Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Index to Management’s Discussion and Analysis of Financial Condition and Results of Operations


			Page
Forward-Looking Statements and Other Financial Information			83
Executive Summary			83
Industry Trends			86
Summary of Critical Accounting Estimates			89
Acquisitions and Dispositions			89
Results of Operations			91
Investments			114
Derivatives			127
Policyholder Liabilities			130
Liquidity and Capital Resources			137
Adopted Accounting Pronouncements			146
Future Adoption of Accounting Pronouncements			146
Non-GAAP and Other Financial Disclosures			146
Risk Management			148
Subsequent Events			148

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Forward-Looking Statements and Other Financial Information

For purposes of this discussion, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. This discussion should be read in conjunction with MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”), the cautionary language regarding forward-looking statements included below, the “Risk Factors” set forth in Part II, Item 1A, and the additional risk factors referred to therein, “Quantitative and Qualitative Disclosures About Market Risk” and the Company’s interim condensed consolidated financial statements included elsewhere herein.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Note Regarding Forward-Looking Statements” for cautionary language regarding forward-looking statements.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes references to our performance measures, adjusted earnings and adjusted earnings available to common shareholders, that are not based on accounting principles generally accepted in the United States of America (“GAAP”). See “— Non-GAAP and Other Financial Disclosures” for definitions and a discussion of these and other financial measures, and “— Results of Operations” and “— Investments” for reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP measures.

Executive Summary

Overview

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. In addition, the Company reports certain of its results of operations in Corporate & Other. See Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for further information on the Company’s segments and Corporate & Other.

COVID-19 Pandemic

We continue to closely monitor developments relating to the COVID-19 pandemic and assess its impact on our business. The COVID-19 pandemic continues to impact the global economy and financial markets and has caused volatility in the global equity, credit and real estate markets. See “— Industry Trends — Financial and Economic Environment.” We have implemented risk management and business continuity plans and taken preventive measures and other precautions, such as employee business travel restrictions and remote work arrangements which, to date, have enabled us to maintain our critical business processes, customer service levels, relationships with key vendors, financial reporting systems, internal control over financial reporting and disclosure controls and procedures.

See “— Results of Operations — Segment Results and Corporate & Other” for further information regarding the effect of the COVID-19 pandemic on our businesses.

Current Period Highlights

During the three months ended June 30, 2022, adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased compared to the prior period driven by growth in our U.S. segment, primarily in our Retirement and Income Solutions (“RIS”) business. Equity market returns had a less favorable impact on our private equity funds and hedge funds compared to the prior period and resulted in lower investment yields, however, positive net flows drove an increase in our investment portfolio. Changes in long-term interest rates drove an unfavorable change in net derivative gains (losses). Current period results include net investment losses versus gains in the prior period, which included the gain on the sale of Metropolitan Property and Casualty Insurance Company and certain of its wholly-owned subsidiaries (collectively, “MetLife P&C”). Underwriting experience was favorable and reflected a decline in COVID-19 related claims. In addition, the current period includes the favorable impact from a reinsurance settlement and the prior period included the release of a legal reserve.

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The following represents segment level results and percentage contributions to total segment level adjusted earnings available to common shareholders for the three months ended June 30, 2022:

(1)Excludes Corporate & Other adjusted loss available to common shareholders of $243 million.

(2)Consistent with GAAP guidance for segment reporting, adjusted earnings is our GAAP measure of segment performance. For additional information, see Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements.

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Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021


		Consolidated Results - Highlights
Net income (loss) available to MetLife, Inc.’s common shareholders down $3.3 billion:

•	Unfavorable change in net investment gains (losses) of $2.3 billion ($1.8 billion, net of income tax)

•	Unfavorable change in net derivative gains (losses) of $1.6 billion ($1.3 billion, net of income tax)(2)

•	Adjusted earnings available to common shareholders down $463 million


(1) See “— Results of Operations — Consolidated Results” and “— Non-GAAP and Other Financial Disclosures” for reconciliations and definitions of non-GAAP financial measures.
(2) Includes amounts relating to investment hedge adjustments, which are also included in adjusted earnings available to common shareholders. See “— Investments — Investment Portfolio Results” for additional information.
Consolidated Results - Adjusted Earnings Highlights
Adjusted earnings available to common shareholders was down $463 million primarily due to lower investment yields as a result of the unfavorable impact of lower equity market returns on our private equity funds and hedge funds and higher expenses, partially offset by higher net investment income due to a larger average invested asset base and favorable underwriting, primarily driven by a decline in COVID-19 related claims. In addition, the current period includes the favorable impact from a reinsurance settlement and the prior period included the release of a legal reserve.
For a more in-depth discussion of our consolidated results, see “— Results of Operations — Consolidated Results,” “— Results of Operations — Consolidated Results - Adjusted Earnings” and “— Results of Operations — Segment Results and Corporate & Other.”

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Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021


		Consolidated Results - Highlights
Net income (loss) available to MetLife, Inc.’s common shareholders down $2.9 billion:

•	Unfavorable change in net investment gains (losses) of $2.9 billion ($2.3 billion, net of income tax)

•	Unfavorable change in net derivative gains (losses) of $240 million ($190 million, net of income tax)(2)

•	Adjusted earnings available to common shareholders down $701 million


(1) See “— Results of Operations — Consolidated Results” and “— Non-GAAP and Other Financial Disclosures” for reconciliations and definitions of non-GAAP financial measures.
(2) Includes amounts relating to investment hedge adjustments, which are also included in adjusted earnings available to common shareholders. See “— Investments — Investment Portfolio Results” for additional information.
Consolidated Results - Adjusted Earnings Highlights
Adjusted earnings available to common shareholders was down $701 million primarily due to lower investment yields as a result of the unfavorable impact of lower equity market returns on our private equity funds and hedge funds and higher expenses, partially offset by higher net investment income due to a larger average invested asset base and favorable underwriting, primarily driven by a decline in COVID-19 related claims. In addition, the current period includes the favorable impact from a reinsurance settlement and the prior period included the release of a legal reserve.
For a more in-depth discussion of our consolidated results, see “— Results of Operations — Consolidated Results,” “— Results of Operations — Consolidated Results - Adjusted Earnings” and “— Results of Operations — Segment Results and Corporate & Other.”

Industry Trends

We continue to be impacted by the changing global financial and economic environment that has been affecting the industry.

Financial and Economic Environment

We are closely monitoring political and economic conditions that might contribute to global market volatility and impact our business operations, investment portfolio and derivatives, such as global inflation, supply chain disruptions, the Russia-Ukraine conflict and the COVID-19 pandemic. See “— Impact of Market Interest Rates — Effects of Inflation,” and “— Investments — Current Environment.” We are also monitoring the imposition of tariffs, sanctions or other barriers to international trade, changes to international trade agreements, and their potential impacts on our business, results of operations and financial condition.

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Governments and central banks around the world responded to the COVID-19 pandemic with unprecedented fiscal and monetary policies, but many of these stimulus programs have concluded due to global economic recovery and rising inflation. In the United States, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) ended its asset purchase program in March 2022 and began to reduce its holdings on June 1, 2022. The Federal Open Market Committee has raised interest rates four times in 2022; further increases in the target range for the federal funds rate are expected throughout 2022 to combat inflation. This has caused the gap between the two-year U.S. Treasury and the 10-year U.S. Treasury yield to flatten and has contributed to a heightened level of concern about an economic downturn in the United States. The European Central Bank (“ECB”) ended its pandemic asset purchase program in March 2022 and its quantitative easing program in July 2022. The ECB raised its policy interest rates in July 2022 and is expected to continue to do so throughout 2022 to combat inflation. It also announced a new program, the Transmission Protection Instrument, which aims to prevent financial fragmentation by helping more indebted periphery euro area member states, which could otherwise face a widening of government bond yield spreads, over core members like Germany, as the ECB tightens policy. The Bank of England ended its quantitative easing program in 2021 and has been raising interest rates since December 2021 to combat inflation, with further increases expected throughout 2022. Russia’s invasion of Ukraine and sanctions imposed in response represent an inflationary shock for Europe and globally, driving commodity prices up and contributing to broader inflationary pressure. Europe is particularly vulnerable given its proximity to the conflict and reliance on Russia as a primary source of its energy imports. Higher global food and energy prices in the wake of the conflict present additional challenges to the economic performance of net importers of these items, particularly for certain emerging market economies in Eastern Europe and the Middle East.

In Japan, the Bank of Japan (“BoJ”) has kept its monetary policy settings on hold. The BoJ has downgraded its economic assessment of the Japanese economy, noting downside risks from higher oil and commodity prices stemming from the Russia-Ukraine conflict. The BoJ has also strengthened its phrasing around the outlook for inflation given the expected pass-through of higher energy and commodity prices. The BoJ’s more cautious view on domestic and external growth, coupled with still below target CPI inflation, suggests that monetary policy will remain on hold for the time being. The Japanese yen has weakened to its lowest level against the U.S. dollar since 2015 as monetary policy divergence has widened between the BoJ and the Federal Reserve leading to growing concerns about Japan’s economy.

Impact of Market Interest Rates

Market interest rates are a key driver of our results. Increases and decreases in such rates, as well as extended periods of stagnation, may impact our business and investments in various ways. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of Market Interest Rates” and “Risk Factors — Economic Environment and Capital Markets Risks” included in the 2021 Annual Report.

Effects of Inflation

Management believes that while inflation has not had a material effect on the Company’s consolidated results of operations, except insofar as inflation may affect interest rates, both rising interest rates and inflation will have a neutral to modest impact on our business. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of Market Interest Rates — Impact of a Rising Interest Rate Environment,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of Market Interest Rates — Interest Rate Scenarios” included in the 2021 Annual Report.

An increase in inflation could affect our business in several ways. In our group life and disability businesses, premiums increase as compensation levels of our customers’ employees increase. However, during inflationary periods with rising interest rates, the value of fixed income investments falls which could increase realized and unrealized losses, resulting in additional deferred tax assets that may not be realizable. Inflation also increases expenses for labor and other costs, potentially putting pressure on profitability if such costs cannot be passed through in our product prices. Prolonged and elevated inflation could adversely affect the financial markets and the economy generally, and dispelling it may require governments to pursue a restrictive fiscal and monetary policy, which could constrain overall economic activity, inhibit revenue growth and reduce the number of attractive investment opportunities.

Competitive Pressures

See “Business — Competition” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Competitive Pressures” in the 2021 Annual Report for information on our competitive position.

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Regulatory Developments

The following discussion on regulatory developments should be read in conjunction with “Business — Regulation” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Regulatory Developments” included in the 2021 Annual Report, as amended or supplemented here.

Environmental Laws and Regulations

In furtherance of President Biden’s Executive Order on Climate-Related Financial Risk, dated May 20, 2021, the Federal Insurance Office (“FIO”) sought public comment on climate-related financial risks in the insurance industry through November 2021. The FIO’s request for information noted that it will work on assessing how the insurance sector may mitigate climate change impacts and help achieve national climate-related goals. The FIO intends to publish a report by year-end that addresses climate-related issues in the regulation of insurers and climate related disclosures by insurers.

On March 21, 2022, the U.S. Securities and Exchange Commission (the “SEC”) proposed rules requiring registrants to provide additional climate-related information in their registration statements and annual reports, including in their financial statements. The proposal sets forth proposed rules for disclosure of climate-related risks, material impacts, governance, risk management, financial statement metrics, greenhouse gas emissions, attestation of emissions disclosures, and targets and goals.

On May 25, 2022, the SEC proposed rules requiring registered investment companies, business development companies, and registered and certain unregistered investment advisers to disclose in their fund prospectuses, annual reports and Form ADV information about how funds and advisers incorporate environmental, social and governance factors into their investment strategies.

Cross-Border Trade and Investments

In April 2022, we received authorization from the Central Bank of Ireland for a new entity, MetLife Investment Management Europe, under the Undertakings for the Collective Investment in Transferable Securities Directive and the Alternative Investment Fund Managers Directive with the Markets in Financial Instruments Directive top-up permissions, which allows us to continue our investment management business in the European Union (“EU”).

The U.S., the EU and the United Kingdom (“U.K.”), maintain and enforce a variety of economic sanctions against designated countries and their nationals around the world, which can result in disruptions in cross-border activity. In particular, U.S., EU and U.K. sanctions on Russia have expanded as a result of the war in Ukraine. These new sanctions, including a series of presidential executive orders and regulations administered by the U.S. Department of Treasury’s Office of Foreign Assets Control, have, inter alia, expanded restrictions on transactions with the Russian Central Bank and other specified Russian government entities, dealing in Russian sovereign debt, engaging in certain debt and equity transactions, and engaging in transactions related to all new investment in the Russian Federation. Trade and investment in China may also be impacted by U.S. sanctions. The Biden administration has previously issued restrictions targeting certain activity involving specified Chinese securities and technology.

London Interbank Offered Rate

In March 2022, federal legislation was enacted to address the transition from U.S. Dollar London Interbank Offered Rate (“LIBOR”) to alternative reference rates for all U.S. law governed contracts with non-existent or inadequate U.S. Dollar LIBOR fallback provisions. Except with respect to the one-week and two-month U.S. Dollar LIBOR tenors, the federal legislation supersedes all state law addressing the U.S. Dollar LIBOR transition, including legislation enacted in New York in 2021. The implementation of the federal legislation is subject to regulations to be promulgated by the Federal Reserve Board. We continue to assess current and alternative reference rates’ merits, limitations, risks and suitability for our investment and insurance processes.

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Summary of Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the Interim Condensed Consolidated Financial Statements. The most critical estimates include those used in determining:

(i)liabilities for future policy benefits and the accounting for reinsurance;

(ii)capitalization and amortization of deferred policy acquisition costs (“DAC”) and the establishment and amortization of value of business acquired (“VOBA”);

(iii)estimated fair values of investments in the absence of quoted market values;

(iv)investment allowance for credit loss (“ACL”) and impairments;

(v)estimated fair values of freestanding derivatives and the recognition and estimated fair value of embedded derivatives requiring bifurcation;

(vi)measurement of goodwill and related impairment;

(vii)measurement of employee benefit plan liabilities;

(viii)measurement of income taxes and the valuation of deferred tax assets; and

(ix)liabilities for litigation and regulatory matters.

In addition, the application of acquisition accounting requires the use of estimation techniques in determining the estimated fair values of assets acquired and liabilities assumed — the most significant of which relate to the aforementioned critical accounting estimates. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our business and operations. Actual results could differ from these estimates.

The Company’s critical accounting estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and Note 1 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Acquisitions and Dispositions

Acquisitions

Ownership Increase of PNB MetLife

In February 2022, the Company acquired approximately 15.0% ownership in PNB MetLife India Insurance Company Limited (“PNB MetLife”). As a result, the Company’s ownership in PNB MetLife, an operating joint venture accounted for under the equity method, increased to approximately 47.0%. This transaction supports the Company’s continued growth in India and will enable us to deliver more value for our customers, partners and shareholders.

Dispositions

Disposition of MetLife Poland and Greece

For information regarding the Company's dispositions of its wholly-owned subsidiaries in Poland and Greece (collectively, “MetLife Poland and Greece”), which were reported as held-for-sale, see Notes 1 and 3 of the Notes to the Interim Condensed Consolidated Financial Statements.

Disposition of MetLife Seguros

For information regarding the Company's September 2021 disposition of its wholly-owned Argentinian subsidiary, MetLife Seguros S.A. (“MetLife Seguros”), see Note 3 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Disposition of MetLife P&C

For information regarding the Company's April 2021 disposition of MetLife P&C, which was reported as held-for-sale, see Notes 1 and 3 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

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Disposition of MetLife Russia

For information regarding the Company's January 2021 disposition of its wholly-owned Russian subsidiary, the Joint-stock Company MetLife Insurance Company (“MetLife Russia”), see Note 3 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

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Results of Operations

Consolidated Results


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
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 and policyholder dividends	11,983		9,641		23,374		20,411
Interest credited to policyholder account balances	492		1,515		1,122		2,866

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
Other expenses	2,873		2,768		5,790		5,884
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

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

During the three months ended June 30, 2022, net income (loss) decreased $3.3 billion from the prior period, primarily driven by unfavorable changes in net investment gains (losses), net derivative gains (losses), net of investment hedge adjustments, and adjusted earnings.

Management of Investment Portfolio and Hedging Market Risks with Derivatives. See “— Investments — Overview” for a discussion of the management of our investment portfolio.

We purchase investments to support our insurance liabilities and not to generate net investment gains and losses. However, net investment gains and losses are incurred and can change significantly from period to period due to changes in external influences, including changes in market factors such as interest rates, foreign currency exchange rates, credit spreads and equity markets; counterparty specific factors such as financial performance, credit rating and collateral valuation; and internal factors such as portfolio rebalancing. Changes in these factors from period to period can significantly impact the levels of provision for credit loss and impairments on our investment portfolio, as well as realized gains and losses on investments sold.

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We also use derivatives as an integral part of our management of the investment portfolio and insurance liabilities to hedge certain risks, including changes in interest rates, foreign currency exchange rates, credit spreads and equity market levels. We use freestanding interest rate, equity, credit and currency derivatives to hedge certain invested assets and insurance liabilities. A portion of these hedges are designated and qualify as accounting hedges, which reduce volatility in earnings. For those hedges not designated as accounting hedges, changes in market factors lead to the recognition of fair value changes in net derivative gains (losses) generally without an offsetting gain or loss recognized in earnings for the item being hedged, which creates volatility in earnings. We actively evaluate market risk hedging needs and strategies to ensure our free cash flow and capital objectives are met under a range of market conditions.

Certain variable annuity products with guaranteed minimum benefits contain embedded derivatives that are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value recorded in net derivative gains (losses). We use freestanding derivatives to hedge the market risks inherent in these variable annuity guarantees. The valuation of these embedded derivatives includes a nonperformance risk adjustment, which is unhedged, and can be a significant driver of net derivative gains (losses) and volatility in earnings, but does not have an economic impact on us.

We continuously review and refine our hedging strategy in light of changing economic and market conditions, evolving National Association of Insurance Commissioners (“NAIC”) and New York State Department of Financial Services statutory requirements, and accounting rule changes. As a part of our current hedging strategy, we maintain portfolio level derivatives in our macro hedge program. These macro hedge program derivatives, which are included in the non-VA program derivatives section of the table below, mitigate the potential deterioration in our capital positions from significant adverse economic conditions.

Net Derivative Gains (Losses). The variable annuity embedded derivatives and associated freestanding derivative hedges are collectively referred to as “VA program derivatives.” All other derivatives that are economic hedges of certain invested assets and insurance liabilities are referred to as “non-VA program derivatives.” The table below presents the impact on net derivative gains (losses) from non-VA program derivatives and VA program derivatives:


	Three Months Ended June 30,
	2022		2021
	(In millions)
Non-VA program derivatives:
Interest rate	$	(1,149)	$	660
Foreign currency exchange rate	(318)		(62)
Credit	(129)		31
Equity	312		(196)
Non-VA embedded derivatives	153		(37)
Total non-VA program derivatives	(1,131)		396
VA program derivatives:
Market risks in embedded derivatives	(1)		78
Nonperformance risk adjustment on embedded derivatives	18		(8)
Other risks in embedded derivatives	(73)		(37)
Total embedded derivatives	(56)		33
Freestanding derivatives hedging embedded derivatives	(8)		(8)
Total VA program derivatives	(64)		25
Net derivative gains (losses)	$	(1,195)	$	421

The unfavorable change in net derivative gains (losses) on non-VA program derivatives was $1.5 billion ($1.2 billion, net of income tax). This was primarily due to long-term interest rates increasing in the current period versus decreasing in the prior period. This unfavorably impacted the estimated fair value of receive fixed interest rate swaps. Because certain of these hedging strategies are not designated or do not qualify as accounting hedges, the changes in the estimated fair value of these freestanding derivatives are recognized in net derivative gains (losses) without an offsetting gain or loss recognized in earnings for the items being hedged.

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The unfavorable change in net derivative gains (losses) on VA program derivatives was $89 million ($70 million, net of income tax). This was due to (i) an unfavorable change of $79 million ($62 million, net of income tax) in market risks in embedded derivatives, net of freestanding derivatives hedging market risks in embedded derivatives, and (ii) an unfavorable change of $36 million, ($28 million, net of income tax) in other risks in embedded derivatives, partially offset by a favorable change of $26 million ($20 million, net of income tax) in the nonperformance risk adjustment on embedded derivatives.

The primary changes in market factors affecting the valuation of VA program derivatives are summarized as follows:

Key equity index levels decreased in the current period versus increased in the prior period, contributing to an unfavorable change in our embedded derivatives and a favorable change in our freestanding derivatives. For example, the S&P Global Ratings (“S&P”) 500 index decreased 16% in the current period and increased 8% in the prior period.
Long-term interest rates increased in the current period versus decreased in the prior period, contributing to an unfavorable change in our freestanding derivatives and a favorable change in our embedded derivatives. For example, the 30-year U.S. swap rate increased 69 basis points in the current period and decreased 43 basis points in the prior period.

The aforementioned $36 million ($28 million, net of income tax) unfavorable change in other risks in embedded derivatives reflects actuarial assumption updates and a combination of factors, such as fees deducted from accounts, changes in the benefit base, premiums, lapses, withdrawals and deaths, in addition to changes to cross-effect, basis mismatch, risk margin and fund allocation.

The aforementioned $26 million ($20 million, net of income tax) favorable change in the nonperformance risk adjustment on embedded derivatives resulted from a favorable change of $27 million, ($21 million, net of income tax) related to changes in our own credit spread, partially offset by a slight unfavorable change related to model changes and changes in capital market inputs, such as long-term interest rates and key equity index levels, on variable annuity guarantees.

When equity index levels decrease in isolation, the variable annuity guarantees become more valuable to policyholders, which results in an increase in the undiscounted embedded derivative liability. Discounting this unfavorable change by the risk adjusted rate results in a smaller loss than by discounting at the risk-free rate, thus creating a gain from including an adjustment for nonperformance risk.

When the risk-free interest rate decreases in isolation, discounting the embedded derivative liability produces a higher valuation of the liability than if the risk-free interest rate had remained constant. Discounting this unfavorable change by the risk adjusted rate results in a smaller loss than by discounting at the risk-free interest rate, thus creating a gain from including an adjustment for nonperformance risk.

When our own credit spread increases in isolation, discounting the embedded derivative liability produces a lower valuation of the liability than if our own credit spread had remained constant. As a result, a gain is created from including an adjustment for nonperformance risk. For each of these primary market drivers, the opposite effect occurs when the driver moves in the opposite direction.

Net Investment Gains (Losses). The unfavorable change in net investment gains (losses) of $2.3 billion ($1.8 billion, net of income tax) primarily reflects (i) a prior period gain on the disposition of MetLife P&C, (ii) current period losses on sales of fixed maturity securities, (iii) lower gains on sales of real estate investments, and (iv) net foreign currency transaction losses in the current period.

Taxes. For the three months ended June 30, 2022, our effective tax rate on income (loss) before provision for income tax, which reflects an income tax benefit, increased from the U.S. statutory rate of 21% 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. For the three months ended June 30, 2021, our effective tax rate on income (loss) before provision for income tax was 24%, which differed from the U.S. 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, partially offset by tax benefits related to tax credits and non-taxable investment income.

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Adjusted Earnings. As more fully described in “— Non-GAAP and Other Financial Disclosures,” we use adjusted earnings, which does not equate to net income (loss), as determined in accordance with GAAP, to analyze our performance, evaluate segment performance, and allocate resources. We believe that the presentation of adjusted earnings and other financial measures based on adjusted earnings, as we measure it for management purposes, enhances the understanding of our performance by highlighting the results of operations and the underlying profitability drivers of the business. Adjusted earnings and other financial measures based on adjusted earnings allow analysis of our performance relative to our business plan and facilitate comparisons to industry results. Adjusted earnings should not be viewed as a substitute for net income (loss). Adjusted earnings available to common shareholders and adjusted earnings available to common shareholders on a constant currency basis should not be viewed as substitutes for net income (loss) available to MetLife, Inc.’s common shareholders. Adjusted earnings available to common shareholders decreased $463 million, net of income tax, to $1.6 billion, net of income tax, for the three months ended June 30, 2022 from $2.1 billion, net of income tax, for the three months ended June 30, 2021.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

During the six months ended June 30, 2022, net income (loss) decreased $3.0 billion from the prior period, primarily driven by unfavorable changes in net investment gains (losses), adjusted earnings and net derivative gains (losses), net of investment hedge adjustments.

The table below presents the impact on net derivative gains (losses) from non-VA program derivatives and VA program derivatives:


	Six Months Ended June 30,
	2022		2021
	(In millions)
Non-VA program derivatives:
Interest rate	$	(2,091)	$	(1,025)
Foreign currency exchange rate	(170)		(209)
Credit	(122)		62
Equity	359		(682)
Non-VA embedded derivatives	47		19
Total non-VA program derivatives	(1,977)		(1,835)
VA program derivatives:
Market risks in embedded derivatives	199		738
Nonperformance risk adjustment on embedded derivatives	4		(51)
Other risks in embedded derivatives	(111)		(37)
Total embedded derivatives	92		650
Freestanding derivatives hedging embedded derivatives	(169)		(629)
Total VA program derivatives	(77)		21
Net derivative gains (losses)	$	(2,054)	$	(1,814)

The unfavorable change in net derivative gains (losses) on non-VA program derivatives was $142 million ($112 million, net of income tax). This was primarily due to long-term interest rates increasing more significantly in the current period as compared to the prior period. This unfavorably impacted the estimated fair value of receive fixed interest rate swaps and options. This unfavorable change was partially offset by key equity indexes decreasing in the current period versus increasing in the prior period, favorably impacting equity options and total rate of return swaps acquired primarily as part of our macro hedge program. Because certain of these hedging strategies are not designated or do not qualify as accounting hedges, the changes in the estimated fair value of these freestanding derivatives are recognized in net derivative gains (losses) without an offsetting gain or loss recognized in earnings for the items being hedged.

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The unfavorable change in net derivative gains (losses) on VA program derivatives was $98 million ($77 million, net of income tax). This was due to (i) an unfavorable change of $79 million ($62 million, net of income tax) in market risks in embedded derivatives, net of freestanding derivatives hedging market risks in embedded derivatives, and (ii) an unfavorable change of $74 million, ($58 million, net of income tax) in other risks in embedded derivatives, partially offset by a favorable change of $55 million ($43 million, net of income tax) in the nonperformance risk adjustment on embedded derivatives.

The aforementioned $79 million ($62 million, net of income tax) unfavorable change reflects a $539 million ($425 million, net of income tax) unfavorable change in market risks in embedded derivatives, partially offset by a $460 million ($363 million, net of income tax) favorable change in freestanding derivatives hedging market risks in embedded derivatives.

The primary changes in market factors affecting the valuation of VA program derivatives are summarized as follows:

Key equity index levels decreased in the current period versus increased in the prior period, contributing to an unfavorable change in our embedded derivatives and a favorable change in our freestanding derivatives. For example, the S&P 500 index decreased 21% in the current period and increased 14% in the prior period.
Long-term interest rates increased more significantly in the current period compared to the prior period, contributing to an unfavorable change in our freestanding derivatives and a favorable change in our embedded derivatives. For example, the 30-year U.S. swap rate increased 122 basis points in the current period and increased 37 basis points in the prior period.

The aforementioned $74 million ($58 million, net of income tax) unfavorable change in other risks in embedded derivatives reflects actuarial assumption updates and a combination of factors, such as fees deducted from accounts, changes in the benefit base, premiums, lapses, withdrawals and deaths, in addition to changes to cross-effect, basis mismatch, risk margin and fund allocation.

The aforementioned $55 million ($43 million, net of income tax) favorable change in the nonperformance risk adjustment on embedded derivatives resulted from a favorable change of $33 million, ($26 million, net of income tax) related to changes in our own credit spread, in addition to a favorable change of $22 million, ($17 million, net of income tax) related to model changes and changes in capital market inputs, such as long-term interest rates and key equity index levels, on variable annuity guarantees.

Net Investment Gains (Losses). The unfavorable change in net investment gains (losses) of $2.9 billion ($2.3 billion, net of income tax) primarily reflects (i) the prior period gain on the disposition of MetLife P&C, (ii) current period losses on sales of fixed maturity securities, (iii) lower gains on sales of real estate investments, (iv) mark-to-market losses in the current period compared to market-to-market gains in the prior period on equity securities, which are measured at fair value through net income (loss), and (v) net foreign currency transaction losses in the current period.

Divested Businesses. Income (loss) before provision for income tax related to divested businesses, excluding net investment gains (losses) and net derivative gains (losses), decreased $81 million ($62 million, net of income tax) to $3 million ($7 million, net of income tax) in the current period from $84 million ($69 million, net of income tax) in the prior period. Included in this decrease was a decline in total revenues of $846 million, before income tax, and a decrease in total expenses of $765 million, before income tax. Divested businesses primarily included activity related to the disposition of MetLife P&C in the prior period.

Taxes. For the six months ended June 30, 2022, our effective tax rate on income (loss) before provision for income tax was (14%), which reflects an income tax benefit despite having income before provision for income tax. Our effective tax rate differed from the U.S. statutory rate of 21% 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. For the six months ended June 30, 2021, our effective tax rate on income (loss) before provision for income tax was equal to the U.S. statutory rate of 21% as 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 were offset by tax benefits related to tax credits, non-taxable investment income and the corporate tax deduction for stock compensation.

Adjusted Earnings. Adjusted earnings available to common shareholders decreased $701 million, net of income tax, to $3.4 billion, net of income tax, for the six months ended June 30, 2022 from $4.1 billion, net of income tax, for the six months ended June 30, 2021.

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Reconciliation of net income (loss) to adjusted earnings available to common shareholders and premiums, fees and other revenues to adjusted premiums, fees and other revenues

Three Months Ended June 30, 2022


		U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total
		(In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders		$	504	$	(737)	$	(21)	$	70	$	367	$	(80)	$	103
Add: Preferred stock dividends		—		—		—		—		—		29		29
Add: Preferred stock redemption premium		—		—		—		—		—		—		—
Add: Net income (loss) attributable to noncontrolling interests		—		1		3		1		—		1		6
Net income (loss)		504		(736)		(18)		71		367		(50)		138
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
Revenues:
	Net investment gains (losses)	(340)		(471)		32		13		(60)		141		(685)
	Net derivative gains (losses)	49		(1,135)		(202)		(3)		(5)		101		(1,195)
	Premiums	—		—		—		—		—		—		—
	Universal life and investment-type product policy fees	—		(11)		—		3		19		—		11
	Net investment income	(66)		(152)		(78)		(559)		(66)		—		(921)
	Other revenues	—		—		—		2		—		46		48
Expenses:
	Policyholder benefits and claims and policyholder dividends	(2)		34		(155)		(24)		148		—		1
	Interest credited to policyholder account balances	—		125		8		562		—		—		695
	Capitalization of DAC	—		—		—		—		—		—		—
	Amortization of DAC and VOBA	—		12		—		—		(32)		—		(20)
	Amortization of negative VOBA	—		—		—		—		—		—		—
	Interest expense on debt	—		—		—		—		—		—		—
	Other expenses	—		—		2		(3)		—		(66)		(67)
	Goodwill impairment	—		—		—		—		—		—		—
Provision for income tax (expense) benefit		75		476		108		16		(1)		(58)		616
Adjusted earnings		$	788	$	386	$	267	$	64	$	364	(214)		1,655
Less: Preferred stock dividends												29		29
Adjusted earnings available to common shareholders												$	(243)	$	1,626

Premiums, fees and other revenues		$	8,943	$	1,906	$	1,132	$	591	$	1,141	$	140	$	13,853
Less: adjustments to premiums, fees and other revenues		—		(11)		—		5		19		46		59
Adjusted premiums, fees and other revenues		$	8,943	$	1,917	$	1,132	$	586	$	1,122	$	94	$	13,794

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Three Months Ended June 30, 2021


		U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total
		(In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders		$	1,169	$	711	$	26	$	(69)	$	492	$	1,037	$	3,366
Add: Preferred stock dividends		—		—		—		—		—		35		35
Add: Preferred stock redemption premium		—		—		—		—		—		6		6
Add: Net income (loss) attributable to noncontrolling interests		—		1		1		—		—		3		5
Net income (loss)		1,169		712		27		(69)		492		1,081		3,412
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
Revenues:
	Net investment gains (losses)	403		66		(4)		(204)		(72)		1,416		1,605
	Net derivative gains (losses)	32		261		(80)		21		135		52		421
	Premiums	—		—		—		—		—		—		—
	Universal life and investment-type product policy fees	—		13		—		3		20		—		36
	Net investment income	(85)		(8)		(8)		333		(69)		—		163
	Other revenues	—		—		—		—		—		60		60
Expenses:
	Policyholder benefits and claims and policyholder dividends	(12)		(15)		21		11		(81)		—		(76)
	Interest credited to policyholder account balances	1		(33)		(14)		(319)		—		—		(365)
	Capitalization of DAC	—		—		—		—		—		—		—
	Amortization of DAC and VOBA	—		(9)		—		1		11		—		3
	Amortization of negative VOBA	—		—		—		—		—		—		—
	Interest expense on debt	—		—		—		—		—		—		—
	Other expenses	—		—		(4)		(2)		—		(62)		(68)
	Goodwill impairment	—		—		—		—		—		—		—
Provision for income tax (expense) benefit		(72)		(83)		19		(7)		12		(360)		(491)
Adjusted earnings		$	902	$	520	$	97	$	94	$	536	(25)		2,124
Less: Preferred stock dividends												35		35
Adjusted earnings available to common shareholders												$	(60)	$	2,089

Adjusted earnings available to common shareholders on a constant currency basis (1)		$	902	$	498	$	83	$	76	$	536	$	(60)	$	2,035

Premiums, fees and other revenues		$	6,136	$	2,050	$	934	$	747	$	1,201	$	150	$	11,218
Less: adjustments to premiums, fees and other revenues		—		13		—		3		20		60		96
Adjusted premiums, fees and other revenues		$	6,136	$	2,037	$	934	$	744	$	1,181	$	90	$	11,122

Adjusted premiums, fees and other revenues on a constant currency basis (1)		$	6,136	$	1,786	$	899	$	665	$	1,181	$	90	$	10,757

(1)Amounts for U.S., MetLife Holdings and Corporate & Other are shown on a reported basis, as constant currency impact is not significant.

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Six Months Ended June 30, 2022


		U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total
		(In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders		$	1,104	$	(829)	$	241	$	7	$	290	$	(104)	$	709
Add: Preferred stock dividends		—		—		—		—		—		92		92
Add: Preferred stock redemption premium		—		—		—		—		—		—		—
Add: Net income (loss) attributable to noncontrolling interests		—		1		4		3		—		3		11
Net income (loss)		1,104		(828)		245		10		290		(9)		812
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
Revenues:
	Net investment gains (losses)	(606)		(657)		38		(103)		(147)		272		(1,203)
	Net derivative gains (losses)	248		(1,909)		62		(23)		(522)		90		(2,054)
	Premiums	—		—		—		41		—		—		41
	Universal life and investment-type product policy fees	—		(19)		—		18		38		—		37
	Net investment income	(133)		(262)		(156)		(944)		(138)		4		(1,629)
	Other revenues	—		—		—		5		—		93		98
Expenses:
	Policyholder benefits and claims and policyholder dividends	14		22		(217)		(80)		227		—		(34)
	Interest credited to policyholder account balances	—		199		44		954		—		—		1,197
	Capitalization of DAC	—		—		—		11		—		—		11
	Amortization of DAC and VOBA	—		27		—		(9)		(29)		—		(11)
	Amortization of negative VOBA	—		—		—		—		—		—		—
	Interest expense on debt	—		—		—		—		—		—		—
	Other expenses	—		—		4		(25)		—		(125)		(146)
	Goodwill impairment	—		—		—		—		—		—		—
	Provision for income tax (expense) benefit	100		805		61		49		120		(75)		1,060
Adjusted earnings		$	1,481	$	966	$	409	$	116	$	741	(268)		3,445
Less: Preferred stock dividends												92		92
Adjusted earnings available to common shareholders												$	(360)	$	3,353

Premiums, fees and other revenues		$	16,830	$	3,920	$	2,163	$	1,256	$	2,249	$	284	$	26,702
Less: adjustments to premiums, fees and other revenues		—		(19)		—		64		38		93		176
Adjusted premiums, fees and other revenues		$	16,830	$	3,939	$	2,163	$	1,192	$	2,211	$	191	$	26,526

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Six Months Ended June 30, 2021


		U.S.		Asia		Latin America		EMEA		MetLife Holdings		Corporate & Other		Total
		(In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders		$	1,927	$	561	$	83	$	(40)	$	245	$	880	$	3,656
Add: Preferred stock dividends		—		—		—		—		—		103		103
Add: Preferred stock redemption premium		—		—		—		—		—		6		6
Add: Net income (loss) attributable to noncontrolling interests		—		1		3		1		—		5		10
Net income (loss)		1,927		562		86		(39)		245		994		3,775
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
Revenues:
	Net investment gains (losses)	358		(60)		4		(187)		46		1,578		1,739
	Net derivative gains (losses)	41		(703)		(113)		15		(961)		(93)		(1,814)
	Premiums	865		—		—		—		—		—		865
	Universal life and investment-type product policy fees	—		13		—		8		40		—		61
	Net investment income	(147)		61		(18)		418		(142)		11		183
	Other revenues	11		—		—		—		—		95		106
Expenses:
	Policyholder benefits and claims and policyholder dividends	(595)		(38)		91		(49)		(149)		—		(740)
	Interest credited to policyholder account balances	1		(139)		(25)		(412)		—		—		(575)
	Capitalization of DAC	89		—		—		—		—		—		89
	Amortization of DAC and VOBA	(98)		3		—		1		15		—		(79)
	Amortization of negative VOBA	—		—		—		—		—		—		—
	Interest expense on debt	—		—		—		—		—		(1)		(1)
	Other expenses	(222)		1		2		(4)		—		(107)		(330)
	Goodwill impairment	—		—		—		—		—		—		—
	Provision for income tax (expense) benefit	(62)		281		8		6		242		(361)		114
Adjusted earnings		$	1,686	$	1,143	$	137	$	165	$	1,154	(128)		4,157
Less: Preferred stock dividends												103		103
Adjusted earnings available to common shareholders												$	(231)	$	4,054

Adjusted earnings available to common shareholders on a constant currency basis (1)		$	1,686	$	1,103	$	115	$	137	$	1,154	$	(231)	$	3,964

Premiums, fees and other revenues		$	13,404	$	4,211	$	1,809	$	1,430	$	2,384	$	329	$	23,567
Less: adjustments to premiums, fees and other revenues		876		13		—		8		40		95		1,032
Adjusted premiums, fees and other revenues		$	12,528	$	4,198	$	1,809	$	1,422	$	2,344	$	234	$	22,535

Adjusted premiums, fees and other revenues on a constant currency basis (1)		$	12,528	$	3,789	$	1,747	$	1,296	$	2,344	$	234	$	21,938

(1)Amounts for U.S., MetLife Holdings and Corporate & Other are shown on a reported basis, as constant currency impact is not significant.

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Consolidated Results - Adjusted Earnings

Business Overview. Adjusted premiums, fees and other revenues for the three months ended June 30, 2022 increased $2.7 billion, or 24%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $3.0 billion, or 28%, compared to the prior period primarily due to higher premiums in our RIS business and growth in our Group Benefits business, both in our U.S. segment. Strong sales and solid persistency in our Latin America segment and higher fees in our Asia segment, primarily in Japan, also contributed to the improvement in adjusted premiums, fees and other revenues. A decrease in adjusted premiums, fees and other revenues in our EMEA segment was primarily due to the disposition of MetLife Poland and Greece. In our MetLife Holdings segment, we anticipate an average decline in adjusted premiums, fees and other revenues of approximately 6% to 8% per year from expected business run-off.

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Overview. The primary drivers of the decrease in adjusted earnings were lower investment yields due to the unfavorable impact of lower equity market returns on our private equity funds and hedge funds and higher expenses, partially offset by higher net investment income due to a larger average invested asset base and favorable underwriting, primarily driven by a decline in COVID-19 related claims. In addition, the current period includes the favorable impact from a reinsurance settlement and the prior period included the release of a legal reserve.

Foreign Currency. Changes in foreign currency exchange rates had a $54 million negative impact on adjusted earnings for the second quarter of 2022 compared to the prior period. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. We benefited from positive net flows from most of our businesses, which increased our average invested asset base and resulted in higher net investment income. However, consistent with the growth in average invested assets, interest credited expenses on certain insurance-related liabilities increased. Higher premiums, fees and other revenues, net of corresponding changes in policyholder benefits, improved adjusted earnings, primarily from growth in our Asia and EMEA segments, partially offset by a decline in our MetLife Holdings segment. Higher commissions were largely offset by higher DAC capitalization. The combined impact of the items affecting our business growth, as well as higher DAC amortization, resulted in a $183 million increase in adjusted earnings.

Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Excluding the impact of changes in foreign currency exchange rates on net investment income in our non-U.S. segments and changes in inflation rates on our inflation-indexed investments, investment yields decreased. The decrease in investment yields was primarily driven by the unfavorable impact of lower equity market returns on our private equity funds and hedge funds. These decreases were partially offset by the favorable impact of higher real estate market returns on our real estate investments, primarily real estate funds, and higher yields on our fixed income securities. The impact of interest rate fluctuations resulted in a decline in our average interest credited rates on long duration insurance and investment-type products, which drove a decrease in interest credited expenses. The changes in market factors discussed above resulted in a $775 million decrease in adjusted earnings.

Underwriting and Other Insurance Adjustments. Favorable underwriting resulted in a $206 million increase in adjusted earnings and reflected overall lower impacts from the COVID-19 pandemic. This was primarily driven by favorable mortality in our Latin America and U.S. segments, partially offset by unfavorable claims experience in our Asia segment. Refinements to certain insurance and other liabilities in both periods resulted in a $103 million increase in adjusted earnings, which includes a reinsurance settlement in the current period in our MetLife Holdings segment.

Expenses. Adjusted earnings decreased $133 million primarily due to increases in corporate-related expenses and the release of a legal reserve in the prior period.

Taxes. For each of the three months ended June 30, 2022 and 2021, our effective tax rate on adjusted earnings was 22%, which differed from the U.S. statutory rate of 21% primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, partially offset by tax benefits from tax credits and non-taxable investment income.

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Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates had a $91 million negative impact on adjusted earnings for the first six months of 2022 compared to the prior period. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. We benefited from positive net flows from most of our businesses, which increased our average invested asset base and resulted in higher net investment income. However, consistent with the growth in average invested assets, interest credited expenses on certain insurance-related liabilities increased. Higher premiums, fees and other revenues, net of corresponding changes in policyholder benefits, improved adjusted earnings, primarily from growth in our EMEA, Asia and Latin America segments, partially offset by a decline in our MetLife Holdings segment. Higher commissions were largely offset by higher DAC capitalization. Lower variable expenses in Asia improved adjusted earnings. The combined impact of the items affecting our business growth, as well as to higher DAC amortization, resulted in a $492 million increase in adjusted earnings.

Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Excluding the impact of changes in foreign currency exchange rates on net investment income in our non-U.S. segments and changes in inflation rates on our inflation-indexed investments, investment yields decreased. The decrease in investment yields was primarily driven by the unfavorable impact of lower equity market returns on our private equity funds, hedge funds, and fair value option securities (“FVO Securities”), as well as lower yields on our mortgage loans. These decreases were partially offset by the favorable impact of higher real estate market returns on our real estate investments, primarily real estate funds. The impact of interest rate fluctuations resulted in a decline in our average interest credited rates on long duration insurance and investment-type products, which drove a decrease in interest credited expenses. The changes in market factors discussed above resulted in a $1.3 billion decrease in adjusted earnings.

Underwriting and Other Insurance Adjustments. Favorable underwriting resulted in a $277 million increase in adjusted earnings and reflected overall lower impacts from the COVID-19 pandemic. This was primarily driven by favorable mortality in our Latin America and U.S. segments, partially offset by unfavorable claims experience in our MetLife Holdings and Asia segments. Refinements to certain insurance and other liabilities in both periods resulted in an $85 million increase in adjusted earnings, which includes a reinsurance settlement in the current period in our MetLife Holdings segment.

Expenses. Adjusted earnings decreased $206 million primarily due to increases in corporate-related expenses and the release of a legal reserve in the prior period.

Taxes. For the six months ended June 30, 2022, our effective tax rate on adjusted earnings was 22%, which differed from the U.S. statutory rate of 21% primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, partially offset by tax benefits from tax credits, the corporate tax deduction for stock compensation and non-taxable investment income. For the six months ended June 30, 2021, our effective tax rate on adjusted earnings was 21%, which is equal to the U.S. statutory rate, and reflects tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, offset by tax benefits from tax credits, non-taxable investment income and the corporate tax deduction for stock compensation.

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Segment Results and Corporate & Other

U.S.

Business Overview. Adjusted premiums, fees and other revenues for the three months ended June 30, 2022 increased $2.8 billion, or 46%, compared to the prior period. This was primarily due to higher premiums in our RIS business, as well as growth in our Group Benefits business. The increase in premiums in RIS was mainly driven by sales in the pension risk transfer business in the current period, as well as an increase in our U.K. longevity reinsurance business. Changes in RIS premiums are mostly offset by a corresponding change in policyholder benefits. The increase in our Group Benefits business was primarily due to growth from our group disability, voluntary products, term life and dental businesses. This was partially offset by a decrease in premiums from our term life participating contracts, which can fluctuate with claims experience.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Adjusted revenues
Premiums	$	8,254	$	5,474	$	15,418	$	11,173
Universal life and investment-type product policy fees	284		282		581		579
Net investment income	1,710		1,998		3,584		4,008
Other revenues	405		380		831		776
Total adjusted revenues	10,653		8,134		20,414		16,536
Adjusted expenses
Policyholder benefits and claims and policyholder dividends	8,320		5,739		15,886		11,881
Interest credited to policyholder account balances	387		359		734		718
Capitalization of DAC	(14)		(13)		(37)		(31)
Amortization of DAC and VOBA	14		8		28		24
Interest expense on debt	1		2		3		3
Other expenses	949		898		1,928		1,809
Total adjusted expenses	9,657		6,993		18,542		14,404
Provision for income tax expense (benefit)	208		239		391		446
Adjusted earnings	$	788	$	902	$	1,481	$	1,686

Adjusted premiums, fees and other revenues	$	8,943	$	6,136	$	16,830	$	12,528

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Business Growth. The impact of positive flows from pension risk transfer transactions and funding agreement issuances resulted in higher average invested assets, improving net investment income. However, consistent with growth in average invested assets, interest credited expenses on long duration insurance and investment-type products increased. Higher direct expenses, including certain employee-related costs, coupled with an increase in variable expenses, were more than offset by a corresponding increase in premiums, fees and other revenues. The combined impact of the items affecting our business growth increased adjusted earnings by $129 million.

Market Factors. Market factors, including interest rate levels, variability in equity market returns and foreign currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased primarily driven by the unfavorable impact of lower equity market returns on our private equity funds and hedge funds, partially offset by the favorable impact of higher real estate market returns on our real estate investments, primarily real estate funds. The impact of interest rate fluctuations resulted in an increase in our average interest credited rates on long duration insurance and investment-type products, which drove an increase in interest credited expenses. The changes in market factors discussed above resulted in a $418 million decrease in adjusted earnings.

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Underwriting and Other Insurance Adjustments. Favorable mortality in our Group Benefits business resulted in an increase in adjusted earnings of $135 million. This was driven by decreases in both incidence and severity of COVID-19 and non-COVID-19 claims. Less favorable mortality in our RIS business resulted in a decrease in adjusted earnings of $24 million, driven by our pension risk transfer and specialized benefit resource businesses. Favorable claims experience in our dental business, as well as growth in our accident & health and vision businesses, partially offset by unfavorable results in our disability businesses, resulted in a $26 million increase in adjusted earnings. Refinements to certain insurance and other liabilities in both periods resulted in a $42 million increase in adjusted earnings.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Business Growth. The impact of positive flows from pension risk transfer transactions and funding agreement issuances resulted in higher average invested assets, improving net investment income. However, consistent with growth in average invested assets, interest credited expenses on long duration insurance and investment-type products increased. Higher direct expenses, including certain employee-related costs, coupled with an increase in variable expenses, were more than offset by a corresponding increase in premiums, fees and other revenues. The combined impact of the items affecting our business growth increased adjusted earnings by $212 million.

Market Factors. Market factors, including interest rate levels, variability in equity market returns and foreign currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased primarily driven by the unfavorable impact of lower equity market returns on our private equity funds and hedge funds, and lower yields on fixed income securities, partially offset by the favorable impact of higher real estate market returns on our real estate investments, primarily real estate funds. The impact of interest rate fluctuations resulted in a decline in our average interest credited rates on long duration insurance and investment-type products, which drove a decrease in interest credited expenses. The changes in market factors discussed above resulted in a $603 million decrease in adjusted earnings.

Underwriting and Other Insurance Adjustments. Favorable mortality in our Group Benefits business resulted in an increase in adjusted earnings of $167 million. This was driven by decreases in both incidence and severity of COVID-19 and non-COVID-19 claims. Less favorable mortality in our RIS business resulted in a decrease in adjusted earnings of $11 million, primarily driven by our pension risk transfer and structured settlement businesses, partially offset by favorable results in our institutional income annuity and specialized benefit resource businesses. Favorable claims experience in our dental business, as well as growth in our accident & health and vision businesses, partially offset by unfavorable results in our disability businesses, resulted in a $13 million increase in adjusted earnings. Refinements to certain insurance and other liabilities in both periods resulted in a $20 million increase in adjusted earnings.

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Asia

Business Overview. Adjusted premiums, fees and other revenues for the three months ended June 30, 2022 decreased $120 million, or 6%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $131 million, or 7%, compared to the prior period, mainly due to increases in Japan, Korea and Australia. In Japan, higher fees from foreign currency-denominated life and fixed annuity products were partially offset by a decrease in premiums from yen-denominated life products.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Adjusted revenues
Premiums	$	1,395	$	1,582	$	2,948	$	3,267
Universal life and investment-type product policy fees	498		436		946		894
Net investment income	1,012		1,158		2,254		2,422
Other revenues	24		19		45		37
Total adjusted revenues	2,929		3,195		6,193		6,620
Adjusted expenses
Policyholder benefits and claims and policyholder dividends	1,185		1,233		2,413		2,530
Interest credited to policyholder account balances	493		496		991		985
Capitalization of DAC	(370)		(395)		(762)		(830)
Amortization of DAC and VOBA	321		296		609		610
Amortization of negative VOBA	(8)		(8)		(16)		(15)
Other expenses	763		832		1,600		1,731
Total adjusted expenses	2,384		2,454		4,835		5,011
Provision for income tax expense (benefit)	159		221		392		466
Adjusted earnings	$	386	$	520	$	966	$	1,143

Adjusted earnings on a constant currency basis	$	386	$	498	$	966	$	1,103

Adjusted premiums, fees and other revenues	$	1,917	$	2,037	$	3,939	$	4,198
Adjusted premiums, fees and other revenues on a constant currency basis	$	1,917	$	1,786	$	3,939	$	3,789

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $22 million for the second quarter of 2022 compared to the prior period, primarily due to the weakening of the Japanese yen, Korean won and Australian dollar against the U.S. dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. Increased premiums, fees and other revenues, partially offset by higher policyholder benefits, contributed to Asia’s business growth. Consistent with this business growth, commissions increased, but were offset by DAC capitalization. Positive net flows in Japan and Korea resulted in higher average invested assets, which improved net investment income. The increase in net investment income was mostly offset by a corresponding increase in interest credited expenses on certain insurance liabilities. The combined impact of the items affecting our business growth, as well as higher DAC amortization, improved adjusted earnings by $30 million.

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Market Factors. Market factors, including interest rate levels and variability in equity market returns, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased, driven by the unfavorable impact of lower equity market returns on our private equity and hedge funds. These unfavorable impacts were partially offset by the favorable impact of higher real estate market returns on our real estate investments, primarily real estate funds, as well as higher earnings from our operating joint ventures in China and India. In addition, there were higher yields on fixed income securities supporting products sold in Japan denominated in Japanese yen, U.S. dollars and Australian dollars. A decrease in interest credited expenses on certain insurance liabilities also improved adjusted earnings. The changes in market factors discussed above decreased adjusted earnings by $90 million.

Underwriting. Unfavorable underwriting, mainly driven by COVID-19-related claims in Japan, decreased adjusted earnings by $55 million.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $40 million for the first six months of 2022 compared to the prior period, primarily due to the weakening of the Japanese yen, Korean won and Australian dollar against the U.S. dollar. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. Increased premiums, fees and other revenues, as well as lower variable expenses, were partially offset by higher policyholder benefits and commissions, net of DAC capitalization, which contributed to Asia’s business growth. Positive net flows in Japan and Korea resulted in higher average invested assets, which improved net investment income. The increase in net investment income was partially offset by a corresponding increase in interest credited expenses on certain insurance liabilities. The combined impact of the items affecting our business growth, as well as higher DAC amortization, improved adjusted earnings by $79 million.

Market Factors. Market factors, including interest rate levels and variability in equity market returns, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased, driven by the unfavorable impact of lower equity market returns on our private equity and hedge funds. These unfavorable impacts were partially offset by the favorable impact of higher real estate market returns on our real estate investments, primarily real estate funds, as well as higher earnings from our operating joint ventures in China and India. In addition, a decrease in interest credited expenses on certain insurance liabilities improved adjusted earnings. The changes in market factors discussed above decreased adjusted earnings by $135 million.

Underwriting. Unfavorable underwriting, mainly driven by COVID-19-related claims in Japan, decreased adjusted earnings by $60 million.

Expenses. Higher expenses, primarily driven by higher employee-related and other operating expenses, as well as an increase in corporate overhead costs, decreased adjusted earnings by $25 million.

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Latin America

Business Overview. Adjusted premiums, fees and other revenues for the three months ended June 30, 2022 increased $198 million, or 21%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $233 million, or 26%, compared to the prior period, mainly driven by strong sales and solid persistency across the region.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Adjusted revenues
Premiums	$	826	$	636	$	1,558	$	1,231
Universal life and investment-type product policy fees	296		287		586		557
Net investment income	459		308		781		607
Other revenues	10		11		19		21
Total adjusted revenues	1,591		1,242		2,944		2,416
Adjusted expenses
Policyholder benefits and claims and policyholder dividends	811		724		1,580		1,485
Interest credited to policyholder account balances	84		60		152		119
Capitalization of DAC	(120)		(100)		(233)		(195)
Amortization of DAC and VOBA	90		83		170		143

Interest expense on debt	4		1		7		2
Other expenses	370		343		724		678
Total adjusted expenses	1,239		1,111		2,400		2,232
Provision for income tax expense (benefit)	85		34		135		47
Adjusted earnings	$	267	$	97	$	409	$	137

Adjusted earnings on a constant currency basis	$	267	$	83	$	409	$	115

Adjusted premiums, fees and other revenues	$	1,132	$	934	$	2,163	$	1,809
Adjusted premiums, fees and other revenues on a constant currency basis	$	1,132	$	899	$	2,163	$	1,747

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $14 million for the second quarter of 2022 compared to the prior period, mainly due to the weakening of foreign currencies against the U.S. dollar, primarily the Chilean peso. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. Latin America experienced premium and fee growth across the region, primarily in Chile and Mexico. The net increase in premiums and fees was largely offset by related changes in policyholder benefits. An increase in average invested assets, primarily in Chile, generated higher net investment income. The increase in net investment income was partially offset by a corresponding increase in interest credited expenses on certain insurance liabilities. Business growth in the region drove an increase in commissions and other variable expenses, which was partially offset by higher DAC capitalization. The combined impact of the items affecting business growth, as well as higher DAC amortization, increased adjusted earnings by $8 million.

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Market Factors. Market factors, including interest rate levels and variability in equity market returns, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields increased, driven by higher yields on fixed maturity securities and mortgage loans in Chile and Mexico, and the favorable impact of an increase in bond index returns on our Chilean encaje within FVO Securities, partially offset by lower equity market returns on private equity funds. The changes in market factors discussed above, as well as the net impact of inflation, resulted in a $39 million increase in adjusted earnings.

Underwriting and Other Insurance Adjustments. Favorable underwriting drove a $124 million increase in adjusted earnings. This increase includes a decline in both incidence and severity of COVID-19-related claims, primarily in Mexico and Brazil, as well as a reduction to the incurred but not reported (“IBNR”) reserve that was established in the prior year. Refinements to certain insurance liabilities and other liabilities in the current period resulted in a $4 million increase in adjusted earnings.

Expenses and Taxes. Adjusted earnings decreased $8 million due to higher employee-related costs and the region’s continued investment in technology. Tax-related adjustments in both periods resulted in an $18 million increase in adjusted earnings, primarily driven by tax items related to inflation in Chile.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $22 million for the first six months of 2022 compared to the prior period, mainly due to the weakening of foreign currencies against the U.S. dollar, primarily the Chilean peso. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. Latin America experienced premium and fee growth across the region, primarily in Chile and Mexico. The net increase in premiums and fees was largely offset by related changes in policyholder benefits. An increase in average invested assets, primarily in Chile, generated higher net investment income. The increase in net investment income was partially offset by a corresponding increase in interest credited expenses on certain insurance liabilities. Business growth in the region drove an increase in commissions and other variable expenses, which was offset by higher DAC capitalization. The combined impact of the items affecting business growth, as well as higher DAC amortization, increased adjusted earnings by $21 million.

Underwriting and Other Insurance Adjustments. Favorable underwriting drove a $222 million increase in adjusted earnings. This increase includes a decline in both incidence and severity of COVID-19-related claims, primarily in Mexico and Brazil, as well as a reduction to the IBNR reserve that was established in the prior year. Refinements to certain insurance liabilities and other liabilities in both periods resulted in a $6 million increase in adjusted earnings.

Expenses and Taxes. Adjusted earnings decreased $18 million due to higher employee-related costs and the region’s continued investment in technology, partially offset by the impact of continued expense discipline. Tax-related adjustments in both periods resulted in a $24 million increase in adjusted earnings, primarily driven by tax items related to inflation in Chile.

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EMEA

Business Overview. Adjusted premiums, fees and other revenues for the three months ended June 30, 2022 decreased $158 million, or 21%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, decreased $79 million, or 12%, compared to the prior period primarily due to (i) the disposition of MetLife Poland and Greece, (ii) a prior period favorable refinement to an unearned premium reserve in Italy, and (iii) a decrease in our corporate solutions business in the Gulf, partially offset by growth in our (i) accident and health business across the region, (ii) corporate solutions business in Egypt, and (iii) credit life business in Turkey.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Adjusted revenues
Premiums	$	492	$	621	$	1,001	$	1,219
Universal life and investment-type product policy fees	86		107		174		174
Net investment income	38		62		79		125
Other revenues	8		16		17		29
Total adjusted revenues	624		806		1,271		1,547
Adjusted expenses
Policyholder benefits and claims and policyholder dividends	237		333		519		676
Interest credited to policyholder account balances	20		25		37		49
Capitalization of DAC	(108)		(122)		(209)		(249)
Amortization of DAC and VOBA	95		94		181		156
Amortization of negative VOBA	(2)		(2)		(3)		(4)

Other expenses	298		349		594		698
Total adjusted expenses	540		677		1,119		1,326
Provision for income tax expense (benefit)	20		35		36		56
Adjusted earnings	$	64	$	94	$	116	$	165

Adjusted earnings on a constant currency basis	$	64	$	76	$	116	$	137

Adjusted premiums, fees and other revenues	$	586	$	744	$	1,192	$	1,422
Adjusted premiums, fees and other revenues on a constant currency basis	$	586	$	665	$	1,192	$	1,296

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $18 million for the second quarter of 2022 as compared to the prior period, primarily driven by the strengthening of the U.S. dollar against the euro, Turkish lira and Egyptian pound. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. Growth in our (i) accident & health business across the region, (ii) corporate solutions business in Egypt, and (iii) credit life business in Turkey, partially offset by a decrease in our corporate solutions business in the Gulf, resulted in a $4 million increase in adjusted earnings.

Market Factors. Market factors, including interest rate levels and variability in equity market returns, decreased adjusted earnings by $9 million. This was primarily due to an increase in DAC amortization in our variable life business as a result of equity market movements.

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Underwriting and Other Insurance Adjustments. Adjusted earnings increased $23 million as a result of favorable underwriting experience, primarily due to the impact of the COVID-19 pandemic, which resulted in lower utilization in the second quarter of 2022 and higher claims in the prior period. Favorable underwriting experience in our (i) corporate solutions business in the U.K., Egypt and the Gulf, (ii) ordinary life business in Portugal, (iii) variable life business in the Gulf and Lebanon, and (iv) credit life business in Turkey were partially offset by unfavorable underwriting experience in our ordinary life business in France and the Gulf. Refinements to certain insurance-related assets and liabilities in both periods resulted in a $23 million decrease in adjusted earnings mainly due to the aforementioned prior period refinement in Italy.

Expenses. Higher expenses resulted in a $7 million decrease in adjusted earnings mainly due to various operating expenses across the region.

Other. In addition to the items discussed above, adjusted earnings decreased slightly due to the disposition of MetLife Poland and Greece.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $28 million for the first six months of 2022 as compared to the prior period, primarily driven by the strengthening of the U.S. dollar against the Turkish lira, euro and Egyptian pound. Unless otherwise stated, all amounts discussed below are net of foreign currency fluctuations. Foreign currency fluctuations can result in significant variances in the financial statement line items.

Business Growth. Growth in our (i) accident & health business across the region, (ii) credit life business in Turkey, (iii) corporate solutions business in Egypt and (iv) ordinary life business in Europe, partially offset by a decrease in our corporate solutions business in the Gulf, resulted in a $7 million increase in adjusted earnings.

Market Factors. Market factors, including interest rate levels and variability in equity market returns, decreased adjusted earnings by $11 million. This was primarily due to an increase in DAC amortization in our variable life business as a result of equity market movements.

Underwriting and Other Insurance Adjustments. Adjusted earnings increased $29 million as a result of favorable underwriting experience, primarily due to the impact of the COVID-19 pandemic, which resulted in lower utilization in the first six months of 2022 and higher claims in the prior period. Favorable underwriting experience in our (i) corporate solutions business in Egypt, the Gulf and the U.K., (ii) variable life business in the Gulf, Lebanon and Czech Republic, (iii) ordinary life business in Portugal, and (iv) credit life business in Turkey were partially offset by unfavorable underwriting experience in our ordinary life business in France and the Gulf. Refinements to certain insurance-related assets and liabilities in both periods resulted in a $21 million decrease in adjusted earnings mainly due to the aforementioned prior period refinement in Italy.

Expenses. Higher expenses resulted in a $15 million decrease in adjusted earnings mainly due to various operating expenses across the region.

Other. In addition to the items discussed above, adjusted earnings decreased by $11 million due to the disposition of MetLife Poland and Greece.

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MetLife Holdings

Business Overview. Our MetLife Holdings segment consists of operations relating to products and businesses, previously included in our former retail business, that we no longer actively market in the United States. We anticipate an average decline in adjusted premiums, fees and other revenues of approximately 6% to 8% per year from expected business run-off. A significant portion of our adjusted earnings is driven by separate account balances. Most directly, these balances determine asset-based fee income but they also impact DAC amortization and asset-based commissions. Separate account balances are driven by movements in the market, surrenders, deposits, withdrawals, benefit payments, transfers and policy charges. Although we have discontinued selling our long-term care product, we continue to collect premiums and administer the existing block of business, which contributed to asset growth in the segment, and we expect the related reserves to grow as this block matures.


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Adjusted revenues
Premiums	$	760	$	839	$	1,536	$	1,666
Universal life and investment-type product policy fees	339		273		608		547
Net investment income	1,280		1,543		2,689		3,189
Other revenues	23		69		67		131
Total adjusted revenues	2,402		2,724		4,900		5,533
Adjusted expenses
Policyholder benefits and claims and policyholder dividends	1,433		1,549		2,951		3,072
Interest credited to policyholder account balances	203		210		405		420
Capitalization of DAC	(8)		(9)		(15)		(17)
Amortization of DAC and VOBA	74		56		150		110
Interest expense on debt	2		2		3		3
Other expenses	242		244		478		497
Total adjusted expenses	1,946		2,052		3,972		4,085
Provision for income tax expense (benefit)	92		136		187		294
Adjusted earnings	$	364	$	536	$	741	$	1,154

Adjusted premiums, fees and other revenues	$	1,122	$	1,181	$	2,211	$	2,344

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Business Growth. An increase in average invested assets resulted in higher net investment income, improving adjusted earnings. However, negative net flows from our deferred annuity business resulted in lower asset-based fee income. In addition, premiums declined due to business run-off and the impact of dividend scale reductions in both periods. The combined impact of the items affecting our business growth, as well as lower DAC amortization, offset and resulted in no impact to adjusted earnings.

Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased, driven by the unfavorable impact of lower equity market returns on our private equity and hedge funds and lower yields on our fixed income securities and mortgage loans. These declines were partially offset by the impact of higher real estate market returns on our real estate investments, primarily real estate funds. In our deferred annuity business, higher costs associated with our variable annuity guaranteed minimum death benefits (“GMDBs”) resulted in a decrease in adjusted earnings. The changes in market factors discussed above, as well as higher DAC amortization, resulted in a $260 million decrease in adjusted earnings.

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Underwriting and Other Insurance Adjustments. Less favorable underwriting in our (i) long-term care business, reflecting a smaller impact from the COVID-19 pandemic in the current period, and (ii) life business, resulted in an $18 million decrease in adjusted earnings. A reinsurance settlement in the current period resulted in a $77 million increase in adjusted earnings. Dividend scale reductions, as well as run-off in the Metropolitan Life Insurance Company’s (“MLIC”) closed block, contributed to lower dividend expense, net of DAC amortization, and resulted in a $17 million increase in adjusted earnings.

Expenses. Adjusted earnings increased by $13 million mainly due to lower corporate-related expenses.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Business Growth. An increase in average invested assets resulted in higher net investment income, improving adjusted earnings. However, negative net flows from our deferred annuity business resulted in lower asset-based fee income. In addition, premiums declined due to business run-off and the impact of dividend scale reductions in both periods. The combined impact of the items affecting our business growth, as well as lower DAC amortization, resulted in a $31 million increase in adjusted earnings.

Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased driven by the unfavorable impact of lower equity market returns on our private equity and hedge funds and lower yields on our fixed income securities and mortgage loans. These declines were partially offset by the impact of higher real estate market returns on our real estate investments, primarily real estate funds. In addition, in our deferred annuity business, higher costs associated with our variable annuity GMDBs resulted in a decrease in adjusted earnings. The changes in market factors discussed above, as well as higher DAC amortization, resulted in a $493 million decrease in adjusted earnings.

Underwriting and Other Insurance Adjustments. Less favorable underwriting, mainly in our long-term care business, reflecting a smaller impact from the COVID-19 pandemic in the current period, resulted in a $79 million decrease in adjusted earnings. A reinsurance settlement in the current period resulted in a $77 million increase in adjusted earnings. Dividend scale reductions, as well as run-off in the MLIC closed block, contributed to lower dividend expense, net of DAC amortization, and resulted in a $42 million increase in adjusted earnings.

Expenses. Adjusted earnings increased by $11 million mainly due to lower corporate-related expenses.

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Corporate & Other


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Adjusted revenues
Premiums	$	(6)	$	(20)	$	(10)	$	38
Universal life and investment-type product policy fees	2		1		2		1
Net investment income	5		48		109		60
Other revenues	98		109		199		195
Total adjusted revenues	99		138		300		294
Adjusted expenses
Policyholder benefits and claims and policyholder dividends	(2)		(13)		(9)		27

Capitalization of DAC	(2)		(3)		(5)		(6)
Amortization of DAC and VOBA	2		3		4		5
Interest expense on debt	219		223		438		447
Other expenses	184		34		320		141
Total adjusted expenses	401		244		748		614
Provision for income tax expense (benefit)	(88)		(81)		(180)		(192)
Adjusted earnings	(214)		(25)		(268)		(128)
Less: Preferred stock dividends	29		35		92		103
Adjusted earnings available to common shareholders	$	(243)	$	(60)	$	(360)	$	(231)

Adjusted premiums, fees and other revenues	$	94	$	90	$	191	$	234

The table below presents adjusted earnings available to common shareholders by source:


	Three Months Ended June 30,			Six Months Ended June 30,
		2022		2021		2022		2021
		(In millions)
Business activities		$	34	$	28	$	70	$	57
Net investment income		6		51		110		64
Interest expense on debt		(226)		(235)		(453)		(469)
Corporate initiatives and projects		(21)		(24)		(33)		(49)
Other		(95)		74		(142)		77
Provision for income tax (expense) benefit and other tax-related items		88		81		180		192
Preferred stock dividends		(29)		(35)		(92)		(103)
Adjusted earnings available to common shareholders		$	(243)	$	(60)	$	(360)	$	(231)

Three Months Ended June 30, 2022 Compared with the Three Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Business Activities. Adjusted earnings from business activities increased $5 million. This was primarily related to improved results from certain of our businesses.

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Net Investment Income. Net investment income decreased $36 million, primarily due to lower returns on our equity market sensitive investments, including private equity funds and FVO Securities, as well as lower yields on our mortgage loans. These decreases were partially offset by a higher average invested asset base and higher income on our real estate investments.

Interest Expense on Debt. Interest expense on debt decreased by $7 million, primarily due to a senior note redemption in July 2021.

Corporate Initiatives and Projects & Other. Adjusted earnings decreased $131 million, primarily as a result of an increase in corporate-related expenses and the release of a legal reserve in the prior period.

Provision for Income Tax (Expense) Benefit and Other Tax-Related Items. An unfavorable change in Corporate & Other’s taxes was primarily due to lower utilization of tax preferenced items, which include non-taxable investment income, tax credits and foreign earnings taxed at different rates than the U.S. statutory rate.

Preferred Stock Dividends. Adjusted earnings available to common shareholders increased $6 million primarily as a result of the redemption and cancellation of the 5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C (the “Series C preferred stock”), in June 2021.

Six Months Ended June 30, 2022 Compared with the Six Months Ended June 30, 2021

Unless otherwise stated, all amounts discussed below are net of income tax.

Business Activities. Adjusted earnings from business activities increased $10 million. This was primarily related to improved results from certain of our businesses.

Net Investment Income. Net investment income increased $36 million, primarily due to a higher average invested asset base, as well as increased income on real estate investments. These increases were partially offset by decreased returns on our equity market sensitive investments, including private equity funds and FVO Securities, as well as lower yields on our mortgage loans.

Interest Expense on Debt. Interest expense on debt decreased by $13 million, primarily due to a senior note redemption in July 2021.

Corporate Initiatives and Projects & Other. Adjusted earnings decreased $160 million, primarily as a result of an increase in corporate-related expenses, the release of a legal reserve in the prior period and higher interest expense on tax positions due to audit settlements in the prior period, partially offset by lower employee-related costs.

Provision for Income Tax (Expense) Benefit and Other Tax-Related Items. An unfavorable change in Corporate & Other’s taxes was primarily due to lower utilization of tax preferenced items, which include foreign earnings taxed at different rates than the U.S. statutory rate, non-taxable investment income and tax credits, partially offset by lower taxes on stock compensation.

Preferred Stock Dividends. Adjusted earnings available to common shareholders increased $11 million primarily as a result of the redemption and cancellation of the Series C preferred stock, in June 2021.

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Investments

Overview

We manage our investment portfolio using disciplined asset/liability management (“ALM”) principles, focusing on cash flow and duration to support our current and future liabilities. Our intent is to match the timing and amount of liability cash outflows with invested assets that have cash inflows of comparable timing and amount, while optimizing risk-adjusted investment income and risk-adjusted total return. Our investment portfolio is heavily weighted toward fixed income investments, with the vast majority of our portfolio invested in fixed maturity securities available-for-sale (“AFS”) and mortgage loans. These securities and loans have varying maturities and other characteristics which cause them to be generally well suited for matching the cash flow and duration of insurance liabilities.

Current Environment

As a global insurance company, we continue to be impacted by the changing global financial and economic environment, the fiscal and monetary policy of governments and central banks around the world and other governmental measures. The COVID-19 pandemic continues to impact the global economy and financial markets and has caused volatility in the global equity, credit and real estate markets. See “— Industry Trends — Financial and Economic Environment.” Uncertainty created by the COVID-19 pandemic may persist for some time and may continue to impact pricing levels of risk-bearing investments, as well as our business operations, investment portfolio and derivatives. Rising market interest rates have impacted our investment portfolio and derivatives. See “— Industry Trends,” as well as “— Results of Operations — Consolidated Results,” and “— Results of Operations — Consolidated Results - Adjusted Earnings” for impacts on our derivatives and analysis of the period over period changes in investment portfolio results. See also “Investments — Fixed Maturity Securities Available-for-Sale — Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position” in Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for impacts on the net unrealized gain (loss) on our fixed maturity securities AFS.

Selected Country and Sector Investments

Selected Country: We have a market presence in numerous countries and, therefore, our investment portfolio, which supports our insurance operations and related policyholder liabilities, as well as our global portfolio diversification objectives, is exposed to risks posed by local political and economic conditions. The countries included in the following table have been the most affected by these risks. The table below presents a summary of selected country fixed maturity securities AFS, at estimated fair value, on a “country of risk basis” (e.g. where the issuer primarily conducts business).


	Selected Country Fixed Maturity Securities AFS at June 30, 2022
Country	Sovereign (1)			Financial Services			Non-Financial Services			Structured Products			Total (2)
	(Dollars in millions)
Mexico	$	2,502		$	692		$	1,833		$	31		$	5,058
Chile	1,420			815			2,637			1			4,873
Italy	16			53			554			—			623
Colombia	328			62			135			—			525
Peru	114			19			206			—			339
Russian Federation (3)	28			—			46			—			74
Ukraine (3)	59			—			2			—			61
Turkey	44			—			9			—			53


Total	$	4,511		$	1,641		$	5,422		$	32		$	11,606
Investment grade %	89.0		%	91.2		%	87.2		%	92.2		%	88.5		%

(1)Sovereign includes government and agency.

(2)The par value, amortized cost net of ACL and estimated fair value, net of purchased and written credit default swaps, of these securities were $12.2 billion, $11.3 billion and $11.1 billion, respectively, at June 30, 2022. The notional value and estimated fair value of the net purchased and written credit default swaps were $(505) million and $19 million, respectively, at June 30, 2022.

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(3)As of June 30, 2022, the amortized cost, ACL and amortized cost, net of ACL of our Russian Federation sovereign securities were $120 million, $89 million and $31 million, respectively; and the amortized cost, ACL and amortized cost, net of ACL of our Russian Federation corporate securities were $88 million, $42 million and $46 million, respectively. As of June 30, 2022, the amortized cost, ACL and amortized cost, net of ACL of our Ukraine sovereign securities were $117 million, $57 million and $60 million, respectively; and the amortized cost, ACL and amortized cost, net of ACL of our Ukraine corporate securities were $3 million, $1 million and $2 million, respectively.

Selected Sector: See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Current Environment —Selected Country and Sector Investments” included in the 2021 Annual Report for information on our Selected Sector investments as of December 31, 2021.

We manage direct and indirect investment exposure in the selected countries and sectors through fundamental analysis and we continually monitor and adjust our level of investment exposure.

Investment Portfolio Results

The reconciliation of net investment income under GAAP to adjusted net investment income is presented below.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
	(In millions)
Net investment income — GAAP	$	3,583	$	5,280	$	7,867	$	10,594
Investment hedge adjustments	232		212		447		432
Unit-linked investment income	688		(378)		1,186		(585)
Other	1		3		(4)		(30)
Adjusted net investment income (1)	$	4,504	$	5,117	$	9,496	$	10,411

(1)See “Financial Measures and Segment Accounting Policies” in Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for a discussion of the adjustments made to net investment income under GAAP in calculating adjusted net investment income.

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The following yield table presentation is consistent with how we measure our investment performance for management purposes, and we believe it enhances understanding of our investment portfolio results.


	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2022				2021				2022				2021
Asset Class	Yield % (1)		Amount		Yield % (1)		Amount		Yield % (1)		Amount		Yield % (1)		Amount
	(Dollars in millions)
Fixed maturity securities AFS (2), (3)	3.66	%	$	2,709	3.76	%	$	2,785	3.59	%	$	5,347	3.74	%	$	5,569
Mortgage loans (3)	4.11		832		4.29		885		4.12		1,655		4.20		$	1,746
Real estate and real estate joint ventures	8.98		277		3.65		109		8.40		518		3.42		$	204
Policy loans	5.09		114		5.18		120		5.11		230		5.16		$	241
Equity securities	2.46		5		4.30		9		2.99		12		4.62		$	20
Other limited partnership interests	4.69		171		36.58		1,050		15.02		1,097		43.04		$	2,335
Cash and short-term investments	1.53		43		0.72		21		1.30		73		0.79		$	42
Other invested assets	—		484		—		266		—		848		—		$	564
Investment income	4.29	%	4,635		4.85	%	5,245		4.51	%	9,780		4.95	%	$	10,721
Investment fees and expenses	(0.12)		(131)		(0.12)		(128)		(0.13)		(273)		(0.13)		$	(274)
Net investment income including divested businesses (4)	4.17	%	4,504		4.73	%	5,117		4.38	%	9,507		4.82	%	$	10,447
Less: net investment income from divested businesses (4)			—				—				11				$	36
Adjusted net investment income			$	4,504			$	5,117			$	9,496			$	10,411

(1)We calculate yields using adjusted net investment income as a percent of average quarterly asset carrying values. Adjusted net investment income excludes realized gains (losses) from sales and disposals, and includes the impact of changes in foreign currency exchange rates. Average quarterly asset carrying values exclude unrealized gains (losses), collateral received in connection with our securities lending program, annuities funding structured settlement claims, freestanding derivative assets, collateral received from derivative counterparties and contractholder-directed equity securities. In addition, average quarterly asset carrying values include invested assets reclassified to held-for-sale, while ending carrying values exclude invested assets reclassified to held-for-sale. A yield is not presented for other invested assets, as it is not considered a meaningful measure of performance for this asset class.

(2)Investment income from fixed maturity securities includes amounts from FVO Securities of ($89) million and ($154) million for the three months and six months ended June 30, 2022, respectively, and $50 million and $86 million for the three months and six months ended June 30, 2021, respectively.

(3)Investment income from fixed maturity securities AFS and mortgage loans includes prepayment fees.

(4)See “Financial Measures and Segment Accounting Policies” in Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for discussion of divested businesses.

See “— Results of Operations — Consolidated Results - Adjusted Earnings” for an analysis of the period over period changes in investment portfolio results.

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Fixed Maturity Securities AFS and Equity Securities

The following table presents fixed maturity securities AFS and equity securities by type (public or private) and information about perpetual and redeemable securities held at:


	June 30, 2022					December 31, 2021
Securities by Type	Estimated Fair Value			% of Total		Estimated Fair Value			% of Total
	(Dollars in millions)
Fixed maturity securities AFS
Publicly-traded	$	218,282		76.8	%	$	267,040		78.5	%
Privately-placed	65,896			23.2		73,234			21.5
Total fixed maturity securities AFS	$	284,178		100.0	%	$	340,274		100.0	%
Percentage of cash and invested assets	62.2		%			66.1		%
Equity securities
Publicly-traded	$	864		79.6	%	$	1,118		88.1	%
Privately-held	221			20.4		151			11.9
Total equity securities	$	1,085		100.0	%	$	1,269		100.0	%
Percentage of cash and invested assets	0.2		%			0.2		%
Perpetual and redeemable securities
Perpetual securities included within fixed maturity securities AFS and equity securities	$	289				$	321
Redeemable preferred stock with a stated maturity included within fixed maturity securities AFS	$	855				$	864

See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about fixed maturity securities AFS by sector, contractual maturities, continuous gross unrealized losses and equity securities by security type and the related cost, net unrealized gains (losses) and estimated fair value of these securities; as well as realized gains (losses) on sales and disposals and unrealized net gains (losses) recognized in earnings.

Included within fixed maturity securities AFS are structured securities, including residential mortgage-backed securities (“RMBS”), asset-backed securities and collateralized loan obligations (“ABS & CLO”), previously disclosed as ABS in the 2021 Annual Report, and commercial mortgage-backed securities (“CMBS”) (collectively, “Structured Products”). See “— Structured Products” for further information.

Perpetual securities are included within fixed maturity securities AFS and equity securities. Upon acquisition, we classify perpetual securities that have attributes of both debt and equity as fixed maturity securities AFS if the securities have an interest rate step-up feature which, when combined with other qualitative factors, indicates that the securities have more debt-like characteristics; while those with more equity-like characteristics are classified as equity securities. Many of such securities, commonly referred to as “perpetual hybrid securities,” have been issued by non-U.S. financial institutions that are accorded the highest two capital treatment categories by their respective regulatory bodies (i.e. core capital, or “Tier 1 capital” and perpetual deferrable securities, or “Upper Tier 2 capital”).

Redeemable preferred stock with a stated maturity is included within fixed maturity securities AFS. These securities, which are commonly referred to as “capital securities,” primarily have cumulative interest deferral features and are primarily issued by U.S. financial institutions.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Fixed Maturity Securities AFS and Equity Securities — Valuation of Securities” included in the 2021 Annual Report for further information on the processes used to value securities and the related controls.

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Fair Value of Fixed Maturity Securities AFS and Equity Securities

Fixed maturity securities AFS and equity securities measured at estimated fair value on a recurring basis and their corresponding fair value pricing sources were as follows:


	June 30, 2022
Level	Fixed Maturity Securities AFS				Equity Securities
	(Dollars in millions)
Level 1
Quoted prices in active markets for identical assets	$	16,825	5.9	%	$	720	66.4	%
Level 2
Independent pricing sources	238,769		84.0		142		13.1
Internal matrix pricing or discounted cash flow techniques	552		0.2		44		4.1
Significant other observable inputs	239,321		84.2		186		17.2
Level 3
Independent pricing sources	22,148		7.8		21		1.9
Internal matrix pricing or discounted cash flow techniques	5,502		2.0		155		14.2
Independent broker quotations	382		0.1		3		0.3
Significant unobservable inputs	28,032		9.9		179		16.4
Total estimated fair value	$	284,178	100.0	%	$	1,085	100.0	%

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for the fixed maturity securities AFS and equity securities fair value hierarchy; a rollforward of the fair value measurements for securities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs; transfers into and/or out of Level 3; and further information about the valuation approaches and inputs by level by major classes of invested assets that affect the amounts reported above.

The majority of the Level 3 fixed maturity securities AFS and equity securities were concentrated in three sectors at June 30, 2022: foreign corporate securities, U.S. corporate securities and RMBS. During the three months ended June 30, 2022, Level 3 fixed maturity securities AFS decreased by $2.5 billion, or 8%. The decrease was driven by a decrease in estimated fair value recognized in other comprehensive income (loss) and by transfers out of Level 3 in excess of transfers into Level 3, partially offset by purchases in excess of sales. During the six months ended June 30, 2022, Level 3 fixed maturity securities AFS decreased by $3.4 billion, or 11%. The decrease was driven by a decrease in estimated fair value recognized in other comprehensive income (loss), partially offset by purchases in excess of sales.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Fixed Maturity Securities AFS and Equity Securities — Valuation of Securities” included in the 2021 Annual Report for further information on the estimates and assumptions that affect the amounts reported above.

Fixed Maturity Securities AFS

See Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about fixed maturity securities AFS by sector, contractual maturities and continuous gross unrealized losses.

Fixed Maturity Securities AFS Credit Quality — Ratings

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Fixed Maturity Securities AFS and Equity Securities — Fixed Maturity Securities AFS Credit Quality — Ratings” included in the 2021 Annual Report for a discussion of the credit quality ratings assigned by Nationally Recognized Statistical Rating Organizations (“NRSRO”), credit quality designations and designation categories assigned by the Securities Valuation Office of the NAIC for fixed maturity securities AFS and modeling methodologies adopted by the NAIC for non-agency RMBS and CMBS that estimate security level expected losses under a variety of economic scenarios.

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NRSRO ratings and NAIC designations are as of the dates shown below. Over time, credit ratings and designations can migrate, up or down, through the NRSRO’s and NAIC’s continuous monitoring process. NRSRO ratings are based on availability of applicable ratings. If no NRSRO rating is available, then an internally developed rating is used. If no NAIC designation is available, then, as permitted by the NAIC, an internally developed designation is used. NAIC designations are generally similar to the credit quality ratings of the NRSRO, except for (i) non-agency RMBS and CMBS and (ii) securities rated Ca or C by NRSROs, included within Caa and lower, that are designated NAIC 6; accordingly, NAIC designations may not correspond to NRSRO ratings.

The following table presents total fixed maturity securities AFS by NRSRO rating, except for non-agency RMBS and CMBS, which are presented using NAIC designations for modeled securities. In addition, in the following table, the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations is provided.


		June 30, 2022								December 31, 2021
NRSRO Rating	NAIC Designation	Amortized Cost net of ACL		Unrealized Gains (Losses)		Estimated Fair Value		% of Total		Amortized Cost net of ACL		Unrealized Gains (Losses) (1)		Estimated Fair Value		% of Total
		(Dollars in millions)
Aaa/Aa/A	1	$	203,589	$	(8,499)	$	195,090	68.7	%	$	217,886	$	21,508	$	239,394	70.4	%
Baa	2	80,253		(5,470)		74,783		26.3		77,739		7,470		85,209		25.0
Subtotal investment grade		283,842		(13,969)		269,873		95.0		295,625		28,978		324,603		95.4
Ba	3	11,955		(826)		11,129		3.9		11,439		534		11,973		3.5
B	4	2,888		(235)		2,653		0.9		3,152		(2)		3,150		0.9
Caa and lower	5	426		(37)		389		0.2		563		(37)		526		0.2
In or near default	6	160		(26)		134		—		14		8		22		—
Subtotal below investment grade		15,429		(1,124)		14,305		5.0		15,168		503		15,671		4.6
Total fixed maturity securities AFS		$	299,271	$	(15,093)	$	284,178	100.0	%	$	310,793	$	29,481	$	340,274	100.0	%

(1) Excludes gross unrealized gains (losses) related to assets held-for-sale. See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements for information on the Company’s business dispositions.

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The following tables present total fixed maturity securities AFS, at estimated fair value, by sector and by NRSRO rating, except for non-agency RMBS and CMBS, which are presented using NAIC designations for modeled securities. In addition, in the following table, the applicable NAIC designation from the NAIC published comparison of the NRSRO ratings to NAIC designations is provided.


	Fixed Maturity Securities AFS — by Sector & Credit Quality Rating
NRSRO Rating	Aaa/Aa/A			Baa			Ba			B			Caa and Lower			In or Near Default			Total Estimated Fair Value
NAIC Designation	1			2			3			4			5			6
	(Dollars in millions)
June 30, 2022
U.S. corporate	$	40,472		$	33,742		$	4,525		$	1,569		$	173		$	74		$	80,555
Foreign corporate	19,021			31,299			3,257			506			93			1			54,177
Foreign government	39,742			5,151			2,698			329			67			29			48,016
U.S. government and agency	33,219			471			—			—			—			—			33,690
RMBS	26,428			713			81			62			4			15			27,303
ABS & CLO	14,051			2,535			351			76			26			15			17,054
Municipals	12,166			323			24			—			—			—			12,513
CMBS	9,991			549			193			111			26			—			10,870
Total fixed maturity securities AFS	$	195,090		$	74,783		$	11,129		$	2,653		$	389		$	134		$	284,178
Percentage of total	68.7		%	26.3		%	3.9		%	0.9		%	0.2		%	—		%	100.0		%

December 31, 2021
U.S. corporate	$	47,377		$	39,094		$	4,523		$	1,796		$	244		$	—		$	93,034
Foreign corporate	23,228			35,893			3,731			577			210			1			63,640
Foreign government	52,316			5,739			3,032			506			14			2			61,609
U.S. government and agency	46,065			534			—			—			—			—			46,599
RMBS	29,529			634			150			67			5			19			30,404
ABS & CLO	15,920			2,221			316			85			27			—			18,569
Municipals	13,737			457			18			—			—			—			14,212
CMBS	11,222			637			203			119			26			—			12,207
Total fixed maturity securities AFS	$	239,394		$	85,209		$	11,973		$	3,150		$	526		$	22		$	340,274
Percentage of total	70.4		%	25.0		%	3.5		%	0.9		%	0.2		%	—		%	100.0		%

U.S. and Foreign Corporate Fixed Maturity Securities AFS

We maintain a diversified portfolio of corporate fixed maturity securities AFS across industries and issuers. This portfolio did not have any exposure to any single issuer in excess of 1% of total investments at June 30, 2022. The top 10 holdings comprised 1% and 2% of total investments at June 30, 2022 and December 31, 2021, respectively. The table below presents our U.S. and foreign corporate securities holdings by industry at:


	June 30, 2022				December 31, 2021
Industry	Estimated Fair Value		% of Total		Estimated Fair Value		% of Total
	(Dollars in millions)
Industrial	$	39,710	29.5	%	$	45,732	29.2	%
Finance	31,125		23.1		35,676		22.7
Consumer	26,735		19.8		31,142		19.9
Utility	23,820		17.7		28,961		18.5
Communications	10,505		7.8		12,346		7.9
Other	2,837		2.1		2,817		1.8
Total	$	134,732	100.0	%	$	156,674	100.0	%

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Structured Products

Structured Products are comprised of investments in securities that are collateralized by residential mortgages, commercial mortgages, bank loans and other assets. Our investment selection criteria and monitoring includes the reviews of credit ratings, characteristics of the assets underlying the securities, borrower characteristics and the level of credit enhancement. We held $55.2 billion and $61.2 billion of Structured Products, at estimated fair value, at June 30, 2022 and December 31, 2021, respectively, as presented in the RMBS, ABS & CLO and CMBS sections below.

RMBS

Our RMBS portfolio is diversified by security type and risk profile. The following table presents our RMBS portfolio by security type, risk profile and ratings profile at:


	June 30, 2022						December 31, 2021
	Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)		Estimated Fair Value		% of Total		Net Unrealized Gains (Losses) (1)
	(Dollars in millions)
Security type
Collateralized mortgage obligations	$	17,029	62.4	%	$	(768)	$	17,646	58.0	%	$	1,092
Pass-through mortgage-backed securities	10,274		37.6		(997)		12,758		42.0		160
Total RMBS	$	27,303	100.0	%	$	(1,765)	$	30,404	100.0	%	$	1,252
Risk profile
Agency	$	16,317	59.8	%	$	(1,286)	$	19,487	64.1	%	$	671
Non Agency
Prime	2,977		10.9		(312)		3,018		9.9		13
Alt-A	4,731		17.3		(124)		3,887		12.8		267
Sub-prime	3,278		12.0		(43)		4,012		13.2		301
Subtotal Non Agency	10,986		40.2	%	(479)		10,917		35.9	%	581
Total RMBS	$	27,303	100.0	%	$	(1,765)	$	30,404	100.0	%	$	1,252
Ratings profile
Rated Aaa and Aa	$	22,001	80.6	%			$	24,190	79.6	%
Designated NAIC 1	$	26,423	96.8	%			$	29,529	97.1	%

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Fixed Maturity Securities AFS and Equity Securities — Structured Products — RMBS” included in the 2021 Annual Report for further information about collateralized mortgage obligations and pass-through mortgage-backed securities, as well as agency, prime, alternative residential mortgage loans (“Alt-A”) and sub-prime RMBS.

Historically, we have managed our exposure to sub-prime RMBS holdings by focusing primarily on senior tranche securities, stress testing the portfolio with severe loss assumptions and closely monitoring the performance of the portfolio. Our sub-prime RMBS portfolio consists predominantly of securities that were purchased at significant discounts to par value and discounts to the expected principal recovery value of these securities. The vast majority of these securities are investment grade under the NAIC designations (e.g., NAIC 1 and NAIC 2).

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ABS & CLO

Our non-mortgage loan-backed structured securities are comprised of two broad categories of securitizations: ABS & CLO. These portfolios are diversified by collateral type and issuer. The following table presents these portfolios by collateral type and ratings profile at:


	June 30, 2022						December 31, 2021
	Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)		Estimated Fair Value		% of Total		Net Unrealized Gains (Losses) (1)
	(Dollars in millions)
ABS
Collateral type
Vehicle and equipment loans	$	1,385	8.1	%	$	(44)	$	1,864	10.0	%	$	10
Consumer Loans	1,510		8.9		(65)		1,653		8.9		48
Student loans	914		5.4		(59)		1,143		6.2		15
Foreign residential loans	708		4.2		(34)		922		5.0		2
Credit card	1,082		6.3		(8)		900		4.8		9
Other (2)	3,977		23.3		(307)		3,646		19.6		45
Total ABS	9,576		56.2	%	(517)		10,128		54.5	%	129
CLO (3)	7,478		43.8		(339)		8,441		45.5		(3)
Total ABS & CLO	$	17,054	100.0	%	$	(856)	$	18,569	100.0	%	$	126

ABS ratings profile
Rated Aaa and Aa	$	4,554	47.6	%			$	5,289	52.2	%
Designated NAIC 1	$	7,252	75.7	%			$	8,105	80.0	%
CLO ratings profile
Rated Aaa and Aa	$	5,703	76.3	%			$	6,749	80.0	%
Designated NAIC 1	$	6,790	90.8	%			$	7,815	92.6	%
ABS & CLO ratings profile
Rated Aaa and Aa	$	10,257	60.1	%			$	12,038	64.8	%
Designated NAIC 1	$	14,042	82.3	%			$	15,920	85.7	%

(2) Other ABS are broadly diversified across several subsectors and issuers, including securities with the following collateral types: digital infrastructure, franchise, transportation equipment, and renewable energy.

(3) Includes primarily securities collateralized by broadly syndicated bank loans.

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CMBS

Our CMBS portfolio is comprised primarily of securities collateralized by multiple commercial mortgage loans and is diversified by property type, borrower and geography. The following tables present our CMBS portfolio by collateral type and ratings profile at.


	June 30, 2022						December 31, 2021
	Estimated Fair Value		% of Total		Net Unrealized Gains (Losses)		Estimated Fair Value		% of Total		Net Unrealized Gains (Losses) (1)
	(Dollars in millions)
Collateral type
Conduit	$	7,456	68.6	%	$	(347)	$	8,282	67.8	%	$	341
Single asset and single borrower	1,959		18.0		(123)		2,269		18.6		32
Commercial real estate collateralized loan obligations	534		4.9		(11)		653		5.4		2
Agency	543		5.0		(36)		610		5.0		50
Other	378		3.5		(18)		393		3.2		2
Total CMBS	$	10,870	100.0	%	$	(535)	$	12,207	100	%	$	427
Ratings profile
Rated Aaa and Aa	$	8,510	78.3	%			$	9,614	78.8	%
Designated NAIC 1	$	9,990	91.9	%			$	11,222	91.9	%

Evaluation of Fixed Maturity Securities AFS for Credit Loss, Rollforward of Allowance for Credit Loss and Credit Loss on Fixed Maturity Securities AFS Recognized in Earnings

See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about the evaluation of fixed maturity securities AFS for credit loss, rollforward of the ACL, net credit loss provision (release), and impairment loss, as well as realized gross gains and gross losses on sales and disposals of fixed maturity securities AFS at and for the six months ended June 30, 2022.

Contractholder-Directed Equity Securities and Fair Value Option Securities

The estimated fair value of these investments, which are primarily comprised of contractholder-directed equity securities supporting unit-linked variable annuity type liabilities (“Unit-linked investments”), was $9.9 billion and $12.1 billion, or 2.2% and 2.4% of cash and invested assets, at June 30, 2022 and December 31, 2021, respectively. See Notes 6 and 8 of the Notes to the Interim Condensed Consolidated Financial Statements for a description of this portfolio, investments by asset type and the related cost or amortized cost, net unrealized gains (losses) and estimated fair value of these securities, the fair value hierarchy and a rollforward of the fair value measurements for these investments measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.

Securities Lending Transactions, Repurchase Agreements and Third-Party Custodian Administered Programs

We participate in securities lending transactions, repurchase agreements and third-party custodian administered programs with unaffiliated financial institutions in the normal course of business for the purpose of enhancing the total return on our investment portfolio.

Securities lending transactions and repurchase agreements: We account for these arrangements as secured borrowings and record a liability in the amount of the cash received. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the securities are returned to us. Through these arrangements, we were liable for cash collateral under our control of $16.9 billion and $24.4 billion at June 30, 2022 and December 31, 2021, respectively, including a portion that may require the immediate return of cash collateral we hold. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as “Summary of Significant Accounting Policies — Investments — Securities Lending Transactions and Repurchase Agreements” in Note 1 of the Notes of the Consolidated Financial Statements included in the 2021 Annual Report for further information about the secured borrowings accounting and the classification of revenues and expenses.

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Third-party custodian administered programs: The estimated fair value of securities we own which are loaned in connection with these programs was $392 million and $273 million at June 30, 2022 and December 31, 2021, respectively. The estimated fair value of the related non-cash collateral on deposit with third-party custodians on our behalf, which is not reflected in our interim condensed consolidated financial statements and cannot be sold or re-pledged, was $403 million and $282 million at June 30, 2022 and December 31, 2021, respectively.

Mortgage Loans

Our mortgage loans held-for-investment are principally collateralized by commercial, agricultural and residential properties. Mortgage loans carried at amortized cost and the related ACL are summarized as follows at:


	June 30, 2022									December 31, 2021
Portfolio Segment		Amortized Cost		% of Total		ACL		% of Amortized Cost		Amortized Cost		% of Total		ACL		% of Amortized Cost
		(Dollars in millions)
Commercial		$	52,348	63.5	%	$	205	0.4	%	$	50,553	63.3	%	$	340	0.7	%
Agricultural		18,563		22.5		107		0.6	%	18,111		22.7		88		0.5	%
Residential		11,497		14.0		174		1.5	%	11,196		14.0		206		1.8	%
Total		$	82,408	100.0	%	$	486	0.6	%	$	79,860	100.0	%	$	634	0.8	%

The carrying value of all mortgage loans, net of ACL, was 18.0% and 15.4% of cash and invested assets at June 30, 2022 and December 31, 2021, respectively.

We diversify our mortgage loan portfolio by both geographic region and property type to reduce the risk of concentration. Of our commercial and agricultural mortgage loan held-for-investment portfolios, 85% are collateralized by properties located in the United States, with the remaining 15% collateralized by properties located outside the United States, which includes 5%, 3% and 1% of properties located in Mexico, U.K. and Chile, respectively, at June 30, 2022. The carrying values of our commercial and agricultural mortgage loans held-for-investment located in California, New York and Texas were 17%, 9% and 7%, respectively, of total commercial and agricultural mortgage loans held-for-investment at June 30, 2022. Additionally, we manage risk when originating commercial and agricultural mortgage loans by generally lending up to 75% of the estimated fair value of the underlying real estate collateral.

We manage our residential mortgage loan held-for-investment portfolio in a similar manner to reduce risk of concentration, with 92% collateralized by properties located in the United States, and the remaining 8% collateralized by properties located outside the United States, principally in Chile, at June 30, 2022. The carrying values of our residential mortgage loans located in California, Florida, and New York were 32%, 10%, and 8%, respectively, of total residential mortgage loans at June 30, 2022.

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Commercial Mortgage Loans by Geographic Region and Property Type. Commercial mortgage loans are the largest mortgage loan portfolio segment. The tables below present the diversification across geographic regions and property types of commercial mortgage loans held-for-investment at:


	June 30, 2022				December 31, 2021
	Amount		% of Total		Amount		% of Total
	(Dollars in millions)
Region
Non-U.S.	$	9,726	18.6	%	$	9,969	19.7	%
Pacific	9,901		18.9		9,676		19.1
Middle Atlantic	7,918		15.1		7,537		14.9
South Atlantic	6,852		13.1		6,800		13.5
West South Central	3,943		7.5		3,492		6.9
New England	2,781		5.3		2,748		5.4
East North Central	1,489		2.9		2,129		4.2
Mountain	2,268		4.3		1,993		4.0
East South Central	636		1.2		759		1.5
West North Central	428		0.8		663		1.3
Multi-Region and Other	6,406		12.3		4,787		9.5
Total amortized cost	52,348		100.0	%	50,553		100.0	%
Less: ACL	205				340
Carrying value, net of ACL	$	52,143			$	50,213
Property Type
Office	$	21,923	41.9	%	$	22,388	44.3	%
Apartment	10,536		20.1		9,121		18.0
Retail	8,524		16.3		8,548		16.9
Industrial	4,902		9.4		5,096		10.1
Hotel	3,323		6.3		3,201		6.3
Other	3,140		6.0		2,199		4.4
Total amortized cost	52,348		100.0	%	50,553		100.0	%
Less: ACL	205				340
Carrying value, net of ACL	$	52,143			$	50,213

Our commercial mortgage loan portfolio is well positioned with exposures concentrated in high quality underlying properties located in primary markets typically with institutional investors who are better positioned to manage their assets during periods of market volatility. Our portfolio is comprised primarily of lower risk loans with higher debt service coverage ratios (“DSCR”) and lower loan-to-value (“LTV”) ratios. See “— Mortgage Loan Credit Quality — Monitoring Process” for further information and Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for a distribution of our commercial mortgage loans by DSCR and LTV ratios.

Mortgage Loan Credit Quality - Monitoring Process. We monitor our mortgage loan investments on an ongoing basis, including a review of loans by credit quality indicator and loans that are current, past due, restructured and under foreclosure. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for further information regarding mortgage loans by credit quality indicator, past due and nonaccrual mortgage loans.

We review our commercial mortgage loans on an ongoing basis. These reviews may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, 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. The monitoring process for agricultural mortgage loans is generally similar, with a focus on higher risk loans, such as loans with higher LTV ratios. Agricultural mortgage loans are reviewed on an ongoing basis which include, but are not limited to, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, including reviews on a geographic and property-type basis. We review our residential mortgage loans on an ongoing basis, with a focus on higher risk loans, such as nonperforming loans. See Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information on our evaluation of residential mortgage loans and related ACL methodology.

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LTV ratios and DSCR are common measures in the assessment of the quality of commercial mortgage loans. LTV ratios are a common measure in the assessment of the quality of agricultural mortgage loans. LTV ratios compare the amount of the loan to the estimated fair value of the underlying collateral. An LTV ratio greater than 100% indicates that the loan amount is greater than the collateral value. An LTV ratio of less than 100% indicates an excess of collateral value over the loan amount. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR 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. For our commercial mortgage loans, our average LTV ratio was 56% at both June 30, 2022 and December 31, 2021 and our average DSCR was 2.6x and 2.5x at June 30, 2022 and December 31, 2021, respectively. 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 our ongoing review of our commercial mortgage loan portfolio. For our agricultural mortgage loans, our average LTV ratio was 48% and 49% at June 30, 2022 and December 31, 2021, respectively. The values utilized in calculating our agricultural mortgage loan LTV ratio are developed in connection with the ongoing review of our agricultural loan portfolio and are routinely updated.

Mortgage Loan Allowance for Credit Loss. Our ACL is established for both pools of loans with similar risk characteristics and for mortgage loans with dissimilar risk characteristics, collateral dependent loans and reasonably expected troubled debt restructurings, individually on a loan specific basis. We record 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 our ACL, management (i) pools mortgage loans that share similar risk characteristics, (ii) considers expected lifetime credit loss over the contractual term of our mortgage loans, as adjusted for expected prepayments and any extensions, and (iii) considers past events and current and forecasted economic conditions. Actual credit loss realized could be different from the amount of the ACL recorded. These evaluations and assessments are revised as conditions change and new information becomes available, which can cause the ACL to increase or decrease over time as such evaluations are revised. Negative credit migration, including an actual or expected increase in the level of problem loans, will result in an increase in the ACL. Positive credit migration, including an actual or expected decrease in the level of problem loans, will result in a decrease in the ACL. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information on how the ACL is established and monitored, and activity in and balances of the ACL.

Real Estate and Real Estate Joint Ventures

Real estate and real estate joint ventures is comprised of wholly-owned real estate and joint ventures with interests in single property income-producing real estate and, to a lesser extent, joint ventures with interests in multi-property projects with varying strategies ranging from the development of properties to the operation of income-producing properties, as well as real estate funds. The carrying value of real estate and real estate joint ventures was $12.4 billion and $12.2 billion, or 2.7% and 2.4% of cash and invested assets, at June 30, 2022 and December 31, 2021, respectively.

Our real estate investments are typically stabilized properties that we intend to hold for the longer-term for portfolio diversification and long-term appreciation. Our real estate investment portfolio has significantly appreciated to a $7.5 billion and $6.2 billion unrealized gain position at June 30, 2022 and June 30, 2021, respectively. We continuously monitor expected future cash flows of each of our real estate investments and incorporate them into our periodic impairment analyses. There were no impairments recognized in earnings within net investment gains (losses) on real estate and real estate joint ventures for either the six months ended June 30, 2022 or 2021.

We diversify our real estate investments by both geographic region and property type to reduce risk of concentration. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for a summary of real estate investments, by income type, as well as income earned.

Other Limited Partnership Interests

Other limited partnership interests are comprised of investments in private funds, including private equity funds and hedge funds. At June 30, 2022 and December 31, 2021, the carrying value of other limited partnership interests was $14.6 billion and $14.6 billion, which included $543 million and $663 million of hedge funds, respectively. Other limited partnership interests were 3.2% and 2.8% of cash and invested assets at June 30, 2022 and December 31, 2021, respectively. Cash distributions on these investments are generated from investment gains, operating income from the underlying investments of the funds and liquidation of the underlying investments of the funds.

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We use the equity method of accounting for most of our private equity funds. We generally recognize our share of a private equity fund’s earnings in net investment income on a three-month lag when the information is reported to us. Accordingly, changes in equity market levels, which can impact the underlying results of these private equity funds, are recognized in earnings within our net investment income on a three-month lag.

Other Invested Assets

The following table presents the carrying value of our other invested assets by type at:


	June 30, 2022					December 31, 2021
Asset Type	Carrying Value			% of Total		Carrying Value			% of Total
	(Dollars in millions)
Freestanding derivatives with positive estimated fair values	$	11,583		58.2	%	$	10,466		56.1	%
Tax credit and renewable energy partnerships	1,466			7.4		1,564			8.4
Annuities funding structured settlement claims	1,237			6.2		1,251			6.7
Direct financing leases	1,061			5.3		1,143			6.1
Operating joint ventures	1,139			5.7		901			4.8
Leveraged leases	788			4.0		787			4.2
FHLB common stock	802			4.0		769			4.1
Funds withheld	451			2.3		525			2.8
Other	1,374			6.9		1,249			6.8
Total	$	19,901		100.0	%	$	18,655		100.0	%

Percentage of cash and invested assets	4.4		%			3.6		%

Investment Commitments

We enter into the following commitments in the normal course of business for the purpose of enhancing the total return on our investment portfolio: mortgage loan commitments and commitments to fund partnerships, bank credit facilities, bridge loans and private corporate bond investments. See Note 14 of the Notes to the Interim Condensed Consolidated Financial Statements for the amount of our unfunded investment commitments at June 30, 2022 and December 31, 2021. See “Net Investment Income” and “Net Investment Gains (Losses)” in Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information on the investment income, investment expense, gains and losses from such investments and the liability for credit loss for unfunded mortgage loan commitments. See also “— Fixed Maturity Securities AFS and Equity Securities,” “— Mortgage Loans,” “— Real Estate and Real Estate Joint Ventures” and “— Other Limited Partnership Interests.”

Derivatives

Overview

We are exposed to various risks relating to our ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. We use a variety of strategies to manage these risks, including the use of derivatives such as market standard purchased and written credit default swap contracts. See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for:

A comprehensive description of the nature of our derivatives, including the strategies for which derivatives are used in managing various risks.
Information about the primary underlying risk exposure, gross notional amount, and estimated fair value of our derivatives by type of hedge designation, excluding embedded derivatives held at June 30, 2022 and December 31, 2021.
The statement of operations effects of derivatives in net investments in foreign operations, cash flow, fair value, or nonqualifying hedge relationships for the three months and six months ended June 30, 2022 and 2021.

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We enter into market standard purchased and written credit default swap contracts. Payout under such contracts is triggered by certain credit events experienced by the referenced entities. For credit default swaps covering North American corporate issuers, credit events typically include bankruptcy and failure to pay on borrowed money. For European corporate issuers, credit events typically also include involuntary restructuring. With respect to credit default contracts on sovereign debt, credit events typically include failure to pay debt obligations, repudiation, moratorium, or involuntary restructuring. In each case, payout on a credit default swap is triggered only after the relevant third party, Credit Derivatives Determinations Committee, determines that a credit event has occurred.

We use purchased credit default swaps to mitigate credit risk in our investment portfolio. Generally, we purchase credit protection by entering into credit default swaps referencing the issuers of specific assets we own. In certain cases, basis risk exists between these credit default swaps and the specific assets we own. For example, we may purchase credit protection on a macro basis to reduce exposure to specific industries or other portfolio concentrations. In such instances, the referenced entities and obligations under the credit default swaps may not be identical to the individual obligors or securities in our investment portfolio. In addition, our purchased credit default swaps may have shorter tenors than the underlying investments they are hedging, which gives us more flexibility in managing our credit exposures. We believe that our purchased credit default swaps serve as effective economic hedges of our credit exposure.

See “Quantitative and Qualitative Disclosures About Market Risk — Management of Market Risk Exposures — Hedging Activities” included in the 2021 Annual Report for more information about our use of derivatives by major hedge program.

Fair Value Hierarchy

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for derivatives measured at estimated fair value on a recurring basis and their corresponding fair value hierarchy.

The valuation of Level 3 derivatives involves the use of significant unobservable inputs and generally requires a higher degree of management judgment or estimation than the valuations of Level 1 and Level 2 derivatives. Although Level 3 inputs are unobservable, management believes they are consistent with what other market participants would use when pricing such instruments and are considered appropriate given the circumstances. The use of different inputs or methodologies could have a material effect on the estimated fair value of Level 3 derivatives and could materially affect net income.

Derivatives categorized as Level 3 at June 30, 2022 include: interest rate forwards with maturities which extend beyond the observable portion of the yield curve; interest rate caps with unobservable volatility inputs; foreign currency swaps and forwards with certain unobservable inputs, including the unobservable portion of the yield curve; and credit default swaps priced using unobservable credit spreads, or that are priced through independent broker quotations. At June 30, 2022, less than 1% of the estimated fair value of our derivatives was priced through independent broker quotations.

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for a rollforward of the fair value measurements for derivatives measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates — Derivatives” included in the 2021 Annual Report for further information on the estimates and assumptions that affect derivatives.

Credit Risk

See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for information about how we manage credit risk related to derivatives and for the estimated fair value of our net derivative assets and net derivative liabilities after the application of master netting agreements and collateral.

Our policy is not to offset the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement. This policy applies to the recognition of derivatives on the consolidated balance sheets, and does not affect our legal right of offset.

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Credit Derivatives

The following table presents the gross notional amount and estimated fair value of credit default swaps at:


	June 30, 2022				December 31, 2021
Credit Default Swaps	Gross Notional Amount		Estimated Fair Value		Gross Notional Amount		Estimated Fair Value
	(In millions)
Purchased	$	2,993	$	(56)	$	3,042	$	(100)
Written	11,786		(49)		8,626		165
Total	$	14,779	$	(105)	$	11,668	$	65

The following table presents the gross gains, gross losses and net gains (losses) recognized in net derivative gains (losses) for credit default swaps as follows:


	Three Months Ended June 30,												Six Months Ended June 30,
	2022						2021						2022						2021
Credit Default Swaps	Gross Gains		Gross Losses		Net Gains (Losses)		Gross Gains		Gross Losses		Net Gains (Losses)		Gross Gains		Gross Losses		Net Gains (Losses)		Gross Gains		Gross Losses		Net Gains (Losses)
	(In millions)
Purchased (1)	$	45	$	2	$	47	$	(4)	$	(3)	$	(7)	$	94	$	(2)	$	92	$	16	$	(4)	$	12
Written (1)	(20)		(175)		(195)		30		—		30		2		(247)		(245)		42		(7)		35
Total	$	25	$	(173)	$	(148)	$	26	$	(3)	$	23	$	96	$	(249)	$	(153)	$	58	$	(11)	$	47

(1)Gains (losses) do not include earned income (expense) on credit default swaps.

The unfavorable change in net gains (losses) on written credit default swaps of $280 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was due to certain credit spreads on certain credit default swaps used as replications widening in the current period as compared to narrowing in the prior period. The favorable change in net gains (losses) on purchased credit defaults swaps of $80 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was due to certain credit spreads on certain credit default swaps widening in the current period as compared to narrowing in the prior period.

The maximum amount at risk related to our written credit default swaps is equal to the corresponding gross notional amount. In a replication transaction, we pair an asset on our balance sheet with a written credit default swap to synthetically replicate a corporate bond, a core asset holding of life insurance companies. Replications are entered into in accordance with the guidelines approved by state insurance regulators and the NAIC and are an important tool in managing the overall corporate credit risk within the Company. In order to match our long-dated insurance liabilities, we seek to buy long-dated corporate bonds. In some instances, these may not be readily available in the market, or they may be issued by corporations to which we already have significant corporate credit exposure. For example, by purchasing Treasury bonds (or other high-quality assets) and associating them with written credit default swaps on the desired corporate credit name, we can replicate the desired bond exposures and meet our ALM needs. In addition, given the shorter tenor of the credit default swaps (generally five-year tenors) versus a long dated corporate bond, we have more flexibility in managing our credit exposures.

Collateral for Derivatives

We enter into derivatives to manage various risks relating to our ongoing business operations. We receive non-cash collateral from counterparties for derivatives, which can be sold or re-pledged subject to certain constraints, and which is not reflected on our interim condensed consolidated balance sheets. The amounts of this non-cash collateral were $977 million and $1.1 billion, at estimated fair value, at June 30, 2022 and December 31, 2021, respectively. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Pledged Collateral” and Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the earned income on and the gross notional amount, estimated fair value of assets and liabilities and primary underlying risk exposure of our derivatives.

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Embedded Derivatives

See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for information about embedded derivatives measured at estimated fair value on a recurring basis and their corresponding fair value hierarchy and a rollforward of the fair value measurements for embedded derivatives measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs.

See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for information about the nonperformance risk adjustment included in the valuation of guaranteed minimum benefits accounted for as embedded derivatives.

Policyholder Liabilities

We establish, and carry as liabilities, actuarially determined amounts that are calculated to meet policy obligations or to provide for future annuity payments. Amounts for actuarial liabilities are computed and reported on the interim condensed consolidated financial statements in conformity with GAAP. For more details on Policyholder Liabilities, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” included in the 2021 Annual Report.

We periodically review our estimates of actuarial liabilities for future benefits and compare them with our actual experience. We revise estimates, to the extent permitted or required under GAAP, if we determine that future expected experience differs from assumptions used in the development of actuarial liabilities. We charge or credit changes in our liabilities to expenses in the period the liabilities are established or re-estimated. If the liabilities originally established for future benefit payments prove inadequate, we must increase them. Such an increase could adversely affect our earnings and have a material adverse effect on our business, results of operations and financial condition.

See “Business — Regulation — Insurance Regulation — Policy and Contract Reserve Adequacy Analysis” and “Risk Factors — Business Risks” included in the 2021 Annual Report for further information regarding required analyses of the adequacy of statutory reserves of our insurance operations.

The following discussions on future policy benefits and policyholder account balances should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of Market Interest Rates” included in the 2021 Annual Report, as amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q and “— Variable Annuity Guarantees.” See also Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for additional information.

Future Policy Benefits

We establish liabilities for amounts payable under insurance policies. A discussion of future policy benefits by segment (as well as Corporate & Other) follows.

U.S.

Amounts payable under insurance policies for this segment are comprised of group insurance and annuities. For group insurance, future policyholder benefits are comprised mainly of liabilities for disabled lives under disability waiver of premium policy provisions, liabilities for survivor income benefit insurance, active life policies and premium stabilization and other contingency liabilities held under life insurance contracts. For group annuity contracts, future policyholder benefits are primarily related to payout annuities, including pension risk transfers, structured settlement annuities and institutional income annuities. There is no interest rate crediting flexibility on these liabilities.

Asia

Future policy benefits for this segment are held primarily for traditional life, endowment, annuity and accident & health contracts. They are also held for total return pass-through provisions included in certain universal life and savings products. They include certain liabilities for variable annuity and variable life guarantees of minimum death benefits, and longevity guarantees. Factors impacting these liabilities include sustained periods of lower than expected yields, lower than expected asset reinvestment rates, market volatility, actual lapses resulting in lower than expected income, and actual mortality or morbidity resulting in higher than expected benefit payments.

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Latin America

Future policy benefit liabilities for this segment are held primarily for immediate annuities, traditional life contracts and total return pass-through provisions included in certain universal life and savings products. There is no interest rate crediting flexibility on the immediate annuity and traditional life liabilities. Other factors impacting these liabilities are actual mortality resulting in higher than expected benefit payments and actual lapses resulting in lower than expected income.

EMEA

Future policy benefits for this segment include unearned premium reserves for group life and medical and credit insurance contracts. Future policy benefits are also held for traditional life, endowment and annuity contracts with significant mortality risk and accident & health contracts. Factors impacting these liabilities include lower than expected asset reinvestment rates, market volatility, actual lapses resulting in lower than expected income, and actual mortality or morbidity resulting in higher than expected benefit payments.

MetLife Holdings

Future policy benefits for the life insurance business are comprised mainly of liabilities for traditional life insurance contracts. For the annuities business, future policy benefits are comprised mainly of liabilities for life-contingent income annuities and liabilities for the variable annuity guaranteed minimum benefits that are accounted for as insurance. For the long-term care business, future policyholder benefits are comprised mainly of liabilities for disabled lives under disability waiver of premium policy provisions, and active life policies. In addition, for our other products, future policyholder benefits related to the reinsurance of our former Japan joint venture are comprised of liabilities for the variable annuity guaranteed minimum benefits that are accounted for as insurance.

Corporate & Other

Future policy benefits primarily include liabilities for other reinsurance business.

Policyholder Account Balances

Policyholder account balances are generally equal to the account value, which includes accrued interest credited, but excludes the impact of any applicable charge that may be incurred upon surrender. A discussion of policyholder account balances by segment follows.

U.S.

Policyholder account balances in this segment are comprised of funding agreements, retained asset accounts, universal life policies, the fixed account of variable life insurance policies and specialized life insurance products for benefit programs.

Group Benefits

Policyholder account balances in this business are held for retained asset accounts, universal life policies, the fixed account of variable life insurance policies and specialized life insurance products for benefit programs. Policyholder account balances are credited interest at a rate we determine, which is influenced by current market rates. Most of these policyholder account balances have minimum credited rate guarantees.

The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Group Benefits:


	June 30, 2022
Guaranteed Minimum Crediting Rate	Account Value		Account Value at Guarantee
	(In millions)
Greater than 0% but less than 2%	$	5,564	$	5,435
Equal to or greater than 2% but less than 4%	$	1,531	$	1,489
Equal to or greater than 4%	$	817	$	786

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Retirement and Income Solutions

Policyholder account balances in this business are held largely for investment-type products, mainly funding agreements, as well as postretirement benefits and corporate-owned life insurance to fund non-qualified benefit programs for executives. Interest crediting rates vary by type of contract and can be fixed or variable. Variable interest crediting rates are generally tied to an external index, most commonly (1-month or 3-month) LIBOR or Secured Overnight Financing Rate. We guarantee payment of interest and return of principal at the contractual maturity date.

The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for RIS:


	June 30, 2022
Guaranteed Minimum Crediting Rate	Account Value		Account Value at Guarantee
	(In millions)
Greater than 0% but less than 2%	$	653	$	—
Equal to or greater than 2% but less than 4%	$	817	$	188
Equal to or greater than 4%	$	4,601	$	4,346

Asia

Policyholder account balances in this segment are held largely for fixed income retirement and savings plans, fixed deferred annuities, interest sensitive whole life products, universal life and, to a lesser degree, liability amounts for Unit-linked investments that do not meet the GAAP definition of separate accounts. Also included are certain liabilities for retirement and savings products sold in certain countries in Asia that generally are sold with minimum credited rate guarantees. Liabilities for guarantees on certain variable annuities in Asia are accounted for as embedded derivatives and recorded at estimated fair value and are also included within policyholder account balances. Most of these policyholder account balances have minimum credited rate guarantees. Liabilities for Unit-linked investments are impacted by changes in the fair value of the associated underlying investments, as the return on assets is generally passed directly to the policyholder.

The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Asia:


	June 30, 2022
Guaranteed Minimum Crediting Rate	Account Value		Account Value at Guarantee
	(In millions)
Annuities:
Greater than 0% but less than 2%	$	30,330	$	1,706
Equal to or greater than 2% but less than 4%	$	920	$	414
Equal to or greater than 4%	$	1	$	1
Life & Other:
Greater than 0% but less than 2%	$	11,414	$	10,700
Equal to or greater than 2% but less than 4%	$	34,371	$	21,276
Equal to or greater than 4%	$	277	$	277

Latin America

Policyholder account balances in this segment are held largely for investment-type products, universal life products, deferred annuities and Unit-linked investments that do not meet the GAAP definition of separate accounts. Liabilities for Unit-linked investments are impacted by changes in the fair value of the associated investments, as the return on assets is generally passed directly to the policyholder. Many of the other liabilities have minimum credited rate guarantees.

EMEA

Policyholder account balances in this segment are held mostly for universal life, deferred annuities, pension products, and Unit-linked investments that do not meet the GAAP definition of separate accounts. They are also held for endowment products without significant mortality risk. Most of these policyholder account balances have minimum credited rate guarantees. Liabilities for Unit-linked investments are impacted by changes in the fair value of the associated investments, as the return on assets is generally passed directly to the policyholder.

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MetLife Holdings

Life policyholder account balances in this segment are held for retained asset accounts, universal life policies, the fixed account of variable life insurance policies, and funding agreements. For annuities, policyholder account balances are held for fixed deferred annuities, the fixed account portion of variable annuities, non-life contingent income annuities, and embedded derivatives related to variable annuity guarantees. Interest is credited to the policyholder’s account at interest rates we determine which are influenced by current market rates, subject to specified minimums. Most of these policyholder account balances have minimum credited rate guarantees. Additionally, for our other products, policyholder account balances are held for variable annuity guarantees assumed from a former operating joint venture in Japan that are accounted for as embedded derivatives.

The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for the MetLife Holdings segment:


	June 30, 2022
Guaranteed Minimum Crediting Rate	Account Value		Account Value at Guarantee
	(In millions)
Greater than 0% but less than 2%	$	1,098	$	1,069
Equal to or greater than 2% but less than 4%	$	17,108	$	15,675
Equal to or greater than 4%	$	7,248	$	6,645

Variable Annuity Guarantees

We issue, directly and through assumed business, certain variable annuity products with guaranteed minimum benefits that provide the policyholder a minimum return based on their initial deposit (i.e., the benefit base) less withdrawals. In some cases, the benefit base may be increased by additional deposits, bonus amounts, accruals or optional market value resets. See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for additional information.

Certain guarantees, including portions thereof, have insurance liabilities established that are included in future policy benefits. Guarantees accounted for in this manner include GMDBs, the life-contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”), elective guaranteed minimum income benefit (“GMIB”) annuitizations, and the life contingent portion of GMIBs that require annuitization when the account balance goes to zero. These liabilities are accrued over the life of the contract in proportion to actual and future expected policy assessments based on the level of guaranteed minimum benefits generated using multiple scenarios of separate account returns. The scenarios are based on best estimate assumptions consistent with those used to amortize DAC. When current estimates of future benefits exceed those previously projected or when current estimates of future assessments are lower than those previously projected, liabilities will increase, resulting in a current period charge to net income. The opposite result occurs when the current estimates of future benefits are lower than those previously projected or when current estimates of future assessments exceed those previously projected. At the end of each reporting period, we update the actual amount of business remaining in-force, which impacts expected future assessments and the projection of estimated future benefits resulting in a current period charge or increase to earnings.

Certain guarantees, including portions thereof, accounted for as embedded derivatives, are recorded at estimated fair value and included in policyholder account balances. Guarantees accounted for as embedded derivatives include guaranteed minimum accumulation benefits (“GMABs”), the non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs. The estimated fair values of guarantees accounted for as embedded derivatives are determined based on the present value of projected future benefits minus the present value of projected future fees. The projections of future benefits and future fees require capital market and actuarial assumptions including expectations concerning policyholder behavior. A risk-neutral valuation methodology is used to project the cash flows from the guarantees under multiple capital market scenarios to determine an economic liability. The reported estimated fair value is then determined by taking the present value of these risk-free generated cash flows using a discount rate that incorporates a spread over the risk-free rate to reflect our nonperformance risk and adding a risk margin. For more information on the determination of estimated fair value, see Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements.

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The table below presents the carrying value for guarantees at:


	Future Policy Benefits				Policyholder Account Balances
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	(In millions)
Asia
GMDB	$	4	$	4	$	—	$	—
GMAB	—		—		10		14
GMWB	28		32		75		107
EMEA
GMDB	5		3		—		—
GMAB	—		—		15		6
GMWB	28		19		(37)		(58)
MetLife Holdings
GMDB	542		561		—		—
GMIB	1,054		1,029		189		180
GMAB	—		—		(1)		—
GMWB	200		174		163		173
Total	$	1,861	$	1,822	$	414	$	422

The carrying amounts for guarantees included in policyholder account balances above include nonperformance risk adjustments of $124 million and $120 million at June 30, 2022 and December 31, 2021, respectively. These nonperformance risk adjustments represent the impact of including a credit spread when discounting the underlying risk-neutral cash flows to determine the estimated fair values. The nonperformance risk adjustment does not have an economic impact on us as it cannot be monetized given the nature of these policyholder liabilities. The change in valuation arising from the nonperformance risk adjustment is not hedged.

The carrying values of these guarantees can change significantly during periods of sizable and sustained shifts in equity market performance, equity volatility, interest rates or foreign currency exchange rates. Carrying values are also impacted by our assumptions around mortality, separate account returns and policyholder behavior, including lapse rates.

As discussed below, we use a combination of product design, hedging strategies, reinsurance, and other risk management actions to mitigate the risks related to these benefits. Within each type of guarantee, there is a range of product offerings reflecting the changing nature of these products over time. Changes in product features and terms are in part driven by customer demand but, more importantly, reflect our risk management practices of continuously evaluating the guaranteed benefits and their associated asset-liability matching. We continue to diversify the concentration of income benefits in our portfolio by focusing on withdrawal benefits, variable annuities without living benefits and index-linked annuities.

The sections below provide further detail by total account value for certain of our most popular guarantees. Total account values include amounts not reported on the interim condensed consolidated balance sheets from assumed business, Unit-linked investments that do not qualify for presentation as separate account assets, and amounts included in our general account. The total account values and the net amounts at risk include direct and assumed business, but exclude offsets from hedging or ceded reinsurance, if any.

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GMDBs

We offer a range of GMDBs to our contractholders. The table below presents GMDBs, by benefit type, at June 30, 2022:


	Total Account Value (1)
	Asia & EMEA		MetLife Holdings
	(In millions)
Return of premium or five to seven year step-up	$	5,835	$	36,544
Annual step-up	—		2,426
Roll-up and step-up combination	—		4,187
Total	$	5,835	$	43,157

(1)Total account value excludes $524 million for contracts with no GMDBs. The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for GMDBs and for living benefit guarantees are not mutually exclusive.

Based on total account value, less than 18% of our GMDBs included enhanced death benefits such as the annual step-up or roll-up and step-up combination products at June 30, 2022.

Living Benefit Guarantees

The table below presents our living benefit guarantees based on total account values at June 30, 2022:


	Total Account Value (1)
	Asia & EMEA		MetLife Holdings
	(In millions)
GMIB	$	—	$	15,503
GMWB - non-life contingent (2)	730		1,547
GMWB - life-contingent	2,361		6,489
GMAB	1,184		109
Total	$	4,275	$	23,648

(1)Total account value excludes $21.6 billion for contracts with no living benefit guarantees. The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for GMDBs and for living benefit guarantee amounts are not mutually exclusive.

(2)The Asia and EMEA segments include the non-life contingent portion of the GMWB total account value of $729 million with a guarantee at annuitization.

In terms of total account value, GMIBs are our most significant living benefit guarantee. Our primary risk management strategy for our GMIB products is our derivatives hedging program as discussed below. Additionally, we have engaged in certain reinsurance agreements covering some of our GMIB business. As part of our overall risk management approach for living benefit guarantees, we continually monitor the reinsurance markets for the right opportunity to purchase additional coverage for our GMIB business. We stopped selling GMIBs in February 2016.

The table below presents our GMIB associated total account values, by their guaranteed payout basis, at June 30, 2022:


	Total Account Value
	(In millions)
7-year setback, 2.5% interest rate	$	4,620
7-year setback, 1.5% interest rate	936
10-year setback, 1.5% interest rate	3,099
10-year mortality projection, 10-year setback, 1.0% interest rate	5,818
10-year mortality projection, 10-year setback, 0.5% interest rate	1,030
	$	15,503

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The annuitization interest rates on GMIBs have been decreased from 2.5% to 0.5% over time, partially in response to the low interest rate environment in effect at the time the GMIBs were sold, accompanied by an increase in the setback period from seven years to 10 years and the introduction of a 10-year mortality projection.

Additionally, 34% of the $15.5 billion of GMIB total account value has been invested in managed volatility funds as of June 30, 2022. These funds seek to manage volatility by adjusting the fund holdings within certain guidelines based on capital market movements. Such activity reduces the overall risk of the underlying funds while maintaining their growth opportunities. These risk mitigation techniques reduce or eliminate the need for us to manage the funds’ volatility through hedging or reinsurance.

Our GMIB products typically have a waiting period of 10 years to be eligible for annuitization. As of June 30, 2022, only 40% of our contracts with GMIBs were eligible for annuitization. The remaining contracts are not eligible for annuitization for an average of three years.

Once eligible for annuitization, contractholders would be expected to annuitize only if their contracts were in-the-money. We calculate in-the-moneyness with respect to GMIBs consistent with net amount at risk as discussed in Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements, by comparing the contractholders’ income benefits based on total account values and current annuity rates versus the guaranteed income benefits. The net amount at risk was $616 million at June 30, 2022, of which $569 million was related to GMIBs. For those contracts with GMIB, the table below presents details of contracts that are in-the-money and out-of-the-money at June 30, 2022:


	In-the- Moneyness	Total Account Value		% of Total
		(In millions)
In-the-money	30% or greater	$	533	3	%
	20% to less than 30%	320		2	%
	10% to less than 20%	615		4	%
	0% to less than 10%	1,375		9	%
		2,843
Out-of-the-money	-10% to 0%	2,966		19	%
	-20% to less than -10%	3,196		21	%
	Greater than -20%	6,498		42	%
		12,660
Total GMIBs		$	15,503

Derivatives Hedging Variable Annuity Guarantees

Our risk mitigating hedging strategy uses various over-the-counter and exchange traded derivatives. The table below presents the gross notional amount, estimated fair value and primary underlying risk exposure of the derivatives hedging our variable annuity guarantees:


	Instrument Type	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)
Interest rate	Interest rate swaps	$	7,341	$	54	$	561	$	8,663	$	52	$	75
	Interest rate futures	1,071		1		7		1,087		3		—
	Interest rate options	50		4		—		100		1		—
Foreign currency exchange rate	Foreign currency forwards	969		3		24		1,149		4		13


Equity market	Equity futures	2,655		29		7		3,641		11		5
	Equity index options	4,110		255		310		4,161		513		362
	Equity variance swaps	692		17		12		699		17		13
	Equity total return swaps	2,798		198		—		2,763		11		44
	Total	$	19,686	$	561	$	921	$	22,263	$	612	$	512

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The change in estimated fair values of our derivatives is recorded in policyholder benefits and claims if such derivatives are hedging guarantees included in future policy benefits, and in net derivative gains (losses) if such derivatives are hedging guarantees included in policyholder account balances.

Our hedging strategy involves the significant use of static longer-term derivative instruments to avoid the need to execute transactions during periods of market disruption or higher volatility. We continually monitor the capital markets for opportunities to adjust our liability coverage, as appropriate. Futures are also used to dynamically adjust the daily coverage levels as markets and liability exposures fluctuate.

We remain liable for the guaranteed benefits in the event that reinsurers or derivative counterparties are unable or unwilling to pay. Certain of our reinsurance agreements and all derivative positions are collateralized and derivatives positions are subject to master netting agreements, both of which significantly reduce the exposure to counterparty risk. In addition, we are subject to the risk that hedging and other risk management actions prove ineffective or that unanticipated policyholder behavior or mortality, combined with adverse market events, produces economic losses beyond the scope of the risk management techniques employed.

Liquidity and Capital Resources

Overview

Our business and results of operations are materially affected by conditions in the global capital markets and the economy generally due to our market presence in numerous countries, large investment portfolio and the sensitivity of our insurance liabilities and derivatives to changing market factors. Changing conditions in the global capital markets and the economy may affect our financing costs and market interest for our debt or equity securities. For further information regarding market factors that could affect our ability to meet liquidity and capital needs, see “— Industry Trends” and “— Investments — Current Environment.”

Liquidity Management

Based upon the strength of our franchise, diversification of our businesses, strong financial fundamentals and the substantial funding sources available to us as described herein, we continue to believe we have access to ample liquidity to meet business requirements under current market conditions and reasonably possible stress scenarios. We continuously monitor and adjust our liquidity and capital plans for MetLife, Inc. and its subsidiaries in light of market conditions, as well as changing needs and opportunities.

Short-term Liquidity

We maintain a substantial short-term liquidity position, which was $12.6 billion and $12.4 billion at June 30, 2022 and December 31, 2021, respectively. Short-term liquidity includes cash and cash equivalents and short-term investments, excluding assets that are pledged or otherwise committed, including amounts received in connection with securities lending, repurchase agreements, derivatives, and secured borrowings, as well as amounts held in the closed block.

Liquid Assets

An integral part of our liquidity management includes managing our level of liquid assets, which was $179.3 billion and $223.0 billion at June 30, 2022 and December 31, 2021, respectively. Liquid assets include cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with securities lending, repurchase agreements, derivatives, regulatory deposits, the collateral financing arrangement, funding agreements and secured borrowings, as well as amounts held in the closed block.

Capital Management

We have established several senior management committees as part of our capital management process. These committees, including the Capital Management Committee and the Enterprise Risk Committee (“ERC”), regularly review actual and projected capital levels (under a variety of scenarios including stress scenarios) and our annual capital plan in accordance with our capital policy. The Capital Management Committee is comprised of members of senior management, including MetLife, Inc.’s Chief Financial Officer (“CFO”), Treasurer, and Chief Risk Officer (“CRO”). The ERC is also comprised of members of senior management, including MetLife, Inc.’s CFO, CRO and Chief Investment Officer.

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MetLife, Inc.’s Board of Directors (“Board of Directors”) and senior management are directly involved in the development and maintenance of our capital policy. The capital policy sets forth, among other things, minimum and target capital levels and the governance of the capital management process. All capital actions, including proposed changes to the annual capital plan, capital targets or capital policy, are reviewed by the Finance and Risk Committee of the Board of Directors prior to obtaining full Board of Directors approval. The Board of Directors approves the capital policy and the annual capital plan and authorizes capital actions, as required.

See “Risk Factors — Capital Risks — We May Not be Able to Pay Dividends or Repurchase Our Stock Due to Legal and Regulatory Restrictions or Cash Buffer Needs” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for information regarding restrictions on payment of dividends and stock repurchases. See also “— The Company — Liquidity and Capital Uses — Common Stock Repurchases” for information regarding MetLife, Inc.’s common stock repurchase authorizations.

The Company

Liquidity

Liquidity refers to the ability to generate adequate amounts of cash to meet our needs. In the event of significant cash requirements beyond anticipated liquidity needs, we have various alternatives available depending on market conditions and the amount and timing of the liquidity need. These available alternatives include cash flows from operations, sales of liquid assets, global funding sources including commercial paper and various credit and committed facilities. See “Management’s Discussion and Analysis of Financial Condition — Liquidity and Capital Resources — The Company — Liquidity” included in the 2021 Annual Report.

Capital

We manage our capital position to maintain our financial strength and credit ratings. Our capital position is supported by our ability to generate strong cash flows within our operating companies and borrow funds at competitive rates, as well as by our demonstrated ability to raise additional capital to meet operating and growth needs despite adverse market and economic conditions.

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Summary of the Company’s Primary Sources and Uses of Liquidity and Capital

Our primary sources and uses of liquidity and capital are summarized as follows:


	Six Months Ended June 30,
	2022		2021
	(In millions)
Sources:
Operating activities, net	$	6,392	$	3,750
Investing activities, net	1,689		—
Net change in policyholder account balances	3,681		3,870
Net change in payables for collateral under securities loaned and other transactions	—		506
Long-term debt issued	6		15
Financing element on certain derivative instruments and other derivative related transactions, net	121		318
Other, net	—		58
Total sources	11,889		8,517
Uses:
Investing activities, net	—		45
Net change in payables for collateral under securities loaned and other transactions	7,809		—
Cash paid for other transactions with tenors greater than three months	—		100
Long-term debt repaid	23		28
Collateral financing arrangement repaid	25		27
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		—
Effect of change in foreign currency exchange rates on cash and cash equivalents	467		192
Total uses	11,457		3,936
Net increase (decrease) in cash and cash equivalents	$	432	$	4,581

Cash Flows from Operations

The principal cash inflows from our insurance activities come from insurance premiums, net investment income, annuity considerations and deposit funds. The principal cash outflows are the result of various life insurance, annuity and pension products, operating expenses and income tax, as well as interest expense.

Cash Flows from Investments

The principal cash inflows from our investment activities come from repayments of principal, proceeds from maturities and sales of investments and settlements of freestanding derivatives. The principal cash outflows relate to purchases of investments, issuances of policy loans and settlements of freestanding derivatives. In addition, cash inflows and outflows relate to sales and purchases of businesses. We typically have a net cash outflow from investing activities because cash inflows from insurance operations are reinvested in accordance with our ALM discipline to fund insurance liabilities. We closely monitor and manage these risks through our comprehensive investment risk management process.

Cash Flows from Financing

The principal cash inflows from our financing activities come from issuances of debt and other securities, deposits of funds associated with policyholder account balances and lending of securities. The principal cash outflows come from repayments of debt and the collateral financing arrangement, payments of dividends on and repurchases or redemptions of MetLife, Inc.’s securities, withdrawals associated with policyholder account balances and the return of securities on loan.

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Liquidity and Capital Sources

In addition to the general description of liquidity and capital sources in “— Summary of the Company’s Primary Sources and Uses of Liquidity and Capital,” the Company’s primary sources of liquidity and capital are set forth below.

Global Funding Sources

Liquidity is provided by a variety of global funding sources, including funding agreements, credit and committed facilities and commercial paper. Capital is provided by a variety of global funding sources, including short-term and long-term debt, the collateral financing arrangement, junior subordinated debt securities, preferred securities, equity securities and equity-linked securities. MetLife, Inc. maintains a shelf registration statement with the SEC that permits the issuance of public debt, equity and hybrid securities. As a “Well-Known Seasoned Issuer” under SEC rules, MetLife, Inc.’s shelf registration statement provides for automatic effectiveness upon filing and has no stated issuance capacity. The diversity of our global funding sources enhances our funding flexibility, limits dependence on any one market or source of funds and generally lowers the cost of funds. Our primary global funding sources include:

Preferred Stock

See Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Common Stock

For the six months ended June 30, 2022 and 2021, MetLife, Inc. issued 2,980,105 and 4,317,294 new shares of its common stock, respectively, for $145 million and $174 million, respectively, to satisfy various stock option exercises and other stock-based awards.

Commercial Paper, Reported in Short-term Debt

MetLife, Inc. and MetLife Funding, Inc. (“MetLife Funding”), a subsidiary of MLIC, each have a commercial paper program that is supported by our unsecured revolving credit facility (see “— Credit and Committed Facilities”). MetLife Funding raises cash from its commercial paper program and uses the proceeds to extend loans through MetLife Credit Corp., another subsidiary of MLIC, to affiliates in order to enhance the financial flexibility and liquidity of these companies.

Policyholder Account Balances

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Liquidity and Capital Sources — Global Funding Sources — Policyholder Account Balances” included in the 2021 Annual Report for information regarding the Company’s contractual obligations related to future policy benefits and policyholder account balances.

Federal Home Loan Bank Funding Agreements, Reported in Policyholder Account Balances

Certain of our U.S. insurance subsidiaries are members of a regional Federal Home Loan Bank (“FHLB”). For the six months ended June 30, 2022 and 2021, we issued $17.6 billion and $18.2 billion, respectively, and repaid $17.3 billion and $18.2 billion, respectively, of funding agreements with certain regional FHLBs. At June 30, 2022 and December 31, 2021, total obligations outstanding under these funding agreements were $16.0 billion and $15.8 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Special Purpose Entity Funding Agreements, Reported in Policyholder Account Balances

We issue fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign currencies, to certain unconsolidated special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. For the six months ended June 30, 2022 and 2021, we issued $27.3 billion and $22.0 billion, respectively, and repaid $25.4 billion and $20.7 billion, respectively, under such funding agreements. At June 30, 2022 and December 31, 2021, total obligations outstanding under these funding agreements were $40.7 billion and $39.5 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

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Federal Agricultural Mortgage Corporation Funding Agreements, Reported in Policyholder Account Balances

We have issued funding agreements to a subsidiary of the Federal Agricultural Mortgage Corporation which are secured by a pledge of certain eligible agricultural mortgage loans. For the six months ended June 30, 2022 and 2021, we issued $350 million and $225 million, respectively, and repaid $350 million and $350 million, respectively, under such funding agreements. At both June 30, 2022 and December 31, 2021, total obligations outstanding under these funding agreements were $2.1 billion. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Debt Issuances

See Note 15 of the Notes to the Interim Condensed Consolidated Financial Statements for information about senior notes issued by MetLife, Inc. subsequent to June 30, 2022.

Credit and Committed Facilities

At June 30, 2022, we maintained a $3.0 billion unsecured revolving credit facility and certain committed facilities aggregating $3.2 billion, to which MetLife, Inc. is a party and/or guarantor. When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements.

The unsecured revolving credit facility is used for general corporate purposes, to support the borrowers’ commercial paper programs and for the issuance of letters of credit. At June 30, 2022, we had outstanding $229 million in letters of credit and no drawdowns against this facility. Remaining availability was $2.8 billion at June 30, 2022.

The committed facilities are used as collateral for certain of our affiliated reinsurance liabilities. At June 30, 2022, we had outstanding $2.8 billion in letters of credit and no drawdowns against these facilities. Remaining availability was $407 million at June 30, 2022.

See Note 13 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for further information on credit and committed facilities.

We have no reason to believe that our lending counterparties will be unable to fulfill their respective contractual obligations under these facilities. As commitments under our credit and committed facilities may expire unused, these amounts do not necessarily reflect our actual future cash funding requirements.

Outstanding Debt Under Global Funding Sources

The following table summarizes our outstanding debt at:


	June 30, 2022		December 31, 2021
	(In millions)
Short-term debt (1)	$	196	$	341
Long-term debt (2)	$	13,677	$	13,933
Collateral financing arrangement	$	741	$	766
Junior subordinated debt securities	$	3,157	$	3,156

(1)Includes $96 million and $241 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at June 30, 2022 and December 31, 2021, respectively. Certain subsidiaries have pledged assets to secure this debt.

(2)Includes $486 million and $482 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at June 30, 2022 and December 31, 2021, respectively. Certain investment subsidiaries have pledged assets to secure this debt.

Debt and Facility Covenants

Certain of our debt instruments and committed facilities, as well as our unsecured revolving credit facility, contain various administrative, reporting, legal and financial covenants. We believe we were in compliance with all applicable financial covenants at June 30, 2022.

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Dispositions

For information regarding the Company’s dispositions, see Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements.

Liquidity and Capital Uses

In addition to the general description of liquidity and capital uses in “— Summary of the Company’s Primary Sources and Uses of Liquidity and Capital,” the Company’s primary uses of liquidity and capital are set forth below.

Preferred Stock Redemption

See Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Common Stock Repurchases

See Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements for information relating to authorizations by the Board of Directors to repurchase MetLife, Inc. common stock, amounts of common stock repurchased pursuant to such authorizations for the six months ended June 30, 2022 and 2021, and the amount remaining under such authorizations at June 30, 2022.

Common stock repurchases are subject to the discretion of our Board of Directors and will depend upon our 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. Restrictions on the payment of dividends that may arise under so-called “Dividend Stopper” provisions would also restrict MetLife, Inc.’s ability to repurchase common stock. See “— Dividends,” as well as “Business — Regulation,” “Risk Factors — Capital Risks — We May Not be Able to Pay Dividends or Repurchase Our Stock Due to Legal and Regulatory Restrictions or Cash Buffer Needs” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Dividends

For the six months ended June 30, 2022 and 2021, MetLife, Inc. paid dividends on its preferred stock of $92 million and $103 million, respectively. For the six months ended June 30, 2022 and 2021, MetLife, Inc. paid dividends on its common stock of $805 million and $829 million, respectively. See Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for information regarding the calculation and timing of these dividend payments.

The declaration and payment of common stock dividends are subject to the discretion of our Board of Directors, and will depend on MetLife, Inc.’s financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the payment of dividends by MetLife, Inc.’s insurance subsidiaries and other factors deemed relevant by the Board of Directors. See Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report for additional information.

Dividend Restrictions

The payment of dividends is also subject to restrictions under the terms of our preferred stock and junior subordinated debentures in situations where we may be experiencing financial stress. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Dividends — ‘Dividend Stopper’ Provisions in MetLife’s Preferred Stock and Junior Subordinated Debentures,” “Risk Factors — Capital Risks — We May Not be Able to Pay Dividends or Repurchase Our Stock Due to Legal and Regulatory Restrictions or Cash Buffer Needs” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Debt Repayments

For the six months ended June 30, 2022 and 2021, following regulatory approval, MetLife Reinsurance Company of Charleston, a wholly-owned subsidiary of MetLife, Inc., repurchased and canceled $25 million and $27 million, respectively, in aggregate principal amount of its surplus notes, which were reported in collateral financing arrangement on the interim condensed consolidated balance sheets.

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Debt Repurchases, Redemptions and Exchanges

We may from time to time seek to retire or purchase our outstanding debt through cash purchases, redemptions and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Any such repurchases, redemptions, or exchanges will be dependent upon several factors, including our liquidity requirements, contractual restrictions, general market conditions, and applicable regulatory, legal and accounting factors. Whether or not to repurchase or redeem any debt and the size and timing of any such repurchases or redemptions will be determined at our discretion.

Support Agreements

MetLife, Inc. and several of its subsidiaries (each, an “Obligor”) are parties to various capital support commitments and guarantees with subsidiaries. Under these arrangements, each Obligor has agreed to cause the applicable entity to meet specified capital and surplus levels or has guaranteed certain contractual obligations. We anticipate that in the event these arrangements place demands upon us, there will be sufficient liquidity and capital to enable us to meet such demands. See Note 5 of the Notes to the MetLife, Inc. (Parent Company Only) Condensed Financial Information included in the 2021 Annual Report.

Insurance Liabilities

Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance, annuity and group pension products, as well as payments for policy surrenders, withdrawals and loans. For annuity or deposit type products, surrender or lapse behavior differs somewhat by segment. In the MetLife Holdings segment, which includes individual annuities, lapses and surrenders tend to occur in the normal course of business. For the six months ended June 30, 2022 and 2021, general account surrenders and withdrawals from annuity products were $650 million and $645 million, respectively. In the RIS business within the U.S. segment, which includes pension risk transfers, bank-owned life insurance and other fixed annuity contracts, as well as funding agreements and other capital market products, most of the products offered have fixed maturities or fairly predictable surrenders or withdrawals. With regard to the RIS business products that provide customers with limited rights to accelerate payments, at June 30, 2022 there were funding agreements totaling $117 million that could be put back to the Company. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Insurance Liabilities” included in the 2021 Annual Report for additional information.

Pledged Collateral

We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives. At June 30, 2022 and December 31, 2021, we had received pledged cash collateral from counterparties of $6.9 billion and $7.5 billion, respectively. At June 30, 2022 and December 31, 2021, we had pledged cash collateral to counterparties of $234 million and $142 million, respectively. See Note 7 of the Notes to the Interim Condensed Consolidated Financial Statements for additional information about collateral pledged to us, collateral we pledge and derivatives subject to credit contingent provisions.

We pledge collateral and have had collateral pledged to us, and may be required from time to time to pledge additional collateral or be entitled to have additional collateral pledged to us, in connection with the collateral financing arrangement related to the reinsurance of closed block liabilities.

We pledge collateral from time to time in connection with funding agreements and advance agreements. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as Note 4 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Securities Lending Transactions, Repurchase Agreements and Third-Party Custodian Administered Programs

See “— Investments — Securities Lending Transactions, Repurchase Agreements and Third-Party Custodian Administered Programs.”

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Litigation

We establish 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. For material matters where a loss is believed to be reasonably possible but not probable, no accrual is made but we disclose the nature of the contingency and an aggregate estimate of the reasonably possible range of loss in excess of amounts accrued, when such an estimate can be made. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to herein, very large and/or indeterminate amounts, including punitive and treble damages, are sought. 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 adverse effect on our consolidated net income or cash flows in particular quarterly or annual periods. See Note 14 of the Notes to the Interim Condensed Consolidated Financial Statements.

MetLife, Inc.

Liquidity and Capital Management

Liquidity and capital are managed to preserve stable, reliable and cost-effective sources of cash to meet all current and future financial obligations and are provided by a variety of sources, including a portfolio of liquid assets, a diversified mix of short- and long-term funding sources from the wholesale financial markets and the ability to borrow through credit and committed facilities. Liquidity is monitored through the use of internal liquidity risk metrics, including the composition and level of the liquid asset portfolio, timing differences in short-term cash flow obligations, access to the financial markets for capital and debt transactions and exposure to contingent draws on MetLife, Inc.’s liquidity. MetLife, Inc. is an active participant in the global financial markets through which it obtains a significant amount of funding. These markets, which serve as cost-effective sources of funds, are critical components of MetLife, Inc.’s liquidity and capital management. Decisions to access these markets are based upon relative costs, prospective views of balance sheet growth and a targeted liquidity profile and capital structure. A disruption in the financial markets could limit MetLife, Inc.’s access to liquidity.

MetLife, Inc.’s ability to maintain regular access to competitively priced wholesale funds is fostered by its current credit ratings from the major credit rating agencies. We view our capital ratios, credit quality, stable and diverse earnings streams, diversity of liquidity sources and our liquidity monitoring procedures as critical to retaining such credit ratings. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Rating Agencies” included in the 2021 Annual Report.

Liquidity

For a summary of MetLife, Inc.’s liquidity, see “— The Company — Liquidity.”

Capital

For a summary of MetLife, Inc.’s capital, see “— The Company — Capital.” See also “— The Company — Liquidity and Capital Uses — Common Stock Repurchases” for information regarding MetLife, Inc.’s common stock repurchases.

Liquid Assets

At June 30, 2022 and December 31, 2021, MetLife, Inc., collectively with other MetLife holding companies, had $4.5 billion and $5.4 billion, respectively, in liquid assets. Of these amounts, $3.1 billion and $4.2 billion were held by MetLife, Inc. and $1.4 billion and $1.2 billion were held by other MetLife holding companies at June 30, 2022 and December 31, 2021, respectively. Liquid assets include cash and cash equivalents, short-term investments and publicly-traded securities, excluding assets that are pledged or otherwise committed. Assets pledged or otherwise committed include amounts received in connection with derivatives and a collateral financing arrangement.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — MetLife, Inc. — Liquid Assets” included in the 2021 Annual Report for additional information on the sources and uses of liquid assets, as well as sources and uses of liquid assets included in free cash flow for MetLife, Inc. and other MetLife holding companies.

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Liquidity and Capital Sources

In addition to the description of liquidity and capital sources in “— The Company — Summary of the Company’s Primary Sources and Uses of Liquidity and Capital” and “— The Company — Liquidity and Capital Sources,” MetLife, Inc.’s primary sources of liquidity and capital are set forth below.

Dividends from Subsidiaries

MetLife, Inc. relies, in part, on dividends from its subsidiaries to meet its cash requirements. MetLife, Inc.’s insurance subsidiaries are subject to regulatory restrictions on the payment of dividends imposed by the regulators of their respective domiciles. The dividend limitation for U.S. insurance subsidiaries is generally based on the surplus to policyholders at the end of the immediately preceding calendar year and statutory net gain from operations for the immediately preceding calendar year. Statutory accounting practices, as prescribed by insurance regulators of various states in which we conduct business, differ in certain respects from accounting principles used in financial statements prepared in conformity with GAAP. The significant differences relate to the treatment of DAC, certain deferred income tax, required investment liabilities, statutory reserve calculation assumptions, goodwill and surplus notes.

The table below sets forth the dividends permitted to be paid in 2022 by MetLife, Inc.’s primary U.S. insurance subsidiaries without insurance regulatory approval and the actual dividends paid for the six months ended June 30, 2022:


Company	Paid (1)		Permitted Without Approval (2)
	(In millions)
Metropolitan Life Insurance Company	$	1,562	$	3,539
American Life Insurance Company	$	620	$	554
Metropolitan Tower Life Insurance Company	$	—	$	163

(1)Reflects all amounts paid, including those where regulatory approval was obtained as required.

(2)Reflects dividend amounts that may be paid during 2022 without prior regulatory approval. However, because dividend tests may be based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2022, some or all of such dividends may require regulatory approval.

In addition to the amounts presented in the table above, for the six months ended June 30, 2022, MetLife, Inc. also received from certain other subsidiaries cash dividends of $36 million, as well as cash returns of capital of $8 million.

The dividend capacity of our non-U.S. operations is subject to similar restrictions established by the local regulators. The non-U.S. regulatory regimes also commonly limit dividend payments to the parent company to a portion of the subsidiary’s prior year statutory income, as determined by the local accounting principles. The regulators of our non-U.S. operations, including Japan’s Financial Services Agency, may also limit or not permit profit repatriations or other transfers of funds to the U.S. if such transfers are deemed to be detrimental to the solvency or financial strength of the non-U.S. operations, or for other reasons. Most of our non-U.S. subsidiaries are second tier subsidiaries which are owned by various non-U.S. holding companies. The capital and rating considerations applicable to our first tier subsidiaries may also impact the dividend flow into MetLife, Inc.

We proactively manage target and excess capital levels and dividend flows and forecast local capital positions as part of the financial planning cycle. The dividend capacity of certain U.S. and non-U.S. subsidiaries is also subject to business targets in excess of the minimum capital necessary to maintain the desired rating or level of financial strength in the relevant market. See “Risk Factors — Capital Risks — Our Subsidiaries May be Unable to Pay Dividends, a Major Component of Holding Company Free Cash Flow” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2021 Annual Report.

Credit and Committed Facilities

See “— The Company — Liquidity and Capital Sources — Global Funding Sources — Credit and Committed Facilities” for further information regarding the Company’s unsecured revolving credit facility and certain committed facilities.

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Long-term Debt Outstanding

The following table summarizes the outstanding long-term debt of MetLife, Inc. at:


	June 30, 2022		December 31, 2021
	(In millions)
Long-term debt — unaffiliated	$	12,567	$	12,814
Long-term debt — affiliated	$	1,635	$	1,884
Junior subordinated debt securities	$	2,464	$	2,463

Debt and Facility Covenants

Certain of MetLife, Inc.’s debt instruments and committed facilities, as well as its unsecured revolving credit facility, contain various administrative, reporting, legal and financial covenants. MetLife, Inc. believes it was in compliance with all applicable financial covenants at June 30, 2022.

Liquidity and Capital Uses

The primary uses of liquidity of MetLife, Inc. include debt service, cash dividends on common and preferred stock, capital contributions to subsidiaries, common stock, preferred stock and debt repurchases and/or redemptions, payment of general operating expenses and acquisitions. Based on our analysis and comparison of our current and future cash inflows from the dividends we receive from subsidiaries that are permitted to be paid without prior insurance regulatory approval, our investment portfolio and other cash flows and anticipated access to the capital markets, we believe there will be sufficient liquidity and capital to enable MetLife, Inc. to make payments on debt, pay cash dividends on its common and preferred stock, contribute capital to its subsidiaries, repurchase its common stock and certain of its other securities, pay all general operating expenses and meet its cash needs under current market conditions and reasonably possible stress scenarios.

In addition to the description of liquidity and capital uses in “— The Company — Liquidity and Capital Uses,” MetLife, Inc.’s primary uses of liquidity and capital are set forth below.

Affiliated Capital and Debt Transactions

For the six months ended June 30, 2022 and 2021, MetLife, Inc. invested a net amount of $10 million and $114 million, respectively, in various subsidiaries.

MetLife, Inc. lends funds, as necessary, through credit agreements or otherwise to its subsidiaries and affiliates, some of which are regulated, to meet their capital requirements or to provide liquidity. MetLife, Inc. had loans to subsidiaries outstanding of $185 million and $35 million at June 30, 2022 and December 31, 2021, respectively.

Support Agreements

MetLife, Inc. is party to various capital support commitments and guarantees with certain of its subsidiaries. Under these arrangements, MetLife, Inc. has agreed to cause each such entity to meet specified capital and surplus levels or has guaranteed certain contractual obligations. See “— The Company — Liquidity and Capital Uses — Support Agreements.”

Adopted Accounting Pronouncements

See Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.

Future Adoption of Accounting Pronouncements

See Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.

Non-GAAP and Other Financial Disclosures

In this report, the Company presents certain measures of its performance on a consolidated and segment basis that are not calculated in accordance with GAAP. We believe that these non-GAAP financial measures enhance the understanding for the Company and our investors of our performance by highlighting the results of operations and the underlying profitability drivers of our business. Segment-specific financial measures are calculated using only the portion of consolidated results attributable to that specific segment.

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The following non-GAAP financial measures should not be viewed as substitutes for the most directly comparable financial measures calculated in accordance with GAAP:


Non-GAAP financial measures:		Comparable GAAP financial measures:
(i)	adjusted premiums, fees and other revenues	(i)	premiums, fees and other revenues
(ii)	adjusted earnings	(ii)	net income (loss)
(iii)	adjusted earnings available to common shareholders	(iii)	net income (loss) available to MetLife, Inc.’s common shareholders
(iv)	adjusted net investment income	(iv)	net investment income

Any of these financial measures shown on a constant currency basis reflect the impact of changes in foreign currency exchange rates and are calculated using the average foreign currency exchange rates for the most recent period and applied to the comparable prior period (“constant currency basis”).

Reconciliations of these non-GAAP financial measures to the most directly comparable historical GAAP financial measures are included in “— Results of Operations” and “— Investments.” Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are not accessible on a forward-looking basis because we believe it is not possible without unreasonable effort to provide other than a range of net investment gains and losses and net derivative gains and losses, which can fluctuate significantly within or outside the range and from period to period and may have a material impact on net income.

Our definitions of non-GAAP and other financial measures discussed in this report may differ from those used by other companies.

Adjusted earnings and related measures:

adjusted earnings;
adjusted earnings available to common shareholders; and
adjusted earnings available to common shareholders on a constant currency basis.

These measures are used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings and components of, or other financial measures based on, adjusted earnings are also our GAAP measures of segment performance. Adjusted earnings and other financial measures based on adjusted earnings are also the measures by which senior management’s and many other employees’ performance is evaluated for the purposes of determining their compensation under applicable compensation plans. Adjusted earnings and other financial measures based on adjusted earnings allow analysis of our performance relative to our business plan and facilitate comparisons to industry results.

Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax. Adjusted loss is defined as negative adjusted earnings. Adjusted earnings available to common shareholders is defined as adjusted earnings less preferred stock dividends. For information relating to adjusted revenues and adjusted expenses, see “Financial Measures and Segment Accounting Policies” in Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements.

In addition, adjusted earnings available to common shareholders excludes the impact of preferred stock redemption premium, which is reported as a reduction to net income (loss) available to MetLife, Inc.’s common shareholders.

Return on equity, allocated equity and related measures:

Total MetLife, Inc.’s common stockholders’ equity, excluding accumulated other comprehensive income (“AOCI”) other than foreign currency translation adjustments (“FCTA”), is defined as total MetLife, Inc.’s common stockholders’ equity, excluding the net unrealized investment gains (losses) and defined benefit plans adjustment components of AOCI, net of income tax.
Adjusted return on MetLife, Inc.’s common stockholders’ equity is defined as adjusted earnings available to common shareholders divided by MetLife, Inc.’s average common stockholders’ equity.

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Adjusted return on MetLife, Inc.’s common stockholders’ equity, excluding AOCI other than FCTA, is defined as adjusted earnings available to common shareholders divided by MetLife, Inc.’s average common stockholders’ equity, excluding AOCI other than FCTA.
Allocated equity is the portion of MetLife, Inc.’s common stockholders’ equity that management allocates to each of its segments and sub-segments based on local capital requirements and economic capital. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management — Economic Capital” in the 2021 Annual Report. Allocated equity excludes the impact of AOCI other than FCTA.

The above measures represent a level of equity consistent with the view that, in the ordinary course of business, we do not plan to sell most investments for the sole purpose of realizing gains or losses.

Expense ratio and direct expense ratio:

Expense ratio: other expenses, net of capitalization of DAC, divided by premiums, fees and other revenues.
Direct expense ratio: adjusted direct expenses divided by adjusted premiums, fees and other revenues. Direct expenses are comprised of employee-related costs, third party staffing costs, and general and administrative expenses.
Direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers: adjusted direct expenses excluding total notable items related to direct expenses, divided by adjusted premiums, fees and other revenues, excluding pension risk transfers.

The following additional information is relevant to an understanding of our performance results and outlook:

We sometimes refer to sales activity for various products. These sales statistics do not correspond to revenues under GAAP, but are used as relevant measures of business activity. Further, sales statistics for our Latin America, Asia and EMEA segments are on a constant currency basis.
Near-term represents one to three years.
Notable items reflect the unexpected impact of events that affect the Company’s results, but that were unknown and that the Company could not anticipate when it devised its business plan. Notable items also include certain items regardless of the extent anticipated in the business plan, to help investors have a better understanding of MetLife’s results and to evaluate and forecast those results. Notable items represent a positive (negative) impact to adjusted earnings available to common shareholders.
The Company uses a measure of free cash flow to facilitate an understanding of its ability to generate cash for reinvestment into its businesses or use in non-mandatory capital actions. The Company defines free cash flow as the sum of cash available at MetLife’s holding companies from dividends from operating subsidiaries, expenses and other net flows of the holding companies (including capital contributions to subsidiaries), and net contributions from debt to be at or below target leverage ratios. This measure of free cash flow is prior to capital actions, such as common stock dividends and repurchases, debt reduction and mergers and acquisitions. Free cash flow should not be viewed as a substitute for net cash provided by (used in) operating activities calculated in accordance with GAAP. The free cash flow ratio is typically expressed as a percentage of annual adjusted earnings available to common shareholders.

Risk Management

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Risk Management” in the 2021 Annual Report for information on our risk management.

Subsequent Events

See Note 15 of the Notes to the Interim Condensed Consolidated Financial Statements.

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