an ACL by sector and aggregated by length of time that the securities have been in a continuous unrealized loss position.


	June 30, 2022								December 31, 2021
	Less than 12 Months				Equal to or Greater than 12 Months				Less than 12 Months				Equal to or Greater than 12 Months
Sector & Credit Quality	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses (1)		Estimated Fair Value		Gross Unrealized Losses (1)
	(Dollars in millions)
U.S. corporate	$	53,448	$	6,137	$	2,459	$	568	$	8,076	$	165	$	1,499	$	116
Foreign corporate	36,341		5,653		3,764		798		10,011		404		2,834		327
Foreign government	17,614		2,014		5,895		1,634		7,812		319		5,377		502
U.S. government and agency	17,853		1,555		2,152		652		14,419		138		1,571		138
RMBS	19,935		1,807		1,847		326		10,363		158		417		30
ABS & CLO	14,275		794		1,201		103		8,150		39		804		20
Municipals	6,328		1,015		74		25		524		10		65		3
CMBS	8,708		602		727		66		2,664		31		657		18
Total fixed maturity securities AFS	$	174,502	$	19,577	$	18,119	$	4,172	$	62,019	$	1,264	$	13,224	$	1,154
Investment grade	$	165,299	$	18,444	$	16,780	$	3,884	$	58,358	$	1,123	$	12,022	$	1,025
Below investment grade	9,203		1,133		1,339		288		3,661		141		1,202		129
Total fixed maturity securities AFS	$	174,502	$	19,577	$	18,119	$	4,172	$	62,019	$	1,264	$	13,224	$	1,154
Total number of securities in an unrealized loss position	14,391				1,752				4,774				979

(1)Excludes gross unrealized losses related to assets held-for-sale; these unrealized losses are included in AOCI as no component of equity is held-for-sale. See Note 3 for information on the Company’s business dispositions.

Evaluation of Fixed Maturity Securities AFS for Credit Loss

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 credit loss evaluation process include, but are not limited to: (i) the extent to which the estimated fair value has been below amortized cost, (ii) adverse conditions specifically related to a security, an industry sector or sub-sector, or an economically depressed geographic area, adverse change in the financial condition of the issuer of the security, changes in technology, discontinuance of a segment of the business that may affect future earnings, and changes in the quality of credit enhancement, (iii) payment structure of the security and likelihood of the issuer being able to make payments, (iv) failure of the issuer to make scheduled interest and principal payments, (v) whether the issuer, or series of issuers or an 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 changes in the financial condition of the underlying loan obligors and 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) changes in the rating of the security by a rating agency, and (ix) other subjective factors, including concentrations and information obtained from regulators.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

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 at the time of purchase for fixed-rate securities and the spot rate at the date of evaluation of credit loss for floating-rate securities.
When determining collectability and the period over which value is expected to recover, the Company applies considerations utilized in its overall credit loss evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s single best estimate, the most likely outcome in a range of possible 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; any private and public sector programs to restructure foreign government securities and municipals; 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, historical performance of the underlying loan obligors, historical rent and vacancy levels, changes in the financial condition of the underlying loan obligors, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying loans or assets backing a particular security, changes in the quality of credit enhancement and the payment priority within the tranche structure of the security.

With respect to securities that have attributes of debt and equity (“perpetual hybrid securities”), consideration is given in the credit loss 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 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.

In periods subsequent to the recognition of an initial ACL on a security, the Company reassesses credit loss quarterly. Subsequent increases or decreases in the expected cash flow from the security result in corresponding decreases or increases in the ACL which are recognized in earnings and reported within net investment gains (losses); however, the previously recorded ACL is not reduced to an amount below zero. Full or partial write-offs are deducted from the ACL in the period the security, or a portion thereof, is considered uncollectible. Recoveries of amounts previously written off are recorded to the ACL in the period received. When the Company has the intent-to-sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, any ACL is written off and the amortized cost is written down to estimated fair value through a charge within net investment gains (losses), which becomes the new amortized cost of the security.

Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position

Gross unrealized losses on securities without an ACL increased $21.3 billion for the six months ended June 30, 2022 to $23.7 billion primarily due to increases in interest rates, widening credit spreads, and the impact of weakening foreign currencies on certain non-functional currency denominated fixed maturity securities.

Gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater were $4.2 billion at June 30, 2022, or 18% of the total gross unrealized losses on securities without an ACL.

Investment Grade Fixed Maturity Securities AFS

Of the $4.2 billion of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $3.9 billion, or 93%, were related to 1,535 investment grade securities. Unrealized losses on investment grade securities are principally related to widening credit spreads since purchase and, with respect to fixed-rate securities, rising interest rates since purchase.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Below Investment Grade Fixed Maturity Securities AFS

Of the $4.2 billion of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $288 million, or 7%, were related to 217 below investment grade securities. Unrealized losses on below investment grade securities are principally related to U.S. corporate and foreign corporate securities (primarily industrial and consumer) and foreign government securities. These unrealized losses are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty, as well as, with respect to fixed-rate securities, rising interest rates since purchase. Management evaluates U.S. corporate and foreign corporate securities based on several factors such as expected cash flows, financial condition and near-term and long-term prospects of the issuers. Management evaluates foreign government securities based on factors impacting the issuers such as expected cash flows, financial condition of the issuers and any country specific economic conditions or public sector programs to restructure foreign government securities.

Current Period Evaluation

At June 30, 2022, with respect to securities in an unrealized loss position without an ACL, the Company did not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized cost. Based on the Company’s current evaluation of its securities in an unrealized loss position without an ACL, the Company concluded that these securities had not incurred a credit loss and should not have an ACL at June 30, 2022.

Future provisions for credit loss will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit ratings and collateral valuation.

Rollforward of Allowance for Credit Loss for Fixed Maturity Securities AFS by Sector

The rollforward of ACL for fixed maturity securities AFS by sector is as follows:


	U.S. Corporate		Foreign Corporate		Foreign Government		CMBS		Total
Three Months Ended June 30, 2022	(In millions)

Balance, at beginning of period	$	13	$	102	$	226	$	14	$	355
Additions:
ACL not previously recorded	—		—		—		—		—


Reductions:
Changes for securities with previously recorded ACL	15		(5)		(23)		—		(13)
Securities sold or exchanged	—		(44)		(37)		—		(81)


Write-offs	—		—		—		—		—

Balance, at end of period	$	28	$	53	$	166	$	14	$	261
Three Months Ended June 30, 2021
Balance, at beginning of period	$	43	$	33	$	21	$	7	$	104
Additions:
ACL not previously recorded	—		4		—		4		8

Reductions:
Changes for securities with previously recorded ACL	4		(1)		—		(4)		(1)
Securities sold or exchanged	(8)		(4)		—		—		(12)


Write-offs	—		—		—		—		—

Balance, at end of period	$	39	$	32	$	21	$	7	$	99

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)


	U.S. Corporate		Foreign Corporate		Foreign Government		CMBS		Total
Six Months Ended June 30, 2022	(In millions)

Balance, at beginning of period	$	30	$	28	$	19	$	14	$	91
Additions:
ACL not previously recorded	13		67		207		—		287


Reductions:
Changes for securities with previously recorded ACL	15		2		(23)		—		(6)
Securities sold or exchanged	(8)		(44)		(37)		—		(89)


Write-offs	(22)		—		—		—		(22)

Balance, at end of period	$	28	$	53	$	166	$	14	$	261
Six Months Ended June 30, 2021
Balance, at beginning of period	$	44	$	16	$	21	$	—	$	81
Additions:
ACL not previously recorded	—		25		—		11		36

Reductions:
Changes for securities with previously recorded ACL	3		(5)		—		(4)		(6)
Securities sold or exchanged	(8)		(4)		—		—		(12)


Write-offs	—		—		—		—		—

Balance, at end of period	$	39	$	32	$	21	$	7	$	99

Equity Securities

The following table presents equity securities by security type. Common stock includes common stock, exchange traded funds, mutual funds and real estate investment trusts.



	June 30, 2022						December 31, 2021
	Cost		Net Unrealized Gains (Losses) (1)		Estimated Fair Value		Cost		Net Unrealized Gains (Losses) (1)		Estimated Fair Value
Security Type
			(In millions)
Common stock	$	714	$	217	$	931	$	784	$	295	$	1,079
Non-redeemable preferred stock	160		(6)		154		189		1		190
Total	$	874	$	211	$	1,085	$	973	$	296	$	1,269

(1)Represents cumulative changes in estimated fair value, recognized in earnings, and not in Other Comprehensive Income (Loss) (“OCI”).

Contractholder-Directed Equity Securities and FVO Securities

The following table presents these investments by asset type. Contractholder-directed investments supporting unit-linked variable annuity type liabilities (“Unit-linked investments”) are primarily equity securities (including mutual funds) and, to a lesser extent, fixed income investments and cash and cash equivalents.


	June 30, 2022						December 31, 2021
	Cost or Amortized Cost		Net Unrealized Gains (Losses) (1)		Estimated Fair Value		Cost or Amortized Cost		Net Unrealized Gains (Losses) (1)		Estimated Fair Value
Asset Type
	(In millions)
Unit-linked investments	$	7,990	$	490	$	8,480	$	8,643	$	1,897	$	10,540
FVO Securities	1,173		222		1,395		1,243		359		1,602
Total	$	9,163	$	712	$	9,875	$	9,886	$	2,256	$	12,142

(1)Represents cumulative changes in estimated fair value, recognized in earnings, and not in OCI.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:


	June 30, 2022				December 31, 2021
Portfolio Segment	Carrying Value		% of Total		Carrying Value		% of Total
	(Dollars in millions)
Commercial	$	52,348	63.8	%	$	50,553	63.7	%
Agricultural	18,563		22.6		18,111		22.8
Residential	11,497		14.0		11,196		14.1
Total amortized cost	82,408		100.4		79,860		100.6
Allowance for credit loss	(486)		(0.6)		(634)		(0.8)
Subtotal mortgage loans, net	81,922		99.8		79,226		99.8
Residential — FVO	109		0.2		127		0.2
Total mortgage loans held-for-investment, net	82,031		100.0		79,353		100.0
Mortgage loans held-for-sale	24		—		—		—
Total mortgage loans, net	$	82,055	100.0	%	$	79,353	100.0	%

The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis, with changes in estimated fair value included in net investment income. See Note 8 for further information.

The amount of net (discounts) premiums and deferred (fees) expenses, included within total amortized cost, primarily attributable to residential mortgage loans was ($695) million and ($759) million at June 30, 2022 and December 31, 2021, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential mortgage loans at June 30, 2022 was $190 million, $152 million and $81 million, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential mortgage loans at December 31, 2021 was $180 million, $161 million and $86 million, respectively.

Purchases of mortgage loans, consisting primarily of residential mortgage loans, were $868 million and $1.7 billion for the three months and six months ended June 30, 2022, respectively, and $532 million and $986 million for the three months and six months ended June 30, 2021, respectively.

Rollforward of Allowance for Credit Loss for Mortgage Loans by Portfolio Segment

The rollforward of ACL for mortgage loans, by portfolio segment, is as follows:


	Six Months Ended June 30,
	2022								2021
	Commercial		Agricultural		Residential		Total		Commercial		Agricultural		Residential		Total
	(In millions)
Balance, beginning of period	$	340	$	88	$	206	$	634	$	252	$	106	$	232	$	590

Provision (release)	(16)		41		(31)		(6)		22		(7)		(23)		(8)
Initial credit losses on PCD loans (1)	—		—		—		—		—		—		2		2
Charge-offs, net of recoveries	(119)		(22)		(1)		(142)		—		(13)		(1)		(14)

Balance, end of period	$	205	$	107	$	174	$	486	$	274	$	86	$	210	$	570

(1)Represents the initial credit losses on purchased mortgage loans accounted for as purchased financial assets with credit deterioration (“PCD”).

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Allowance for Credit Loss Methodology

The Company records an allowance for expected lifetime credit loss in earnings within net investment gains (losses) in an amount that represents the portion of the amortized cost basis of mortgage loans that the Company does not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. In determining the Company’s ACL, management applies significant judgment to estimate expected lifetime credit loss, including: (i) pooling mortgage loans that share similar risk characteristics, (ii) considering expected lifetime credit loss over the contractual term of its mortgage loans adjusted for expected prepayments and any extensions, and (iii) considering past events and current and forecasted economic conditions. Each of the Company’s commercial, agricultural and residential mortgage loan portfolio segments are evaluated separately. The ACL is calculated for each mortgage loan portfolio segment based on inputs unique to each loan portfolio segment. On a quarterly basis, mortgage loans within a portfolio segment that share similar risk characteristics, such as internal risk ratings or consumer credit scores, are pooled for calculation of ACL. On an ongoing basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is reasonably possible or probable) and reasonably expected TDRs (i.e., the Company grants concessions to borrower that is experiencing financial difficulties) are evaluated individually for credit loss. The ACL for loans evaluated individually are established using the same methodologies for all three portfolio segments. For example, the ACL for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of collateral dependent loans, which are evaluated individually for credit loss, is recorded as a change in the ACL which is recorded on a quarterly basis as a charge or credit to earnings in net investment gains (losses).

Commercial and Agricultural Mortgage Loan Portfolio Segments

Commercial and agricultural mortgage loan ACL are calculated in a similar manner. Within each loan portfolio segment, commercial and agricultural, loans are pooled by internal risk rating. Estimated lifetime loss rates, which vary by internal risk rating, are applied to the amortized cost of each loan, excluding accrued investment income, on a quarterly basis to develop the ACL. Internal risk ratings are based on an assessment of the loan’s credit quality, which can change over time. The estimated lifetime loss rates are based on several loan portfolio segment-specific factors, including (i) the Company’s experience with defaults and loss severity, (ii) expected default and loss severity over the forecast period, (iii) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, (iv) loan specific characteristics including loan-to-value (“LTV”) ratios, and (v) internal risk ratings. These evaluations are revised as conditions change and new information becomes available. The Company uses its several decades of historical default and loss severity experience which capture multiple economic cycles. The Company uses a forecast of economic assumptions for a two-year period for most of its commercial and agricultural mortgage loans, while a one-year period is used for loans originated in certain markets. After the applicable forecast period, the Company reverts to its historical loss experience using a straight-line basis over two years. 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, recent loss and recovery trend experience as compared to historical loss and recovery experience, and loan specific characteristics including debt service coverage ratios (“DSCR”). In estimating expected lifetime credit loss over the term of its commercial mortgage loans, the Company adjusts for expected prepayment and extension experience during the forecast period using historical prepayment and extension experience considering the expected position in the economic cycle and the loan profile (i.e., floating rate, shorter-term fixed rate and longer-term fixed rate) and after the forecast period using long-term historical prepayment 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. In estimating expected lifetime credit loss over the term of its agricultural mortgage loans, the Company’s experience is much less sensitive to the position in the economic cycle and by loan profile; accordingly, historical prepayment experience is used, while extension terms are not prevalent with the Company’s agricultural mortgage loans.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Commercial mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios, DSCR 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 LTV ratios and lower DSCR. Agricultural mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, as well as reviews on a geographic and property-type basis. The monitoring process for agricultural mortgage loans also focuses on higher risk loans.

For commercial mortgage loans, the primary credit quality indicator is the DSCR, 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 DSCR, the higher the risk of experiencing a credit loss. The Company also reviews the LTV ratio of its commercial mortgage loan portfolio. LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV 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 LTV 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.

Commitments to lend: After loans are approved, the Company makes commitments to lend and, typically, borrowers draw down on some or all of the commitments. The timing of mortgage loan funding is based on the commitment expiration dates. A liability for credit loss for unfunded commercial and agricultural mortgage loan commitments that are not unconditionally cancellable is recognized in earnings and is reported within net investment gains (losses). The liability is based on estimated lifetime loss rates as described above and the amount of the outstanding commitments, which for lines of credit, considers estimated utilization rates. When the commitment is funded or expires, the liability is adjusted accordingly.

Residential Mortgage Loan Portfolio Segment

The Company’s residential mortgage loan portfolio is comprised primarily of purchased closed end, amortizing residential mortgage loans, including both performing loans purchased within 12 months of origination and reperforming loans purchased after they have been performing for at least 12 months post-modification. Residential mortgage loans are pooled by loan type (i.e., new origination and reperforming) and pooled by similar risk profiles (including consumer credit score and LTV ratios). Estimated lifetime loss rates, which vary by loan type and risk profile, are applied to the amortized cost of each loan excluding accrued investment income on a quarterly basis to develop the ACL. The estimated lifetime loss rates are based on several factors, including (i) industry historical experience and expected results over the forecast period for defaults, (ii) loss severity, (iii) prepayment rates, (iv) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, and (v) loan pool specific characteristics including consumer credit scores, LTV ratios, payment history and home prices. These evaluations are revised as conditions change and new information becomes available. The Company uses industry historical experience which captures multiple economic cycles as the Company has purchased most of its residential mortgage loans in the last five years. The Company uses a forecast of economic assumptions for a two-year period for most of its residential mortgage loans. After the applicable forecast period, the Company immediately reverts to industry historical loss experience.

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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Credit Quality of Mortgage Loans by Portfolio Segment

The amortized cost of commercial mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2022:


Credit Quality Indicator	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total		% of Total
	(Dollars in millions)
LTV ratios:
Less than 65%	$	4,139	$	5,557	$	4,006	$	5,352	$	5,462	$	14,552	$	2,597	$	41,665	79.6	%
65% to 75%	937		1,483		777		2,230		1,349		1,631		—		8,407		16.0
76% to 80%	—		2		32		410		200		291		—		935		1.8
Greater than 80%	61		—		—		4		79		1,197		—		1,341		2.6
Total	$	5,137	$	7,042	$	4,815	$	7,996	$	7,090	$	17,671	$	2,597	$	52,348	100.0	%
DSCR:
> 1.20x	$	5,016	$	6,349	$	4,610	$	7,592	$	6,535	$	15,498	$	2,242	$	47,842	91.4	%
1.00x - 1.20x	92		272		18		—		223		340		—		945		1.8
<1.00x	29		421		187		404		332		1,833		355		3,561		6.8
Total	$	5,137	$	7,042	$	4,815	$	7,996	$	7,090	$	17,671	$	2,597	$	52,348	100.0	%

The amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2022:


Credit Quality Indicator	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total		% of Total
	(Dollars in millions)
LTV ratios:
Less than 65%	$	1,794	$	2,586	$	2,633	$	1,726	$	2,402	$	4,534	$	1,061	$	16,736	90.2	%
65% to 75%	140		321		356		185		100		503		55		1,660		8.9
76% to 80%	—		—		—		—		—		11		—		11		0.1
Greater than 80%	—		—		30		76		—		44		6		156		0.8
Total	$	1,934	$	2,907	$	3,019	$	1,987	$	2,502	$	5,092	$	1,122	$	18,563	100.0	%

The amortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at June 30, 2022:


Credit Quality Indicator	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total		% of Total
	(Dollars in millions)
Performance indicators:
Performing	$	909	$	1,270	$	386	$	1,039	$	465	$	6,957	$	—	$	11,026	95.9	%
Nonperforming (1)	2		6		7		47		16		393		—		471		4.1
Total	$	911	$	1,276	$	393	$	1,086	$	481	$	7,350	$	—	$	11,497	100.0	%

(1)Includes residential mortgage loans in process of foreclosure of $137 million and $70 million at June 30, 2022 and December 31, 2021, respectively.

LTV ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. The amortized cost of commercial and agricultural mortgage loans with an LTV ratio in excess of 100% was $507 million, or 1% of total commercial and agricultural mortgage loans, at June 30, 2022.

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 June 30, 2022 and December 31, 2021. The Company defines delinquency consistent with industry practice, when mortgage loans are past due more than two or more months, as applicable, by portfolio segment. The past due and nonaccrual mortgage loans at amortized cost, prior to ACL, by portfolio segment, were as follows:

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)


	Past Due				Greater than 90 Days Past Due and Still Accruing Interest				Nonaccrual
Portfolio Segment	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	(In millions)
Commercial	$	5	$	13	$	5	$	13	$	180	$	155
Agricultural	96		124		33		16		178		225
Residential	471		450		8		8		464		442
Total	$	572	$	587	$	46	$	37	$	822	$	822

The amortized cost for nonaccrual commercial, agricultural and residential mortgage loans at beginning of year 2021 was $317 million, $266 million and $534 million, respectively. The amortized cost for nonaccrual agricultural mortgage loans with no ACL was $86 million and $134 million at June 30, 2022 and December 31, 2021, respectively. There were no nonaccrual commercial or residential mortgage loans without an ACL at either June 30, 2022 or December 31, 2021.

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, were as follows at and for the periods indicated:


	June 30, 2022		December 31, 2021		Three Months Ended June 30,				Six Months Ended June 30,
			2022		2021		2022		2021
Income Type	Carrying Value				Income
	(In millions)
Wholly-owned real estate:
Leased real estate	$	4,519	$	5,146	$	98	$	108	$	204	$	219
Other real estate	478		474		68		44		100		86
Real estate joint ventures	7,379		6,596		213		53		403		76
Total real estate and real estate joint ventures	$	12,376	$	12,216	$	379	$	205	$	707	$	381

The carrying value of wholly-owned real estate acquired through foreclosure was $182 million and $181 million at June 30, 2022 and December 31, 2021, respectively. Depreciation expense on real estate investments was $31 million and $59 million for the three months and six months ended June 30, 2022, respectively, and $31 million and $61 million for the three months and six months ended June 30, 2021, respectively. Real estate investments were net of accumulated depreciation of $890 million and $883 million at June 30, 2022 and December 31, 2021, 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.

See Note 8 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for a summary of leased real estate investments and income earned, by property type.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Leveraged and Direct Financing Leases

The Company has diversified leveraged 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 commercial real estate. 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 using available third-party data at inception of the lease. 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 rental receipts to changes in inflation rates. Generally, estimated residual values are not guaranteed by the lessee or a third party.

Lease receivables are generally due in periodic installments. The payment periods for leveraged leases generally range from one to 10 years, but in certain circumstances can be over 10 years, while the payment periods for direct financing leases generally range from one to 25 years but in certain circumstances can be over 25 years.

The Company records an allowance for expected lifetime credit loss in earnings within net investment gains (losses) in an amount that represents the portion of the investment in leases that the Company does not expect to collect, resulting in the investment in leases being presented at the net amount expected to be collected. In determining the ACL, management applies significant judgment to estimate expected lifetime credit loss, including: (i) pooling leases that share similar risk characteristics, (ii) considering expected lifetime credit loss over the contractual term of the lease, and (iii) considering past events and current and forecasted economic conditions. Leases with dissimilar risk characteristics are evaluated individually for credit loss. Expected lifetime credit loss on leveraged lease receivables is estimated using a probability of default and loss given default model, where the probability of default incorporates third party credit ratings of the lessee and the related historical default data. Direct financing leases principally relate to leases of commercial real estate; accordingly, expected lifetime credit loss is estimated on such lease receivables consistent with the methodology for commercial mortgage loans (see “— Mortgage Loans — Allowance for Credit Loss Methodology”). The Company also assesses the non-guaranteed residual values for recoverability by comparison to the current estimated fair value of the leased asset and considers other relevant market information such as independent third-party forecasts, consulting, asset brokerage and investment banking reports and data, comparable market transactions, and factors such as the competitive dynamics impacting specific industries, technological change and obsolescence, government and regulatory rules, tax policy, potential environmental liabilities and litigation.

The investment in leveraged and direct financing leases, net of ACL, was $788 million and $1.1 billion, respectively, at June 30, 2022 and $787 million and $1.1 billion, respectively, at December 31, 2021. The ACL for leveraged and direct financing leases was $33 million and $40 million at June 30, 2022 and December 31, 2021, respectively.

Cash Equivalents

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 $9.8 billion and $9.0 billion, principally at estimated fair value, at June 30, 2022 and December 31, 2021, respectively.

Net Unrealized Investment Gains (Losses)

Unrealized investment gains (losses) on fixed maturity securities AFS and derivatives and the effect on policyholder liabilities, DAC, VOBA and deferred sales inducements (“DSI”) that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.

The components of net unrealized investment gains (losses), included in AOCI, were as follows:


	June 30, 2022		December 31, 2021
	(In millions)
Fixed maturity securities AFS	$	(15,291)	$	29,461
Derivatives	2,336		2,061
Other	294		389
Subtotal	(12,661)		31,911
Amounts allocated from:
Policyholder liabilities (1)	(850)		(4,978)
DAC, VOBA and DSI	2,052		(3,208)
Subtotal	1,202		(8,186)
Deferred income tax benefit (expense)	2,023		(6,031)
Net unrealized investment gains (losses)	(9,436)		17,694
Net unrealized investment gains (losses) attributable to noncontrolling interests	(21)		(23)
Net unrealized investment gains (losses) attributable to MetLife, Inc.	$	(9,457)	$	17,671

(1)Includes unearned revenue liabilities.

The changes in net unrealized investment gains (losses) were as follows:


	Six Months Ended June 30, 2022
	(In millions)
Balance, beginning of period	$	17,671
Unrealized investment gains (losses) during the period	(44,572)
Unrealized investment gains (losses) relating to:
Policyholder liabilities	4,128
DAC, VOBA and DSI	5,260
Deferred income tax benefit (expense)	8,054
Net unrealized investment gains (losses)	(9,459)
Net unrealized investment gains (losses) attributable to noncontrolling interests	2
Balance, end of period	$	(9,457)
Change in net unrealized investment gains (losses)	$	(27,130)
Change in net unrealized investment gains (losses) attributable to noncontrolling interests	2
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.	$	(27,128)

Concentrations of Credit Risk

Investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at estimated fair value at June 30, 2022 and December 31, 2021, were in fixed income securities of the Japanese government and its agencies of $24.7 billion and $32.7 billion, respectively, and in fixed income securities of the South Korean government and its agencies of $5.7 billion and $7.1 billion, respectively.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Securities Lending Transactions and Repurchase Agreements

Securities, Collateral and Reinvestment Portfolio

A summary of these transactions and agreements accounted for as secured borrowings was as follows:


		June 30, 2022						December 31, 2021
		Securities (1)						Securities (1)
Agreement Type		Estimated Fair Value		Cash Collateral Received from Counterparties (2)		Reinvestment Portfolio at Estimated Fair Value		Estimated Fair Value		Cash Collateral Received from Counterparties (2)		Reinvestment Portfolio at Estimated Fair Value
	(In millions)
Securities lending		$	13,509	$	13,748	$	13,514	$	20,654	$	21,055	$	21,319
Repurchase agreements		$	3,208	$	3,125	$	3,065	$	3,416	$	3,325	$	3,357

(1)These securities were included within fixed maturity securities AFS, short-term investments and cash equivalents at June 30, 2022 and within fixed maturity securities AFS at December 31, 2021.

(2)The liability for cash collateral is included within payables for collateral under securities loaned and other transactions.

Contractual Maturities

Contractual maturities of these transactions and agreements accounted for as secured borrowings were as follows:


	June 30, 2022										December 31, 2021
	Remaining Maturities										Remaining Maturities
Security Type	Open (1)		1 Month or Less		Over 1 Month to 6 Months		Over 6 Months to 1 Year		Total		Open (1)		1 Month or Less		Over 1 Month to 6 Months		Over 6 Months to 1 Year		Total
	(In millions)
Cash collateral liability by security type:
Securities lending:
U.S. government and agency	$	2,643	$	7,017	$	2,974	$	—	$	12,634	$	5,900	$	7,052	$	7,055	$	—	$	20,007
Foreign government	—		206		712		—		918		—		285		762		—		1,047
Agency RMBS	—		141		55		—		196		—		—		—		—		—
U.S. corporate	—		—		—		—		—		1		—		—		—		1

Total	$	2,643	$	7,364	$	3,741	$	—	$	13,748	$	5,901	$	7,337	$	7,817	$	—	$	21,055

Repurchase agreements:
U.S. government and agency	$	—	$	3,125	$	—	$	—	$	3,125	$	—	$	3,325	$	—	$	—	$	3,325

(1)The related security could be returned to the Company on the next business day, which would require the Company to immediately return the cash collateral.

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell investments to meet the return obligation, it may have difficulty selling such collateral that is invested in a timely manner, be forced to sell investments 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, or the reinvestment portfolio become less liquid, liquidity resources within the general account are available to meet any potential cash demands when securities are put back by the counterparty.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Invested Assets on Deposit, Held in Trust and Pledged as Collateral

Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans, which are presented at carrying value and were as follows at:


	June 30, 2022		December 31, 2021
	(In millions)
Invested assets on deposit (regulatory deposits)	$	1,640	$	1,872
Invested assets held in trust (external reinsurance agreements) (1)	914		1,114
Invested assets pledged as collateral (2)	27,358		24,261
Total invested assets on deposit, held in trust and pledged as collateral	$	29,912	$	27,247

(1) Represents assets held in trust related to third-party reinsurance agreements. Excludes assets held in trust related to reinsurance agreements between wholly-owned subsidiaries of $2.0 billion and $2.1 billion at June 30, 2022 and December 31, 2021, respectively.

(2) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements, secured debt and short-term debt related to repurchase agreements and a collateral financing arrangement (see Notes 4, 13 and 14 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report) and derivative transactions (see Note 7).

See “— Securities Lending Transactions and Repurchase Agreements” for information regarding securities supporting securities lending transactions and repurchase agreements and Note 5 for information regarding investments designated to the closed block. In addition, the Company’s investment in Federal Home Loan Bank common stock, included within other invested assets, which is considered restricted until redeemed by the issuer, was $802 million and $769 million, at redemption value, at June 30, 2022 and December 31, 2021, respectively.

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.

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:


	June 30, 2022				December 31, 2021
Asset Type	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Investment funds (primarily other invested assets)	$	277	$	9	$	292	$	1
Renewable energy partnership (primarily other invested assets)	75		—		79		—
Other investments (primarily other assets)	1		—		1		—
Total	$	353	$	9	$	372	$	1

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

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:


	June 30, 2022				December 31, 2021
Asset Type	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS (2)	$	55,463	$	55,463	$	62,654	$	62,654



Other limited partnership interests	13,432		19,549		13,287		20,720
Other invested assets	1,411		1,467		1,257		1,314
Other investments	917		939		776		926
Total	$	71,223	$	77,418	$	77,974	$	85,614

(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 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 $5 million at June 30, 2022 and December 31, 2021, respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2)For variable interests in Structured Products included within fixed maturity securities AFS, 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 14, 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 either the six months ended June 30, 2022 or 2021.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Net Investment Income

The composition of net investment income by asset type was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Asset Type	2022		2021		2022		2021
	(In millions)
Fixed maturity securities AFS	$	2,832	$	2,739	$	5,546	$	5,492
Equity securities	5		9		12		20
FVO Securities	(89)		50		(154)		86
Mortgage loans	833		885		1,657		1,748
Policy loans	114		120		230		241
Real estate and real estate joint ventures	379		205		707		381
Other limited partnership interests	168		1,047		1,094		2,329
Cash, cash equivalents and short-term investments	49		24		80		49
Operating joint ventures	31		15		49		38
Other	221		40		347		94
Subtotal investment income	4,543		5,134		9,568		10,478
Less: Investment expenses	273		232		515		469
Subtotal, net	4,270		4,902		9,053		10,009
Unit-linked investments	(687)		378		(1,186)		585


Net investment income	$	3,583	$	5,280	$	7,867	$	10,594

Net investment income included realized and unrealized gains (losses) recognized in earnings of ($777) million and ($1.3) billion for the three months and six months ended June 30, 2022, respectively, and $413 million and $674 million for the three months and six months ended June 30, 2021, respectively. The amount includes realized gains (losses) on sales and disposals, primarily related to FVO securities (“FVO Securities”) and Unit-linked investments, of $40 million and $109 million for the three months and six months ended June 30, 2022, respectively, and $94 million and $261 million for the three months and six months ended June 30, 2021, respectively. The amount also includes unrealized gains (losses), representing changes in estimated fair value, recognized in earnings, primarily related to FVO Securities and Unit-linked investments, of ($817) million and ($1.4) billion for the three months and six months ended June 30, 2022, respectively, and $319 million and $413 million for the three months and six months ended June 30, 2021, respectively.

Changes in estimated fair value subsequent to purchase of FVO Securities and Unit-linked investments still held at the end of the respective periods and included in net investment income were ($802) million and ($1.3) billion for the three months and six months ended June 30, 2022, respectively, and $347 million and $549 million for the three months and six months ended June 30, 2021, respectively.

Net investment income from equity method investments, comprised primarily of real estate joint ventures, other limited partnership interests, tax credit and renewable energy partnerships and operating joint ventures, was $386 million and $1.5 billion for the three months and six months ended June 30, 2022, respectively, and $1.0 billion and $2.3 billion for the three months and six months ended June 30, 2021, respectively.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Net Investment Gains (Losses)

Net Investment Gains (Losses) by Asset Type and Transaction Type

The composition of net investment gains (losses) by asset type and transaction type was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Asset Type	2022		2021		2022		2021
	(In millions)
Fixed maturity securities AFS	$	(671)	$	5	$	(1,269)	$	(62)



Equity securities	(42)		55		(92)		130



Mortgage loans	48		(2)		92		58
Real estate and real estate joint ventures (excluding changes in estimated fair value)	159		368		163		416
Other limited partnership interests (excluding changes in estimated fair value)	(2)		(8)		16		(13)
Other gains (losses)	110		23		176		46
Subtotal	(398)		441		(914)		575




Change in estimated fair value of other limited partnership interests and real estate joint ventures	(1)		5		6		14
Non-investment portfolio gains (losses)	(286)		1,159		(295)		1,150
Subtotal	(287)		1,164		(289)		1,164
Net investment gains (losses)	$	(685)	$	1,605	$	(1,203)	$	1,739

Transaction Type
Realized gains (losses) on investments sold or disposed	$	(445)	$	434	$	(656)	$	437
Impairments	5		(13)		(35)		(13)
Recognized gains (losses):
Change in allowance for credit loss recognized in earnings	84		(39)		(159)		(17)
Unrealized net gains (losses) recognized in earnings	(43)		64		(58)		182
Total recognized gains (losses)	41		25		(217)		165
Non-investment portfolio gains (losses)	(286)		1,159		(295)		1,150
Net investment gains (losses)	$	(685)	$	1,605	$	(1,203)	$	1,739

Net realized investment gains (losses) of ($405) million and ($547) million for the three months and six months ended June 30, 2022, respectively, and $528 million and $698 million for the three months and six months ended June 30, 2021, respectively, represent realized gains (losses) on sales and disposals from all invested asset classes, including realized gains (losses) on sales and disposals recognized in net investment income, primarily related to FVO Securities and Unit-linked investments.

Changes in estimated fair value subsequent to purchase of equity securities still held as of the end of the period included in net investment gains (losses) were ($40) million and ($62) million for the three months and six months ended June 30, 2022, respectively, and $50 million and $113 million for the three months and six months ended June 30, 2021, respectively.

Other gains (losses) included $42 million and $60 million reclassified from AOCI to earnings due to the sale of certain investments that were hedged in qualifying cash flow hedges for the three months and six months ended June 30, 2022, respectively, and $19 million and $48 million for the three months and six months ended June 30, 2021, respectively.

Net investment gains (losses) includes gains (losses) from foreign currency transactions of ($137) million and ($14) million for the three months and six months ended June 30, 2022, respectively, and $10 million and $19 million for the three months and six months ended June 30, 2021, respectively.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments (continued)

Non-investment portfolio gains (losses) for the three months and six months ended June 30, 2021, include a gain of $1.4 billion on the disposition of Metropolitan Property and Casualty Insurance Company and certain of its wholly-owned subsidiaries (collectively, “MetLife P&C”). See Note 3 for information on non-investment portfolio losses relating to the disposition of MetLife Poland and Greece.

Fixed Maturity Securities AFS and Equity Securities – Composition of Net Investment Gains (Losses)

The composition of net investment gains (losses) for these securities is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Fixed Maturity Securities AFS	2022		2021		2022		2021
	(In millions)
Proceeds	$	20,710	$	10,923	$	34,734	$	26,563
Gross investment gains	$	231	$	145	$	340	$	363
Gross investment (losses)	(1,001)		(132)		(1,404)		(391)
Realized gains (losses) on sales and disposals	(770)		13		(1,064)		(28)
Net credit loss (provision) release (change in ACL recognized in earnings)	94		5		(170)		(21)
Impairment (loss)	5		(13)		(35)		(13)
Net credit loss (provision) release and impairment (loss)	99		(8)		(205)		(34)
Net investment gains (losses)	$	(671)	$	5	$	(1,269)	$	(62)

Equity Securities
Realized gains (losses) on sales and disposals	$	—	$	(2)	$	(30)	$	(34)
Unrealized net gains (losses) recognized in earnings	(42)		57		(62)		164
Net investment gains (losses)	$	(42)	$	55	$	(92)	$	130

7. Derivatives

Accounting for Derivatives

See Note 1 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for a description of the Company’s accounting policies for derivatives and Note 8 for information about the fair value hierarchy for derivatives.

Derivative Strategies

Types of Derivative Instruments and 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. Commonly used derivative instruments include, but are not limited to:

Interest rate derivatives: swaps, total return swaps, caps, floors, futures, swaptions, forwards and synthetic guaranteed interest contracts (“GICs”);
Foreign currency exchange rate derivatives: swaps, forwards, options and exchange-traded futures;
Credit derivatives: purchased or written single name or index credit default swaps, and forwards; and
Equity derivatives: index options, variance swaps, exchange-traded futures and total return swaps.

For detailed information on these contracts and the related strategies, see Note 9 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (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:


		June 30, 2022						December 31, 2021
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
	Assets	Liabilities		Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments:
Fair value hedges:
Interest rate swaps	Interest rate	$	4,331	$	1,683	$	313	$	3,550	$	2,164	$	6
Foreign currency swaps	Foreign currency exchange rate	735		81		—		801		11		23
Foreign currency forwards	Foreign currency exchange rate	1,536		—		154		1,636		—		58
Subtotal		6,602		1,764		467		5,987		2,175		87
Cash flow hedges:
Interest rate swaps	Interest rate	3,778		14		—		4,117		6		1
Interest rate forwards	Interest rate	8,042		—		958		6,889		89		119
Foreign currency swaps	Foreign currency exchange rate	42,653		3,159		1,938		41,095		1,600		1,557
Subtotal		54,473		3,173		2,896		52,101		1,695		1,677
Net investment in a foreign operation (“NIFO”) hedges:
Foreign currency forwards	Foreign currency exchange rate	249		25		—		—		—		—
Currency options	Foreign currency exchange rate	3,000		319		—		3,000		139		—
Subtotal		3,249		344		—		3,000		139		—
Total qualifying hedges		64,324		5,281		3,363		61,088		4,009		1,764
Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate swaps	Interest rate	33,956		2,006		887		38,860		3,644		115
Interest rate floors	Interest rate	8,351		35		—		7,701		145		—
Interest rate caps	Interest rate	66,410		739		—		65,559		124		—
Interest rate futures	Interest rate	1,106		1		7		1,615		4		—
Interest rate options	Interest rate	20,304		553		43		11,754		493		10
Interest rate forwards	Interest rate	450		—		102		374		—		26
Interest rate total return swaps	Interest rate	1,048		—		109		1,048		9		4
Synthetic GICs	Interest rate	44,841		—		—		40,121		—		—
Foreign currency swaps	Foreign currency exchange rate	13,392		1,426		466		12,787		768		614
Foreign currency forwards	Foreign currency exchange rate	18,043		150		1,330		16,230		36		666
Currency futures	Foreign currency exchange rate	727		3		—		839		—		2
Currency options	Foreign currency exchange rate	—		—		—		900		—		—
Credit default swaps — purchased	Credit	2,993		28		84		3,042		13		113
Credit default swaps — written	Credit	11,786		35		84		8,626		177		12
Equity futures	Equity market	3,592		38		8		4,204		12		5
Equity index options	Equity market	26,013		1,065		360		29,743		1,004		458
Equity variance swaps	Equity market	692		17		12		699		17		13
Equity total return swaps	Equity market	3,060		206		—		3,025		11		50
Total non-designated or nonqualifying derivatives		256,764		6,302		3,492		247,127		6,457		2,088
Total		$	321,088	$	11,583	$	6,855	$	308,215	$	10,466	$	3,852

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)

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 June 30, 2022 and December 31, 2021. 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.

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)

The Effects of Derivatives on the Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

The following table presents the interim condensed consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow, NIFO, nonqualifying hedging relationships and embedded derivatives:


	Three Months Ended June 30, 2022
	Net Investment Income		Net Investment Gains (Losses)		Net Derivative Gains (Losses)		Policyholder Benefits and Claims		Interest Credited to Policyholder Account Balances		Other Expenses		OCI
	(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)	$	3	$	—	$	—	$	(408)	$	(10)	$	—	N/A
Hedged items	(4)		—		—		388		9		—		N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)	61		(170)		—		—		—		—		N/A
Hedged items	(61)		165		—		—		—		—		N/A
Amount excluded from the assessment of hedge effectiveness	—		28		—		—		—		—		N/A
Subtotal	(1)		23		—		(20)		(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		$	(903)
Amount of gains (losses) reclassified from AOCI into income	16		42		—		—		—		1		(59)
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		749
Amount of gains (losses) reclassified from AOCI into income	1		(690)		—		—		—		1		688
Foreign currency transaction gains (losses) on hedged items	—		682		—		—		—		—		—
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	—		—		—		—		—		—		—
Subtotal	17		34		—		—		—		2		475
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)	N/A		N/A		N/A		N/A		N/A		N/A		168
Non-derivative hedging instruments	N/A		N/A		N/A		N/A		N/A		N/A		37
Subtotal	N/A		N/A		N/A		N/A		N/A		N/A		205
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)	2		—		(1,494)		(27)		—		—		N/A
Foreign currency exchange rate derivatives (1)	1		—		(664)		(1)		—		—		N/A
Credit derivatives — purchased (1)	—		—		46		—		—		—		N/A
Credit derivatives — written (1)	—		—		(195)		—		—		—		N/A
Equity derivatives (1)	36		—		590		187		—		—		N/A
Foreign currency transaction gains (losses) on hedged items	—		—		176		—		—		—		N/A
Subtotal	39		—		(1,541)		159		—		—		N/A
Earned income on derivatives	140		—		249		46		(37)		—		—
Embedded derivatives (2)	N/A		N/A		97		—		N/A		N/A		N/A
Total	$	195	$	57	$	(1,195)	$	185	$	(38)	$	2	$	680

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)


	Three Months Ended June 30, 2021
	Net Investment Income		Net Investment Gains (Losses)		Net Derivative Gains (Losses)		Policyholder Benefits and Claims		Interest Credited to Policyholder Account Balances		Other Expenses		OCI
	(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)	$	—	$	—	$	—	$	237	$	—	$	—	N/A
Hedged items	1		—		—		(242)		—		—		N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)	(1)		(7)		—		—		—		—		N/A
Hedged items	1		7		—		—		—		—		N/A
Amount excluded from the assessment of hedge effectiveness	—		(2)		—		—		—		—		N/A
Subtotal	1		(2)		—		(5)		—		—		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		$	510
Amount of gains (losses) reclassified from AOCI into income	15		19		—		—		—		—		(34)
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		322
Amount of gains (losses) reclassified from AOCI into income	1		95		—		—		—		1		(97)
Foreign currency transaction gains (losses) on hedged items	—		(95)		—		—		—		—		—
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCI	N/A		N/A		N/A		N/A		N/A		N/A		(4)
Amount of gains (losses) reclassified from AOCI into income	—		—		—		—		—		—		—
Subtotal	16		19		—		—		—		1		697
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)	N/A		N/A		N/A		N/A		N/A		N/A		17
Non-derivative hedging instruments	N/A		N/A		N/A		N/A		N/A		N/A		2
Subtotal	N/A		N/A		N/A		N/A		N/A		N/A		19
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)	—		—		636		8		—		—		N/A
Foreign currency exchange rate derivatives (1)	—		—		(123)		—		—		—		N/A
Credit derivatives — purchased (1)	—		—		(7)		—		—		—		N/A
Credit derivatives — written (1)	—		—		30		—		—		—		N/A
Equity derivatives (1)	(15)		—		(363)		(103)		—		—		N/A
Foreign currency transaction gains (losses) on hedged items	—		—		7		—		—		—		N/A
Subtotal	(15)		—		180		(95)		—		—		N/A
Earned income on derivatives	27		—		245		52		(38)		—		—
Embedded derivatives (2)	N/A		N/A		(4)		—		N/A		N/A		N/A
Total	$	29	$	17	$	421	$	(48)	$	(38)	$	1	$	716

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)


	Six Months Ended June 30, 2022
	Net Investment Income		Net Investment Gains (Losses)		Net Derivative Gains (Losses)		Policyholder Benefits and Claims		Interest Credited to Policyholder Account Balances		Other Expenses		OCI
	(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)	$	7	$	—	$	—	$	(860)	$	(10)	$	—	N/A
Hedged items	(8)		—		—		823		9		—		N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)	93		(251)		—		—		—		—		N/A
Hedged items	(91)		245		—		—		—		—		N/A
Amount excluded from the assessment of hedge effectiveness	—		61		—		—		—		—		N/A
Subtotal	1		55		—		(37)		(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		$	(1,667)
Amount of gains (losses) reclassified from AOCI into income	31		60		—		—		—		2		(93)
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		1,201
Amount of gains (losses) reclassified from AOCI into income	3		(838)		—		—		—		1		834
Foreign currency transaction gains (losses) on hedged items	—		828		—		—		—		—		—
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	—		—		—		—		—		—		—
Subtotal	34		50		—		—		—		3		275
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)	N/A		N/A		N/A		N/A		N/A		N/A		211
Non-derivative hedging instruments	N/A		N/A		N/A		N/A		N/A		N/A		56
Subtotal	N/A		N/A		N/A		N/A		N/A		N/A		267
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)	3		—		(2,831)		(56)		—		—		N/A
Foreign currency exchange rate derivatives (1)	2		—		(738)		(2)		—		—		N/A
Credit derivatives — purchased (1)	—		—		92		—		—		—		N/A
Credit derivatives — written (1)	—		—		(245)		—		—		—		N/A
Equity derivatives (1)	45		—		751		269		—		—		N/A
Foreign currency transaction gains (losses) on hedged items	—		—		294		—		—		—		N/A
Subtotal	50		—		(2,677)		211		—		—		N/A
Earned income on derivatives	223		—		484		98		(72)		—		—
Embedded derivatives (2)	N/A		N/A		139		—		N/A		N/A		N/A
Total	$	308	$	105	$	(2,054)	$	272	$	(73)	$	3	$	542

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)


	Six Months Ended June 30, 2021
	Net Investment Income		Net Investment Gains (Losses)		Net Derivative Gains (Losses)		Policyholder Benefits and Claims		Interest Credited to Policyholder Account Balances		Other Expenses		OCI
	(In millions)
Gain (Loss) on Fair Value Hedges:
Interest rate derivatives:
Derivatives designated as hedging instruments (1)	$	3	$	—	$	—	$	(365)	$	—	$	—	N/A
Hedged items	(2)		—		—		331		—		—		N/A
Foreign currency exchange rate derivatives:
Derivatives designated as hedging instruments (1)	12		(135)		—		—		—		—		N/A
Hedged items	(11)		130		—		—		—		—		N/A
Amount excluded from the assessment of hedge effectiveness	—		(4)		—		—		—		—		N/A
Subtotal	2		(9)		—		(34)		—		—		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		$	(711)
Amount of gains (losses) reclassified from AOCI into income	27		48		—		—		—		1		(76)
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		169
Amount of gains (losses) reclassified from AOCI into income	4		(124)		—		—		—		1		119
Foreign currency transaction gains (losses) on hedged items	—		116		—		—		—		—		—
Credit derivatives: (1)
Amount of gains (losses) deferred in AOCI	N/A		N/A		N/A		N/A		N/A		N/A		(72)
Amount of gains (losses) reclassified from AOCI into income	—		—		—		—		—		—		—
Subtotal	31		40		—		—		—		2		(571)
Gain (Loss) on NIFO Hedges:
Foreign currency exchange rate derivatives (1)	N/A		N/A		N/A		N/A		N/A		N/A		46
Non-derivative hedging instruments	N/A		N/A		N/A		N/A		N/A		N/A		29
Subtotal	N/A		N/A		N/A		N/A		N/A		N/A		75
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:
Interest rate derivatives (1)	2		—		(1,614)		(39)		—		—		N/A
Foreign currency exchange rate derivatives (1)	—		—		(606)		3		—		—		N/A
Credit derivatives — purchased (1)	—		—		12		—		—		—		N/A
Credit derivatives — written (1)	—		—		35		—		—		—		N/A
Equity derivatives (1)	(32)		—		(1,039)		(207)		—		—		N/A
Foreign currency transaction gains (losses) on hedged items	—		—		232		—		—		—		N/A
Subtotal	(30)		—		(2,980)		(243)		—		—		N/A
Earned income on derivatives	66		—		497		105		(77)		—		—
Embedded derivatives (2)	N/A		N/A		669		—		N/A		N/A		N/A
Total	$	69	$	31	$	(1,814)	$	(172)	$	(77)	$	2	$	(496)

(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 $18 million and $4 million for the three months and six months ended June 30, 2022, respectively, and ($8) million and ($51) million for the three months and six months ended June 30, 2021, respectively.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (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, (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities, and (iii) foreign currency forwards to hedge the foreign currency fair value exposure of foreign currency denominated investments.

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:


Balance Sheet Line Item	Carrying Amount of the Hedged Assets/(Liabilities)				Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Assets/(Liabilities) (1)
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	(In millions)
Fixed maturity securities AFS	$	1,752	$	2,164	$	—	$	(1)
Mortgage loans	$	444	$	634	$	(8)	$	3
Future policy benefits	$	(4,087)	$	(4,735)	$	(40)	$	(877)
Policyholder account balances	$	(1,082)	$	—	$	9	$	—

(1)Includes ($149) million and ($161) million of hedging adjustments on discontinued hedging relationships at June 30, 2022 and December 31, 2021, respectively.

For the Company’s foreign currency forwards, the change in the estimated fair value of the derivative related to the changes in the difference between the spot price and the forward price is excluded from the assessment of hedge effectiveness. The Company has elected to record changes in estimated fair value of excluded components in earnings. For all other derivatives, 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 $4 million and $2 million for the three months and six months ended June 30, 2022, respectively, and $1 million and ($1) million for the three months and six months ended June 30, 2021, respectively.

At both June 30, 2022 and December 31, 2021, 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 seven years.

At June 30, 2022 and December 31, 2021, the balance in AOCI associated with cash flow hedges was $2.3 billion and $2.1 billion, respectively.

All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

At June 30, 2022, the Company expected to reclassify $320 million of deferred net gains (losses) on derivatives in AOCI to earnings within the next 12 months.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)

NIFO Hedges

The Company uses foreign currency exchange rate derivatives, which may include foreign currency forwards and currency options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company also designates a portion of its foreign-denominated debt as a non-derivative hedging instrument of its net investments in foreign operations. The Company assesses hedge effectiveness of its derivatives based upon the change in forward rates and assesses its non-derivative hedging instruments based upon the change in spot rates. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

When net investments in foreign operations are sold or substantially liquidated, the amounts in AOCI are reclassified to the statement of operations.

At June 30, 2022 and December 31, 2021, the cumulative foreign currency translation gain (loss) recorded in AOCI related to NIFO hedges was $570 million and $303 million, respectively. At June 30, 2022 and December 31, 2021, the carrying amount of debt designated as a non-derivative hedging instrument was $309 million and $365 million, respectively.

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 effects of derivatives on the interim condensed consolidated statements of operations and comprehensive income (loss) 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 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (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:


	June 30, 2022					December 31, 2021
Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps		Weighted Average Years to Maturity (2)
	(Dollars in millions)
Aaa/Aa/A
Single name credit default swaps (3)	$	3	$	159	2.6	$	4	$	159	3.1
Credit default swaps referencing indices	4		2,742		3.3	17		1,191		2.5
Subtotal	7		2,901		3.3	21		1,350		2.6
Baa
Single name credit default swaps (3)	2		101		2.7	2		101		3.4
Credit default swaps referencing indices	(46)		8,612		5.4	146		6,988		5.0
Subtotal	(44)		8,713		5.4	148		7,089		5.0
Ba
Single name credit default swaps (3)	—		42		2.0	1		82		1.2
Credit default swaps referencing indices	(2)		45		4.5	(1)		20		5.0
Subtotal	(2)		87		3.3	—		102		2.0
B

Credit default swaps referencing indices	1		55		3.5	5		55		4.0
Subtotal	1		55		3.5	5		55		4.0
Caa3

Credit default swaps referencing indices	(11)		30		4.0	(9)		30		4.5
Subtotal	(11)		30		4.0	(9)		30		4.5
Total	$	(49)	$	11,786	4.8	$	165	$	8,626	4.6

(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 Global Ratings (“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.

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 clearinghouses (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”).

The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties in jurisdictions in which it understands that close-out netting should be enforceable and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are governed by International Swaps and Derivatives

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)

Association, Inc. (“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, close-out netting permits the Company (subject to financial regulations such as the Orderly Liquidation Authority under Title II of Dodd-Frank) to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions and to apply collateral to the obligations, without application of the automatic stay, upon the counterparty’s bankruptcy. 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 as required by applicable law. Additionally, effective September 1, 2021, the Company is required to pledge initial margin for certain new OTC-bilateral derivative transactions to third party custodians.

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 brokers and central clearinghouses to such derivatives.

See Note 8 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:


	June 30, 2022				December 31, 2021
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)	$	11,608	$	6,665	$	10,132	$	3,798
OTC-cleared (1)	73		160		448		24
Exchange-traded	42		15		16		7
Total gross estimated fair value of derivatives presented on the interim condensed consolidated balance sheets (1)	11,723		6,840		10,596		3,829
Gross amounts not offset on the interim condensed consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(4,166)		(4,166)		(2,204)		(2,204)
OTC-cleared	(28)		(28)		(6)		(6)
Exchange-traded	(3)		(3)		(2)		(2)
Cash collateral: (3), (4)
OTC-bilateral	(6,454)		—		(6,948)		—
OTC-cleared	—		(112)		(421)		(13)
Exchange-traded	—		(12)		—		(3)
Securities collateral: (5)
OTC-bilateral	(852)		(2,442)		(891)		(1,473)
OTC-cleared	—		(19)		—		(5)
Exchange-traded	—		—		—		(2)
Net amount after application of master netting agreements and collateral	$	220	$	58	$	124	$	121

(1)At June 30, 2022 and December 31, 2021, derivative assets included income (expense) accruals reported in accrued investment income or in other liabilities of $140 million and $130 million, respectively, and derivative liabilities included (income) expense accruals reported in accrued investment income or in other liabilities of ($15) million and ($23) 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (continued)

(3)Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the centralized clearinghouse treats variation margin as collateral, 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. For certain collateral agreements, cash collateral is pledged to the Company as initial margin on its OTC-bilateral derivatives.

(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 June 30, 2022 and December 31, 2021, the Company received excess cash collateral of $492 million and $172 million, respectively, and provided excess cash collateral of $110 million and $126 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 June 30, 2022, 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 June 30, 2022 and December 31, 2021, the Company received excess securities collateral with an estimated fair value of $125 million and $160 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At June 30, 2022 and December 31, 2021, the Company provided excess securities collateral with an estimated fair value of $1.1 billion and $243 million, respectively, for its OTC-bilateral derivatives, $1.1 billion and $1.2 billion, respectively, for its OTC-cleared derivatives, and $164 million and $185 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 generally 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. Substantially all of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s credit or financial strength rating, as applicable, were to fall below that specific investment grade 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. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of MetLife, Inc. and/or the counterparty. At June 30, 2022, the amount of collateral not provided by the Company due to the existence of these thresholds was $15 million.

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.


	June 30, 2022						December 31, 2021
	Derivatives Subject to Credit- Contingent Provisions		Derivatives Not Subject to Credit- Contingent Provisions		Total		Derivatives Subject to Credit- Contingent Provisions		Derivatives Not Subject to Credit- Contingent Provisions		Total
	(In millions)
Estimated fair value of derivatives in a net liability position (1)	$	2,340	$	159	$	2,499	$	1,386	$	209	$	1,595
Estimated fair value of collateral provided:
Fixed maturity securities AFS	$	2,656	$	123	$	2,779	$	1,370	$	221	$	1,591

(1)After taking into consideration the existence of netting agreements.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivat****ives (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:


	Balance Sheet Location	June 30, 2022		December 31, 2021
		(In millions)
Embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	35	$	38
Embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	Policyholder account balances	$	317	$	324
Assumed guaranteed minimum benefits	Policyholder account balances	97		98
Funds withheld and guarantees on reinsurance	Other liabilities	(25)		57
Fixed annuities with equity indexed returns	Policyholder account balances	142		165
Other guarantees	Policyholder account balances	—		5
Embedded derivatives within liability host contracts		$	531	$	649

8. Fair Value

Considerable judgment is often required in interpreting the market data used 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. 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:


	June 30, 2022
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities AFS:
U.S. corporate	$	—	$	69,753	$	10,802	$	80,555
Foreign corporate	—		42,397		11,780		54,177
Foreign government	—		47,913		103		48,016
U.S. government and agency	16,725		16,965		—		33,690
RMBS	100		24,503		2,700		27,303
ABS & CLO	—		15,140		1,914		17,054
Municipals	—		12,513		—		12,513
CMBS	—		10,137		733		10,870
Total fixed maturity securities AFS	16,825		239,321		28,032		284,178
Equity securities	720		186		179		1,085
Unit-linked and FVO Securities (2)	7,319		1,814		742		9,875
Short-term investments (3)	1,944		544		119		2,607
Residential mortgage loans — FVO	—		—		109		109
Other investments	—		165		1,013		1,178
Derivative assets: (4)
Interest rate	1		4,695		335		5,031
Foreign currency exchange rate	3		5,140		20		5,163
Credit	—		37		26		63
Equity market	38		1,281		7		1,326
Total derivative assets	42		11,153		388		11,583
Embedded derivatives within asset host contracts (5)	—		—		35		35
Separate account assets (6)	61,489		81,100		1,240		143,829
Total assets (7)	$	88,339	$	334,283	$	31,857	$	454,479
Liabilities
Derivative liabilities: (4)
Interest rate	$	7	$	1,983	$	429	$	2,419
Foreign currency exchange rate	—		3,680		208		3,888
Credit	—		130		38		168
Equity market	8		372		—		380
Total derivative liabilities	15		6,165		675		6,855
Embedded derivatives within liability host contracts (5)	—		—		531		531
Separate account liabilities (6)	14		21		10		45
Total liabilities	$	29	$	6,186	$	1,216	$	7,431

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


	December 31, 2021 (1)
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities AFS:
U.S. corporate	$	—	$	81,266	$	11,768	$	93,034
Foreign corporate	—		49,973		13,667		63,640
Foreign government	—		61,518		91		61,609
U.S. government and agency	25,482		21,117		—		46,599
RMBS	7		27,270		3,127		30,404
ABS & CLO	—		16,707		1,862		18,569
Municipals	—		14,212		—		14,212
CMBS	—		11,325		882		12,207
Total fixed maturity securities AFS	25,489		283,388		31,397		340,274
Equity securities	931		187		151		1,269
Unit-linked and FVO Securities (2)	9,173		2,068		901		12,142
Short-term investments (3)	5,607		950		3		6,560

Residential mortgage loans — FVO	—		—		127		127


Other investments	—		61		898		959
Derivative assets: (4)
Interest rate	4		6,577		97		6,678
Foreign currency exchange rate	—		2,551		3		2,554
Credit	—		173		17		190
Equity market	12		1,025		7		1,044
Total derivative assets	16		10,326		124		10,466
Embedded derivatives within asset host contracts (5)	—		—		38		38
Separate account assets (6)	76,312		101,424		2,137		179,873
Total assets (7)	$	117,528	$	398,404	$	35,776	$	551,708
Liabilities
Derivative liabilities: (4)
Interest rate	$	—	$	259	$	22	$	281
Foreign currency exchange rate	2		2,676		242		2,920
Credit	—		113		12		125
Equity market	5		521		—		526
Total derivative liabilities	7		3,569		276		3,852
Embedded derivatives within liability host contracts (5)	—		—		649		649
Separate account liabilities (6)	7		12		6		25
Total liabilities	$	14	$	3,581	$	931	$	4,526

(1)Excludes amounts reclassified to assets held-for-sale or liabilities held-for-sale. Assets held-for-sale and liabilities held-for-sale are valued on a basis consistent with similar assets and liabilities described herein. See Note 3 for information on the Company’s business dispositions.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

(2)Contractholder-directed equity securities and FVO Securities (collectively, “Unit-linked and FVO Securities”) were primarily comprised of Unit-linked investments at both June 30, 2022 and December 31, 2021.

(3)Short-term investments as presented in the tables above differ from the amounts presented on the interim condensed consolidated balance sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.

(4)Derivative assets are presented within other invested assets on the interim condensed consolidated balance sheets and derivative liabilities are presented within other liabilities on the interim condensed consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the interim condensed consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.

(5)Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables on the interim condensed consolidated balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances and other liabilities on the interim condensed consolidated balance sheets.

(6)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.

(7)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 June 30, 2022 and December 31, 2021, the estimated fair value of such investments was $95 million and $99 million, respectively.

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 of securities 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. Unobservable inputs are based on management’s assumptions about the inputs market participants would use in pricing such investments.

The estimated fair value of short-term investments and other investments is determined on a basis consistent with the methodologies described herein.

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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


Instrument	Level 2 Observable Inputs			Level 3 Unobservable Inputs
Fixed maturity securities AFS
U.S. corporate and Foreign corporate securities
	Valuation Approaches: Principally the market and income approaches.			Valuation Approaches: Principally the market approach.
	Key Inputs:			Key Inputs:
	•	quoted prices in markets that are not active		•	illiquidity premium
	•	benchmark yields; spreads off benchmark yields; new issuances; issuer ratings		•	delta spread adjustments to reflect specific credit-related issues
	•	trades of identical or comparable securities; duration		•	credit spreads
	•	privately-placed securities are valued using the additional key inputs:		•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
		•	market yield curve; call provisions
		•	observable prices and spreads for similar public or private securities that incorporate the credit quality and industry sector of the issuer	•	independent non-binding broker quotations
		•	delta spread adjustments to reflect specific credit-related issues
Foreign government securities, U.S. government and agency securities and Municipals
	Valuation Approaches: Principally the market approach.			Valuation Approaches: Principally the market approach.
	Key Inputs:			Key Inputs:
	•	quoted prices in markets that are not active		•	independent non-binding broker quotations
	•	benchmark U.S. Treasury yield or other yields		•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
	•	the spread off the U.S. Treasury yield curve for the identical security
	•	issuer ratings and issuer spreads; broker-dealer quotations		•	credit spreads
	•	comparable securities that are actively traded
Structured Products
	Valuation Approaches: Principally the market and income approaches.			Valuation Approaches: Principally the market and income approaches.
	Key Inputs:			Key Inputs:
	•	quoted prices in markets that are not active		•	credit spreads
	•	spreads for actively traded securities; spreads off benchmark yields		•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
	•	expected prepayment speeds and volumes
	•	current and forecasted loss severity; ratings; geographic region		•	independent non-binding broker quotations
	•	weighted average coupon and weighted average maturity		•	credit ratings
	•	average delinquency rates; DSCR
	•	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

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


Instrument	Level 2 Observable Inputs			Level 3 Unobservable Inputs
Equity securities
	Valuation Approaches: Principally the market approach.			Valuation Approaches: Principally the market and income approaches.
	Key Input:			Key Inputs:
	•	quoted prices in markets that are not considered active		•	credit ratings; issuance structures
				•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
				•	independent non-binding broker quotations
Unit-linked and FVO Securities, Short-term investments and Other investments
	Valuation Approaches: Principally the market and income approaches.			Valuation Approaches: Principally the market and income approaches.
	Key Inputs:			Key Inputs:
	•	Unit-linked and FVO Securities include mutual fund interests without readily determinable fair values given prices are not published publicly. Valuation of these mutual funds is based upon quoted prices or reported NAV provided by the fund managers, which were based on observable inputs.		•	Unit-linked and FVO Securities, short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and unobservable inputs used in their valuation are also similar to those described above. Other investments also include certain real estate joint ventures and use the valuation approach and key inputs as described for other limited partnership interests below.
	•	Short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and observable inputs used in their valuation are also similar to those described above.

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. The estimated fair value of fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents is determined on a basis consistent with the assets 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

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. Unobservable inputs are based on management’s assumptions about the inputs market participants would use in pricing such derivatives.

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.

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:


Instrument		Interest Rate		Foreign Currency Exchange Rate		Credit		Equity Market
Inputs common to Level 2 and Level 3 by instrument type	•	swap yield curves	•	swap yield curves	•	swap yield curves	•	swap yield curves
•	basis curves	•	basis curves	•	credit curves	•	spot equity index levels
•	interest rate volatility (1)	•	currency spot rates	•	recovery rates	•	dividend yield curves
			•	cross currency basis curves			•	equity volatility (1)
			•	currency volatility (1)
Level 3	•	swap yield curves (2)	•	swap yield curves (2)	•	swap yield curves (2)	•	dividend yield curves (2)
	•	basis curves (2)	•	basis curves (2)	•	credit curves (2)	•	equity volatility (1), (2)
	•	repurchase rates	•	cross currency basis curves (2)	•	credit spreads	•	correlation between model inputs (1)
	•	interest rate volatility (1), (2)	•	currency correlation	•	repurchase rates
			•	currency volatility (1)	•	independent non-binding broker quotations

(1)Option-based only.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

(2)Extrapolation beyond the observable limits of the curve(s).

Embedded Derivatives

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, annuity contracts, guarantees on reinsurance, 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 interim condensed consolidated balance sheets.

The Company calculates the fair value of these embedded derivatives, which is 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 Company ceded the risk associated with certain of the GMIBs previously described. These reinsurance agreements contain embedded derivatives which are included within premiums, reinsurance and other receivables on the interim condensed consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses) or policyholder benefits and claims depending on the statement of operations classification of the direct risk. The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer.

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 guarantees related to reinsurance is determined based on multiple stochastic scenarios and includes a nonperformance risk adjustment. The estimated fair value of these embedded derivatives is included, along with their underlying host contracts, in other liabilities on the interim condensed 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

The Company issues certain annuity contracts which allow the policyholder to participate in returns from equity indices. These equity indexed features are embedded derivatives which are measured at estimated fair value separately from the host fixed 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 interim condensed consolidated balance sheets.

The estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity returns to the policyholder using actuarial and present value assumptions including expectations concerning policyholder behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business and uses standard capital market techniques, such as Black-Scholes, to calculate the value of the portion of the embedded derivative for which the terms are set. The portion of the embedded derivative covering the period beyond where terms are set is calculated as the present value of amounts expected to be spent to provide equity indexed returns in those periods. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.

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 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.

Reinsurance ceded on certain guaranteed minimum benefits

These embedded derivatives are principally valued using the income approach. The valuation techniques and significant market standard unobservable inputs used in their valuation are similar to those described above in “— Direct and assumed guaranteed minimum benefits” and also include counterparty credit spreads.

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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. 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:


					June 30, 2022				December 31, 2021				Impact of Increase in Input on Estimated Fair Value (2)
	Valuation Techniques		Significant Unobservable Inputs		Range			Weighted Average (1)	Range			Weighted Average (1)
Fixed maturity securities AFS (3)
U.S. corporate and foreign corporate	•	Matrix pricing	•	Offered quotes (4)	—	-	132	91	1	-	165	109	Increase
	•	Market pricing	•	Quoted prices (4)	20	-	126	94	—	-	117	100	Increase
	•	Consensus pricing	•	Offered quotes (4)	95	-	101	98	99	-	104	100	Increase
RMBS	•	Market pricing	•	Quoted prices (4)	—	-	117	93	—	-	121	99	Increase (5)
ABS & CLO	•	Market pricing	•	Quoted prices (4)	3	-	104	94	3	-	110	102	Increase (5)

Derivatives
Interest rate	•	Present value techniques	•	Swap yield (6)	299	-	317	310	151	-	200	188	Increase (7)
			•	Volatility (8)	1%	-	1%	1%	1%	-	1%	1%	Increase (7)
Foreign currency exchange rate	•	Present value techniques	•	Swap yield (6)	29	-	1,938	204	2	-	305	134	Increase (7)
Credit	•	Present value techniques	•	Credit spreads (9)	85	-	148	112	96	-	133	109	Decrease (7)
	•	Consensus pricing	•	Offered quotes (10)
Embedded derivatives
Direct, assumed and ceded guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates:
				Ages 0 - 40	0%	-	0.17%	0.08%	0%	-	0.17%	0.08%	Decrease (11)
				Ages 41 - 60	0.03%	-	0.75%	0.27%	0.03%	-	0.75%	0.27%	Decrease (11)
				Ages 61 - 115	0.12%	-	100%	2.07%	0.12%	-	100%	2.08%	Decrease (11)
			•	Lapse rates:
				Durations 1 - 10	0%	-	100%	6.24%	0.25%	-	100%	6.30%	Decrease (12)
				Durations 11 - 20	0.50%	-	100%	5.18%	0.50%	-	100%	5.22%	Decrease (12)
				Durations 21 - 116	0.50%	-	100%	5.18%	0.50%	-	100%	5.22%	Decrease (12)





			•	Utilization rates	0%	-	22%	0.22%	0%	-	22%	0.22%	Increase (13)
			•	Withdrawal rates	0%	-	20%	3.70%	0%	-	20%	3.72%	(14)
			•	Long-term equity volatilities	8.74%	-	25%	18.60%	7.69%	-	25%	18.60%	Increase (15)
			•	Nonperformance risk spread	0.10%	-	1.90%	0.35%	0.04%	-	1.45%	0.35%	Decrease (16)

(1)The weighted average for fixed maturity securities AFS and derivatives is determined based on the estimated fair value of the securities and derivatives. The weighted average for embedded derivatives is determined based on a combination of account values and experience data.

(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; changes to ceded guaranteed minimum benefits are based on asset 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

(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.

(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 the underlying interest rate volatility quoted in percentage points. Since this valuation methodology uses an equivalent of LIBOR for secured overnight financing rate volatility, presenting a range is more representative of the unobservable input used in the valuation.

(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 June 30, 2022 and December 31, 2021, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value.

(11)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.

(12)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.

(13)The utilization rate assumption estimates the percentage of contractholders with GMIBs or a 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.

(14)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.

(15)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.

(16)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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. 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
	Corporate (7)		Foreign Government		Structured Products		Municipals		Equity Securities		Unit-linked and FVO Securities
	(In millions)
Three Months Ended June 30, 2022
Balance, beginning of period	$	24,362	$	248	$	5,930	$	29	$	189	$	868
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	(5)		4		12		—		(2)		(132)
Total realized/unrealized gains (losses) included in AOCI	(2,857)		3		(207)		—		—		—
Purchases (3)	1,643		1		536		—		2		8
Sales (3)	(315)		(2)		(468)		—		(10)		(2)
Issuances (3)	—		—		—		—		—		—
Settlements (3)	—		—		—		—		—		—
Transfers into Level 3 (4)	154		3		129		—		—		—
Transfers out of Level 3 (4)	(400)		(154)		(585)		(29)		—		—
Balance, end of period	$	22,582	$	103	$	5,347	$	—	$	179	$	742
Three Months Ended June 30, 2021
Balance, beginning of period	$	23,419	$	132	$	5,507	$	5	$	154	$	812
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	(8)		—		16		—		6		45
Total realized/unrealized gains (losses) included in AOCI	415		—		19		—		—		—
Purchases (3)	868		46		823		—		3		12
Sales (3)	(286)		(3)		(332)		—		(15)		(16)
Issuances (3)	—		—		—		—		—		—
Settlements (3)	—		—		—		—		—		—
Transfers into Level 3 (4)	48		10		345		—		—		10
Transfers out of Level 3 (4), (5)	(683)		(40)		(375)		(5)		(5)		(14)
Balance, end of period	$	23,773	$	145	$	6,003	$	—	$	143	$	849
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (6)	$	(5)	$	4	$	12	$	—	$	(3)	$	(132)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2021 (6)	$	(8)	$	—	$	15	$	—	$	3	$	44
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2022 (6)	$	(2,851)	$	3	$	(205)	$	—	$	—	$	—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2021 (6)	$	416	$	—	$	19	$	—	$	—	$	—

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Short-term Investments		Residential Mortgage Loans — FVO		Other Investments		Net Derivatives (8)		Net Embedded Derivatives (9)		Separate Accounts (10)
	(In millions)
Three Months Ended June 30, 2022
Balance, beginning of period	$	5	$	119	$	1,047	$	31	$	(578)	$	2,118
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	—		(5)		26		(292)		97		24
Total realized/unrealized gains (losses) included in AOCI	—		—		—		(191)		14		—
Purchases (3)	15		—		61		152		—		36
Sales (3)	(1)		—		(21)		—		—		(949)
Issuances (3)	—		—		—		—		—		(5)
Settlements (3)	—		(5)		—		13		(29)		6
Transfers into Level 3 (4)	100		—		—		—		—		—
Transfers out of Level 3 (4)	—		—		(100)		—		—		—
Balance, end of period	$	119	$	109	$	1,013	$	(287)	$	(496)	$	1,230
Three Months Ended June 30, 2021
Balance, beginning of period	$	102	$	149	$	656	$	(162)	$	(508)	$	1,133
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	—		(1)		12		(49)		(4)		12
Total realized/unrealized gains (losses) included in AOCI	1		—		—		205		1		—
Purchases (3)	35		—		113		4		—		118
Sales (3)	(46)		(2)		—		—		—		(27)
Issuances (3)	—		—		—		(5)		—		1
Settlements (3)	—		(6)		—		—		(63)		3
Transfers into Level 3 (4)	50		—		—		—		—		9
Transfers out of Level 3 (4), (5)	(29)		—		—		64		—		—
Balance, end of period	$	113	$	140	$	781	$	57	$	(574)	$	1,249
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (6)	$	—	$	(5)	$	23	$	(291)	$	97	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2021 (6)	$	—	$	(2)	$	12	$	(69)	$	(3)	$	—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2022 (6)	$	—	$	—	$	—	$	(199)	$	13	$	—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2021 (6)	$	(1)	$	—	$	—	$	200	$	1	$	—

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities AFS
	Corporate (7)		Foreign Government		Structured Products		Municipals		Equity Securities		Unit-linked and FVO Securities
	(In millions)
Six Months Ended June 30, 2022
Balance, beginning of period	$	25,435	$	91	$	5,871	$	—	$	151	$	901
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	(16)		(43)		23		—		11		(169)
Total realized/unrealized gains (losses) included in AOCI	(4,892)		7		(423)		—		—		—
Purchases (3)	2,698		1		732		—		25		15
Sales (3)	(782)		(2)		(668)		—		(6)		(4)
Issuances (3)	—		—		—		—		—		—
Settlements (3)	—		—		—		—		—		—
Transfers into Level 3 (4)	463		49		190		—		—		13
Transfers out of Level 3 (4)	(324)		—		(378)		—		(2)		(14)
Balance, end of period	$	22,582	$	103	$	5,347	$	—	$	179	$	742
Six Months Ended June 30, 2021
Balance, beginning of period	$	24,101	$	117	$	5,289	$	—	$	150	$	701
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	(5)		1		24		—		10		62
Total realized/unrealized gains (losses) included in AOCI	(776)		(1)		(28)		—		—		—
Purchases (3)	1,722		46		1,380		—		3		21
Sales (3)	(507)		(5)		(685)		—		(16)		(15)
Issuances (3)	—		—		—		—		—		—
Settlements (3)	—		—		—		—		—		—
Transfers into Level 3 (4)	101		13		270		—		—		95
Transfers out of Level 3 (4)	(863)		(26)		(247)		—		(4)		(15)
Balance, end of period	$	23,773	$	145	$	6,003	$	—	$	143	$	849
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (6)	$	(16)	$	(43)	$	23	$	—	$	9	$	(168)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2021 (6)	$	(8)	$	1	$	22	$	—	$	5	$	61
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2022 (6)	$	(4,885)	$	6	$	(416)	$	—	$	—	$	—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2021 (6)	$	(767)	$	(1)	$	(26)	$	—	$	—	$	—

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Short-term Investments		Residential Mortgage Loans — FVO		Other Investments		Net Derivatives (8)		Net Embedded Derivatives (9)		Separate Accounts (10)
	(In millions)
Six Months Ended June 30, 2022
Balance, beginning of period	$	3	$	127	$	898	$	(152)	$	(611)	$	2,131
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	(1)		(9)		72		17		139		43
Total realized/unrealized gains (losses) included in AOCI	—		—		—		(410)		23		—
Purchases (3)	119		—		187		240		—		107
Sales (3)	(2)		—		(44)		—		—		(1,047)
Issuances (3)	—		—		—		(2)		—		(5)
Settlements (3)	—		(9)		—		20		(47)		4
Transfers into Level 3 (4)	—		—		—		—		—		1
Transfers out of Level 3 (4)	—		—		(100)		—		—		(4)
Balance, end of period	$	119	$	109	$	1,013	$	(287)	$	(496)	$	1,230
Six Months Ended June 30, 2021
Balance, beginning of period	$	43	$	165	$	573	$	594	$	(1,141)	$	1,079
Total realized/unrealized gains (losses) included in net income (loss) (1), (2)	—		(3)		25		(217)		669		2
Total realized/unrealized gains (losses) included in AOCI	(1)		—		—		(412)		22		—
Purchases (3)	84		—		183		4		—		188
Sales (3)	(10)		(11)		—		—		—		(32)
Issuances (3)	—		—		—		(6)		—		—
Settlements (3)	—		(11)		—		94		(124)		5
Transfers into Level 3 (4)	—		—		—		1		—		10
Transfers out of Level 3 (4)	(3)		—		—		(1)		—		(3)
Balance, end of period	$	113	$	140	$	781	$	57	$	(574)	$	1,249
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2022 (6)	$	—	$	(9)	$	69	$	(15)	$	139	$	—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2021 (6)	$	—	$	(7)	$	26	$	(132)	$	668	$	—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2022 (6)	$	—	$	—	$	—	$	(390)	$	22	$	—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at June 30, 2021 (6)	$	(1)	$	—	$	—	$	(274)	$	22	$	—

(1)Amortization of premium/accretion of discount is included within net investment income. Impairments and changes in ACL charged to net income (loss) on certain securities are included in net investment gains (losses), while changes in estimated fair value of Unit-linked and FVO Securities and 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).

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

(3)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.

(4)Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

(5)Transfers out of Level 3 for the three months ended June 30, 2021 included $28 million of short-term investments reclassified to assets held-for-sale.

(6)Changes in unrealized gains (losses) included in net income (loss) and included in AOCI 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)Comprised of U.S. and foreign corporate securities.

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

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

(10)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 income (loss). 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.


	June 30, 2022		December 31, 2021
	(In millions)
Unpaid principal balance	$	115	$	130
Difference between estimated fair value and unpaid principal balance	(6)		(3)
Carrying value at estimated fair value	$	109	$	127
Loans in nonaccrual status	$	24	$	32
Loans more than 90 days past due	$	10	$	14
Loans in nonaccrual status or more than 90 days past due, or both — difference between aggregate estimated fair value and unpaid principal balance	$	(2)	$	(7)

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)

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 Company believes that due to the short-term nature of these excluded assets, which are primarily classified in Level 2, the estimated fair value approximates carrying value. 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:


	June 30, 2022
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans (2)	$	81,946	$	—	$	—	$	79,974	$	79,974
Policy loans	$	8,876	$	—	$	—	$	9,965	$	9,965

Other invested assets	$	1,010	$	—	$	802	$	208	$	1,010
Premiums, reinsurance and other receivables	$	2,664	$	—	$	950	$	1,802	$	2,752
Other assets	$	450	$	—	$	296	$	170	$	466
Liabilities
Policyholder account balances	$	124,081	$	—	$	—	$	119,988	$	119,988
Long-term debt	$	13,609	$	—	$	13,850	$	—	$	13,850
Collateral financing arrangement	$	741	$	—	$	—	$	602	$	602
Junior subordinated debt securities	$	3,157	$	—	$	3,555	$	—	$	3,555
Other liabilities	$	2,622	$	—	$	1,072	$	1,919	$	2,991
Separate account liabilities	$	79,050	$	—	$	79,050	$	—	$	79,050

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

8. Fair Value (continued)


	December 31, 2021 (1)
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans (2)	$	79,226	$	—	$	—	$	82,788	$	82,788
Policy loans	$	9,111	$	—	$	—	$	10,751	$	10,751

Other invested assets	$	1,025	$	—	$	769	$	256	$	1,025
Premiums, reinsurance and other receivables	$	2,262	$	—	$	492	$	1,962	$	2,454
Other assets	$	290	$	—	$	101	$	190	$	291
Liabilities
Policyholder account balances	$	123,865	$	—	$	—	$	127,728	$	127,728
Long-term debt	$	13,852	$	—	$	16,621	$	—	$	16,621
Collateral financing arrangement	$	766	$	—	$	—	$	630	$	630
Junior subordinated debt securities	$	3,156	$	—	$	4,447	$	—	$	4,447
Other liabilities	$	2,143	$	—	$	514	$	2,321	$	2,835
Separate account liabilities	$	95,619	$	—	$	95,619	$	—	$	95,619

(1)Excludes amounts reclassified to assets held-for-sale or liabilities held-for-sale. See Note 3 for information on the Company’s business dispositions.

(2)Includes mortgage loans measured at estimated fair value on a nonrecurring basis and excludes mortgage loans measured at estimated fair value on a recurring basis.

9. Equity

Preferred Stock

Preferred stock authorized, issued and outstanding was as follows at both June 30, 2022 and December 31, 2021:


Series	Shares Authorized	Shares Issued and Outstanding
Floating Rate Non-Cumulative Preferred Stock, Series A	27,600,000	24,000,000
5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D	500,000	500,000
5.625% Non-Cumulative Preferred Stock, Series E	32,200	32,200
4.75% Non-Cumulative Preferred Stock, Series F	40,000	40,000
3.85% Fixed Rate Reset Non-Cumulative Preferred Stock, Series G	1,000,000	1,000,000
Series A Junior Participating Preferred Stock	10,000,000	—
Not designated	160,827,800	—
Total	200,000,000	25,572,200

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

9. Equity (continued)

The per share and aggregate dividends declared for MetLife, Inc.’s preferred stock were as follows:


	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
Series	Per Share		Aggregate		Per Share		Aggregate		Per Share		Aggregate		Per Share		Aggregate
	(In millions, except per share data)
A	$	0.256	$	6	$	0.256	$	6	$	0.506	$	12	$	0.506	$	12
C (1)	$	—	—		$	9.606	5		$	—	—		$	19.085	10
D	$	—	—		$	—	—		$	29.375	15		$	29.375	15
E	$	351.563	11		$	351.563	12		$	703.126	22		$	703.126	23
F	$	296.875	12		$	296.875	12		$	593.750	24		$	593.750	24
G	$	—	—		$	—	—		$	19.250	19		$	19.785	19
Total			$	29			$	35			$	92			$	103

(1)Dividends were paid through the dividend payment date of June 15, 2021, when all outstanding shares of MetLife, Inc.’s 5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C were redeemed and eliminated. See Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Common Stock

MetLife, Inc. announced that its Board of Directors authorized common stock repurchases as follows:


			Authorization Remaining at
Announcement Date	Authorization Amount		June 30, 2022
	(In millions)
May 4, 2022	$	3,000	$	2,475
August 4, 2021	$	3,000	$	—
December 11, 2020	$	3,000	$	—

Under these authorizations, MetLife, Inc. may purchase its common stock from the MetLife Policyholder Trust, in the open market (including pursuant to the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934), and in privately negotiated transactions. Common stock repurchases are subject to the discretion of MetLife, Inc.’s Board of Directors and will depend upon the Company’s capital position, liquidity, financial strength and credit ratings, general market conditions, the market price of MetLife, Inc.’s common stock compared to management’s assessment of the stock’s underlying value, applicable regulatory approvals, and other legal and accounting factors.

For the six months ended June 30, 2022 and 2021, MetLife, Inc. repurchased 30,939,541 shares and 36,170,428 shares of its common stock, respectively, through open market purchases for $2.0 billion and $2.1 billion, respectively.

Stock-Based Compensation Plans

Performance Shares and Performance Units

Final Performance Shares are paid in shares of MetLife, Inc. common stock. Final Performance Units are payable in cash equal to the closing price of MetLife, Inc. common stock on a date following the last day of the three-year performance period. The performance factor for the January 1, 2019 – December 31, 2021 performance period was 141.3%, which was determined within a possible range from 0% to 175%. This factor has been applied to the 1,485,512 Performance Shares and 156,090 Performance Units associated with that performance period that vested on December 31, 2021. As a result, in the first quarter of 2022, MetLife, Inc. issued 2,099,028 shares of its common stock (less withholding for taxes and other items, as applicable), excluding shares that payees choose to defer, and MetLife, Inc. or its affiliates paid the cash value of 220,555 Performance Units (less withholding for taxes and other items, as applicable).

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

9. Equity (continued)

Dividend Restrictions

Insurance Operations

For the six months ended June 30, 2022, American Life Insurance Company paid a dividend of $620 million to MetLife, Inc., for which regulatory approval was obtained as required.

See Note 16 of the Notes to Consolidated Financial Statements included in the 2021 Annual Report for additional information on dividend restrictions.

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI attributable to MetLife, Inc. was as follows:


	Three Months Ended June 30, 2022
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Foreign Currency Translation Adjustments		Defined Benefit Plans Adjustment		Total
	(In millions)
Balance, beginning of period	$	3,718	$	1,464	$	(5,517)	$	(1,577)	$	(1,912)
OCI before reclassifications	(20,082)		(154)		(1,126)		3		(21,359)
Deferred income tax benefit (expense)	4,512		40		(66)		—		4,486
AOCI before reclassifications, net of income tax	(11,852)		1,350		(6,709)		(1,574)		(18,785)
Amounts reclassified from AOCI	682		629		—		23		1,334
Deferred income tax benefit (expense)	(155)		(132)		—		(4)		(291)
Amounts reclassified from AOCI, net of income tax	527		497		—		19		1,043



Sale of subsidiary, net of income tax (2)	21		—		349		—		370
Balance, end of period	$	(11,304)	$	1,847	$	(6,360)	$	(1,555)	$	(17,372)

	Three Months Ended June 30, 2021
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Foreign Currency Translation Adjustments		Defined Benefit Plans Adjustment		Total
	(In millions)
Balance, beginning of period	$	16,194	$	518	$	(4,467)	$	(1,848)	$	10,397
OCI before reclassifications	2,099		828		6		1		2,934
Deferred income tax benefit (expense)	(570)		(169)		(2)		(1)		(742)
AOCI before reclassifications, net of income tax	17,723		1,177		(4,463)		(1,848)		12,589
Amounts reclassified from AOCI	(15)		(131)		—		17		(129)
Deferred income tax benefit (expense)	3		27		—		(5)		25
Amounts reclassified from AOCI, net of income tax	(12)		(104)		—		12		(104)


Sale of subsidiary, net of income tax	(176)		—		—		—		(176)
Balance, end of period	$	17,535	$	1,073	$	(4,463)	$	(1,836)	$	12,309

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

9. Equity (continued)


	Six Months Ended June 30, 2022
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Foreign Currency Translation Adjustments		Defined Benefit Plans Adjustment		Total
	(In millions)
Balance, beginning of period	$	16,042	$	1,629	$	(5,154)	$	(1,598)	$	10,919
OCI before reclassifications	(36,455)		(466)		(1,508)		6		(38,423)
Deferred income tax benefit (expense)	8,345		95		(85)		(1)		8,354
AOCI before reclassifications, net of income tax	(12,068)		1,258		(6,747)		(1,593)		(19,150)
Amounts reclassified from AOCI	1,003		741		—		47		1,791
Deferred income tax benefit (expense)	(230)		(152)		—		(7)		(389)
Amounts reclassified from AOCI, net of income tax	773		589		—		40		1,402
Sale of subsidiaries, net of income tax (2)	(9)		—		387		(2)		376
Balance, end of period	$	(11,304)	$	1,847	$	(6,360)	$	(1,555)	$	(17,372)

	Six Months Ended June 30, 2021
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)		Unrealized Gains (Losses) on Derivatives		Foreign Currency Translation Adjustments		Defined Benefit Plans Adjustment		Total
	(In millions)
Balance, beginning of period	$	22,217	$	1,513	$	(3,795)	$	(1,863)	$	18,072
OCI before reclassifications	(5,879)		(614)		(747)		4		(7,236)
Deferred income tax benefit (expense)	1,376		141		(36)		(1)		1,480
AOCI before reclassifications, net of income tax	17,714		1,040		(4,578)		(1,860)		12,316
Amounts reclassified from AOCI	15		43		—		31		89
Deferred income tax benefit (expense)	(4)		(10)		—		(7)		(21)
Amounts reclassified from AOCI, net of income tax	11		33		—		24		68
Sale of subsidiaries, net of income tax	(190)		—		115		—		(75)
Balance, end of period	$	17,535	$	1,073	$	(4,463)	$	(1,836)	$	12,309

(1)See Note 6 for information on offsets to investments related to policyholder liabilities, DAC, VOBA and DSI**.**

(2)See Note 3 for information on the Company’s business dispositions**.**

Table of Contents

MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

9. Equity (continued)

Information regarding amounts reclassified out of each component of AOCI was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
AOCI Components	Amounts Reclassified from AOCI								Consolidated Statements of Operations and Comprehensive Income (Loss) Locations
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	(772)	$	(6)	$	(1,122)	$	(55)	Net investment gains (losses)
Net unrealized investment gains (losses)	2		(4)		4		(9)		Net investment income
Net unrealized investment gains (losses)	88		25		115		49		Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	(682)		15		(1,003)		(15)
Income tax (expense) benefit	155		(3)		230		4
Net unrealized investment gains (losses), net of income tax	(527)		12		(773)		(11)
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate derivatives	16		15		31		27		Net investment income
Interest rate derivatives	42		19		60		48		Net investment gains (losses)
Interest rate derivatives	1		—		2		1		Other expenses
Foreign currency exchange rate derivatives	1		1		3		4		Net investment income
Foreign currency exchange rate derivatives	(690)		95		(838)		(124)		Net investment gains (losses)
Foreign currency exchange rate derivatives	1		1		1		1		Other expenses

Gains (losses) on cash flow hedges, before income tax	(629)		131		(741)		(43)
Income tax (expense) benefit	132		(27)		152		10
Gains (losses) on cash flow hedges, net of income tax	(497)		104		(589)		(33)
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)	(26)		(35)		(53)		(53)
Amortization of prior service (costs) credit	3		18		6		22
Amortization of defined benefit plan items, before income tax	(23)		(17)		(47)		(31)
Income tax (expense) benefit	4		5		7		7
Amortization of defined benefit plan items, net of income tax	(19)		(12)		(40)		(24)
Total reclassifications, net of income tax	$	(1,043)	$	104	$	(1,402)	$	(68)

(1)These AOCI components are included in the computation of net periodic benefit costs. See Note 11.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

10. Other Revenues and Other Expenses

Other Revenues

Information on other revenues, which primarily includes fees related to service contracts from customers, was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Vision fee for service arrangements	$	138	$	135	$	292	$	275
Prepaid legal plans	118		108		238		217
Fee-based investment management	100		86		202		171
Recordkeeping and administrative services (1)	43		53		90		106
Administrative services-only contracts	59		58		118		119
Other revenue from service contracts from customers	67		74		135		141
Total revenues from service contracts from customers	525		514		1,075		1,029
Other	91		150		201		266
Total other revenues	$	616	$	664	$	1,276	$	1,295

(1)Related to products and businesses no longer actively marketed by the Company.

Receivables related to revenues from service contracts from customers were $236 million and $235 million at June 30, 2022 and December 31, 2021, respectively.

Other Expenses

Information on other expenses was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Employee-related costs (1)	$	868	$	808	$	1,772	$	1,782
Third party staffing costs	375		336		758		648
General and administrative expenses	169		135		290		243
Pension, postretirement and postemployment benefit costs	24		26		49		51
Premium taxes, other taxes, and licenses & fees	137		169		290		336
Commissions and other variable expenses	1,300		1,294		2,631		2,824
Capitalization of DAC	(622)		(642)		(1,272)		(1,417)
Amortization of DAC and VOBA	616		537		1,153		1,127
Amortization of negative VOBA	(10)		(10)		(19)		(19)
Interest expense on debt	226		228		451		456
Total other expenses	$	3,083	$	2,881	$	6,103	$	6,031

(1)Includes $78 million and $115 million for the three months and six months ended June 30, 2022, respectively, and ($58) million and ($74) million for the three months and six months ended June 30, 2021, respectively, for the net change in cash surrender value of investments in certain life insurance policies, net of premiums paid.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

11. Employee Benefit Plans

Pension and Other Postretirement Benefit Plans

Certain subsidiaries of MetLife, Inc. sponsor a U.S. qualified and various U.S. and non-U.S. nonqualified defined benefit pension plans covering employees who meet specified eligibility requirements. These subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance benefits for U.S. and non-U.S. retired employees.

The components of net periodic benefit costs, reported in other expenses, were as follows:


	Three Months Ended June 30,
	2022				2021
	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
	(In millions)
Service costs	$	50	$	1	$	56	$	1
Interest costs	82		9		83		10
Curtailment (gains) losses	—		—		(17)		—
Expected return on plan assets	(129)		(15)		(125)		(14)
Amortization of net actuarial (gains) losses	30		(6)		39		(7)
Amortization of prior service costs (credit)	(3)		—		(1)		—
Net periodic benefit costs (credit)	$	30	$	(11)	$	35	$	(10)

	Six Months Ended June 30,
	2022				2021
	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
	(In millions)
Service costs	$	102	$	2	$	119	$	2
Interest costs	163		17		161		18
Curtailment (gains) losses	—		—		(17)		—
Expected return on plan assets	(258)		(28)		(257)		(28)
Amortization of net actuarial (gains) losses	61		(12)		77		(27)
Amortization of prior service costs (credit)	(6)		—		(5)		—
Net periodic benefit costs (credit)	$	62	$	(21)	$	78	$	(35)

12. Income Tax

The Company’s effective tax rate for the three months ended June 30, 2022, reflecting an income tax benefit, increased from the U.S. statutory rate primarily due to tax benefits from foreign earnings taxed at different rates than the U.S. statutory rate, tax credits and non-taxable investment income. The Company’s effective tax rate for the six months ended June 30, 2022 was (14%), reflecting an income tax benefit despite having income before provision for income tax and, differed from the U.S. statutory rate primarily due to tax benefits from foreign earnings taxed at different rates than the U.S. statutory rate, tax credits, the corporate tax deduction for stock compensation and non-taxable investment income.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

12. Income Tax (continued)

For the three months and six months ended June 30, 2021, the effective tax rate on income (loss) before provision for income tax was 24% and 21%, respectively. The Company’s effective tax rate for the three months ended June 30, 2021 differed from the U.S. statutory rate primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, the completed sale of MetLife P&C and the pending disposition of MetLife Poland and Greece, partially offset by tax benefits related to tax credits and non-taxable investment income. The Company’s effective tax rate for the six months ended June 30, 2021 was equal to the statutory rate of 21%, primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, the completed sale of MetLife P&C and the pending disposition of MetLife Poland and Greece, offset by tax benefits related to tax credits, non-taxable investment income and the corporate tax deduction for stock compensation.

13. Earnings Per Common Share

The following table presents the weighted average shares, basic earnings per common share and diluted earnings per common share:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions, except per share data)
Weighted Average Shares:
Weighted average common stock outstanding - basic	809.7		873.3		816.7		879.3
Incremental common shares from assumed exercise or issuance of stock-based awards	4.8		6.4		5.8		6.5
Weighted average common stock outstanding - diluted	814.5		879.7		822.5		885.8
Net Income (Loss):
Net income (loss)	$	138	$	3,412	$	812	$	3,775
Less: Net income (loss) attributable to noncontrolling interests	6		5		11		10
Less: Preferred stock dividends	29		35		92		103
Preferred stock redemption premium	—		6		—		6
Net income (loss) available to MetLife, Inc.’s common shareholders	$	103	$	3,366	$	709	$	3,656
Basic	$	0.13	$	3.85	$	0.87	$	4.16
Diluted	$	0.13	$	3.83	$	0.86	$	4.13

14. 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 interim condensed 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.

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 U.S. Securities and Exchange Commission; 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

14. Contingencies, Commitments and Guarantees (continued)

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. In certain circumstances where liabilities have been established there may be coverage under one or more corporate insurance policies, pursuant to which there may be an insurance recovery. Insurance recoveries are recognized as gains when any contingencies relating to the insurance claim have been resolved, which is the earlier of when the gains are realized or realizable. 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 June 30, 2022. 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 June 30, 2022, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued for these matters to be $0 to $100 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

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

MLIC’s defenses include that: (i) MLIC owed no duty to the plaintiffs; (ii) plaintiffs did not rely on any actions of MLIC; (iii) MLIC’s conduct was not the cause of the plaintiffs’ injuries; and (iv) plaintiffs’ exposure occurred after the dangers of asbestos were known. During the course of the litigation, certain trial courts have granted motions dismissing claims against MLIC, while other trial courts have denied MLIC’s motions. There can be no assurance that MLIC will receive favorable decisions on motions in the future. While most cases brought to date have settled, MLIC intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

14. Contingencies, Commitments and Guarantees (continued)

As reported in the 2021 Annual Report, MLIC received approximately 2,824 asbestos-related claims in 2021. For the six months ended June 30, 2022 and 2021, MLIC received approximately 1,319 and 1,304 new asbestos-related claims, respectively. See Note 21 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for historical information concerning asbestos claims and MLIC’s update in its recorded liability at December 31, 2021. The number of asbestos cases that may be brought, the aggregate amount of any liability that MLIC 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 MLIC to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict 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 willingness of courts to allow plaintiffs to pursue claims against MLIC when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse verdicts and their amounts.

The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company’s judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company’s total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary, but 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 interim condensed consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. MLIC’s recorded asbestos liability covers pending claims, claims not yet asserted, and legal defense costs and is based on estimates and includes significant assumptions underlying its analysis.

MLIC reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. Based upon its regular reevaluation of its exposure from asbestos litigation, MLIC has updated its liability analysis for asbestos-related claims through June 30, 2022.

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 (“FLSA”), the New York Labor Law, and the Connecticut Minimum Wage Act. The suit alleges that MLIC 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 June 29, 2022, the United States District Court for the Southern District of New York entered an offer of judgment disposing of the FLSA claims in exchange for a $3,000 payment to plaintiffs by MLIC. The parties entered into an agreement to settle the remaining state law claims, and on July 15, 2022, the court entered a stipulation of dismissal with prejudice disposing of those claims. MLIC has accrued the full amount of the settlement payments in prior periods.

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., MLIC, 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. The Appellate Division of the New York State Supreme Court, First Department, reversed the court’s order granting MetLife, Inc. and MLIC’s motion to dismiss and remanded the case to the trial court where the Relator has filed an amended complaint. The Company intends to defend the action vigorously.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

14. Contingencies, Commitments and Guarantees (continued)

Matters Related to Group Annuity Benefits and Assumed Variable Annuity Guarantee Reserves

In 2018, the Company announced that it identified two material weaknesses in its internal control over financial reporting related to the practices and procedures for estimating reserves for certain group annuity benefits and the calculation of reserves associated with certain variable annuity guarantees assumed from the former operating joint venture in Japan. Several regulators have made inquiries into these issues and it is possible that other jurisdictions may pursue similar investigations or inquiries. The Company is exposed to lawsuits, and could be exposed to additional legal actions relating to these issues. 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, Employee Retirement Income Security Act of 1974, or other laws or regulations. The Company could incur significant costs in connection with these actions.

Derivative Demands

The MetLife, Inc. Board of Directors received six letters, dated March 28, 2018, May 11, 2018, July 16, 2018, December 20, 2018, February 5, 2019, and April 7, 2020, written on behalf of individual stockholders, demanding that MetLife, Inc. take action against current and former directors and officers for alleged breaches of fiduciary duty and/or investigate, remediate, and recover damages allegedly suffered by the Company as a result of (i) the Company’s allegedly inadequate practices and procedures for estimating reserves for certain group annuity benefits, (ii) the Company’s allegedly inadequate internal controls over financial reporting and corporate governance practices and procedures, and (iii) the alleged dissemination of false or misleading information related to these issues. The MetLife, Inc. Board of Directors appointed a special committee to investigate the allegations set forth in these six letters.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $4.7 billion and $4.6 billion at June 30, 2022 and December 31, 2021, 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 $9.8 billion and $9.1 billion at June 30, 2022 and December 31, 2021, respectively.

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 $329 million, with a cumulative maximum of $629 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.

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MetLife, Inc.

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

14. Contingencies, Commitments and Guarantees (continued)

The Company also has minimum fund yield requirements on certain pension funds. Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future.

The Company’s recorded liabilities were $20 million at both June 30, 2022 and December 31, 2021, for indemnities, guarantees and commitments.

15. Subsequent Events

Senior Notes

In July 2022, MetLife, Inc. issued $1.0 billion of senior notes due July 2052 which bear interest at a fixed rate of 5.00%, payable semi-annually. In connection with the issuance, MetLife, Inc. incurred $11 million of related costs which will be amortized over the term of the senior notes.

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