0001099219 srt:MaximumMember us-gaap:FixedMaturitiesMember met:DerivativesSubjectToCreditContingentProvisionsMember 2018-12-31ResidentialMortgageBackedSecuritiesMember us-gaap:MeasurementInputQuotedPriceMember us-gaap:MarketApproachValuationTechniqueMember 2019-12-31
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________
Form 10-Q
(Mark One)
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019MARCH 31, 2020
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission file number: 001-15787
 _____________________________________
MetLife, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-4075851
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
    
200 Park Avenue,,New York,,NY 10166-0188
(Address of principal executive offices) (Zip Code)
(212) 578-9500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01METNew York Stock Exchange
Floating Rate Non-Cumulative Preferred Stock, Series A, par value $0.01METPRAMET PRANew York Stock Exchange
Depositary Shares, each representing a 1/1000th1,000th interest in a share of 5.625% Non-Cumulative Preferred Stock, Series EMETPREMET PRENew York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in
a share of 4.75% Non-Cumulative Preferred Stock, Series F
MET PRFNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☑Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
  Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
At July 31, 2019, 936,447,592April 30, 2020, 907,588,731 shares of the registrant’s common stock, $0.01 par value per share, were outstanding.
 
 


Table of Contents
  Page
Part I — Financial Information
 
Item 1.Financial Statements (Unaudited) (at June 30, 2019March 31, 2020 and December 31, 20182019 and for the Three Months Ended March 31, 2020 and Six Months Ended June 30, 2019 and 2018)2019) 
 
Interim Condensed Consolidated Balance Sheets
43
 
Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
54
 
Interim Condensed Consolidated Statements of Equity
65
 
Interim Condensed Consolidated Statements of Cash Flows
76
 
Notes to the Interim Condensed Consolidated Financial Statements:
 
 
Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies
87
 
Note 2 — Segment Information
1112
 
Note 3 — Pending Disposition
1917
 
Note 4 — Insurance
1917
 
Note 5 — Closed Block
2119
 
Note 6 — Investments
2422
 
Note 7 — Derivatives
4039
 
Note 8 — Fair Value
5653
 
Note 9 — LeasesLong-Term Debt
69
Note 10 — Equity
69
Note 11 — Other Revenues and Other Expenses
74
 
Note 1012 — Long-Term DebtEmployee Benefit Plans
75
Note 13 — Income Tax
75
Note 14 — Earnings Per Common Share
76
 
Note 1115 — EquityContingencies, Commitments and Guarantees
76
 
Note 12 — Other Revenues and Other Expenses
81
Note 13 — Employee Benefit Plans
82
Note 14 — Income Tax
82
Note 15 — Earnings Per Common Share
83
Note 16 — Contingencies, Commitments and Guarantees
84
Note 17 — Subsequent Events
9081
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
9182
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
160148
Item 4.
Controls and Procedures
161149
   
Part II — Other Information
 
Item 1.
Legal Proceedings
162150
Item 1A.
Risk Factors
162150
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
162152
Item 6.
Exhibits
163153
   
Signatures
164154
  
  
  

Table of Contents


As used in this Form 10‑Q, “MetLife,” the “Company,” “we,” “our” and “us” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates.
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10‑Q, including 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. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words and terms such as “anticipate,” "assume," "become," “believe,” "can," “continue,” "could," "emerging," “estimate,” "evolve," “expect,” "forecast," "future," "if," “intend,” "may," “plan,” "possible," "potential," "probable," “project,” “intend,“remain,” “plan,"risk," "scheduled," "target," "ultimate," "vary," "when," “will,” “believe,” “will,”"would" and other words and terms of similar meaning, in each of their forms of speech, or that are tied to future periods, in connection with a discussion of future performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.
Many factors will be important in determining the results of MetLife, Inc., its subsidiaries and affiliates. Forward-looking statements are based on our assumptions and current expectations, which may be inaccurate, and on the current economic environment, which may change. These statements are not guarantees of future performance. They involve a number of risks and uncertainties that are difficult to predict. Results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission. These factors include: (1) the course of the COVID-19 pandemic, and responses to it, which may also precipitate or exacerbate the remaining risks; (2) difficult economic conditions, including risks relating to interest rates, credit spreads, equity, real estate, obligors and counterparties, currency exchange rates, derivatives, and terrorism and security; (2)(3) adverse global capital and credit market conditions, which may affect our ability to meet liquidity needs and access capital, including through our credit facilities; (3)(4) downgrades in our claims paying ability, financial strength or credit ratings; (4)(5) availability and effectiveness of reinsurance, hedging or indemnification arrangements; (5)(6) increasing cost and limited market capacity for statutory life insurance reserve financings; (6)(7) the impact on us of changes to and implementation of the wide variety of laws and regulations to which we are subject; (7)(8) regulatory, legislative or tax changes relating to our operations that may affect the cost of, or demand for, our products or services; (8)(9) adverse results or other consequences from litigation, arbitration or regulatory investigations; (9)(10) legal, regulatory and other restrictions affecting MetLife, Inc.’s ability to pay dividends and repurchase common stock; (10)(11) MetLife, Inc.’s primary reliance, as a holding company, on dividends from subsidiaries to meet free cash flow targets and debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries to pay such dividends; (11)(12) investment losses, defaults and volatility; (12)(13) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (13)(14) changes to securities and investment valuations, allowances and impairments taken on investments, and methodologies, estimates and assumptions; (14)(15) differences between actual claims experience and underwriting and reserving assumptions; (15)(16) political, legal, operational, economic and other risks relating to our global operations; (16)(17) competitive pressures, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, and for personnel; (17)(18) the impact of technological changes on our businesses; (18)(19) catastrophe losses; (19)(20) a deterioration in the experience of the closed block established in connection with the reorganization of Metropolitan Life Insurance Company; (20)(21) impairment of goodwill or other long-lived assets, or the establishment of a valuation allowance against our deferred income tax asset; (21)(22) changes in assumptions related to deferred policy acquisition costs, deferred sales inducements or value of business acquired; (22)(23) exposure to losses related to guarantees in certain products; (23)(24) ineffectiveness of risk management policies and procedures or models; (24)(25) a failure in our cybersecurity systems or other information security systems or our disaster recovery plans; (25)(26) any failure to protect the confidentiality of client information; (26)(27) changes in accounting standards; (27) our(28) associates taking excessive risks; (28)(29) difficulties in or complications from marketing and distributing products through our distribution channels; (29)(30) increased expenses relating to pension and other postretirement benefit plans; (30)(31) inability to protect our intellectual property rights or claims of infringement of others’ intellectual property rights; (31)(32) difficulties, unforeseen liabilities, asset impairments, or rating agency actions arising from business acquisitions and dispositions, joint ventures, or other legal entity reorganizations; (32)(33) unanticipated or adverse developments that could adversely affectharm our expected operational or other benefits from the separation of Brighthouse Financial, Inc. and its subsidiaries; (33)(34) the possibility that MetLife, Inc.’s Board of Directors may influence the outcome of stockholder votes through the voting provisions of the MetLife Policyholder Trust; (34)(35) provisions of laws and our incorporation documents that may delay, deter or prevent takeovers and corporate combinations involving MetLife; and (35)(36) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission.
MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related subjects in reports to the U.S. Securities and Exchange Commission.

2
Table of Contents

Corporate Information
We announce financial and other information about MetLife to our investors on our website (www.metlife.com) through the MetLife Investor Relations web page (https://investor.metlife.com), as well as in U.S. Securities and Exchange Commission filings, news releases, public conference calls and webcasts. MetLife encourages investors to visit the Investor Relations web page from time to time, as information is updated and new information is posted. The information found on our website is not incorporated by reference into this Quarterly Report on Form 10-Q or in any other report or document we file with the U.S. Securities and Exchange Commission, and any references to our website are intended to be inactive textual references only.
Note Regarding Reliance on Statements in Our Contracts
See “Exhibits — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements included as exhibits to this Quarterly Report on Form 10-Q.

3
Table of Contents



Part I — Financial Information
Item 1. Financial Statements
MetLife, Inc.
Interim Condensed Consolidated Balance Sheets
June 30, 2019March 31, 2020 and December 31, 20182019 (Unaudited)
(In millions, except share and per share data)
  June 30, 2019 December 31, 2018
Assets    
Investments:    
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $291,229 and $286,816, respectively) $318,689
 $298,265
Equity securities, at estimated fair value 1,476
 1,440
Contractholder-directed equity securities and fair value option securities, at estimated fair value (includes $3 and $4, respectively, relating to variable interest entities) 13,000
 12,616
Mortgage loans (net of valuation allowances of $357 and $342, respectively; includes $262 and $299, respectively, under the fair value option) 77,997
 75,752
Policy loans 9,705
 9,699
Real estate and real estate joint ventures (includes $22 and $0, respectively, of real estate held-for-sale) 10,326
 9,698
Other limited partnership interests 7,054
 6,613
Short-term investments, principally at estimated fair value 2,811
 3,937
Other invested assets (includes $2,440 and $2,300, respectively, of leveraged and direct financing leases and $237 and $141, respectively, relating to variable interest entities) 20,036
 18,190
Total investments 461,094
 436,210
Cash and cash equivalents, principally at estimated fair value (includes $11 and $52, respectively, relating to variable interest entities) 18,435
 15,821
Accrued investment income 3,535
 3,582
Premiums, reinsurance and other receivables (includes $4 and $3, respectively, relating to variable interest entities) 20,425
 19,644
Deferred policy acquisition costs and value of business acquired 17,880
 18,895
Current income tax recoverable 97
 —
Goodwill 9,408
 9,422
Other assets (includes $2 and $2, respectively, relating to variable interest entities) 10,029
 8,408
Separate account assets 191,264
 175,556
Total assets $732,167
 $687,538
Liabilities and Equity    
Liabilities    
Future policy benefits $191,139
 $186,780
Policyholder account balances 190,033
 183,693
Other policy-related balances 16,815
 16,529
Policyholder dividends payable 689
 677
Policyholder dividend obligation 1,834
 428
Payables for collateral under securities loaned and other transactions 25,354
 24,794
Short-term debt 158
 268
Long-term debt (includes $5 and $5, respectively, at estimated fair value, relating to variable interest entities) 13,346
 12,829
Collateral financing arrangement 1,026
 1,060
Junior subordinated debt securities 3,149
 3,147
Current income tax payable —
 441
Deferred income tax liability 8,766
 5,414
Other liabilities (includes $1 and $1, respectively, relating to variable interest entities) 24,548
 22,964
Separate account liabilities 191,264
 175,556
Total liabilities 668,121
 634,580
Contingencies, Commitments and Guarantees (Note 16) 

 

Equity    
MetLife, Inc.’s stockholders’ equity:    
Preferred stock, par value $0.01 per share; $3,405 aggregate liquidation preference —
 —
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,176,087,431 and 1,171,824,242 shares issued, respectively; 935,921,796 and 958,613,542 shares outstanding, respectively 12
 12
Additional paid-in capital 32,602
 32,474
Retained earnings 31,209
 28,926
Treasury stock, at cost; 240,165,635 and 213,210,700 shares, respectively (11,643) (10,393)
Accumulated other comprehensive income (loss) 11,631
 1,722
Total MetLife, Inc.’s stockholders’ equity 63,811
 52,741
Noncontrolling interests 235
 217
Total equity 64,046
 52,958
Total liabilities and equity $732,167
 $687,538
  March 31, 2020 December 31, 2019
Assets    
Investments:    
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $302,624 and $297,655, respectively; allowance for credit loss of $187 and $0, respectively) $326,685
 $327,820
Equity securities, at estimated fair value 1,050
 1,342
Contractholder-directed equity securities and fair value option securities, at estimated fair value (includes $3 and $3, respectively, relating to variable interest entities) 11,145
 13,102
Mortgage loans (net of allowance for credit loss of $464 and $353, respectively; includes $180 and $188, respectively, under the fair value option and $0 and $59, respectively, of mortgage loans held-for-sale) 81,344
 80,529
Policy loans 9,638
 9,680
Real estate and real estate joint ventures (includes $144 and $127, respectively, under the fair value option) 11,250
 10,741
Other limited partnership interests 8,230
 7,716
Short-term investments, principally at estimated fair value 5,930
 3,850
Other invested assets (includes $2,019 and $2,299, respectively, of leveraged and direct financing leases and $301 and $290, respectively, relating to variable interest entities) 27,839
 19,015
Total investments 483,111
 473,795
Cash and cash equivalents, principally at estimated fair value (includes $12 and $12, respectively, relating to variable interest entities) 24,094
 16,598
Accrued investment income 3,828
 3,523
Premiums, reinsurance and other receivables (includes $2 and $4, respectively, relating to variable interest entities) 21,224
 20,443
Deferred policy acquisition costs and value of business acquired 17,254
 17,833
Goodwill 9,159
 9,308
Other assets (includes $2 and $2, respectively, relating to variable interest entities) 10,617
 10,518
Separate account assets 168,454
 188,445
Total assets $737,741
 $740,463
Liabilities and Equity    
Liabilities    
Future policy benefits $193,106
 $194,909
Policyholder account balances 193,875
 192,627
Other policy-related balances 16,755
 17,171
Policyholder dividends payable 654
 681
Policyholder dividend obligation 1,677
 2,020
Payables for collateral under securities loaned and other transactions 35,530
 26,745
Short-term debt 298
 235
Long-term debt (includes $5 and $5, respectively, at estimated fair value, relating to variable interest entities) 14,510
 13,466
Collateral financing arrangement 981
 993
Junior subordinated debt securities 3,151
 3,150
Current income tax payable 708
 363
Deferred income tax liability 10,009
 9,097
Other liabilities (includes $1 and $1, respectively, relating to variable interest entities) 27,570
 24,179
Separate account liabilities 168,454
 188,445
Total liabilities 667,278
 674,081
Contingencies, Commitments and Guarantees (Note 15) 

 

Equity    
MetLife, Inc.’s stockholders’ equity:    
Preferred stock, par value $0.01 per share; $4,405 and $3,405, respectively, aggregate liquidation preference —
 —
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 1,180,575,685 and 1,177,680,299 shares issued, respectively; 907,568,876 and 915,338,098 shares outstanding, respectively 12
 12
Additional paid-in capital 33,711
 32,680
Retained earnings 36,919
 33,078
Treasury stock, at cost; 273,006,809 and 262,342,201 shares, respectively (13,178) (12,678)
Accumulated other comprehensive income (loss) ("AOCI") 12,757
 13,052
Total MetLife, Inc.’s stockholders’ equity 70,221
 66,144
Noncontrolling interests 242
 238
Total equity 70,463
 66,382
Total liabilities and equity $737,741
 $740,463

See accompanying notes to the interim condensed consolidated financial statements.

43
Table of Contents
MetLife, Inc.
Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
For the Three Months Ended March 31, 2020 and Six Months Ended June 30, 2019 and 2018 (Unaudited)
(In millions, except per share data)




 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2019
2018 2020
2019
Revenues            
Premiums $10,129
 $15,153
 $19,534
 $24,331
 $9,466
 $9,405
Universal life and investment-type product policy fees 1,412
 1,370
 2,777
 2,762
 1,431
 1,365
Net investment income 4,693
 4,473
 9,601
 8,218
 3,061
 4,908
Other revenues 478
 475
 972
 949
 439
 494
Net investment gains (losses) 61
 (227) 76
 (560) (288) 15
Net derivative gains (losses) 724
 (59) 839
 290
 4,201
 115
Total revenues 17,497

21,185
 33,799
 35,990
 18,310
 16,302
Expenses            
Policyholder benefits and claims 9,993
 14,866
 19,065
 23,584
 9,022
 9,072
Interest credited to policyholder account balances 1,515
 1,424
 3,476
 2,193
 80
 1,961
Policyholder dividends 302
 309
 602
 606
 292
 300
Other expenses 3,390
 3,485
 6,615
 6,850
 3,273
 3,225
Total expenses 15,200

20,084
 29,758
 33,233
 12,667
 14,558
Income (loss) before provision for income tax 2,297
 1,101
 4,041
 2,757
 5,643
 1,744
Provision for income tax expense (benefit) 551
 207
 910
 606
 1,242
 359
Net income (loss) 1,746

894
 3,131
 2,151
 4,401
 1,385
Less: Net income (loss) attributable to noncontrolling interests 5
 3
 9
 7
 3
 4
Net income (loss) attributable to MetLife, Inc. 1,741

891
 3,122
 2,144
 4,398
 1,381
Less: Preferred stock dividends 57
 46
 89
 52
 32
 32
Net income (loss) available to MetLife, Inc.’s common shareholders $1,684

$845
 $3,033
 $2,092
 $4,366
 $1,349
Comprehensive income (loss) $6,466
 $(1,885) $13,021
 $(3,333) $4,107
 $6,555
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax 5
 4
 11
 8
 4
 6
Comprehensive income (loss) attributable to MetLife, Inc. $6,461

$(1,889) $13,010
 $(3,341) $4,103
 $6,549
Net income (loss) available to MetLife, Inc.’s common shareholders per common share:            
Basic $1.78
 $0.83
 $3.19
 $2.04
 $4.78
 $1.41
Diluted $1.77
 $0.83
 $3.17
 $2.02
 $4.75
 $1.40
See accompanying notes to the interim condensed consolidated financial statements.


4
Table of Contents
MetLife, Inc.
Interim Condensed Consolidated Statements of Equity
For the Three Months Ended March 31, 2020 and 2019 (Unaudited)
(In millions)

  
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Stock
at Cost
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
MetLife, Inc.’s
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2019 $—
 $12
 $32,680
 $33,078
 $(12,678) $13,052
 $66,144
 $238
 $66,382
Cumulative effects of changes in accounting principles, net of income tax (Note 1)       (121)     (121)   (121)
Balance at January 1, 2020 —
 12
 32,680
 32,957
 (12,678) 13,052
 66,023
 238
 66,261
Preferred stock issuance     972
       972
   972
Treasury stock acquired in connection with share repurchases         (500)   (500)   (500)
Stock-based compensation     59
       59
   59
Dividends on preferred stock       (32)     (32)   (32)
Dividends on common stock       (404)     (404)   (404)
Net income (loss)       4,398
     4,398
 3
 4,401
Other comprehensive income (loss), net of income tax           (295) (295) 1
 (294)
Balance at March 31, 2020 $—
 $12
 $33,711
 $36,919
 $(13,178) $12,757
 $70,221
 $242
 $70,463
  
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Stock
at Cost
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
MetLife, Inc.’s
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2018 $—
 $12
 $32,474
 $28,926
 $(10,393) $1,722
 $52,741
 $217
 $52,958
Cumulative effects of changes in accounting principles, net of income tax       74
   21
 95
   95
Balance at January 1, 2019 —
 12
 32,474
 29,000
 (10,393) 1,743
 52,836
 217
 53,053
Treasury stock acquired in connection with share repurchases         (500)   (500)   (500)
Stock-based compensation     61
       61
   61
Dividends on preferred stock       (32)     (32)   (32)
Dividends on common stock       (405)     (405)   (405)
Change in equity of noncontrolling interests             —
 6
 6
Net income (loss)       1,381
     1,381
 4
 1,385
Other comprehensive income (loss), net of income tax           5,168
 5,168
 2
 5,170
Balance at March 31, 2019 $—
 $12
 $32,535
 $29,944
 $(10,893) $6,911
 $58,509
 $229
 $58,738
See accompanying notes to the interim condensed consolidated financial statements.


5
Table of Contents
MetLife, Inc.
Interim Condensed Consolidated Statements of EquityCash Flows
For the SixThree Months Ended June 30,March 31, 2020 and 2019 and 2018 (Unaudited)
(In millions)

 Three Months
Ended
March 31,
 2020 2019
Net cash provided by (used in) operating activities$1,847
 $2,072
Cash flows from investing activities   
Sales, maturities and repayments of:   
Fixed maturity securities available-for-sale19,378
 21,606
Equity securities25
 149
Mortgage loans2,821
 1,769
Real estate and real estate joint ventures90
 103
Other limited partnership interests146
 250
Purchases and originations of:   
Fixed maturity securities available-for-sale(26,924) (23,386)
Equity securities(35) (16)
Mortgage loans(4,151) (4,416)
Real estate and real estate joint ventures(573) (483)
Other limited partnership interests(480) (428)
Cash received in connection with freestanding derivatives4,987
 1,021
Cash paid in connection with freestanding derivatives(1,440) (1,231)
Net change in policy loans20
 16
Net change in short-term investments(2,125) (545)
Net change in other invested assets(1) (53)
Other, net(75) (55)
Net cash provided by (used in) investing activities(8,337) (5,699)
Cash flows from financing activities   
Policyholder account balances:   
Deposits24,820
 23,891
Withdrawals(20,477) (20,904)
Payables for collateral under securities loaned and other transactions:   
Net change in payables for collateral under securities loaned and other transactions8,796
 388
Cash received for other transactions with tenors greater than three months50
 —
Cash paid for other transactions with tenors greater than three months(50) (75)
Long-term debt issued1,074
 —
Long-term debt repaid(6) (10)
Collateral financing arrangement repaid(12) (12)
Financing element on certain derivative instruments and other derivative related transactions, net(167) (29)
Treasury stock acquired in connection with share repurchases(500) (500)
Preferred stock issued, net of issuance costs972
 —
Dividends on preferred stock(32) (32)
Dividends on common stock(404) (405)
Other, net93
 4
Net cash provided by (used in) financing activities14,157
 2,316
Effect of change in foreign currency exchange rates on cash and cash equivalents balances(171) (4)
Change in cash and cash equivalents7,496
 (1,315)
Cash and cash equivalents, beginning of period16,598
 15,821
Cash and cash equivalents, end of period$24,094
 $14,506
  
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Stock
at Cost
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
MetLife, Inc.’s
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2018 $—
 $12
 $32,474
 $28,926
 $(10,393) $1,722
 $52,741
 $217
 $52,958
Cumulative effects of changes in accounting principles, net of income tax (Note 1)       74
   21
 95
   95
Balance at January 1, 2019 —
 12
 32,474
 29,000
 (10,393) 1,743
 52,836
 217
 53,053
Treasury stock acquired in connection with share repurchases         (500)   (500)   (500)
Stock-based compensation     61
       61
   61
Dividends on preferred stock       (32)     (32)   (32)
Dividends on common stock       (405)     (405)   (405)
Change in equity of noncontrolling interests             —
 6
 6
Net income (loss)       1,381
     1,381
 4
 1,385
Other comprehensive income (loss), net of income tax           5,168
 5,168
 2
 5,170
Balance at March 31, 2019 —
 12
 32,535
 29,944
 (10,893) 6,911
 58,509
 229
 58,738
Treasury stock acquired in connection with share repurchases         (750)   (750)   (750)
Stock-based compensation     67
       67
   67
Dividends on preferred stock       (57)     (57)   (57)
Dividends on common stock       (419)     (419)   (419)
Change in equity of noncontrolling interests             —
 1
 1
Net income (loss)       1,741
     1,741
 5
 1,746
Other comprehensive income (loss), net of income tax           4,720
 4,720
 —
 4,720
Balance at June 30, 2019 $—
 $12
 $32,602
 $31,209
 $(11,643) $11,631
 $63,811
 $235
 $64,046
Supplemental disclosures of cash flow information   
Net cash paid (received) for:   
Interest$136
 $148
Income tax$(35) $114
Non-cash transactions:   
Operating lease liability associated with the recognition of right-of-use assets$—
 $153

  
Preferred
Stock
 
Common
Stock
 
Additional
Paid-in
Capital
 
Retained
Earnings
 
Treasury
Stock
at Cost
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
MetLife, Inc.’s
Stockholders’
Equity
 
Noncontrolling
Interests
 
Total
Equity
Balance at December 31, 2017 $—
 $12
 $31,111
 $26,527
 $(6,401) $7,427
 $58,676
 $194
 $58,870
Cumulative effects of changes in accounting principles, net of income tax       (905)   912
 7
   7
Balance at January 1, 2018 —
 12
 31,111
 25,622
 (6,401) 8,339
 58,683
 194
 58,877
Preferred stock issuance     494
       494
   494
Treasury stock acquired in connection with share repurchases         (1,041)   (1,041)   (1,041)
Stock-based compensation     48
       48
   48
Dividends on preferred stock       (6)     (6)   (6)
Dividends on common stock       (416)     (416)   (416)
Change in equity of noncontrolling interests             —
 —
 —
Net income (loss)       1,253
     1,253
 4
 1,257
Other comprehensive income (loss), net of income tax           (2,705) (2,705) —
 (2,705)
Balance at March 31, 2018 —
 12
 31,653
 26,453
 (7,442) 5,634
 56,310
 198
 56,508
Preferred stock issuance     780
       780
   780
Treasury stock acquired in connection with share repurchases         (1,115)   (1,115)   (1,115)
Stock-based compensation     21
       21
   21
Dividends on preferred stock       (46)     (46)   (46)
Dividends on common stock       (428)     (428)   (428)
Change in equity of noncontrolling interests             —
 (3) (3)
Net income (loss)       891
     891
 3
 894
Other comprehensive income (loss), net of income tax           (2,780) (2,780) 1
 (2,779)
Balance at June 30, 2018 $—
 $12
 $32,454
 $26,870
 $(8,557) $2,854
 $53,633
 $199
 $53,832
See accompanying notes to the interim condensed consolidated financial statements.

statements.

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MetLife, Inc.
Interim Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2019 and 2018 (Unaudited)
(In millions)

 Six Months
Ended
June 30,
 2019 2018
Net cash provided by (used in) operating activities$4,459
 $6,904
Cash flows from investing activities   
Sales, maturities and repayments of:   
Fixed maturity securities available-for-sale42,055
 54,497
Equity securities183
 280
Mortgage loans5,065
 4,341
Real estate and real estate joint ventures138
 422
Other limited partnership interests402
 337
Purchases and originations of:   
Fixed maturity securities available-for-sale(44,504) (58,061)
Equity securities(76) (64)
Mortgage loans(7,236) (6,380)
Real estate and real estate joint ventures(804) (495)
Other limited partnership interests(798) (568)
Cash received in connection with freestanding derivatives1,724
 2,376
Cash paid in connection with freestanding derivatives(2,462) (2,638)
Net change in policy loans(4) (42)
Net change in short-term investments1,202
 1,055
Net change in other invested assets65
 164
Other, net(92) 12
Net cash provided by (used in) investing activities(5,142) (4,764)
Cash flows from financing activities   
Policyholder account balances:   
Deposits45,511
 46,858
Withdrawals(40,945) (44,976)
Payables for collateral under securities loaned and other transactions:   
Net change in payables for collateral under securities loaned and other transactions725
 1,558
Cash received for other transactions with tenors greater than three months—
 75
Cash paid for other transactions with tenors greater than three months(200) —
Long-term debt issued1,382
 14
Long-term debt repaid(895) (200)
Collateral financing arrangement repaid(34) (36)
Financing element on certain derivative instruments and other derivative related transactions, net(14) 12
Treasury stock acquired in connection with share repurchases(1,250) (2,156)
Preferred stock issued, net of issuance costs—
 1,274
Dividends on preferred stock(89) (52)
Dividends on common stock(824) (844)
Other, net(117) 85
Net cash provided by (used in) financing activities3,250
 1,612
Effect of change in foreign currency exchange rates on cash and cash equivalents balances47
 (141)
Change in cash and cash equivalents2,614
 3,611
Cash and cash equivalents, beginning of period15,821
 12,701
Cash and cash equivalents, end of period$18,435
 $16,312
Supplemental disclosures of cash flow information   
Net cash paid (received) for:   
Interest$510
 $592
Income tax$756
 $577
Non-cash transactions:   
Fixed maturity securities available-for-sale received in connection with pension risk transfer transactions$410
 $3,016
Brighthouse common stock exchange transaction:   
Reduction of long-term debt$—
 $944
Reduction of fair value option securities$—
 $1,030
Reclassification of certain equity securities to other invested assets$—
 $791

See accompanying notes to the interim condensed consolidated financial statements.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)


1. Business, Basis of Presentation and Summary of Significant Accounting Policies
Business
“MetLife” and the “Company” refer to MetLife, Inc., a Delaware corporation incorporated in 1999, its subsidiaries and affiliates. MetLife is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management. MetLife is organized into five5 segments: U.S.; Asia; Latin America; Europe, the Middle East and Africa (“EMEA”); and MetLife Holdings.
Basis of Presentation
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the interim condensed consolidated financial statements. In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain.uncertain, including the novel coronavirus COVID-19 pandemic (“COVID-19 Pandemic”). Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s business and operations. Actual results could differ from these estimates.
The accompanying interim condensed consolidated financial statements are unaudited and reflect all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 20182019 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife, Inc.’s Annual Report on Form 10-K for the year ended December 31, 20182019 (the “2018“2019 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 20182019 Annual Report.
Consolidation
The accompanying interim condensed consolidated financial statements include the accounts of MetLife, Inc. and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Intercompany accounts and transactions have been eliminated.
The Company uses the equity method of accounting or the fair value option (“FVO”) for real estate joint ventures and other limited partnership interests (“investee”) when it has more than a minor ownership interest or more than a minor influence over the investee’s operations. The Company generally recognizes its share of the investee’s earnings in net investment income on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period.
Reclassifications
Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform to the 20192020 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements.
Summary of Significant Accounting Policies
The following are the Company’s significant accounting policies updated for the January 1, 2020 adoption of new accounting pronouncements related to investments and goodwill.
Net Investment Income and Net Investment Gains (Losses)
Income from investments is reported within net investment income, unless otherwise stated herein. Gains and losses on sales of investments, intent-to-sell impairments, as well as provisions for credit loss in the allowance for credit loss (“ACL”) on fixed maturity securities available-for-sale (“AFS”), mortgage loans and investments in leases and subsequent changes in the ACL or for impairment losses on real estate investments, are reported within net investment gains (losses), unless otherwise stated herein. Accrued investment income is presented separately on the consolidated balance sheet and excluded from the carrying value of the related investments, primarily fixed maturity securities and mortgage loans.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Fixed Maturity Securities
The majority of the Company’s fixed maturity securities are classified as AFS and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income (loss) (“OCI”), net of policy-related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Sales of securities are determined on a specific identification basis.
Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premium and accretion of discount and is based on the estimated economic life of the securities, which for mortgage-backed and asset-backed securities considers the estimated timing and amount of prepayments of the underlying loans. See also Note 8 “— Fixed Maturity Securities AFS — Methodology for Amortization of Premium and Accretion of Discount on Structured Products” in the Notes to the Consolidated Financial Statements included in the 2019 Annual Report. The amortization of premium and accretion of discount also takes into consideration call and maturity dates.
The Company periodically evaluates its fixed maturity securities AFS for impairment. The assessment of whether impairments have occurred is based on management’s case-by-case evaluation of the underlying reasons for the decline in estimated fair value as described in Note 6 “— Fixed Maturity Securities Available-for-Sale — Evaluation of Fixed Maturity Securities AFS for Credit Loss.”
Prior to January 1, 2020, the Company applied other than temporary impairment (“OTTI”) guidance for securities in an unrealized loss position. An OTTI was recognized in earnings within net investment gains (losses) when it was anticipated that the amortized cost would not be recovered. When either: (i) the Company had the intent to sell the security, or (ii) it was more likely than not that the Company would be required to sell the security before recovery, the reduction of amortized cost and the OTTI recognized in earnings was the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions existed, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected was recognized as a reduction of amortized cost and an OTTI in earnings. If the estimated fair value was less than the present value of projected future cash flows expected to be collected, this portion of OTTI related to other-than-credit factors was recorded in OCI.
On January 1, 2020, the Company adopted accounting standards update (“ASU”) 2016-13,Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments(“ASU 2016-13”) using a modified retrospective approach. Under ASU 2016-13, for securities in an unrealized loss position, a credit loss is recognized in earnings within net investment gains (losses) when it is anticipated that the amortized cost will not be recovered. When either: (i) the Company has the intent to sell the security, or (ii) it is more likely than not that the Company will be required to sell the security before recovery, the reduction of amortized cost and the loss recognized in earnings is the entire difference between the security’s amortized cost and estimated fair value. If neither of these conditions exists, the difference between the amortized cost of the security and the present value of projected future cash flows expected to be collected is recognized as a “credit loss” by establishing an ACL with a corresponding charge to earnings in net investment gains (losses). However, the ACL is limited by the amount that the fair value is less than the amortized cost. This limitation is known as the “fair value floor”. If the estimated fair value is less than the present value of projected future cash flows expected to be collected, this portion of the decline in value related to other-than-credit factors (“noncredit loss”) is recorded in OCI.
The new guidance also replaces the model for purchased credit impaired (“PCI”) fixed maturity securities AFS and financing receivables and requires the establishment of an ACL at acquisition, which is added to the purchase price to establish the initial amortized cost of the investment. Upon adoption, the replacement of the PCI model did not have a material impact on the Company’s interim condensed consolidated financial statements.
Mortgage Loans
ASU 2016-13 requires an ACL based on the expectation of lifetime credit loss on financing receivables carried at amortized cost, including, but not limited to, mortgage loans and leveraged and direct financing leases, as described in Note 6.
The Company disaggregates its mortgage loan investments into three portfolio segments: commercial, agricultural and residential. Also included in commercial mortgage loans are revolving line of credit loans collateralized by commercial properties. The accounting policies that are applicable to all portfolio segments are presented below and the accounting policies related to each of the portfolio segments are included in Note 6.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Mortgage loans are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, and are net of ACL. Interest income and prepayment fees are recognized when earned. Interest income is recognized using an effective yield method giving effect to amortization of premium and accretion of discount.
The Company ceases to accrue interest when the collection of interest is not considered probable, which is based on a current evaluation of the status of the borrower including the number of days past due. When a loan is placed on non-accrual status, uncollected past due accrued interest income that is considered uncollectible is charged-off against net investment income. Generally, the accrual of interest income resumes after all delinquent amounts are paid and management believes all future principal and interest payments will be collected. The Company records cash receipts on non-accruing loans in accordance with the loan agreement. The Company records charge-offs upon the realization of a credit loss, typically through foreclosure or after a decision is made to sell a loan, or for residential loans when, after considering the individual consumer’s financial status, management believes amounts are not collectible. Gain or loss upon charge-off is recorded, net of previously established ACL, in net investment gains (losses). Cash recoveries on principal amounts previously charged-off are generally recorded in net investment gains.
Also included in mortgage loans are residential mortgage loans for which the FVO was elected, and which are stated at estimated fair value. Changes in estimated fair value are recognized in net investment income.
Goodwill
On January 1, 2020, the Company adopted ASU 2017-04,Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, using a prospective transition approach for goodwill impairment tests subsequent to January 1, 2020. As a result of the new guidance, Step 2 of the goodwill impairment test (measuring a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying value of that goodwill) has been eliminated and the Company is only required to perform a one-step goodwill impairment test as described below. Goodwill represents the future economic benefits arising from net assets acquired in a business combination that are not individually identified and recognized. Goodwill is calculated as the excess of cost over the estimated fair value of such net assets acquired, is not amortized, and is tested for impairment based on a fair value approach at least annually, or more frequently if events or circumstances indicate that there may be justification for conducting an interim test. The Company performs its annual goodwill impairment testing during the third quarter based upon data as of the close of the second quarter.
The impairment test is performed at the reporting unit level, which is the operating segment or a business one level below the operating segment, if discrete financial information is prepared and regularly reviewed by management at that level. For purposes of goodwill impairment testing, if the carrying value of a reporting unit exceeds its estimated fair value, an impairment charge would be recognized for the amount by which the carrying value exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the Company will consider income tax effects from any tax deductible goodwill on the carrying value of the reporting unit when measuring the goodwill impairment loss, if applicable. On an ongoing basis, the Company evaluates potential triggering events that may affect the estimated fair value of the Company’s reporting units to assess whether any goodwill impairment exists. Deteriorating or adverse market conditions for certain reporting units may have a significant impact on the estimated fair value of these reporting units and could result in future impairments of goodwill.
In the first quarter of 2020, the Company performed interim goodwill impairment testing on all of its reporting units due to the recent economic impacts caused by the COVID-19 Pandemic. The interim goodwill impairment testing was conducted by measuring the estimated fair value of the reporting unit and comparing such estimated fair value to the carrying value of the reporting unit. The result of the interim goodwill impairment testing was that the estimated fair value exceeded the carrying value of its reporting units and the Company determined that its goodwill in the current quarter was not impaired, although the amount of excess of estimated fair value above the carrying value for the reporting units has decreased significantly since the previous annual test. The excess of estimated fair value over carrying value in the Asia and EMEA reporting units has decreased below what would be considered a substantial margin.
Recent Accounting Pronouncements
Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of accounting standards updates (“ASUs”)ASUs to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. The following tables provide a description of new ASUs issued by the FASB and the impact of the adoption on the Company’s consolidated financial statements.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Adoption of New Accounting Pronouncements
Except as noted below, the ASUs adopted by the Company effective January 1, 20192020 did not have a material impact on its consolidated financial statements.statements or disclosures.
StandardDescriptionEffective Date and Method of AdoptionImpact on Financial Statements
ASU 2017-12,2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, with certain exceptions.

Effective for contract modifications made between March 12, 2020 and December 31, 2022

The new guidance will reduce the operational and financial impacts of contract modifications that replace a reference rate, such as London InterBank Offered Rate (LIBOR), affected by reference rate reform. The adoption of the new guidance did not have an impact on the Company’s interim condensed consolidated financial statements. The Company will continue to evaluate the impacts of reference rate reform on contract modifications and hedging relationships through December 31, 2022.
ASU 2017-04, DerivativesIntangibles-Goodwill and HedgingOther (Topic 815)350): Targeted Improvements to AccountingSimplifying the Test for Hedging Activities,Goodwill Impairment
The new guidance simplifies the former two-step goodwill impairment test by eliminating Step 2 of the test. The new guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any.January 1, 2020, the Company adopted, using a prospective approach.The adoption of the new guidance reduced the complexity involved with the evaluation of goodwill for impairment. The impact of the new guidance will depend on the outcomes of future goodwill impairment tests.
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as clarified and amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses; ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—CreditInstruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial InstrumentsInstruments; ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief; and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses
This new guidance requires an ACL based on the expectation of lifetime credit loss on financing receivables carried at amortized cost, including, but not limited to, mortgage loans, premium receivables, reinsurance receivables and leveraged and direct financing leases.

The former model for OTTI on fixed maturity securities AFS has been modified and requires the recording of an ACL instead of a reduction of the amortized cost. Any improvements in expected future cash flows will no longer be reflected as a prospective yield adjustment, but instead will be reflected as a reduction in the ACL. The new guidance simplifiesalso replaces the applicationmodel for PCI fixed maturity securities AFS and financing receivables and requires the establishment of hedge accounting in certain situations and amendsan ACL at acquisition, which is added to the hedge accounting modelpurchase price to enable entities to better portrayestablish the economicsinitial amortized cost of their risk management activities in their financial statements.the investment.

The new guidance also requires enhanced disclosures.
January 1, 2019. The2020 for substantially all financial assets, the Company adopted using a modified retrospective approach.

The adoption For previously impaired fixed maturity securities AFS and certain fixed maturity securities AFS acquired with evidence of credit quality deterioration since origination, the guidance resulted in an $18 million, net of income tax, increase to accumulated other comprehensive income (loss) (“AOCI”) with a corresponding decrease to retained earnings due to the reclassification of hedge ineffectiveness for cash flow hedging relationships existing as ofCompany adopted prospectively on January 1, 2019. The Company has included the expanded disclosures within Note 7.
ASU 2016-02,Leases (Topic 842), as clarified and amended by ASU 2018-10, Codification Improvements to Topic 842, Leases, ASU 2018-11, Leases (Topic 842): Targeted Improvements, andASU 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors

2020.
The new guidance requires a lessee to recognize assets and liabilities for leases with lease terms of more than 12 months. Leases are classified as finance or operating leases and both types of leases are recognized on the balance sheet. Lessor accounting remains largely unchanged from previous guidance except for certain targeted changes. The new guidance also requires new qualitative and quantitative disclosures. In July 2018, two amendments to the new guidance were issued. The amendments provide the option to adopt the new guidance prospectively without adjusting comparative periods. Also, the amendments provide lessors with a practical expedient not to separate lease and non-lease components for certain operating leases. In December 2018, an amendment was issued to clarify lessor accounting relating to taxes, certain lessor’s costs and variable payments related to both lease and non-lease components.

January 1, 2019. The Company adopted using a modified retrospective approach.
The Company elected the package of practical expedients allowed under the transition guidance. This allowed the Company to carry forward its historical lease classification. In addition, the Company elected all other practical expedients that were allowed under the new guidance and were applicable, including the practical expedient to combine lease and non-lease components into one lease component for certain real estate leases.

The adoption of this guidance resulted in the recording of additional net right-of-use (“ROU”) assets and lease liabilities of approximately $1.5 billion and $1.7 billion, respectively, as of January 1, 2019. The reduction of the ROU assets was a result of adjustments for prepaid/deferred rent, unamortized initial direct costs and impairment of certain ROU assets based on the net present value of the remaining minimum lease payments and sublease revenues. In addition, retained earnings increased by $95$121 million, net of income tax, as a result of the recognition of deferred gains on previous sale leaseback transactions. The guidance did not have a material impact ondecrease to retained earnings primarily related to the Company’s consolidated net income and cash flows.mortgage loan investments. The Company has included expandedthe required disclosures on the consolidated balance sheets and in Notes 6 and 9.
within Note 6.


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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

Future Adoption of New Accounting Pronouncements
ASUs not listed below were assessed and either determined to be not applicable or are not expected to have a material impact on the Company’s consolidated financial statements.statements or disclosures. ASUs issued but not yet adopted as of June 30, 2019March 31, 2020 that are currently being assessed and may or may not have a material impact on the Company’s consolidated financial statements or disclosures are summarized in the table below.
StandardDescriptionEffective Date and Method of AdoptionImpact on Financial Statements
ASU 2018-15,2019-12, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40)Income Taxes (Topic 740): Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as an asset and which costs to expense as incurred. Implementation costs that are capitalized under the new guidance are required to be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use.

January 1, 2020. The new guidance can be applied either prospectively to eligible costs incurred on or after the guidance is first applied, or retrospectively to all periods presented.
The new guidance will not have a material impact on the Company’s consolidated financial statements and will be adopted prospectively.

ASU 2018-14,Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit PlansIncome Taxes

The new guidance simplifies the accounting for income taxes by removing certain exceptions to the tax accounting guidance and providing clarification to other specific tax accounting guidance to eliminate variations in practice. Specifically, it removes certain disclosuresthe exceptions related to the a) incremental approach for intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items, b) recognition of a deferred tax liability when foreign investment ownership changes from equity method investment to consolidated subsidiary and vice versa and c) use of interim period tax accounting for year-to-date losses that no longerexceed anticipated losses. The guidance also simplifies the application of the income tax guidance for franchise taxes that are considered cost beneficial,partially based on income and the accounting for tax law changes during interim periods, clarifies the specific requirementsaccounting for transactions that result in a step-up in tax basis of disclosures,goodwill, provides for the option to elect allocation of consolidated income taxes to entities disregarded by taxing authorities for their stand-alone reporting, and adds disclosure requirements identified as relevant for employersrequires that sponsor defined benefit pensionan entity reflect the effect of an enacted change in tax laws or other postretirement plans.rates in the annual effective tax rate computation in the interim period that includes the enactment date.

December 31, 2020, to
January 1, 2021. The new guidance should be applied either on a retrospective, modified retrospective or prospective basis to all periods presented (with early adoption permitted).
The new guidance will not have a material impactbased on the Company’s consolidated financial statements.items to which the amendments relate. Early adoption is permitted.

ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement
The new guidance modifiesCompany has started its implementation efforts and is currently evaluating the disclosure requirements on fair value by removing some requirements, modifying others, adding changes in unrealized gains and losses included in other comprehensive income (loss) (“OCI”) for recurring Level 3 fair value measurements, and under certain circumstances, providing the option to disclose certain other quantitative information with respect to significant unobservable inputs in lieu of a weighted average.

January 1, 2020. Amendments related to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively. All other amendments should be applied retrospectively.
As of December 31, 2018, the Company early adopted the provisions of the guidance that removed the requirements relating to transfers between fair value hierarchy levels and certain disclosures about valuation processes for Level 3 fair value measurements. The Company will adopt the remainderimpact of the new guidance at the effective date. The new guidance will not have a material impact on the Company’sits consolidated financial statements.

ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts,as amended by ASU 2019-09, Financial Services—Insurance (Topic 944): Effective Date
The new guidance (i) prescribes the discount rate to be used in measuring the liability for future policy benefits for traditional and limited payment long-duration contracts, and requires assumptions for those liability valuations to be updated after contract inception, (ii) requires more market-based product guarantees on certain separate account and other account balance long-duration contracts to be accounted for at fair value, (iii) simplifies the amortization of deferred policy acquisition costs (“DAC”) for virtually all long-duration contracts, and (iv) introduces certain financial statement presentation requirements, as well as significant additional quantitative and qualitative disclosures. The amendments in ASU 2019-09 defer the effective date of the amendments in ASU 2018-12 for all entities.January 1, 2021,2022, to be applied retrospectively to January 1, 20192020 (with early adoption permitted).
The Company has started its implementation efforts of the Company and is currently evaluatingthe evaluation of the impact of the new guidance.guidance are in progress. Given the nature and extent of the required changes to a significant portion of the Company’s operations, the adoption of this guidance is expected to have a material impact on its consolidated financial statements.



1011
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
1. Business, Basis of Presentation and Summary of Significant Accounting Policies (continued)

StandardDescriptionEffective Date and Method of AdoptionImpact on Financial Statements
ASU 2017-04,Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

The new guidance simplifies the current two-step goodwill impairment test by eliminating Step 2 of the test. The new guidance requires a one-step impairment test in which an entity compares the fair value of a reporting unit with its carrying amount and recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any.

January 1, 2020, to be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.
The new guidance will reduce the complexity involved with the evaluation of goodwill for impairment. The impact of the new guidance will depend on the outcomes of future goodwill impairment tests.

ASU 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as clarified and amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments andASU 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief
This new guidance requires an allowance for credit losses based on the expectation of lifetime credit losses on financing receivables carried at amortized cost, including, but not limited to, mortgage loans, premium receivables, reinsurance receivables and certain leases.

The current model for other-than-temporary impairment (“OTTI”) on available-for-sale (“AFS”) debt securities has been modified and requires the recording of an allowance for credit losses rather than a reduction of the carrying value. Any improvements in expected future cash flows will no longer be reflected as a prospective yield adjustment, but rather as a reduction in the allowance. The new guidance also replaces the model for purchased credit impaired debt securities and financing receivables and requires the establishment of an allowance for credit losses at acquisition, which is added to the purchase price to establish the initial amortized cost.

The new guidance also requires enhanced disclosures.
January 1, 2020, to be applied on a modified retrospective basis, which requires transition adjustments to be recorded as a cumulative effect adjustment to retained earnings. 

The Company continues to evaluate the impact of the new guidance on its consolidated financial statements.

The Company is finalizing the development of the credit loss models for its financing receivables carried at amortized cost that are within the scope of the new guidance. The development of these credit loss models has resulted in data input validations, enhanced policies and controls and continued updates to information systems. The Company will begin testing these models and information systems in the second half of 2019.

The Company is in the process of preparing the required disclosures.

2. Segment Information
MetLife is organized into five5 segments: U.S.; Asia; Latin America; EMEA; and MetLife Holdings. In addition, the Company reports certain of its results of operations in Corporate & Other.
U.S.
The U.S. segment offers a broad range of protection products and services aimed at serving the financial needs of customers throughout their lives. These products are sold to corporations and their respective employees, other institutions and their respective members, as well as individuals. The U.S. segment is organized into three businesses: Group Benefits, Retirement and Income Solutions (“RIS”) and Property & Casualty.
The Group Benefits business offers life, dental, group short- and long-term disability, individual disability, accidental death and dismemberment, vision and accident & health coverages, as well as prepaid legal plans. This business also sells administrative services-only arrangements to some employers.
The RIS business offers a broad range of life and annuity-based insurance and investment products, including stable value and pension risk transfer products, institutional income annuities, tort settlements, and capital markets investment products, as well as solutions for funding postretirement benefits and company-, bank- or trust-owned life insurance.
The Property & Casualty business offers personal and commercial lines of property and casualty insurance, including private passenger automobile, homeowners’ and personal excess liability insurance. In addition, Property & Casualty offers to small business owners property, liability and business interruption insurance.

11
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

Asia
The Asia segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include whole and term life, group life, endowments, universal and variable life, accident & health insurance and fixed and variable annuities.
Latin America
The Latin America segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include life insurance, retirement and savings products, accident & health insurance and credit insurance.
EMEA
The EMEA segment offers a broad range of products to both individuals and corporations, as well as to other institutions, and their respective employees, which include life insurance, accident & health insurance, retirement and savings products and credit insurance.
MetLife Holdings
The MetLife Holdings segment consists of operations relating to products and businesses, previously included in MetLife’s former retail business, that the Company no longer actively markets in the United States, such as variable, universal, term and whole life insurance, variable, fixed and index-linked annuities, and long-term care insurance, as well as the assumed variable annuity guarantees from the Company’s former operating joint venture in Japan.
Corporate & Other
Corporate & Other contains various start-up, developing and run-off businesses. Also included in Corporate & Other are: the excess capital, as well as certain charges and activities, not allocated to the segments including(including external integration and disposition costs, internal resource costs for associates committed to acquisitions and dispositions and enterprise-wide strategic initiative restructuring charges and various start-up and developing businesses (including the investment management business through which the Company, as a manager of assets such as global fixed income and real estate, provides differentiated investment solutions to institutional investors worldwide). Additionally, Corporate & Other includes run-off businesses. Corporate & Other also includescharges), interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. In addition, Corporate & Other includesissues, the elimination of intersegment amounts which(which generally relate to affiliated reinsurance, investment expenses and intersegment loans, which bearbearing interest rates commensurate with related borrowings.borrowings), and the Company’s investment management business (through which the Company provides public fixed income, private capital and real estate investment solutions to institutional investors worldwide).

12
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

Financial Measures and Segment Accounting Policies
Adjusted earnings is used by management to evaluate performance and allocate resources. Consistent with GAAP guidance for segment reporting, adjusted earnings is also the Company’s GAAP measure of segment performance and is reported below. Adjusted earnings should not be viewed as a substitute for net income (loss). The Company believes the presentation of adjusted earnings, as the Company measures it for management purposes, enhances the understanding of its performance by highlighting the results of operations and the underlying profitability drivers of the business.
Adjusted earnings is defined as adjusted revenues less adjusted expenses, net of income tax.
The financial measures of adjusted revenues and adjusted expenses focus on the Company’s primary businesses principally by excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MetLife but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also includesinclude the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in results of discontinued operations under GAAP. Adjusted revenues also excludes net investment gains (losses) and net derivative gains (losses). Adjusted expenses also excludes goodwill impairments.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues:
•
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity guaranteed minimum income benefits (“GMIBs”) fees (“GMIB fees”);
Net investment income: (i) includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment, (ii) excludes post-tax adjusted earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to contractholder-directed equity securities, (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (v) includes distributions of profits from certain other limited partnership interests that were previously accounted for under the cost method, but are now accounted for at estimated fair value, where the change in estimated fair value is recognized in net investment gains (losses) under GAAP; and
Other revenues is adjusted for settlements of foreign currency earnings hedges and excludes fees received in association with services provided under transition service agreements (“TSA fees”).

13
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted expenses:
Policyholder benefits and claims and policyholder dividends excludes: (i) amortization of basis adjustments associated with de-designated fair value hedges of future policy benefits, (ii) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii)(iii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass-through adjustments, (iii)(iv) benefits and hedging costs related to GMIBs (“GMIB costs”) and (iv)(v) market value adjustments associated with surrenders or terminations of contracts (“Market value adjustments”);
Interest credited to policyholder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes certain amounts related to net investment income earned on contractholder-directed equity securities;
•
Amortization of DAC and value of business acquired (“VOBA”) excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB fees and GMIB costs and (iii) Market value adjustments;
Amortization of negative VOBA excludes amounts related to Market value adjustments;
Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
Other expenses excludes costs related to:excludes: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements costs and (iii) acquisition, integration and other costs. Other expenses includes TSA fees.
Adjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from the Company’s effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact related to the timing of certain tax credits, as well as certain tax reforms.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three monthsandsix months ended June 30, 2019March 31, 2020 and 20182019. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for adjusted earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s business.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

The Company’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. The Company’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.
Segment net investment income is credited or charged based on the level of allocated equity; however, changes in allocated equity do not impact the Company’s consolidated net investment income, net income (loss), or adjusted earnings.
Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs;costs, (ii) time studies analyzing the amount of employee compensation costs incurred by each segment;segment, and (iii) cost estimates included in the Company’s product pricing.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)








Three Months Ended March 31, 2020
U.S. Asia Latin
America		 EMEA 
MetLife
Holdings
 
Corporate
& Other
 Total Adjustments Total
Consolidated


(In millions)
Revenues

















Premiums
$5,674

$1,636

$640

$568

$904

$12

$9,434

$32

$9,466
Universal life and investment-type product policy fees
275

430

270

116

294

—

1,385

46

1,431
Net investment income
1,766

937

218

69

1,315

16

4,321

(1,260)
3,061
Other revenues
240

14

11

13

35

84

397

42

439
Net investment gains (losses)
—

—

—

—

—

—

—

(288)
(288)
Net derivative gains (losses)
—

—

—

—

—

—

—

4,201

4,201
Total revenues
7,955
 3,017
 1,139
 766
 2,548
 112
 15,537
 2,773
 18,310
Expenses








 


 


 
Policyholder benefits and claims and policyholder dividends
5,435

1,321

610

310

1,661

26

9,363

(49)
9,314
Interest credited to policyholder account balances
458

445

70

27

218

—

1,218

(1,138)
80
Capitalization of DAC
(112)
(421)
(100)
(130)
(5)
(3)
(771)
(3)
(774)
Amortization of DAC and VOBA
119

315

74

130

100

1

739

49

788
Amortization of negative VOBA
—

(8)
—

(2)
—

—

(10)
—

(10)
Interest expense on debt
2

—

1

—

2

217

222

—

222
Other expenses
1,066

874

345

332

228

136

2,981

66

3,047
Total expenses
6,968
 2,526
 1,000
 667
 2,204
 377
 13,742
 (1,075) 12,667
Provision for income tax expense (benefit)
207

141

44

21

67

(166)
314

928

1,242
Adjusted earnings
$780
 $350
 $95
 $78
 $277
 $(99)
1,481




Adjustments to:












 


 
Total revenues












2,773



 
Total expenses












1,075



 
Provision for income tax (expense) benefit            
(928)


 
Net income (loss)            
$4,401



$4,401
       
Three Months Ended June 30, 2019 U.S. Asia Latin
America		 EMEA MetLife
Holdings		 Corporate
& Other		 Total Adjustments 
Total
Consolidated
  (In millions)
Revenues                  
Premiums $6,234
 $1,631
 $773
 $551
 $924
 $16
 $10,129
 $—
 $10,129
Universal life and investment-type product policy fees 274
 419
 280
 105
 286
 —
 1,364
 48
 1,412
Net investment income 1,795
 944
 360
 73
 1,338
 44
 4,554
 139
 4,693
Other revenues 223
 13
 11
 13
 65
 82
 407
 71
 478
Net investment gains (losses) —
 —
 —
 —
 —
 —
 —
 61
 61
Net derivative gains (losses) —
 —
 —
 —
 —
 —
 —
 724
 724
Total revenues 8,526
 3,007
 1,424
 742
 2,613
 142
 16,454
 1,043
 17,497
Expenses                  
Policyholder benefits and claims and policyholder dividends 6,101
 1,279
 790
 292
 1,703
 18
 10,183
 112
 10,295
Interest credited to policyholder account balances 504
 424
 86
 23
 227
 —
 1,264
 251
 1,515
Capitalization of DAC (127) (472) (100) (126) (8) (4) (837) —
 (837)
Amortization of DAC and VOBA 117
 312
 79
 107
 80
 2
 697
 (8) 689
Amortization of negative VOBA —
 (7) —
 (3) —
 —
 (10) —
 (10)
Interest expense on debt 3
 —
 1
 —
 2
 268
 274
 —
 274
Other expenses 1,009
 955
 352
 350
 237
 289
 3,192
 82
 3,274
Total expenses 7,607
 2,491
 1,208
 643
 2,241
 573
 14,763
 437
 15,200
Provision for income tax expense (benefit) 187
 157
 57
 22
 73
 (181) 315
 236
 551
Adjusted earnings $732
 $359
 $159
 $77
 $299
 $(250) 1,376
    
Adjustments to:                  
Total revenues             1,043
    
Total expenses             (437)    
Provision for income tax (expense) benefit             (236)    
Net income (loss)             $1,746
   $1,746


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

       
Three Months Ended June 30, 2018 U.S. Asia Latin
America		 EMEA MetLife
Holdings		 Corporate
& Other		 Total Adjustments 
Total
Consolidated
  (In millions)
Revenues                  
Premiums $11,302
 $1,654
 $688
 $546
 $957
 $6
 $15,153
 $—
 $15,153
Universal life and investment-type product policy fees 262
 399
 275
 107
 301
 —
 1,344
 26
 1,370
Net investment income 1,719
 839
 327
 73
 1,329
 40
 4,327
 146
 4,473
Other revenues 203
 13
 9
 20
 68
 79
 392
 83
 475
Net investment gains (losses) —
 —
 —
 —
 —
 —
 —
 (227) (227)
Net derivative gains (losses) —
 —
 —
 —
 —
 —
 —
 (59) (59)
Total revenues 13,486
 2,905
 1,299
 746
 2,655
 125
 21,216
 (31) 21,185
Expenses                  
Policyholder benefits and claims and policyholder dividends 11,233
 1,237
 660
 286
 1,706
 3
 15,125
 50
 15,175
Interest credited to policyholder account balances 439
 362
 95
 26
 235
 —
 1,157
 267
 1,424
Capitalization of DAC (114) (495) (91) (121) (10) (3) (834) —
 (834)
Amortization of DAC and VOBA 114
 313
 71
 108
 101
 1
 708
 (1) 707
Amortization of negative VOBA —
 (12) —
 (4) —
 —
 (16) —
 (16)
Interest expense on debt 4
 —
 1
 —
 2
 272
 279
 30
 309
Other expenses 965
 976
 363
 339
 275
 259
 3,177
 142
 3,319
Total expenses 12,641
 2,381
 1,099
 634
 2,309
 532
 19,596
 488
 20,084
Provision for income tax expense (benefit) 174
 161
 55
 26
 66
 (234) 248
 (41) 207
Adjusted earnings $671
 $363
 $145
 $86
 $280
 $(173) 1,372
    
Adjustments to:                  
Total revenues             (31)    
Total expenses             (488)    
Provision for income tax (expense) benefit             41
    
Net income (loss)             $894
   $894



16
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)








 
    
Six Months Ended June 30, 2019
U.S. Asia Latin
America		 EMEA 
MetLife
Holdings
 
Corporate
& Other
 Total Adjustments Total
Consolidated
Three Months Ended March 31, 2019 U.S. Asia 
Latin
America
 EMEA 
MetLife
Holdings
 
Corporate
& Other
 Total Adjustments Total
Consolidated


(In millions) (In millions)
Revenues

















                  
Premiums
$11,801

$3,330

$1,419

$1,093

$1,851

$40

$19,534

$—

$19,534
 $5,567
 $1,699
 $646
 $542
 $927
 $24
 $9,405
 $—
 $9,405
Universal life and investment-type product policy fees
544

825

564

208

560

1

2,702

75

2,777
 270
 406
 284
 103
 274
 1
 1,338
 27
 1,365
Net investment income
3,514

1,824

656

147

2,625

69

8,835

766

9,601
 1,719
 880
 296
 74
 1,287
 25
 4,281
 627
 4,908
Other revenues
444

29

23

27

132

176

831

141

972
 221
 16
 12
 14
 67
 94
 424
 70
 494
Net investment gains (losses)
—

—

—

—

—

—

—

76

76
 —
 —
 —
 —
 —
 —
 —
 15
 15
Net derivative gains (losses)
—

—

—

—

—

—

—

839

839
 —
 —
 —
 —
 —
 —
 —
 115
 115
Total revenues
16,303
 6,008
 2,662
 1,475
 5,168
 286
 31,902
 1,897
 33,799
 7,777
 3,001
 1,238
 733
 2,555
 144
 15,448
 854
 16,302
Expenses








 


 


                   
Policyholder benefits and claims and policyholder dividends
11,474

2,598

1,387

576

3,351

38

19,424

243

19,667
 5,373
 1,319
 597
 284
 1,648
 20
 9,241
 131
 9,372
Interest credited to policyholder account balances
1,005

827

180

47

453

—

2,512

964

3,476
 501
 403
 94
 24
 226
 —
 1,248
 713
 1,961
Capitalization of DAC
(241)
(951)
(194)
(243)
(14)
(6)
(1,649)
—

(1,649) (114) (479) (94) (117) (6) (2) (812) —
 (812)
Amortization of DAC and VOBA
231

619

157

199

143

3

1,352

(39)
1,313
 114
 307
 78
 92
 63
 1
 655
 (31) 624
Amortization of negative VOBA
—

(16)
—

(4)
—

—

(20)
—

(20) —
 (9) —
 (1) —
 —
 (10) —
 (10)
Interest expense on debt
5

—

2

—

4

497

508

—

508
 2
 —
 1
 —
 2
 229
 234
 —
 234
Other expenses
2,002

1,910

718

688

464

511

6,293

170

6,463
 993
 955
 366
 338
 227
 222
 3,101
 88
 3,189
Total expenses
14,476
 4,987
 2,250
 1,263
 4,401
 1,043
 28,420
 1,338
 29,758
 6,869
 2,496
 1,042
 620
 2,160
 470
 13,657
 901
 14,558
Provision for income tax expense (benefit)
371

306

119

49

151

(346)
650

260

910
 184
 149
 62
 27
 78
 (165) 335
 24
 359
Adjusted earnings
$1,456
 $715
 $293
 $163
 $616
 $(411)
2,832




 $724
 $356
 $134
 $86
 $317
 $(161) 1,456
    
Adjustments to:












 


                   
Total revenues












1,897



              854
    
Total expenses












(1,338)


              (901)    
Provision for income tax (expense) benefit            
(260)


              (24)    
Net income (loss)            
$3,131



$3,131
             $1,385
   $1,385


17
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

  
    
Six Months Ended June 30, 2018 U.S. Asia 
Latin
America
 EMEA 
MetLife
Holdings
 
Corporate
& Other
 Total Adjustments Total
Consolidated
  (In millions)
Revenues                  
Premiums $16,519
 $3,402
 $1,387
 $1,097
 $1,907
 $19
 $24,331
 $—
 $24,331
Universal life and investment-type product policy fees 520
 793
 557
 219
 615
 —
 2,704
 58
 2,762
Net investment income 3,381
 1,634
 603
 148
 2,681
 99
 8,546
 (328) 8,218
Other revenues 407
 28
 17
 36
 135
 160
 783
 166
 949
Net investment gains (losses) —
 —
 —
 —
 —
 —
 —
 (560) (560)
Net derivative gains (losses) —
 —
 —
 —
 —
 —
 —
 290
 290
Total revenues 20,827
 5,857
 2,564
 1,500
 5,338
 278
 36,364
 (374) 35,990
Expenses                  
Policyholder benefits and claims and policyholder dividends 16,371
 2,580
 1,306
 580
 3,256
 —
 24,093
 97
 24,190
Interest credited to policyholder account balances 846
 713
 193
 51
 471
 —
 2,274
 (81) 2,193
Capitalization of DAC (220) (960) (185) (239) (20) (5) (1,629) (1) (1,630)
Amortization of DAC and VOBA 229
 627
 131
 214
 201
 3
 1,405
 (5) 1,400
Amortization of negative VOBA —
 (27) —
 (10) —
 —
 (37) (1) (38)
Interest expense on debt 6
 —
 3
 —
 4
 552
 565
 30
 595
Other expenses 1,926
 1,928
 701
 690
 551
 491
 6,287
 236
 6,523
Total expenses 19,158
 4,861
 2,149
 1,286
 4,463
 1,041
 32,958
 275
 33,233
Provision for income tax expense (benefit) 345
 306
 130
 47
 170
 (393) 605
 1
 606
Adjusted earnings $1,324
 $690
 $285
 $167
 $705
 $(370) 2,801
    
Adjustments to:                  
Total revenues             (374)    
Total expenses             (275)    
Provision for income tax (expense) benefit             (1)    
Net income (loss)             $2,151
   $2,151


1816
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
2. Segment Information (continued)

The following table presents total assets with respect to the Company’s segments, as well as Corporate & Other, at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 (In millions) (In millions)
U.S. $263,410
 $248,174
 $273,341
 $266,174
Asia 157,743
 146,278
 160,442
 161,018
Latin America 76,881
 70,417
 61,526
 75,069
EMEA 27,462
 27,829
 24,365
 27,281
MetLife Holdings 172,957
 166,872
 172,347
 175,199
Corporate & Other 33,714
 27,968
 45,720
 35,722
Total $732,167
 $687,538
 $737,741
 $740,463



Revenues derived from any customer did not exceed 10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the three months and six months endedJune 30, 2019. Revenues derived from one U.S. segment customer were $6.0 billion for both the three months and six months ended June 30, 2018, which represented 35% and 21%, respectively, of consolidated premiums, universal life and investment-type product policy fees and other revenues. The revenue was from a single premium received for a pension risk transfer. Revenues derived from any other customer did not exceed 10% of consolidated premiums, universal life and investment-type product policy fees and other revenues for the three months and six months endedJune 30, 2018.
3. Pending Disposition
In June 2019, the Company entered into a definitive agreement to sell its two wholly-owned subsidiaries, MetLife Limited and Metropolitan Life Insurance Company of Hong Kong Limited (collectively, “MetLife Hong Kong”). As a result of the agreement, a loss of $140 million, net of income tax, was recorded for the three months and six months ended June 30, 2019. This loss is comprised of an expected $100 million pre-tax loss, which is reflected in net investment gains (losses) and includes allocated goodwill of $75 million. Additionally, the $140 million loss includes a $40 million net tax charge, which was recorded in the provision for income tax expense (benefit) and includes previously deferred tax items and losses which are not recognized for tax purposes. At June 30, 2019, MetLife Hong Kong reported $2.9 billion of total assets. MetLife Hong Kong’s results of operations which are included in continuing operations. MetLife Hong Kong’s results of operations and balance sheet data arewere reported in the Asia segment.segment adjusted earnings through June 30, 2019. See Note 2 for information on divested businesses. The transaction is expected to close in 2020 and is subject to regulatory approvals and satisfaction of other closing conditions.
4. Insurance
Guarantees
As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report, the Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum benefits. Guaranteed minimum accumulation benefits (“GMABs”), the non-life contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and certain non-life contingent portions of GMIBs are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 7.
The Company also issues other annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize. These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed annuitization benefits that may be above what would be provided by the current account value of the contract. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit.

19
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
4. Insurance (continued)

Information regarding the Company’s guarantee exposure, which includes direct and assumed business, but excludes offsets from hedging or ceded reinsurance, if any, was as follows at:
 June 30, 2019  December 31, 2018  March 31, 2020  December 31, 2019 
 In the
Event of Death		 At
Annuitization		 In the
Event of Death (8)		 At
Annuitization (8)		 In the
Event of Death		 At
Annuitization		 In the
Event of Death		 At
Annuitization
 (Dollars in millions)  (Dollars in millions) 
Annuity Contracts:                        
Variable Annuity Guarantees:                        
Total account value (1), (2), (3) $65,393
  $24,353
  $63,381
  $23,174
  $55,583
  $20,475
  $64,506
  $24,036
 
Separate account value (1) $41,563
  $22,562
  $38,888
  $21,385
  $34,167
  $18,774
  $41,305
  $22,291
 
Net amount at risk (2) $1,767
(4) $449
(5) $3,197
(4) $511
(5) $4,009
(4) $1,131
(5) $1,572
(4) $584
(5)
Average attained age of contractholders 67 years
  65 years
  66 years
  64 years
  67 years
  66 years
  67 years
  65 years
 
Other Annuity Guarantees:                        
Total account value (1), (3) N/A
  $5,739
  N/A
  $5,787
  N/A
  $4,885
  N/A
  $5,671
 
Net amount at risk N/A
  $444
(6) N/A
  $549
(6) N/A
  $388
(6) N/A
  $408
(6)
Average attained age of contractholders N/A
  51 years
  N/A
  50 years
  N/A
  51 years
  N/A
  51 years
 

17
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
4. Insurance (continued)

 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 Secondary
Guarantees		 Paid-Up
Guarantees		 Secondary
Guarantees (8)		 Paid-Up
Guarantees		 Secondary
Guarantees		 Paid-Up
Guarantees		 Secondary
Guarantees		 Paid-Up
Guarantees
 (Dollars in millions) (Dollars in millions)
Universal and Variable Life Contracts:                
Total account value (1), (3) $11,367
 $3,000
 $11,205
 $3,070
 $10,994
 $2,903
 $11,937
 $2,940
Net amount at risk (7) $89,502
 $15,012
 $93,028
 $15,539
 $84,436
 $14,231
 $86,221
 $14,500
Average attained age of policyholders 53 years
 64 years
 52 years
 64 years
 54 years
 65 years
 53 years
 65 years
__________________
(1)The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive.
(2)Includes amounts, which are not reported on the interim condensed consolidated balance sheets, from assumed variable annuity guarantees from the Company’s former operating joint venture in Japan.
(3)Includes the contractholder’s investments in the general account and separate account, if applicable.
(4)Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death.
(5)Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved.
(6)Defined as either the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date or the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. These amounts represent the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date.
(7)Defined as the guarantee amount less the account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date.

2018
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
4. Insurance (continued)

(8)The Company’s guarantee exposure amounts at December 31, 2018 as reported in the 2018 Annual Report have been revised. They conform to the 2019 presentation, which includes certain contracts with guarantees that were previously excluded. They include the following increases from the amounts reported in the 2018 Annual Report: (i) variable annuity guarantees in the event of death: $7.1 billion from $56.2 billion for total account value, $1.5 billion from $37.3 billion for separate account value and $429 million from $2.8 billion for net amount at risk; (ii) variable annuity guarantees at annuitization: $1.5 billion from $21.6 billion for total account value, $1.5 billion from $19.8 billion for separate account value and $28 million from $483 million for net amount at risk; (iii) other annuity guarantees: $4.5 billion from $1.3 billion for total account value and $60 million from $489 million for net amount at risk; and (iv) universal and variable life contract secondary guarantees: $2.3 billion from $8.9 billion for total account value and $28.9 billion from $64.2 billion for net amount at risk. 
Additionally, the average attained age of contractholders at annuitization for variable annuity guarantees decreased by one year from 65 years and the average attained age of policyholders with universal and variable life contract secondary guarantees decreased by five years from 57 years.
Liabilities for Unpaid Claims and Claim Expenses
Rollforward of Claims and Claim Adjustment Expenses
Information regarding the liabilities for unpaid claims and claim adjustment expenses was as follows:
 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2020 2019
 (In millions) (In millions)
Balance, beginning of period $17,788
 $17,094
 $19,216
 $17,788
Less: Reinsurance recoverables 2,332
 2,198
 2,377
 2,332
Net balance, beginning of period 15,456
 14,896
 16,839
 15,456
Incurred related to:        
Current period 13,521
 12,257
 6,455
 6,338
Prior periods (1) 78
 200
 113
 210
Total incurred 13,599
 12,457
 6,568
 6,548
Paid related to:        
Current period (9,098) (8,021) (3,523) (3,430)
Prior periods (4,034) (4,146) (3,160) (2,814)
Total paid (13,132) (12,167) (6,683) (6,244)
Net balance, end of period 15,923
 15,186
 16,724
 15,760
Add: Reinsurance recoverables 2,393
 2,289
 2,461
 2,354
Balance, end of period (included in future policy benefits and other policy-related balances) $18,316
 $17,475
 $19,185
 $18,114
__________________
(1)For both the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, claims and claim adjustment expenses associated with prior periods increased due to events incurred in prior periods but reported in the current period.
5. Closed Block
On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a mutual life insurance company to a stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York Superintendent of Insurance approving MLIC’s plan of reorganization, as amended (the “Plan of Reorganization”). On the Demutualization Date, MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC.

21
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
5. Closed Block (continued)

Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the closed block.
Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item.
Information regarding the closed block liabilities and assets designated to the closed block was as follows at:
  June 30, 2019 December 31, 2018
  (In millions)
Closed Block Liabilities    
Future policy benefits $39,608
 $40,032
Other policy-related balances 395
 317
Policyholder dividends payable 457
 431
Policyholder dividend obligation 1,834
 428
Deferred income tax liability 51
 28
Other liabilities 137
 328
Total closed block liabilities 42,482
 41,564
Assets Designated to the Closed Block    
Investments:    
Fixed maturity securities available-for-sale, at estimated fair value 26,132
 25,354
Equity securities, at estimated fair value 64
 61
Contractholder-directed equity securities and fair value option securities, at estimated fair value 49
 43
Mortgage loans 6,900
 6,778
Policy loans 4,498
 4,527
Real estate and real estate joint ventures 550
 544
Other invested assets 657
 643
Total investments 38,850
 37,950
Cash and cash equivalents 75
 —
Accrued investment income 434
 443
Premiums, reinsurance and other receivables 85
 83
Current income tax recoverable 78
 69
Total assets designated to the closed block 39,522
 38,545
Excess of closed block liabilities over assets designated to the closed block 2,960
 3,019
Amounts included in AOCI:    
Unrealized investment gains (losses), net of income tax 2,226
 1,089
Unrealized gains (losses) on derivatives, net of income tax 103
 86
Allocated to policyholder dividend obligation, net of income tax (1,449) (338)
Total amounts included in AOCI 880
 837
Maximum future earnings to be recognized from closed block assets and liabilities $3,840
 $3,856


2219
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
5. Closed Block (continued)

Information regarding the closed block liabilities and assets designated to the closed block was as follows at:
  March 31, 2020 December 31, 2019
  (In millions)
Closed Block Liabilities    
Future policy benefits $39,214
 $39,379
Other policy-related balances 340
 423
Policyholder dividends payable 431
 432
Policyholder dividend obligation 1,677
 2,020
Deferred income tax liability 82
 79
Other liabilities 169
 81
Total closed block liabilities 41,913
 42,414
Assets Designated to the Closed Block    
Investments:    
Fixed maturity securities available-for-sale, at estimated fair value 25,332
 25,977
Equity securities, at estimated fair value 44
 49
Contractholder-directed equity securities and fair value option securities, at estimated fair value 46
 53
Mortgage loans 6,995
 7,052
Policy loans 4,478
 4,489
Real estate and real estate joint ventures 556
 544
Other invested assets 844
 314
Total investments 38,295
 38,478
Cash and cash equivalents 148
 448
Accrued investment income 427
 419
Premiums, reinsurance and other receivables 67
 75
Current income tax recoverable 90
 91
Total assets designated to the closed block 39,027
 39,511
Excess of closed block liabilities over assets designated to the closed block 2,886
 2,903
AOCI:    
Unrealized investment gains (losses), net of income tax 2,008
 2,453
Unrealized gains (losses) on derivatives, net of income tax 314
 97
Allocated to policyholder dividend obligation, net of income tax (1,325) (1,596)
Total amounts included in AOCI 997
 954
Maximum future earnings to be recognized from closed block assets and liabilities $3,883
 $3,857

Information regarding the closed block policyholder dividend obligation was as follows:
 Six Months
Ended
June 30, 2019		 Year
Ended
December 31, 2018		 Three Months
Ended
March 31, 2020		 Year
Ended
December 31, 2019
 (In millions) (In millions)
Balance, beginning of period $428
 $2,121
 $2,020
 $428
Change in unrealized investment and derivative gains (losses) 1,406
 (1,693) (343) 1,592
Balance, end of period $1,834
 $428
 $1,677
 $2,020


20
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
5. Closed Block (continued)

Information regarding the closed block revenues and expenses was as follows:
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
2019 2018 2019 2018 2020 2019
(In millions) (In millions)
Revenues           
Premiums$390
 $410
 $757
 $797
 $367
 $367
Net investment income447
 431
 875
 875
 407
 428
Net investment gains (losses)(4) (24) (5) (53) (19) (1)
Net derivative gains (losses)9
 13
 12
 10
 26
 3
Total revenues842
 830
 1,639
 1,629
 781
 797
Expenses           
Policyholder benefits and claims563
 596
 1,102
 1,167
 550
 539
Policyholder dividends231
 238
 459
 482
 219
 228
Other expenses28
 30
 57
 59
 27
 29
Total expenses822
 864
 1,618
 1,708
 796
 796
Revenues, net of expenses before provision for income tax expense (benefit)20
 (34) 21
 (79) (15) 1
Provision for income tax expense (benefit)4
 (7) 4
 (17) (3) —
Revenues, net of expenses and provision for income tax expense (benefit)$16
 $(27) $17
 $(62) $(12) $1

MLIC charges the closed block with federal income taxes, state and local premium taxes and other state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan of Reorganization. MLIC also charges the closed block for expenses of maintaining the policies included in the closed block.

2321
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

6. Investments
Fixed Maturity Securities Available-for-Sale
Fixed Maturity Securities Available-for-Sale by Sector
The following table presents the fixed maturity securities AFS by sector. U.S. corporate and foreign corporate sectors include redeemable preferred stock. Residential mortgage-backed securities (“RMBS”) includes Agency,agency, prime, alternative and sub-prime mortgage-backed securities. Asset-backed securities (“ABS”) includes securities collateralized by corporate loans and consumer loans. Municipals includes taxable and tax-exempt revenue bonds and, to a much lesser extent, general obligations of states, municipalities and political subdivisions. Commercial mortgage-backed securities (“CMBS”) primarily includes securities collateralized by multiple properties.commercial mortgage loans. RMBS, ABS and CMBS are collectively, “Structured Securities.Products.” In accordance with new guidance adopted January 1, 2020 regarding expected credit loss, securities that incurred a credit loss after December 31, 2019 and were still held as of March 31, 2020, are presented net of ACL. In accordance with previous guidance, both the temporary loss and OTTI loss are presented for securities that were in an unrealized loss position as of December 31, 2019.
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Amortized
Cost		 Gross Unrealized Estimated
Fair
Value		 Amortized
Cost		 Gross Unrealized Estimated
Fair
Value		Amortized
Cost		 ACL Gross UnrealizedEstimated
Fair
Value		 Amortized
Cost		 Gross Unrealized Estimated
Fair
Value

Gains		 Temporary
Losses		 OTTI
Losses (1)		 
Gains		 Temporary
Losses		 OTTI
Losses (1)		  
Gains		 Losses 
Gains		 Temporary
Losses		 OTTI
Losses (1)		 
(In millions)(In millions)
U.S. corporate$76,928
 $7,216
 $432
 $—
 $83,712
 $77,761
 $3,467
 $2,280
 $—
 $78,948
$80,287
 $(51) $7,151
 $2,316
 $85,071
 $79,115
 $8,943
 $305
 $—
 $87,753
Foreign government58,605
 9,205
 256
 —
 67,554
 56,353
 6,406
 471
 —
 62,288
57,737
 (136) 7,816
 573
 64,844
 58,840
 8,710
 321
 —
 67,229
Foreign corporate58,682
 4,730
 1,014
 —
 62,398
 56,290
 2,438
 2,025
 —
 56,703
58,679
 —
 3,281
 2,765
 59,195
 59,342
 5,540
 717
 —
 64,165
U.S. government and agency35,727
 4,326
 50
 —
 40,003
 37,030
 2,756
 464
 —
 39,322
38,181
 —
 9,787
 9
 47,959
 37,586
 4,604
 106
 —
 42,084
RMBS27,635
 1,465
 88
 (37) 29,049
 27,409
 920
 394
 (26) 27,961
29,242
 —
 1,636
 409
 30,469
 27,051
 1,535
 72
 (33) 28,547
ABS13,687
 98
 72
 1
 13,712
 12,552
 74
 153
 1
 12,472
15,870
 —
 48
 1,080
 14,838
 14,547
 83
 88
 —
 14,542
Municipals10,339
 1,920
 4
 —
 12,255
 10,376
 1,228
 71
 —
 11,533
11,877
 —
 2,054
 60
 13,871
 11,081
 2,001
 29
 —
 13,053
CMBS9,626
 413
 33
 —
 10,006
 9,045
 115
 122
 —
 9,038
10,751
 —
 232
 545
 10,438
 10,093
 396
 42
 —
 10,447
Total fixed maturity securities AFS$291,229

$29,373

$1,949

$(36)
$318,689

$286,816

$17,404

$5,980

$(25)
$298,265
$302,624
 $(187) $32,005

$7,757

$326,685

$297,655

$31,812

$1,680

$(33)
$327,820

__________________
(1)Noncredit OTTI losses included in AOCI in an unrealized gain position are due to increases in estimated fair value subsequent to initial recognition of noncredit lossesloss on such securities. See also “— Net Unrealized Investment Gains (Losses).”
The Company held non-income producing fixed maturity securities AFS with an estimated fair value of $35 million and $15 million, and unrealized gains (losses) of $2 million and ($1) million at June 30, 2019 and December 31, 2018, respectively.
Maturities of Fixed Maturity Securities AFS
The amortized cost, net of ACL and estimated fair value of fixed maturity securities AFS, by contractual maturity date, were as follows at June 30, 2019:March 31, 2020:
 Due in One
Year or Less		 Due After
One Year
Through
Five Years		 
Due After
Five Years
Through Ten
Years
 
Due After
Ten Years
 
Structured
Securities
 
Total Fixed
Maturity
Securities AFS
 Due in One
Year or Less		 Due After
One Year
Through
Five Years		 
Due After
Five Years
Through
Ten Years
 
Due After
Ten Years
 
Structured
Products
 
Total Fixed
Maturity
Securities AFS
 (In millions) (In millions)
Amortized cost $16,336
 $51,147
 $57,849
 $114,949
 $50,948
 $291,229
Amortized cost, net of ACL $16,862
 $47,867
 $57,679
 $124,166
 $55,863
 $302,437
Estimated fair value $16,415
 $53,234
 $62,407
 $133,866
 $52,767
 $318,689
 $17,061
 $48,490
 $60,624
 $144,765
 $55,745
 $326,685

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities AFS not due at a single maturity date have been presented in the year of final contractual maturity. Structured SecuritiesProducts are shown separately, as they are not due at a single maturity.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Continuous Gross Unrealized Losses for Fixed Maturity Securities AFS by Sector
The following table presents the estimated fair value and gross unrealized losses of fixed maturity securities AFS in an unrealized loss position by sector and aggregated by length of time that the securities have been in a continuous unrealized loss position. Included in the table below are securities without an ACL as of March 31, 2020, in accordance with new guidance adopted January 1, 2020. Also included in the table below are all securities in an unrealized loss position at:as of December 31, 2019, in accordance with previous guidance.
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 Less than 12 Months 
Equal to or Greater
than 12 Months
 Less than 12 Months 
Equal to or Greater
than 12 Months
 Less than 12 Months 
Equal to or Greater
than 12 Months
 Less than 12 Months 
Equal to or Greater
than 12 Months
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
 
Gross
Unrealized
Losses
 (Dollars in millions) (Dollars in millions)
U.S. corporate $4,058
 $105
 $5,190
 $327
 $32,430
 $1,663
 $5,826
 $617
 $22,055
 $2,136
 $655
 $174
 $3,817
 $107
 $2,226
 $198
Foreign government 1,469
 110
 1,863
 146
 4,392
 243
 2,902
 228
 5,813
 335
 1,347
 194
 3,295
 149
 1,490
 172
Foreign corporate 3,425
 157
 8,628
 857
 19,564
 1,230
 5,765
 795
 21,922
 2,401
 2,103
 364
 3,188
 133
 5,873
 584
U.S. government and agency 2,155
 9
 2,634
 41
 6,813
 58
 8,937
 406
 1,103
 8
 37
 —
 5,391
 97
 196
 9
RMBS 1,686
 14
 3,138
 37
 6,506
 120
 6,423
 248
 5,617
 390
 227
 20
 2,341
 25
 584
 14
ABS 5,336
 45
 2,012
 28
 8,230
 138
 392
 16
 9,866
 757
 2,995
 323
 3,692
 22
 4,843
 66
Municipals 64
 —
 124
 4
 1,380
 46
 349
 25
 1,351
 60
 1
 —
 1,156
 29
 1
 —
CMBS 768
 2
 534
 31
 3,893
 67
 707
 55
 4,693
 485
 384
 60
 1,926
 16
 487
 26
Total fixed maturity securities AFS $18,961
 $442
 $24,123
 $1,471
 $83,208
 $3,565
 $31,301
 $2,390
 $72,420
 $6,572
 $7,749
 $1,135
 $24,806
 $578
 $15,700
 $1,069
Investment grade $63,072
 $5,080
 $6,970
 $919
 $22,838
 $437
 $13,813
 $821
Below investment grade 9,348
 1,492
 779
 216
 1,968
 141
 1,887
 248
Total fixed maturity securities AFS $72,420

$6,572

$7,749

$1,135

$24,806

$578

$15,700

$1,069
Total number of securities in an unrealized loss position 1,743
 
 1,992
 
 6,913
 
 2,335
 
 6,667
 
 947
 
 2,153
 
 1,411
 

Evaluation of Fixed Maturity Securities AFS for Credit Loss
Evaluation and Measurement Methodologies
Management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management’s evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used in the credit loss evaluation process include, but are not limited to: (i) the extent to which the estimated fair value has been below amortized cost, (ii) adverse conditions specifically related to a security, an industry sector or sub-sector, or an economically depressed geographic area, adverse change in the financial condition of the issuer of the security, changes in technology, discontinuance of a segment of the business that may affect future earnings, and changes in the quality of credit enhancement, (iii) payment structure of the security and likelihood of the issuer being able to make payments, (iv) failure of the issuer to make scheduled interest and principal payments, (v) the issuer, or series of issuers or an industry has suffered a catastrophic loss or has exhausted natural resources, (vi) whether the Company has the intent to sell or will more likely than not be required to sell a particular security before the decline in estimated fair value below amortized cost recovers, (vii) with respect to Structured Products, changes in forecasted cash flows after considering the changes in the financial condition of the underlying loan obligors and quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security, (viii) changes in the rating of the security by a rating agency, and (ix) other subjective factors, including concentrations and information obtained from regulators.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

The methodology and significant inputs used to determine the amount of credit loss are as follows:
The Company calculates the recovery value by performing a discounted cash flow analysis based on the present value of future cash flows. The discount rate is generally the effective interest rate of the security at the time of purchase for fixed-rate securities and the spot rate at the date of evaluation of credit loss for floating-rate securities.
When determining collectability and the period over which value is expected to recover, the Company applies considerations utilized in its overall credit loss evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s single best estimate, the most likely outcome in a range of possible outcomes, after giving consideration to a variety of variables that include, but are not limited to: payment terms of the security; the likelihood that the issuer can service the interest and principal payments; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; any private and public sector programs to restructure foreign government securities and municipals; and changes to the rating of the security or the issuer by rating agencies.
Additional considerations are made when assessing the unique features that apply to certain Structured Products including, but not limited to: the quality of underlying collateral, historical performance of the underlying loan obligors, historical rent and vacancy levels, changes in the financial condition of the underlying loan obligors, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying loans or assets backing a particular security, changes in the quality of credit enhancement and the payment priority within the tranche structure of the security.
With respect to securities that have attributes of debt and equity (“perpetual hybrid securities”), consideration is given in the credit loss analysis as to whether there has been any deterioration in the credit of the issuer and the likelihood of recovery in value of the securities that are in a severe unrealized loss position. Consideration is also given as to whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any dividend payments.
After the adoption of new guidance on January 1, 2020, in periods subsequent to the recognition of an initial ACL on a security, the Company reassesses credit loss quarterly. Subsequent increases or decreases in the expected cash flow from the security result in corresponding decreases or increases in the ACL which are recorded within net investment gains (losses); however, the previously recorded ACL is not reduced to an amount below zero. Full or partial write-offs are deducted from the ACL in the period the security, or a portion, is considered uncollectible. Recoveries of amounts previously written off are recorded to the ACL in the period received. When the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, any ACL is written off and the amortized cost is written down to estimated fair value through a charge within net investment gains (losses), which becomes the new amortized cost of the security.
In accordance with the previous guidance, methodologies to evaluate the recoverability of a security in an unrealized loss position were similar, except: (i) the length of time estimated fair value had been below amortized cost was considered for securities, and (ii) for non-functional currency denominated securities, the impact from weakening non-functional currencies on securities that were near maturity was considered in the evaluation. In addition, measurement methodologies were similar, except: (i) a fair value floor was not utilized to limit the credit loss recognized, (ii) the amortized cost of securities was adjusted for the OTTI to the expected recoverable amount and Evaluating Temporarily Impairedan ACL was not utilized, (iii) subsequent to a credit loss being recognized, increases in expected cash flows from the security did not result in an immediate increase in valuation recognized in earnings through net investment gains (losses) from reduction of the ACL instead such increases in value were recorded as unrealized gains in OCI, and (iv) in periods subsequent to the recognition of OTTI on a security, the Company accounted for the impaired security as if it had been purchased on the measurement date of the impairment; accordingly, the discount (or reduced premium) based on the new cost basis was accreted over the remaining term of the security in a prospective manner based on the amount and timing of estimated future cash flows.
Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position
Gross unrealized losses on securities without an ACL increased $6.1 billion for the three months ended March 31, 2020 to $7.7 billion. The increase in gross unrealized losses for the three months ended March 31, 2020 was primarily attributable to widening credit spreads and movement in foreign currency exchange rates, partially offset by decreases in interest rates.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater were $1.1 billion at March 31, 2020, or 15% of the total gross unrealized losses on securities without an ACL.
Investment Grade Fixed Maturity Securities AFS
As described more fullyOf the $1.1 billion of gross unrealized losses on securities without an ACL that have been in Notes 1a continuous gross unrealized loss position for 12 months or greater, $919 million, or 81%, were related to 757 investment grade securities. Unrealized losses on investment grade securities are principally related to widening credit spreads since purchase and, 8with respect to fixed-rate securities, rising interest rates since purchase.
Below Investment Grade Fixed Maturity Securities AFS
Of the $1.1 billion of gross unrealized losses on securities without an ACL that have been in a continuous gross unrealized loss position for 12 months or greater, $216 million, or 19%, were related to 190 below investment grade securities. Unrealized losses on below investment grade securities are principally related to U.S. and foreign corporate securities (primarily industrial and consumer), foreign government securities and ABS and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty, as well as with respect to fixed-rate securities, rising interest rates since purchase. Management evaluates U.S. corporate and foreign corporate securities based on factors such as expected cash flows, financial condition and near-term and long-term prospects of the Notesissuers. Management evaluates foreign government securities based on factors impacting the issuers such as expected cash flows, financial condition of the issuers and any country-specific economic conditions or public sector programs to restructure foreign government securities. Management evaluates ABS based on actual and projected cash flows after considering the Consolidated Financial Statements included inquality of underlying collateral, credit enhancements, expected prepayment speeds, current and forecasted loss severity, the 2018 Annual Report,payment terms of the Company performsunderlying assets backing a regular evaluationparticular security and the payment priority within the tranche structure of all investment classes for impairment, including fixed maturity securities AFS and perpetual hybrid securities, in accordance with its impairment policy, in order to evaluate whether such investments are other-than-temporarily impaired.the security.
Current Period Evaluation
At March 31, 2020, with respect to securities in an unrealized loss position, the Company does not intend to sell these securities, and it was not more likely than not that the Company would be required to sell these securities before the anticipated recovery of the remaining amortized cost. Based on the Company’s current evaluation of its securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities,without an ACL, the Company concluded that these securities werehad not other-than-temporarily impairedincurred a credit loss and should not have an ACL at June 30, 2019. March 31, 2020.
Future OTTIprovisions for credit loss will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), and changes in credit ratings and collateral valuation and foreign currency exchange rates. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods.valuation.
Rollforward of Allowance for Credit Loss for Fixed Maturity Securities AFS By Sector
Gross unrealized losses onThe rollforwardof ACL for fixed maturity securities AFS decreased $4.0 billion for the six months endedJune 30, 2019to$1.9 billion. The decrease in gross unrealized losses for the six months ended June 30, 2019 was primarily attributable to decreases in interest rates and narrowing credit spreads.by sector is as follows:
At June 30, 2019, $156 million of the total $1.9 billion of gross unrealized losses were from 48 fixed maturity securities AFS with an unrealized loss position of 20% or more of amortized cost for six months or greater.
 U.S. Corporate Foreign Government Total
 (In millions)
Three Months Ended March 31, 2020     
Balance, beginning of period$—
 $—
 $—
Additions:     
Securities for which credit loss was not previously recorded(51) (136) (187)
Balance, end of period$(51) $(136) $(187)

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Investment Grade Fixed Maturity Securities AFS
Of the $156 million of gross unrealized losses on fixed maturity securities AFS with an unrealized loss of 20% or more of amortized cost for six months or greater, $97 million, or 62%, were related to gross unrealized losses on 18 investment grade fixed maturity securities AFS. Unrealized losses on investment grade fixed maturity securities AFS are principally related to widening credit spreads since purchase and, with respect to fixed-rate fixed maturity securities AFS, rising interest rates since purchase.
Below Investment Grade Fixed Maturity Securities AFS
Of the $156 million of gross unrealized losses on fixed maturity securities AFS with an unrealized loss of 20% or more of amortized cost for six months or greater, $59 million, or 38%, were related to gross unrealized losses on 30 below investment grade fixed maturity securities AFS. Unrealized losses on below investment grade fixed maturity securities AFS are principally related to U.S. and foreign corporate securities (primarily industrial and financial institutions) and foreign government securities and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainty. Management evaluates U.S. corporate and foreign corporate securities based on factors such as expected cash flows, financial condition and near-term and long-term prospects of the issuers. Management evaluates foreign government securities based on factors impacting the issuers such as expected cash flows, financial condition and any country-specific economic or public sector programs.
Equity Securities
Equity securities are summarized as follows at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Estimated
Fair
Value
 
% of
Total
 
Estimated
Fair
Value
 
% of
Total
Estimated
Fair
Value
 
% of
Total
 
Estimated
Fair
Value
 
% of
Total
(Dollars in millions)(Dollars in millions)
Common stock$1,067
 72.3% $1,037
 72.0%$682
 65.0% $944
 70.3%
Non-redeemable preferred stock409
 27.7
 403
 28.0
368
 35.0
 398
 29.7
Total equity securities$1,476
 100.0% $1,440
 100.0%$1,050
 100.0% $1,342
 100.0%

Contractholder-Directed Equity Securities and Fair Value Option Securities
As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report, contractholder-directed equity securities and fair value option (“FVO”)FVO securities (“FVO Securities”) (collectively, “Unit-linked and FVO Securities”) include three categories of investments for which the FVO has been elected, or are otherwise required to be carried at estimated fair value.
Mortgage Loans
Mortgage Loans by Portfolio Segment
Mortgage loans are summarized as follows at:
 March 31, 2020 December 31, 2019
 
Carrying
Value
 % of
Total		 
Carrying
Value
 % of
Total
 (Dollars in millions)
Mortgage loans:       
Commercial$50,077
 61.6 % $49,624
 61.6 %
Agricultural16,788
 20.6
 16,695
 20.7
Residential14,763
 18.2
 14,316
 17.8
Total amortized cost81,628
 100.4
 80,635
 100.1
Allowance for credit loss(464) (0.6) (353) (0.4)
Subtotal mortgage loans, net81,164
 99.8
 80,282
 99.7
Residential — FVO180
 0.2
 188
 0.2
Total mortgage loans held-for-investment, net$81,344
 100.0 % $80,470
 99.9 %
Mortgage loans held-for-sale—
 —
 59
 0.1
Total mortgage loans, net$81,344
 100.0 % $80,529
 100.0 %

Information on commercial, agricultural, and residential mortgage loans is presented in the tables below. Information on residential mortgage loans - FVO is presented in Note 8. The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis.
The amount of net discounts, included within total amortized cost, primarily attributable to residential mortgage loans was $883 million and $867 million at March 31, 2020 and December 31, 2019, respectively. The accrued interest income excluded from total amortized cost for commercial, agricultural and residential mortgage loans at March 31, 2020 and December 31, 2019 was $187 million and $188 million; $157 million and $186 million; and $91 million and $94 million, respectively.
Purchases of mortgage loans, primarily residential, were $1.3 billion and $1.4 billionfor the three months endedMarch 31, 2020 and 2019, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Mortgage Loans
Mortgage LoansAllowance for Credit Loss Rollforward by Portfolio Segment
Mortgage loans are summarizedThe changes in the ACL, by portfolio segment, were as follows at:follows:
 June 30, 2019 December 31, 2018
 Carrying Value % of
Total		 Carrying Value % of
Total
 (Dollars in millions)
Mortgage loans:       
Commercial$49,570
 63.6 % $48,463
 64.0 %
Agricultural15,334
 19.7
 14,905
 19.7
Residential13,188
 16.9
 12,427
 16.4
Total recorded investment78,092
 100.2
 75,795
 100.1
Valuation allowances(357) (0.5) (342) (0.5)
Subtotal mortgage loans, net77,735
 99.7
 75,453
 99.6
Residential — FVO (1)262
 0.3
 299
 0.4
Total mortgage loans, net$77,997
 100.0 % $75,752
 100.0 %
 Three Months
Ended
March 31,
 2020 2019
 Commercial Agricultural Residential Total Commercial Agricultural Residential Total
 (In millions)
Balance, beginning of period$246
 $52
 $55
 $353
 $238
 $46
 $58
 $342
Adoption of new credit loss guidance(118) 35
 161
 78
 —
 —
 —
 —
Provision (release)15
 (3) 24
 36
 7
 1
 2
 10
Charge-offs, net of recoveries—
 —
 (3) (3) —
 —
 (2) (2)
Balance, end of period$143

$84

$237

$464

$245

$47

$58

$350

__________________Allowance for Credit Loss Methodology
(1)Information on residential mortgage loans — FVO is presented in Note 8. The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis.
TheAfter the adoption of new guidance on January 1, 2020, the Company records an allowance for expected credit loss in an amount that represents the portion of net discounts, included within total recorded investment, primarily residential, was $935 million and $944 million at June 30, 2019 and December 31, 2018, respectively.
Purchasesthe amortized cost basis of mortgage loans primarilythat the Company does not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. In determining the Company’s ACL, management: (i) pools mortgage loans that share similar risk characteristics, (ii) considers lifetime credit loss expected over the contractual term of its mortgage loans adjusted for expected prepayments and any extensions, and (iii) considers past events, current economic conditions and forecasts of future economic conditions. Each of the Company’s commercial, agricultural and residential were $567 million and $1.9 billionmortgage loan portfolio segments are evaluated separately. The ACL is calculated for the three months and six months endedJune 30, 2019, respectively, and$666 million and $973 millionfor the three monthsandsix months endedJune 30, 2018, respectively.
Mortgage Loans, Valuation Allowance and Impaired Loans by Portfolio Segment
Mortgage loans byeach mortgage loan portfolio segment by methodbased on inputs unique to each loan portfolio segment. On a quarterly basis, mortgage loans within a portfolio segment that share similar risk characteristics, such as internal risk ratings or consumer credit scores, are pooled for calculation of evaluationACL. On an ongoing basis, mortgage loans with dissimilar risk characteristics (i.e., loans with significant declines in credit quality), collateral dependent mortgage loans (i.e., when the borrower is experiencing financial difficulty, including when foreclosure is reasonable possible or probable) and reasonably expected troubled debt restructurings (i.e., the Company grants concessions to borrower that is experiencing financial difficulties) are evaluated individually for credit loss. The ACL for loans evaluated individually are established using the same methodologies for all three portfolio segments. For example, the ACL for a collateral dependent loan is established as the excess of amortized cost over the estimated fair value of the loan’s underlying collateral, less selling cost when foreclosure is probable. Accordingly, the change in the estimated fair value of collateral dependent loans, which are evaluated individually for credit loss, impaired mortgageis recorded as a change in the ACL which is recorded on a quarterly basis as a charge or credit to earnings in net investment gains (losses).
In accordance with the previous guidance, evaluation and measurement methodologies in determining the ACL were similar, except: (i) credit loss was recognized when incurred (when it was probable, based on current information and events, that all amounts due under the loan agreement would not be collected), (ii) pooling of loans including those modifiedwith similar risk characteristics was permitted, but not required, (iii) forecasts of future economic conditions were not considered in a troubled debt restructuring,the evaluation, (iv) measurement of the expected credit loss over the contractual term, or expected term, was not considered in the measurement, and (v) the related valuation allowances, were as follows at:
  Evaluated Individually for Credit Losses 
Evaluated Collectively for
Credit Losses
 
Impaired
Loans
  
Impaired Loans with a
Valuation Allowance
 
Impaired Loans without a
Valuation Allowance
      
  
Unpaid
Principal
Balance
 
Recorded
Investment
 Valuation
Allowances		 
Unpaid
Principal
Balance
 Recorded
Investment		 Recorded
Investment		 Valuation
Allowances		 Carrying
Value
  (In millions)
June 30, 2019                
Commercial $—
 $—
 $—
 $—
 $—
 $49,570
 $246
 $—
Agricultural 31
 31
 3
 191
 190
 15,113
 45
 218
Residential —
 —
 —
 504
 403
 12,785
 63
 403
Total $31

$31

$3

$695

$593

$77,468

$354

$621
December 31, 2018                
Commercial $—
 $—
 $—
 $—
 $—
 $48,463
 $238
 $—
Agricultural 31
 31
 3
 169
 169
 14,705
 43
 197
Residential —
 —
 —
 431
 386
 12,041
 58
 386
Total $31

$31

$3

$600

$555

$75,209

$339

$583

credit loss for loans evaluated individually could also be determined using either discounted cash flows using the loans original effective interest rate or observable market prices.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Commercial and Agricultural Mortgage Loan Portfolio Segments
Commercial and agricultural mortgage loan ACL are calculated in a similar manner. Within each loan portfolio segment, commercial and agricultural, loans are pooled by internal risk rating. Estimated lifetime loss rates, which vary by internal risk rating, are applied to the amortized cost of each loan, excluding accrued investment income, on a quarterly basis to develop the ACL. Internal risk ratings are based on an assessment of the loan’s credit quality, which can change over time. The average recorded investmentestimated lifetime loss rates are based on several loan portfolio segment-specific factors, including (i) the Company’s experience with defaults and loss severity, (ii) expected default and loss severity over the forecast period, (iii) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, (iv) loan specific characteristics including loan-to-value ratios, and (v) internal risk ratings. These evaluations are revised as conditions change and new information becomes available. The Company uses its several decades of historical default and loss severity experience which capture multiple economic cycles. The Company uses a forecast of economic assumptions for impaireda two-year period for most of its commercial agricultural and residentialagricultural mortgage loans, was$0,$172 millionand$401 million, respectively,while a one-year period is used for loans originated in certain markets. After the three months endedJune 30, 2019, and $0, $181 million and $396 million, respectively, forapplicable forecast period, the six months endedJune 30,2019.
The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $0,$122 millionand$351 million, respectively, for the three months ended June 30, 2018, and $0, $97 million and $342 million, respectively, for the six months ended June 30, 2018.
Valuation Allowance Rollforward by Portfolio Segment
The changes in the valuation allowance, by portfolio segment, were as follows:
 Six Months
Ended
June 30,
 2019 2018
 Commercial Agricultural Residential Total Commercial Agricultural Residential Total
 (In millions)
Balance, beginning of period$238
 $46
 $58
 $342
 $214
 $41
 $59
 $314
Provision (release)8
 2
 9
 19
 13
 —
 2
 15
Charge-offs, net of recoveries—
 —
 (4) (4) —
 —
 (4) (4)
Balance, end of period$246

$48

$63

$357

$227

$41

$57

$325


Credit Quality of Commercial Mortgage Loans
The credit qualityCompany reverts to its historical loss experience using a straight-line basis over two years. For evaluations of commercial mortgage loans, wasin addition to historical experience, management considers factors that include the impact of a rapid change to the economy, which may not be reflected in the loan portfolio, recent loss and recovery trend experience as follows at:compared to historical loss and recovery experience, and loan specific characteristics including debt service coverage ratios. In estimating lifetime credit loss expected over the term of its commercial mortgage loans, the Company adjusts for expected prepayment and extension experience during the forecast period using historical prepayment and extension experience considering the expected position in the economic cycle and the loan profile (i.e., floating rate, shorter-term fixed rate and longer-term fixed rate) and after the forecast period using long-term historical prepayment experience. For evaluations of agricultural mortgage loans, in addition to historical experience, management considers factors that include increased stress in certain sectors, which may be evidenced by higher delinquency rates, or a change in the number of higher risk loans. In estimating lifetime credit loss expected over the term of its agricultural mortgage loans, the Company’s experience is much less sensitive to the position in the economic cycle and by loan profile, accordingly historical prepayment experience is used, while extension terms are not prevalent with the Company’s agricultural mortgage loans.
Commercial mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, loan-to-value ratios, debt service coverage ratios and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher loan-to-value ratios and lower debt service coverage ratios. Agricultural mortgage loans are reviewed on an ongoing basis, which review includes, but is not limited to, property inspections, market analysis, estimated valuations of the underlying collateral, loan-to-value ratios and borrower creditworthiness, as well as reviews on a geographic and property-type basis. The monitoring process for agricultural mortgage loans also focuses on higher risk loans.
  Recorded Investment Estimated
Fair
Value		 
% of
Total
  Debt Service Coverage Ratios   
% of
Total
 
  > 1.20x 1.00x - 1.20x < 1.00x Total 
  (Dollars in millions)
June 30, 2019              
Loan-to-value ratios:              
Less than 65% $41,424
 $773
 $156
 $42,353
 85.4% $43,922
 85.7%
65% to 75% 5,649
 26
 166
 5,841
 11.8
 5,975
 11.7
76% to 80% 377
 228
 55
 660
 1.3
 645
 1.3
Greater than 80% 482
 234
 —
 716
 1.5
 690
 1.3
Total $47,932

$1,261

$377

$49,570

100.0%
$51,232

100.0%
December 31, 2018              
Loan-to-value ratios:              
Less than 65% $40,360
 $827
 $101
 $41,288
 85.2% $41,599
 85.3%
65% to 75% 5,790
 —
 25
 5,815
 12.0
 5,849
 12.0
76% to 80% 423
 209
 56
 688
 1.4
 664
 1.4
Greater than 80% 496
 176
 —
 672
 1.4
 635
 1.3
Total $47,069

$1,212

$182

$48,463
 100.0% $48,747
 100.0%
For commercial mortgage loans, the primary credit quality indicator is the debt service coverage ratio, which compares a property’s net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. The Company also reviews the loan-to-value ratio of its commercial mortgage loan portfolio. Loan-to-value ratios compare the unpaid principal balance of the loan to the estimated fair value of the underlying collateral. Generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss. The debt service coverage ratio and the values utilized in calculating the ratio are updated routinely. In addition, the loan-to-value ratio is routinely updated for all but the lowest risk loans as part of the Company’s ongoing review of its commercial mortgage loan portfolio.

For agricultural mortgage loans, the Company’s primary credit quality indicator is the loan-to-value ratio. The values utilized in calculating this ratio are developed in connection with the ongoing review of the agricultural mortgage loan portfolio and are routinely updated.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Commitments to lend: After loans are approved, the Company makes commitments to lend and, typically, borrowers draw down on some or all of the commitments. The timing of mortgage loan funding is based on the commitment expiration dates. A liability for expected credit loss for unfunded commercial and agricultural mortgage loan commitments is recorded within net investment gains (losses). The liability is based on estimated lifetime loss rates as described above and the amount of the outstanding commitments, which for lines of credit, considers estimated utilization rates. When the commitment is funded or expires, the liability is adjusted accordingly.
Residential Mortgage Loan Portfolio Segment
The Company’s residential mortgage loan portfolio is comprised primarily of purchased closed end, amortizing residential mortgage loans, including both performing loans purchased within 12 months of origination and reperforming loans purchased after they have been performing for at least 12 months post-modification. Residential mortgage loans are pooled by loan type (i.e., new origination and reperforming) and pooled by similar risk profiles (including consumer credit score and loan-to-value ratios). Estimated lifetime loss rates, which vary by loan type and risk profile, are applied to the amortized cost of each loan excluding accrued investment income on a quarterly basis to develop the ACL. The estimated lifetime loss rates are based on several factors, including (i) industry historical experience and expected results over the forecast period for defaults, (ii) loss severity, (iii) prepayment rates, (iv) current and forecasted economic conditions including growth, inflation, interest rates and unemployment levels, and (v) loan pool specific characteristics including consumer credit scores, loan-to-value ratios, payment history and home prices. These evaluations are revised as conditions change and new information becomes available. The Company uses industry historical experience which captures multiple economic cycles as the Company has purchased most of its residential mortgage loans in the last five years. The Company uses a forecast of economic assumptions for a two-year period for most of its residential mortgage loans. After the applicable forecast period, the Company immediately reverts to industry historical loss experience.
For residential mortgage loans, the Company’s primary credit quality indicator is whether the loan is performing or nonperforming. The Company generally defines nonperforming residential mortgage loans as those that are 60 or more days past due and/or in nonaccrual status which is assessed monthly. Generally, nonperforming residential mortgage loans have a higher risk of experiencing a credit loss.
Credit Quality of Agricultural Mortgage Loans by Portfolio Segment
The amortized cost of commercial mortgage loans by credit quality indicator and vintage year was as follows at March 31, 2020:
  2020 2019 2018 2017 2016 Prior Revolving Loans Total % of Total
  (Dollars in millions)
Loan-to-value ratios:                  
Less than 65% $1,276
 $6,618
 $7,108
 $5,291
 $5,431
 $12,384
 $2,886
 $40,994
 81.8%
65% to 75% 446
 2,455
 1,631
 959
 884
 1,218
 —
 7,593
 15.2
76% to 80% —
 —
 19
 336
 131
 369
 —
 855
 1.7
Greater than 80% —
 —
 —
 401
 58
 176
 —
 635
 1.3
Total $1,722

$9,073

$8,758

$6,987

$6,504

$14,147

$2,886
 $50,077
 100.0%
Debt service coverage ratios:                  
> 1.20x $1,619
 $8,668
 $8,357
 $6,535
 $6,144
 $13,235
 $2,886
 $47,444
 94.8%
1.00x - 1.20x —
 —
 95
 80
 321
 817
 —
 1,313
 2.6
<1.00x 103
 405
 306
 372
 39
 95
 —
 1,320
 2.6
Total $1,722

$9,073

$8,758

$6,987
 $6,504
 $14,147
 $2,886
 $50,077
 100.0%


29
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

The amortized cost of agricultural mortgage loans by credit quality indicator and vintage year was as follows at:
at March 31, 2020:
 June 30, 2019 December 31, 2018
 Recorded
Investment		 % of
Total		 Recorded
Investment		 % of
Total		 2020 2019 2018 2017 2016 Prior Revolving Loans Total % of Total
 (Dollars in millions) (Dollars in millions)
Loan-to-value ratios:                          
Less than 65% $14,250
 92.9% $13,704
 92.0% $522
 $2,419
 $3,131
 $1,118
 $2,898
 $5,068
 $853
 $16,009
 95.4%
65% to 75% 992
 6.5
 1,145
 7.7
 39
 192
 113
 95
 27
 241
 11
 718
 4.3
76% to 80% 69
 0.4
 33
 0.2
 —
 —
 11
 —
 —
 6
 2
 19
 0.1
Greater than 80% 23
 0.2
 23
 0.1
 —
 —
 —
 —
 —
 42
 —
 42
 0.2
Total $15,334
 100.0% $14,905
 100.0% $561
 $2,611
 $3,255
 $1,213
 $2,925
 $5,357
 $866
 $16,788
 100.0%

Credit Quality of Residential Mortgage Loans
The credit qualityamortized cost of residential mortgage loans by credit quality indicator and vintage year was as follows at:at March 31, 2020:
  June 30, 2019 December 31, 2018
  Recorded
Investment		 % of
Total		 Recorded
Investment		 % of
Total
  (Dollars in millions)
Performance indicators:        
Performing $12,755
 96.7% $11,956
 96.2%
Nonperforming (1) 433
 3.3
 471
 3.8
Total $13,188
 100.0% $12,427
 100.0%

  2020 2019 2018 2017 2016 Prior Revolving Loans Total % of Total
  (Dollars in millions)
Performance indicators:                  
Performing $249
 $3,084
 $1,479
 $510
 $268
 $8,766
 $—
 $14,356
 97.2%
Nonperforming (1) —
 9
 9
 5
 7
 377
 —
 407
 2.8
Total $249
 $3,093
 $1,488
 $515
 $275
 $9,143
 $—
 $14,763
 100.0%
__________________
(1)Includes residential mortgage loans in process of foreclosure of $124$119 million and $140$118 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
Past Due and Nonaccrual Mortgage Loans
The Company has a high quality, well performing mortgage loan portfolio, with over 99% of all mortgage loans classified as performing at both June 30, 2019March 31, 2020 and December 31, 2018.2019. The Company defines delinquency consistent with industry practice, when mortgage loans are past due more than two or more months, as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days.applicable, by portfolio segment. The past due and nonaccrual mortgage loans at recorded investment,amortized cost, prior to valuation allowances,ACL, by portfolio segment, were as follows at:
  Past Due 
Greater than 90 Days Past Due
 and Still Accruing Interest
 Nonaccrual
  June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018
  (In millions)
Commercial $4
 $9
 $4
 $9
 $176
 $176
Agricultural 134
 204
 52
 109
 105
 105
Residential 433
 471
 38
 35
 395
 436
Total $571
 $684
 $94
 $153
 $676
 $717

  Past Due 
Greater than 90 Days Past Due
 and Still Accruing Interest
 Nonaccrual
  March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
  (In millions)
Commercial $6
 $10
 $—
 $9
 $182
 $176
Agricultural 271
 129
 121
 7
 166
 137
Residential 407
 452
 16
 35
 391
 418
Total $684
 $591
 $137
 $51
 $739
 $731
The amortized cost for nonaccrual commercial, agricultural and residential mortgage loans at beginning of year 2019 was $176 million, $105 million and $436 million, respectively. The amortized cost for nonaccrual agricultural mortgage loans with no ACL at March 31, 2020 and December 31, 2019 was $115 million and $93 million, respectively. There were 0 nonaccrual commercial or residential mortgage loans without an ACL at either March 31, 2020 or December 31, 2019.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Real Estate and Real Estate Joint Ventures
The Company’s real estate investment portfolio is diversified by property type, geography and income stream, including income from operating leases, operating income and equity in earnings from equity method income from real estate joint ventures. Real estate investments, by income type, as well as income earned, are as follows at and for the periods indicated:
June 30, 2019 December 31, 2018 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		March 31, 2020 December 31, 2019 Three Months
Ended
March 31,
 2019 2018 2019 2018 2020 2019
Carrying Value IncomeCarrying Value Income
(In millions)(In millions)
Leased real estate investments$4,502
 $4,132
 $90
 $104
 $182
 $208
$5,129
 $4,893
 $106
 $92
Other real estate investments479
 461
 56
 57
 90
 90
419
 420
 35
 34
Real estate joint ventures5,345
 5,105
 33
 34
 37
 65
5,702
 5,428
 24
 4
Total real estate and real estate joint ventures$10,326
 $9,698
 $179
 $195
 $309
 $363
$11,250
 $10,741
 $165
 $130

The carrying value of real estate investments acquired through foreclosure was $44$33 million and $45$36 million at June 30, 2019 March 31,2020andDecember 31, 2018,2019, respectively. Depreciation expense on real estate investments was $25$28 million and $48$23 million for the three months ended March 31, 2020 and six months ended June 30, 2019, respectively, and $21 million and $47 million for the three months and six months ended June 30, 2018, respectively. Real estate investments were net of accumulated depreciation of $991$980 million and $931$957 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
Leases
Leased Real Estate Investments - Operating Leases
The Company, as lessor, leases investment real estate, principally commercial real estate for office and retail use, through a variety of operating lease arrangements, which typically include tenant reimbursement for property operating costs and options to renew or extend the lease. In some circumstances, leases may include an option for the lessee to purchase the property. In addition, certain leases of retail space may stipulate that a portion of the income earned is contingent upon the level of the tenants’ revenues. The Company has elected a practical expedient of not separating non-lease components related to reimbursement of property operating costs from associated lease components. These property operating costs have the same timing and pattern of transfer as the related lease component, because they are incurred over the same period of time as the operating lease. Therefore, the combined component is accounted for as ana single operating lease. Risk is managed through lessee credit analysis, property type diversification, and geographic diversification, primarily across the United States. diversification.
Leased real estate investments and income earned by property type, are as follows atwas $106 million and for the periods indicated:
 June 30, 2019 December 31, 2018 Three Months
Ended
June 30,		 Six Months
Ended
June 30,
   2019 2018 2019 2018
 Carrying Value Income
 (In millions)
Leased real estate investments:           
Office$2,205
 $1,999
 $42
 $44
 $86
 $89
Retail1,096
 1,006
 25
 25
 49
 51
Apartment256
 253
 5
 19
 10
 37
Industrial276
 223
 11
 10
 22
 19
Land505
 489
 5
 4
 10
 9
Hotel95
 94
 1
 —
 3
 —
Other69
 68
 1
 2
 2
 3
Total leased real estate investments$4,502
 $4,132
 $90
 $104
 $182
 $208


30
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Future contractual receipts under operating leases at June 30, 2019 are $154$92 million for the remainder ofthree months ended March 31, 2020 and 2019, $246 million in 2020, $193 million in 2021, $163 million in 2022, $142 million in 2023, $992 million thereafter, and in total are $1.9 billion.respectively.
Leveraged and Direct Financing Leases
The Company has diversified leveraged lease and direct financing lease portfolios. Its leveraged leases principally include renewable energy generation facilities, rail cars, commercial real estate and commercial aircraft, and its direct financing leases principally include commercial real estate. These assets are leased through a variety of lease arrangements, which may include options to renew or extend the lease and options for the lessee to purchase the property. Residual values are estimated using available third-party data at inception of the lease. Risk is managed through lessee credit analysis, asset allocation, geographic diversification, and ongoing reviews of estimated residual values, using available third-party data and, in certain leases, linking the amount of future rental receipts to changes in inflation rates. Generally, estimated residual values are not guaranteed by the lessee or a third party.
Investment in leveraged and direct financing leases consisted of the following at:
 June 30, 2019 December 31, 2018
 
Leveraged
Leases
 
Direct
Financing
Leases
 
Leveraged
Leases
 
Direct
Financing
Leases
 (In millions)
Lease receivables, net (1)$707
 $2,017
 $715
 $1,855
Estimated residual values807
 42
 807
 42
Subtotal1,514
 2,059
 1,522
 1,897
Unearned income(391) (742) (414) (705)
Investment in leases$1,123
 $1,317
 $1,108
 $1,192
__________________
(1)Future contractual receipts under direct financing leases at June 30, 2019 are $62 million for the remainder of 2019, $109 million in 2020, $108 million in 2021, $132 million in 2022, $104 million in 2023, $1.5 billion thereafter, and in total $2.0 billion.
Lease receivables are generally due in periodic installments. The payment periods for leveraged leases generally range from one to 1512 years but in certain circumstances can be over 2512 years, while the payment periods for direct financing leases generally range from one to 25 years but in certain circumstances can be over 25 yearsyears.. For lease receivables, the primary credit quality indicator is whether the lease receivable is performing or nonperforming, which is assessed monthly. The Company generally defines nonperforming lease receivables as those that are 90 days or more past due. At both June 30, 2019 and December 31, 2018, all leveraged lease receivables were performing and over 99% of direct financing lease receivables were performing.
The Company’s deferred income tax liability related to leveraged leases was $510 million and $519 million at June 30,2019andDecember 31, 2018, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

In accordance with new guidance adopted January 1, 2020 regarding expected credit loss, the Company records an allowance for expected credit loss in an amount that represents the portion of the investment in leases that the Company does not expect to collect, resulting in the investment in leases being presented at the net amount expected to be collected. In determining the ACL, management: (i) pools leases that share similar risk characteristics, (ii) considers lifetime credit loss expected over the contractual term of the lease, and (iii) considers past events, current economic conditions and forecasts of future economic conditions. Leases with dissimilar risk characteristics are evaluated individually for credit loss. Lifetime credit loss on leveraged lease receivables is estimated using a probability of default and loss given default model, where the probability of default incorporates third party credit ratings of the lessee and the related historical default data. Direct financing leases principally relate to leases of commercial real estate; accordingly, lifetime credit loss is estimated on such lease receivables consistent with the methodology for commercial mortgage loans (see “— Mortgage Loans — Allowance for Credit Loss Methodology”). The componentsCompany also assesses the non-guaranteed residual values for recoverability by comparison to the current estimated fair value of income fromthe leased asset and considering other relevant market information such as independent third-party forecasts, consulting, asset brokerage and investment banking reports and data, comparable market transactions, and factors such as the competitive dynamics impacting specific industries, technological change and obsolescence, government and regulatory rules, tax policy, potential environmental liabilities and litigation.
Prior to the adoption of the new guidance regarding expected credit loss, lease impairment losses were recorded as incurred. Under the incurred loss model, if all amounts due under the lease agreement would not be collected based on current information and events, an impairment loss was recorded. The impairment loss was recorded as a reduction of the investment in lease and within net investment gains (losses).
The investment in leveraged and direct financing leases, excluding net of ACL, was $901 million and $1.1 billion, respectively, at March 31, 2020. The ACL for leveraged and direct financing leases was $56 million at March 31, 2020. The investment gains (losses), were as follows:
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,
 2019 2018 2019 2018
 Leveraged Leases Direct Financing Leases Leveraged Leases Direct Financing Leases Leveraged Leases Direct Financing Leases Leveraged Leases Direct Financing Leases
 (In millions)
Lease investment income$12
 $27
 $12
 $27
 $24
 $47
 $23
 $47
Less: Income tax expense3
 6
 2
 6
 5
 10
 5
 10
Lease investment income, net of income tax$9
 $21
 $10
 $21
 $19
 $37
 $18
 $37

in leveraged and direct financing leases was $1.1 billion and $1.2 billion, respectively, at December 31, 2019.
Cash Equivalents
The carrying value of cash equivalents, which includes securities and other investments with an original or remaining maturity of three months or less at the time of purchase, was $11.4$11.0 billion and $9.0$8.6 billion at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
Net Unrealized Investment Gains (Losses)
Unrealized investment gains (losses) on fixed maturity securities AFS and derivatives and the effect on DAC, VOBA, deferred sales inducements (“DSI”), future policy benefits and the policyholder dividend obligation, that would result from the realization of the unrealized gains (losses), are included in net unrealized investment gains (losses) in AOCI.
The components of net unrealized investment gains (losses), included in AOCI, were as follows:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 (In millions) (In millions)
Fixed maturity securities AFS $27,390
 $11,356
 $24,197
 $30,050
Fixed maturity securities AFS with noncredit OTTI losses included in AOCI 36
 25
 —
 33
Total fixed maturity securities AFS 27,426
 11,381
 24,197
 30,083
Derivatives 2,680
 2,127
 6,336
 2,209
Other 265
 290
 524
 310
Subtotal 30,371
 13,798
 31,057
 32,602
Amounts allocated from:        
Future policy benefits (1,054) 31
 546
 (1,019)
DAC, VOBA and DSI (2,683) (1,231) (2,759) (2,716)
Policyholder dividend obligation (1,834) (428) (1,677) (2,020)
Subtotal (5,571) (1,628) (3,890) (5,755)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI (5) (3) —
 (4)
Deferred income tax benefit (expense) (6,401) (3,502) (6,781) (6,846)
Net unrealized investment gains (losses) 18,394
 8,665
 20,386
 19,997
Net unrealized investment gains (losses) attributable to noncontrolling interests (13) (10) (17) (16)
Net unrealized investment gains (losses) attributable to MetLife, Inc. $18,381
 $8,655
 $20,369
 $19,981


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

The changes in net unrealized investment gains (losses) were as follows:
Six Months
Ended
June 30, 2019		Three Months
Ended
March 31, 2020
(In millions)(In millions)
Balance, beginning of period$8,655
$19,981
Cumulative effects of changes in accounting principles, net of income tax (Note 1)21
Fixed maturity securities AFS on which noncredit OTTI losses have been recognized11
(33)
Unrealized investment gains (losses) during the period16,536
(1,512)
Unrealized investment gains (losses) relating to:  
Future policy benefits(1,085)1,565
DAC, VOBA and DSI(1,452)(43)
Policyholder dividend obligation(1,406)343
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI(2)4
Deferred income tax benefit (expense)(2,894)65
Net unrealized investment gains (losses)18,384
20,370
Net unrealized investment gains (losses) attributable to noncontrolling interests(3)(1)
Balance, end of period$18,381
$20,369
Change in net unrealized investment gains (losses)$9,729
$389
Change in net unrealized investment gains (losses) attributable to noncontrolling interests(3)(1)
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.$9,726
$388

Concentrations of Credit Risk
Investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at estimated fair value at June 30, 2019March 31, 2020 and December 31, 2018,2019, were in fixed income securities of the Japanese government and its agencies of $33.2$34.1 billion and $30.2$33.7 billion, respectively, and in fixed income securities of the South Korean government and its agencies of $7.4$7.2 billion and $7.1$7.3 billion, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Securities Lending, Repurchase Agreements and RepurchaseFederal Home Loan Bank of Boston Advance Agreements
Securities, Collateral and Reinvestment Portfolio
A summary of the outstanding securities lending, and repurchase agreements transactionsand Federal Home Loan Bank (“FHLB”) of Boston short-term advance agreements is as follows:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Securities on Loan (1)     Securities on Loan (1)  Securities (1)     Securities (1)    
Amortized Cost Estimated Fair Value Cash Collateral Received from Counterparties (2), (3) Reinvestment Portfolio at Estimated Fair Value Amortized Cost Estimated Fair Value Cash Collateral Received from Counterparties (2), (3) Reinvestment Portfolio at Estimated Fair Value
Estimated
Fair Value
 
Cash Collateral
Received from
Counterparties
(2), (3)
 
Reinvestment
Portfolio at
Estimated Fair
Value
 
Estimated
Fair Value
 
Cash Collateral
Received from
Counterparties
(2), (3)
 
Reinvestment
Portfolio at
Estimated Fair
Value
(In millions)(In millions)
Securities lending$15,472
 $17,396
 $17,782
 $17,952
 $16,969
 $17,724
 $18,005
 $18,074
$19,170
 $19,718
 $19,541
 $16,926
 $17,369
 $17,451
Repurchase agreements$1,520
 $1,648
 $1,612
 $1,629
 $1,033
 $1,093
 $1,067
 $1,069
$2,746
 $2,700
 $2,676
 $2,333
 $2,310
 $2,320
FHLB of Boston advance agreements$1,132
 $800
 $807
 $1,083
 $800
 $843
__________________
(1)Securities on loan or securities pledged in connection with securities lendingthese programs are included within fixed maturities securities AFS and cash equivalents and securities on loan in connection with repurchase agreements are included within fixed maturitiesmaturity securities AFS, short-term investments and cash equivalents.
(2)In connection with securities lending, in addition to cash collateral received, the Company received from counterparties security collateral of $21 million and $0 at March 31, 2020 and December 31, 2019, respectively, which may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.
(3)The liability for cash collateral for these programs is included within payables for collateral under securities loaned, other transactions and other liabilities.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

(2)In connection with securities lending, in addition to cash collateral received, the Company received from counterparties security collateral of $10 million and $78 million at June 30, 2019 and December 31, 2018, respectively, which may not be sold or re-pledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.
(3)The securities lending liability for cash collateral is included within payables for collateral under securities loaned and other transactions, and the repurchase agreements liability for cash collateral is included within payables for collateral under securities loaned and other transactions and other liabilities.
Contractual Maturities
A summary of the remaining contractual maturities of securities lending, repurchase agreements and repurchaseFHLB of Boston short-term advance agreements is as follows:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Remaining Maturities   Remaining Maturities  Remaining Maturities   Remaining Maturities  
Open (1) 
1 Month
or Less
 
Over
 1 to 6
Months
 Total Open (1) 
1 Month
or Less
 
Over
1 to 6
Months
 TotalOpen (1) 
1 Month
or Less
 
Over
 1 to 6
Months
 Over 6 Months to 1 Year Total Open (1) 
1 Month
or Less
 
Over
1 to 6
Months
 Over 6 Months to 1 Year Total
(In millions)(In millions)
Cash collateral liability by loaned security type:                                  
Securities lending:                                  
U.S. government and agency$3,440
 $4,147
 $9,081
 $16,668
 $2,736
 $8,995
 $5,220
 $16,951
$3,965
 $8,116
 $6,525
 $—
 $18,606
 $2,928
 $6,676
 $6,663
 $—
 $16,267
Foreign government—
 380
 666
 1,046
 —
 214
 761
 975
—
 268
 762
 —
 1,030
 —
 259
 767
 —
 1,026
Agency RMBS—
 68
 —
 68
 —
 79
 —
 79
—
 73
 —
 —
 73
 —
 76
 —
 —
 76
U.S. corporate9
 —
 —
 —
 9
 —
 —
 —
 —
 —
Total$3,440
 $4,595
 $9,747
 $17,782
 $2,736
 $9,288
 $5,981
 $18,005
$3,974
 $8,457
 $7,287
 $—
 $19,718
 $2,928
 $7,011
 $7,430
 $—
 $17,369
                                  
Repurchase agreements:                                  
U.S. government and agency$—
 $1,535
 $—
 $1,535
 $—
 $1,000
 $—
 $1,000
$—
 $2,700
 $—
 $—
 $2,700
 $—
 $2,310
 $—
 $—
 $2,310
All other corporate and government—
 6
 71
 77
 —
 —
 67
 67
Total$—
 $1,541
 $71
 $1,612
 $—
 $1,000
 $67
 $1,067
Cash collateral liability by pledged security type: (2)                   
FHLB of Boston:                   
Municipals$—
 $250
 $550
 $—
 $800
 $—
 $250
 $475
 $75
 $800
__________________
(1)
The related loaned security could be returned to the Company on the next business day, which would require the Company to immediately return the cash collateral.
(2)The estimated fair valueCompany is permitted to withdraw any portion of the securities on loan related to this cashpledged collateral over the minimum collateral requirement at June 30, 2019 was $3.4 billion, allany time, other than in the event of which were U.S. government and agency securities which, if put back toa default by the Company, could be immediately sold to satisfy the cash requirement.Company.
If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both.
The securities lending, repurchase agreements and repurchaseFHLB of Boston short-term advance agreements reinvestment portfolios acquired with the cash collateral consist principally of high quality, liquid, publicly-traded fixed maturity securities AFS, short-term investments, cash equivalents or held in cash. If the securities on loan, securities pledged or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of itswithin the general account are available to meet any potential cash demands when securities on loan or securities pledged are put back toby the Company.counterparty.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Federal Home Loan Bank of Boston Advance Agreements
At June 30, 2019 and December 31, 2018, a subsidiary of the Company had pledged municipals with an estimated fair value of $1.1 billion and $1.2 billion, respectively, as collateral, and at both June 30, 2019 and December 31, 2018, received $800 million in cash advances under short-term advance agreements with the Federal Home Loan Bank (“FHLB”) of Boston. The liability to return the cash advances is included within payables for collateral under securities loaned and other transactions. The estimated fair value of the reinvestment portfolio acquired with the cash advances was $833 million and $799 million at June 30, 2019 and December 31, 2018, respectively, and consisted primarily of Structured Securities, U.S. and foreign corporate securities and U.S. government and agency securities. At both June 30, 2019 and December 31, 2018, the reinvestment portfolio also included a $33 million, at redemption value, required investment in FHLB of Boston common stock. The subsidiary is permitted to withdraw any portion of the pledged collateral over the minimum collateral requirement at any time, other than in the event of a default by the subsidiary.
The cash advance liability by loaned security type and remaining contractual maturities of the agreements was as follows at:
  June 30, 2019 December 31, 2018
  Remaining Maturities   Remaining Maturities  
  
1 Month
or Less
 
Over
1 to 6 Months
 6 Months to 1 Year Total 
1 Month
or Less
 
Over
1 to 6 Months
 6 Months to 1 Year Total
  (In millions)
Cash advance liability by loaned security type:                
Municipals $200
 $600
 $—
 $800
 $150
 $650
 $—
 $800

Invested Assets on Deposit, Held in Trust and Pledged as Collateral
Invested assets on deposit, held in trust and pledged as collateral are presented below at estimated fair value for all asset classes, except mortgage loans, which are presented at carrying value, at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 (In millions) (In millions)
Invested assets on deposit (regulatory deposits) $1,940
 $1,788
 $1,669
 $2,034
Invested assets held in trust (collateral financing arrangement and reinsurance agreements) 3,241
 2,971
 3,007
 2,991
Invested assets pledged as collateral (1) 24,237
 24,168
 27,687
 24,493
Total invested assets on deposit, held in trust and pledged as collateral $29,418

$28,927
 $32,363

$29,518
__________________
(1)The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements, secured debt, a collateral financing arrangement (see Notes 4, 1213 and 1314 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report) and derivative transactions (see Note 7).
See “— Securities Lending, Repurchase Agreements and RepurchaseFederal Home Loan Bank of Boston Advance Agreements” for information regarding securities supporting securities lending, and repurchase agreement transactions and FHLB of Boston short-term advance agreements and Note 5 for information regarding investments designated to the closed block. In addition, the restrictedCompany’s investment in FHLB common stock, which is considered restricted until redeemed by the issuers, was $800$849 million and $793$809 million, at redemption value, at June 30, 2019 March 31,2020andDecember 31, 2018,2019, respectively.
Variable Interest Entities
The Company has invested in legal entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, is deemed to be the primary beneficiary or consolidator of the entity. The determination of the VIE’s primary beneficiary requires an evaluation of the contractual and implied rights and obligations associated with each party’s relationship with or involvement in the entity, an estimate of the entity’s expected losses and expected residual returns and the allocation of such estimates to each party involved in the entity.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Consolidated VIEs
Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.
The following table presents the total assets and total liabilities relating to investment-related VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 Total
Assets		 Total
Liabilities		 Total
Assets		 Total
Liabilities		 Total
Assets (1)		 Total
Liabilities		 Total
Assets (1)		 Total
Liabilities
 (In millions) (In millions)
Renewable energy partnership (1) $99
 $—
 $102
 $—
Investment funds (2) 138
 1
 79
 1
Investment funds $215
 $1
 $207
 $1
Renewable energy partnership 95
 —
 94
 —
Other investments (1) 20
 5
 21
 5
 10
 5
 10
 5
Total $257

$6

$202

$6
 $320

$6

$311

$6
__________________
(1)Assets of the investment funds, renewable energy partnership and other investments primarily consisted of other invested assets.
(2)Assets of the investment funds primarily consisted of other invested assets at June 30, 2019 and cash and cash equivalents at December 31, 2018.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Unconsolidated VIEs
The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 Carrying
Amount		 Maximum
Exposure
to Loss (1)		 Carrying
Amount		 Maximum
Exposure
to Loss (1)		 Carrying
Amount		 Maximum
Exposure
to Loss (1)		 Carrying
Amount		 Maximum
Exposure
to Loss (1)
 (In millions) (In millions)
Fixed maturity securities AFS:                
Structured Securities (2) $51,175
 $51,175
 $47,874
 $47,874
Structured Products (2) $53,654
 $53,654
 $51,962
 $51,962
U.S. and foreign corporate 1,358
 1,358
 932
 932
 1,780
 1,780
 1,764
 1,764
Foreign government 139
 139
 —
 —
 124
 124
 136
 136
Other limited partnership interests 5,997
 11,020
 5,641
 9,888
 7,164
 12,841
 6,674
 12,016
Other invested assets 1,762
 1,875
 1,906
 2,063
 1,458
 1,567
 1,495
 1,621
Other investments 412
 426
 296
 300
 453
 500
 450
 497
Total $60,843

$65,993

$56,649

$61,057
 $64,633

$70,466

$62,481

$67,996
__________________
(1)The maximum exposure to loss relating to fixed maturity securities AFS is equal to their carrying amounts or the carrying amounts of retained interests. The maximum exposure to loss relating to other limited partnership interests is equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $73$7 million and $94$6 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.
(2)For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.
As described in Note 16,15, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs for botheither the sixthree months ended June 30, 2019 and 2018.March 31, 2020 or 2019.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

For the three months ended June 30, 2019, the Company securitized certain residential mortgage loans and acquired an interest in the related RMBS issued. While the Company has a variable interest in the issuer of the securities, it is not the primary beneficiary of the issuer of the securities since it does not have any rights to remove the servicer or veto rights over the servicer’s actions. For the three months ended June 30, 2019, the carrying value and the estimated fair value of mortgage loans securitized were $443 million and $467 million, respectively, resulting in a gain of $24 million, which was included within net investment gains (losses). The estimated fair value of the RMBS acquired in connection with the securitizations was $133 million, which was included in the carrying amount and maximum exposure to loss for Structured Securities presented above. See Note 8 for information on how the estimated fair value of mortgage loans and RMBS is determined, the valuation approaches and key inputs, their placement in the fair value hierarchy, and for certain RMBS, quantitative information about the significant unobservable inputs and the sensitivity of their estimated fair value to changes in those inputs.
Net Investment Income
The components of net investment income were as follows:
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
2019 2018 2019 2018 2020 2019
(In millions) (In millions)
Investment income:           
Fixed maturity securities AFS$3,024
 $3,014
 $5,963
 $5,910
 $2,875
 $2,939
Equity securities15
 15
 32
 31
 14
 17
FVO Securities (1)38
 8
 93
 14
 (78) 55
Mortgage loans943
 815
 1,855
 1,607
 884
 912
Policy loans129
 127
 257
 251
 126
 128
Real estate and real estate joint ventures179
 195
 309
 363
 165
 130
Other limited partnership interests243
 120
 366
 327
 320
 123
Cash, cash equivalents and short-term investments113
 95
 241
 167
 92
 128
Operating joint ventures38
 19
 56
 32
 25
 18
Other71
 94
 149
 200
 102
 78
Subtotal4,793
 4,502
 9,321
 8,902
 4,525
 4,528
Less: Investment expenses361
 315
 717
 617
 324
 356
Subtotal, net4,432
 4,187
 8,604
 8,285
 4,201
 4,172
Unit-linked investments (1)261
 286
 997
 (67) (1,140) 736
Net investment income$4,693
 $4,473
 $9,601
 $8,218
 $3,061
 $4,908
__________________
(1)Changes in estimated fair value subsequent to purchase for investments still held as of the end of the respective periods and included in net investment income were principally from contractholder-directed equity securities supporting unit-linked variable annuity type liabilities (“Unit-linked investments”), and were $149 million($1.1) billion and $757$648 million for the three months ended March 31, 2020 and six months ended June 30, 2019, respectively, and $165 million and ($174) million for the three months and six months ended June 30, 2018, respectively.
The Company invests in real estate joint ventures, other limited partnership interests and tax credit and renewable energy partnerships, and also does business through certain operating joint ventures, the majority of which are accounted for under the equity method. Net investment income from (i) other limited partnership interests and operating joint ventures, accounted for under the equity method, and (ii) real estate joint ventures and tax credit and renewable energy partnerships, primarily accounted for under the equity method, totaled $241$323 million and $330$89 million for the three months ended March 31, 2020 and six months ended June 30, 2019, respectively, and $97 million and $302 million for the three months and six months ended June 30, 2018, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Net Investment Gains (Losses)
Components of Net Investment Gains (Losses)
The components of net investment gains (losses) were as follows:
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
2019 2018 2019 2018 2020 2019
(In millions) (In millions)
Total gains (losses) on fixed maturity securities AFS:           
Total OTTI losses recognized — by sector and industry:       
U.S. and foreign corporate securities — by industry:       
Industrial$—
 $—
 $(8) $—
Total U.S. and foreign corporate securities—

—
 (8) —
RMBS—
 —
 (2) —
OTTI losses on fixed maturity securities AFS recognized in earnings—

—
 (10) —
Fixed maturity securities AFS — net gains (losses) on sales and disposals138
 (46) 124
 (141)
Net credit loss (provision) release (1) $(215) $(10)
Net gains (losses) on sales and disposals 219
 (14)
Total gains (losses) on fixed maturity securities AFS138

(46) 114
 (141) 4
 (24)
Total gains (losses) on equity securities:           
Equity securities — net gains (losses) on sales and disposals4
 14
 47
 116
Change in estimated fair value of equity securities (1)(6) 20
 58
 (113)
Net gains (losses) on sales and disposals 8
 43
Change in estimated fair value (2) (292) 64
Total gains (losses) on equity securities(2) 34
 105
 3
 (284) 107
Mortgage loans14
 (15) (1) (36) (63) (15)
Real estate and real estate joint ventures1
 89
 6
 114
 1
 5
Other limited partnership interests—
 8
 —
 8
 4
 —
Other (2), (3)(42) (58) (110) (188)
Other (3) 25
 (68)
Subtotal109

12
 114
 (240) (313) 5
Change in estimated fair value of other limited partnership interests and real estate joint ventures3
 (1) (12) (6) 1
 (15)
Non-investment portfolio gains (losses) (4)(51) (238) (26) (314)
Non-investment portfolio gains (losses) 24
 25
Subtotal(48) (239) (38) (320) 25
 10
Total net investment gains (losses)$61

$(227) $76
 $(560) $(288) $15

__________________
(1)Net credit loss provision by sector for the three months ended March 31, 2019 were $8 million Industrial and $2 million RMBS. See “— Rollforward of Allowance for Credit Loss for Fixed Maturity Securities AFS By Sector.” Due to the adoption of new guidance on January 1, 2020, prior period OTTI loss is presented as credit loss.
(2)
Changes in estimated fair value subsequent to purchase for equity securities still held as of the end of the period included in net investment gains (losses) were ($1)288) million and $92$97 million for the three months and six months ended June 30, 2019, respectively, and $31 million and ($5) million for the three months and six months ended June 30, 2018March 31,,2020and2019, respectively.
(2)(3)
Other gains (losses) for thethree monthsandsix months ended June 30, 2019 included tax credit partnership impairment losses of $14($78) million and $92 million, respectively, and a renewable energy partnership disposal gain of $46 million for the sixthree months ended June 30,March 31, 2019.
(3)
Other gains (losses) includedrenewable energy partnership disposal losses of $83 million for both the three monthsandsix months ended June 30, 2018 and leveraged lease impairment losses of $105 million for the six months endedJune 30, 2018.
Gains (losses) from foreign currency transactions included within net investment gains (losses) were $51 million and $14 million for the three months ended March 31, 2020 and 2019, respectively.
(4)
Non-investment portfolio gains (losses) for thethree monthsandsix months ended June 30, 2018, included a loss of $159 million and $327 million, respectively, which represents both the change in estimated fair value of Brighthouse Financial, Inc. common stock (“FVO Brighthouse Common Stock”) held by the Company through date of disposal and the loss on disposal in June 2018.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
6. Investments (continued)

Gains (losses) from foreign currency transactions included within net investment gains (losses) were $25 million and $39 million for the three months and six months ended June 30, 2019, respectively, and ($47) million and $18 million for the three months and six months ended June 30, 2018, respectively.
Sales or Disposals and Impairments of Fixed Maturity Securities AFS - Sales and Disposals and Credit Loss
Sales of securities are determined on a specific identification basis. Proceeds from sales or disposals and the components of net investment gains (losses) were as shown in the table below:
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
2019 2018 2019 2018 2020 2019
(In millions) (In millions)
Proceeds$13,895
 $20,183
 $29,720
 $39,253
 $12,089
 $15,825
Gross investment gains$262
 $149
 $467
 $255
 $337
 $205
Gross investment losses(124) (195) (343) (396) (118) (219)
OTTI losses—
 —
 (10) —
Net credit loss (provision) release (215) (10)
Net investment gains (losses)$138
 $(46) $114
 $(141) $4
 $(24)

Credit Loss Rollforward of Fixed Maturity Securities AFS
The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities AFS still held for which a portion of the OTTI loss was recognized in OCI:
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,
 2019 2018 2019 2018
 (In millions)
Balance, beginning of period$85
 $128
 $89
 $138
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI(8) (17) (11) (26)
Increase in cash flows — accretion of previous credit loss OTTI—
 —
 (1) (1)
Balance, end of period$77
 $111
 $77

$111


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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

7. Derivatives
Accounting for Derivatives
Freestanding Derivatives
Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.
Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivative’s carrying value in other invested assets or other liabilities.
If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses) except as follows:
Statement of Operations Presentation:Derivative:
Policyholder benefits and claims•Economic hedges of variable annuity guarantees included in future policy benefits
Net investment income•Economic hedges of equity method investments in joint ventures
 •Derivatives held within Unit-linked investments
Hedge Accounting
To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. Hedge designation and financial statement presentation of changes in estimated fair value of the hedging derivatives are as follows:
•
Fair value hedge - a hedge of the estimated fair value of a recognized asset or liability - in the same line item as the earnings effect of the hedged item. The carrying value of the hedged recognized asset or liability is adjusted for changes in its estimated fair value due to the hedged risk.
•
Cash flow hedge - a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability - in OCI and reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.
•
Net investment in a foreign operation (“NIFO”) hedge - in OCI, consistent with the translation adjustment for the hedged net investment in the foreign operation.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The changes in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported on the statement of operations within interest income or interest expense to match the location of the hedged item. Accruals on derivatives in net investment hedges are recognized in OCI.
In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. Assessments of hedge effectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income.
The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item;item, (ii) the derivative expires, is sold, terminated, or exercised;exercised, (iii) it is no longer probable that the hedged forecasted transaction will occur;occur, or (iv) the derivative is de-designated as a hedging instrument.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurring, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.
When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded in OCI pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable of occurring are recognized immediately in net investment gains (losses).
In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).
Embedded Derivatives
The Company soldissues certain products, which include variable annuities and issues certain insurance products and investment contracts, and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:
the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;
the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and
a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.
Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses). If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation. At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent “excess” fees and are reported in universal life and investment-type product policy fees.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

See Note 8 for information about the fair value hierarchy for derivatives.
Derivative Strategies
The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.
Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Interest Rate Derivatives
The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships.
The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. government and agency, or other fixed maturity securities AFS. Structured interest rate swaps are included in interest rate swaps and are not designated as hedging instruments.
Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships.
The Company purchases interest rate caps primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, and interest rate floors primarily to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships.
In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products offeredissued by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.
The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow and nonqualifying hedging relationships.
A synthetic guaranteed interest contract (“GIC”) is a contract that simulates the performance of a traditional GIC through the use of financial instruments. Under a synthetic GIC, theThe contractholder owns the underlying assets.assets, and the Company provides a guarantee (or “wrap”) on the participant funds for an annual risk charge. The Company guaranteesCompany’s maximum exposure to loss on synthetic GICs is the notional amount, in the event the values of all of the underlying assets were reduced to zero. The Company’s risk is substantially lower due to contractual provisions that limit the portfolio to high quality assets, which are pre-approved and monitored for compliance, as well as the collection of risk charges. In addition, the crediting rates reset periodically to amortize market value gains and losses over a rateperiod equal to the duration of return on those assets forthe wrapped portfolio, subject to a premium.0% floor. While plan participants may transact at book value, contractholder withdrawals may only occur immediately at market value, or at book value paid over a period of time per contract provisions. Synthetic GICs are not designated as hedging instruments.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Foreign Currency Exchange Rate Derivatives
The Company uses foreign currency exchange rate derivatives, including foreign currency swaps, foreign currency forwards, currency options and exchange-traded currency futures, to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency derivatives to hedge the foreign currency exchange rate risk associated with certain of its net investments in foreign operations.
In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow and nonqualifying hedging relationships.
In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company utilizes foreign currency forwards in fair value, NIFO hedges and nonqualifying hedging relationships.
The Company enters into currency options that give it the right, but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign currency exchange rate and the strike price. The Company uses currency options to hedge against the foreign currency exposure inherent in certain of its variable annuity products. The Company also uses currency options as an economic hedge of foreign currency exposure related to the Company’s non-U.S. subsidiaries. The Company utilizes currency options in NIFO hedges and nonqualifying hedging relationships.
To a lesser extent, the Company uses exchange-traded currency futures to hedge currency mismatches between assets and liabilities, and to hedge minimum guarantees embedded in certain variable annuity products offeredissued by the Company. The Company utilizes exchange-traded currency futures in nonqualifying hedging relationships.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Credit Derivatives
The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations and involuntary restructuring for corporate obligors, as well as repudiation, moratorium or governmental intervention for sovereign obligors. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships.
The Company enters into written credit default swaps to synthetically create credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency, or other fixed maturity securities AFS. These credit default swaps are not designated as hedging instruments.
The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these transactions as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships.
Equity Derivatives
The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offeredissued by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the underlying equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.
Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offeredissued by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.
In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products offeredissued by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships.
In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to synthetically create investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Primary Risks Managed by Derivatives
The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 Primary Underlying Risk Exposure Gross
Notional
Amount		 Estimated Fair Value Gross
Notional
Amount		 Estimated Fair Value Primary Underlying Risk Exposure Gross
Notional
Amount		 Estimated Fair Value Gross
Notional
Amount		 Estimated Fair Value
 Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
 (In millions) (In millions)
Derivatives Designated as Hedging Instruments:Derivatives Designated as Hedging Instruments:            Derivatives Designated as Hedging Instruments:            
Fair value hedges:                        
Interest rate swaps Interest rate $2,315
 $2,590
 $3
 $2,446
 $2,197
 $2
 Interest rate $3,240
 $3,394
 $10
 $2,369
 $2,667
 $2
Foreign currency swaps Foreign currency exchange rate 1,182
 41
 5
 1,233
 54
 —
 Foreign currency exchange rate 1,304
 71
 —
 1,304
 16
 17
Foreign currency forwards Foreign currency exchange rate 2,412
 28
 8
 2,140
 28
 18
 Foreign currency exchange rate 2,236
 11
 26
 2,336
 1
 40
Subtotal 5,909
 2,659
 16
 5,819
 2,279
 20
 6,780
 3,476
 36
 6,009
 2,684
 59
Cash flow hedges:                        
Interest rate swaps Interest rate 3,792
 184
 8
 3,515
 143
 1
 Interest rate 5,084
 181
 27
 3,675
 145
 27
Interest rate forwards Interest rate 2,855
 39
 19
 3,022
 —
 216
 Interest rate 7,239
 1,037
 —
 7,364
 83
 144
Foreign currency swaps Foreign currency exchange rate 35,457
 1,937
 1,444
 35,931
 1,796
 1,831
 Foreign currency exchange rate 37,187
 4,141
 2,359
 36,983
 1,627
 1,430
Subtotal 42,104
 2,160
 1,471
 42,468
 1,939
 2,048
 49,510
 5,359
 2,386
 48,022
 1,855
 1,601
NIFO hedges:                        
Foreign currency forwards Foreign currency exchange rate 509
 5
 7
 960
 4
 27
 Foreign currency exchange rate 1,059
 67
 2
 1,059
 —
 10
Currency options Foreign currency exchange rate 3,500
 18
 88
 5,137
 3
 202
 Foreign currency exchange rate 3,200
 65
 —
 4,200
 33
 91
Subtotal 4,009
 23
 95
 6,097
 7
 229
 4,259
 132
 2
 5,259
 33
 101
Total qualifying hedgesTotal qualifying hedges 52,022
 4,842
 1,582
 54,384
 4,225
 2,297
Total qualifying hedges 60,549
 8,967
 2,424
 59,290
 4,572
 1,761
Derivatives Not Designated or Not Qualifying as Hedging Instruments:Derivatives Not Designated or Not Qualifying as Hedging Instruments:            Derivatives Not Designated or Not Qualifying as Hedging Instruments:            
Interest rate swaps Interest rate 54,465
 2,617
 166
 54,891
 1,796
 175
 Interest rate 70,027
 5,127
 711
 58,083
 2,867
 185
Interest rate floors Interest rate 12,701
 186
 —
 12,701
 102
 —
 Interest rate 12,701
 424
 —
 12,701
 155
 —
Interest rate caps Interest rate 52,388
 30
 2
 54,575
 154
 1
 Interest rate 55,630
 22
 —
 42,622
 18
 5
Interest rate futures Interest rate 1,786
 —
 —
 2,353
 1
 3
 Interest rate 2,514
 1
 5
 2,423
 2
 3
Interest rate options Interest rate 30,780
 932
 —
 26,690
 416
 —
 Interest rate 27,600
 1,269
 —
 27,344
 764
 1
Interest rate forwards Interest rate 235
 6
 3
 234
 1
 15
 Interest rate 130
 1
 2
 129
 1
 2
Interest rate total return swaps Interest rate 1,048
 65
 —
 1,048
 33
 2
 Interest rate 1,048
 180
 —
 1,048
 5
 49
Synthetic GICs Interest rate 27,219
 —
 —
 25,700
 —
 —
 Interest rate 33,588
 —
 —
 30,341
 —
 —
Foreign currency swaps Foreign currency exchange rate 12,860
 833
 466
 11,388
 884
 458
 Foreign currency exchange rate 13,807
 1,119
 788
 13,699
 644
 461
Foreign currency forwards Foreign currency exchange rate 14,320
 108
 228
 13,417
 198
 213
 Foreign currency exchange rate 13,376
 193
 428
 13,507
 50
 393
Currency futures Foreign currency exchange rate 883
 —
 6
 847
 4
 —
 Foreign currency exchange rate 927
 5
 —
 880
 7
 —
Currency options Foreign currency exchange rate 1,920
 1
 —
 2,040
 7
 —
 Foreign currency exchange rate 1,800
 1
 —
 1,801
 —
 —
Credit default swaps — purchased Credit 2,483
 17
 74
 1,903
 25
 39
 Credit 2,919
 43
 68
 2,944
 4
 102
Credit default swaps — written Credit 12,340
 257
 1
 11,391
 95
 13
 Credit 11,353
 30
 90
 11,520
 272
 1
Equity futures Equity market 3,946
 4
 22
 2,992
 13
 77
 Equity market 2,586
 28
 19
 4,540
 6
 8
Equity index options Equity market 27,763
 692
 666
 27,707
 884
 550
 Equity market 25,181
 1,237
 303
 27,105
 694
 677
Equity variance swaps Equity market 2,173
 41
 94
 2,269
 40
 87
 Equity market 937
 34
 11
 1,115
 23
 19
Equity total return swaps Equity market 769
 —
 13
 929
 91
 —
 Equity market 761
 188
 —
 761
 —
 70
Total non-designated or nonqualifying derivativesTotal non-designated or nonqualifying derivatives 260,079
 5,789
 1,741
 253,075
 4,744
 1,633
Total non-designated or nonqualifying derivatives 276,885
 9,902
 2,425
 252,563
 5,512
 1,976
Total $312,101
 $10,631
 $3,323
 $307,459
 $8,969
 $3,930
 $337,434
 $18,869
 $4,849
 $311,853
 $10,084
 $3,737


4544
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both June 30, 2019March 31, 2020 and December 31, 2018.2019. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules;rules, (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship;relationship, (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income;income, and (iv) written credit default swaps and interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.

4645
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The Effects of Derivatives on the Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
The following table presents the consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow, NIFO, nonqualifying hedging relationships and embedded derivatives:
  Three Months Ended March 31, 2020
  
Net
Investment
Income
 
Net
Investment
Gains
(Losses)
 
Net
Derivative
Gains
(Losses)
 
Policyholder
Benefits and
Claims
 
Interest
Credited to
Policyholder
Account
Balances
 
Other
Expenses
 OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(11) $—
 $—
 $774
 $—
 $—
 N/A
Hedged items 5
 —
 —
 (769) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) 72
 12
 —
 —
 —
 —
 N/A
Hedged items (65) (10) —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (20) —
 —
 —
 —
 N/A
Subtotal 1

(18)
—

5
 —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $2,011
Amount of gains (losses) reclassified from AOCI into income 6
 6
 —
 —
 —
 1
 (13)
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 1,614
Amount of gains (losses) reclassified from AOCI into income —
 (451) —
 —
 —
 —
 451
Foreign currency transaction gains (losses) on hedged items —
 453
 —
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 62
Amount of gains (losses) reclassified from AOCI into income —
 —
 —
 —
 —
 —
 —
Subtotal 6
 8
 —
 —
 —
 1
 4,125
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 110
Non-derivative hedging instruments N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (2)
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 108
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (4) —
 4,177
 48
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 135
 (8) —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 73
 —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 (311) —
 —
 —
 N/A
Equity derivatives (1) —
 —
 1,559
 208
 —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (157) —
 —
 —
 N/A
Subtotal (4) —
 5,476
 248
 —
 —
 N/A
Earned income on derivatives 77
 —
 147
 39
 (44) —
 —
Embedded derivatives (2) N/A
 N/A
 (1,422) —
 N/A
 N/A
 N/A
Total $80
 $(10) $4,201
 $292
 $(44) $1
 $4,233
  Three Months Ended June 30, 2019
  Net Investment Income Net Investment Gains (Losses) Net Derivative Gains (Losses) Policyholder Benefits and Claims Interest Credited to Policyholder Account Balances Other Expenses OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(1) $—
 $—
 $205
 $—
 $—
 N/A
Hedged items 2
 —
 —
 (206) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) 10
 59
 —
 —
 —
 —
 N/A
Hedged items (11) (54) —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (22) —
 —
 —
 —
 N/A
Subtotal —
 (17) —
 (1) —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)

              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $358
Amount of gains (losses) reclassified from AOCI into income 6
 4
 —
 —
 —
 —
 (10)
Foreign currency exchange rate derivatives: (1)

              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 300
Amount of gains (losses) reclassified from AOCI into income (1) 83
 —
 —
 —
 1
 (83)
Foreign currency transaction gains (losses) on hedged items —
 (90) —
 —
 —
 —
 —
Credit derivatives: (1)

              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 —
Amount of gains (losses) reclassified from AOCI into income —
 (1) —
 —
 —
 —
 1
Subtotal 5
 (4) —
 —
 —
 1
 566
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1)

 N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (37)
Non-derivative hedging instruments

 N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (7)
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (44)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (1) —
 857
 12
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 136
 (4) —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 (5) —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 50
 —
 —
 —
 N/A
Equity derivatives (1) —
 —
 (182) (30) —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (111) —
 —
 —
 N/A
Subtotal (1) —
 745
 (22) —
 —
 N/A
Earned income on derivatives 60
 —
 125
 33
 (36) —
 —
Embedded derivatives (2) N/A
 N/A
 (146) —
 N/A
 N/A
 N/A
Total $64
 $(21) $724
 $10
 $(36) $1
 $522


4746
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

 Three Months Ended June 30, 2018 Three Months Ended March 31, 2019
 Net Investment Income Net Investment Gains (Losses) Net Derivative Gains (Losses) Policyholder Benefits and Claims Interest Credited to Policyholder Account Balances Other Expenses OCI 
Net
Investment
Income
 
Net
Investment
Gains
(Losses)
 
Net
Derivative
Gains
(Losses)
 
Policyholder
Benefits and
Claims
 
Interest
Credited to
Policyholder
Account
Balances
 
Other
Expenses
 OCI
 (In millions) (In millions)
Gain (Loss) on Fair Value Hedges:                            
Interest rate derivatives:                            
Derivatives designated as hedging instruments (1) $—
 $—
 $(68) $—
 $—
 $—
 N/A
 $(3) $—
 $—
 $127
 $—
 $—
 N/A
Hedged items —
 —
 70
 —
 —
 —
 N/A
 3
 —
 —
 (128) —
 —
 N/A
Foreign currency exchange rate derivatives:                            
Derivatives designated as hedging instruments (1) —
 —
 (57) —
 —
 —
 N/A
 (30) (14) —
 —
 —
 —
 N/A
Hedged items —
 —
 51
 —
 —
 —
 N/A
 29
 12
 —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 —
 (12) —
 —
 —
 N/A
 —
 (16) —
 —
 —
 —
 N/A
Subtotal —
 —
 (16) —
 —
 —
 N/A
 (1) (18) —
 (1) —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:                            
Interest rate derivatives: (1)

                            
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $(57) NA
 NA
 NA
 NA
 NA
 NA
 $252
Amount of gains (losses) reclassified from AOCI into income 6
 —
 (1) —
 —
 1
 (6) 5
 (6) —
 —
 —
 1
 —
Foreign currency exchange rate derivatives: (1)

                            
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 198
 NA
 NA
 NA
 NA
 NA
 NA
 (241)
Amount of gains (losses) reclassified from AOCI into income (1) —
 (475) —
 —
 —
 476
 (2) 25
 —
 —
 —
 —
 (23)
Foreign currency transaction gains (losses) on hedged items —
 —
 478
 —
 —
 —
 —
 —
 (35) —
 —
 —
 —
 —
Credit derivatives: (1)

                            
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 —
 NA
 NA
 NA
 NA
 NA
 NA
 —
Amount of gains (losses) reclassified from AOCI into income —
 —
 —
 —
 —
 —
 —
 —
 1
 —
 —
 —
 —
 (1)
Subtotal 5
 —
 2
 —
 —
 1
 611
 3
 (15) —
 —
 —
 1
 (13)
Gain (Loss) on NIFO Hedges:                            
Foreign currency exchange rate derivatives (1)

 N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 81
 N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (6)
Non-derivative hedging instruments

 N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 —
 N/A

 N/A

 N/A

 N/A

 N/A

 N/A

 —
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 81
 N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (6)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:                            
Interest rate derivatives (1) —
 —
 (75) (5) —
 —
 N/A
 (1) —
 409
 19
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 (1) (5) —
 —
 N/A
 —
 —
 (142) 3
 —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 14
 —
 —
 —
 N/A
 —
 —
 (15) —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 (35) —
 —
 —
 N/A
 —
 —
 136
 —
 —
 —
 N/A
Equity derivatives (1) —
 —
 (174) (33) —
 —
 N/A
 —
 —
 (667) (96) —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (58) —
 —
 —
 N/A
 —
 —
 82
 —
 —
 —
 N/A
Subtotal —
 —
 (329) (43) —
 —
 N/A
 (1) —
 (197) (74) —
 —
 N/A
Earned income on derivatives 93
 —
 133
 3
 (28) (4) —
 56
 —
 119
 32
 (32) —
 —
Embedded derivatives (2) N/A
 N/A
 151
 —
 N/A
 N/A
 N/A
 N/A
 N/A
 193
 —
 N/A
 N/A
 N/A
Total $98
 $—
 $(59) $(40) $(28) $(3) $692
 $57
 $(33) $115
 $(43) $(32) $1
 $(19)

__________________
(1)Excludes earned income on derivatives.
(2)The valuation of guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $185 million and ($62) million for the three months ended March 31, 2020 and 2019, respectively.

4847
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

  Six Months Ended June 30, 2019
  Net Investment Income Net Investment Gains (Losses) Net Derivative Gains (Losses) Policyholder Benefits and Claims Interest Credited to Policyholder Account Balances Other Expenses OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(4) $—
 $—
 $332
 $—
 $—
 N/A
Hedged items 5
 —
 —
 (334) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) (20) 45
 —
 —
 —
 —
 N/A
Hedged items 18
 (42) —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (38) —
 —
 —
 —
 N/A
Subtotal (1)
(35)
—

(2) —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $610
Amount of gains (losses) reclassified from AOCI into income 11
 (2) —
 —
 —
 1
 (10)
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 59
Amount of gains (losses) reclassified from AOCI into income (3) 108
 —
 —
 —
 1
 (106)
Foreign currency transaction gains (losses) on hedged items —
 (125) —
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 —
Amount of gains (losses) reclassified from AOCI into income —
 —
 —
 —
 —
 —
 —
Subtotal 8
 (19) —
 —
 —
 2
 553
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (43)
Non-derivative hedging instruments N/A

 N/A
 N/A
 N/A
 N/A

 N/A
 (7)
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (50)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (2) —
 1,266
 31
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 (6) (1) —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 (20) —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 186
 —
 —
 —
 N/A
Equity derivatives (1) —
 —
 (849) (126) —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (29) —
 —
 —
 N/A
Subtotal (2) —
 548
 (96) —
 —
 N/A
Earned income on derivatives 116
 —
 244
 65
 (68) —
 —
Embedded derivatives (2) N/A
 N/A
 47
 —
 N/A
 N/A
 N/A
Total $121
 $(54) $839
 $(33) $(68) $2
 $503


49
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

  Six Months Ended June 30, 2018
  Net Investment Income Net Investment Gains (Losses) Net Derivative Gains (Losses) Policyholder Benefits and Claims Interest Credited to Policyholder Account Balances Other Expenses OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $—
 $—
 $(278) $—
 $—
 $—
 N/A
Hedged items —
 —
 280
 —
 —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) —
 —
 113
 —
 —
 —
 N/A
Hedged items —
 —
 (108) —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 —
 (20) —
 —
 —
 N/A
Subtotal —
 —
 (13) —
 —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $(334)
Amount of gains (losses) reclassified from AOCI into income 10
 —
 20
 —
 —
 1
 (31)
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 123
Amount of gains (losses) reclassified from AOCI into income (1) —
 (336) —
 —
 1
 336
Foreign currency transaction gains (losses) on hedged items —
 —
 340
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 —
Amount of gains (losses) reclassified from AOCI into income —
 —
 —
 —
 —
 —
 —
Subtotal 9
 —
 24
 —
 —
 2
 94
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (76)
Non-derivative hedging instruments N/A

 N/A

 N/A

 N/A

 N/A

 N/A

 —
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (76)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) 4
 —
 (310) (12) —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 386
 (3) —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 11
 —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 (79) —
 —
 —
 N/A
Equity derivatives (1) 1
 —
 (76) (21) —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (107) —
 —
 —
 N/A
Subtotal 5
 —
 (175) (36) —
 —
 N/A
Earned income on derivatives 174
 —
 266
 5
 (51) (6) —
Embedded derivatives (2) N/A
 N/A
 188
 —
 N/A
 N/A
 N/A
Total $188
 $—
 $290
 $(31) $(51) $(4) $18
__________________
(1)Excludes earned income on derivatives.
(2)
The valuation of guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were ($13) million and ($75) million for the three months and six months ended June 30, 2019, respectively, and($25) millionand($5) millionfor thethree months and six months ended June 30, 2018, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Fair Value Hedges
The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities;liabilities, (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities;liabilities, and (iii) foreign currency forwards to hedge the foreign currency fair value exposure of foreign currency denominated investments.
The following table presents the balance sheet classification, carrying amount and cumulative fair value hedging adjustments for items designated and qualifying as hedged items in fair value hedges:
  June 30, 2019
Balance Sheet Line Item 
Carrying Amount
 of the Hedged
Assets/(Liabilities)
 Cumulative Amount
of Fair Value Hedging Adjustments
Included in the Carrying Amount of Hedged
Assets/(Liabilities) (1)
  (In millions)
Fixed maturity securities AFS $2,613
 $(1)
Mortgage loans $1,096
 $6
Future policy benefits $(4,286) $(873)
Policyholder account balances $(74) $—
Balance Sheet Line Item 
Carrying Amount
 of the Hedged
Assets/(Liabilities)
 Cumulative Amount
of Fair Value Hedging Adjustments
Included in the Carrying Amount of Hedged
Assets/(Liabilities) (1)
  March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
  (In millions)
Fixed maturity securities AFS $2,662
 $2,736
 $(1) $(1)
Mortgage loans $1,048
 $1,159
 $16
 $2
Future policy benefits $(5,705) $(4,475) $(1,677) $(908)
__________________
(1)Includes ($1) million ofAt both March 31, 2020 and December 31, 2019, the hedging adjustments on discontinued hedging relationships.relationships includes ($1) million.
For the Company’s foreign currency forwards, the change in the estimated fair value of the derivative related to the changes in the difference between the spot price and the forward price is excluded from the assessment of hedge effectiveness. The Company has elected to record changes in estimated fair value of excluded components in earnings. For all other derivatives, all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities;liabilities, (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and liabilities;liabilities, (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments;investments, (iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments;investments, and (v) interest rate swaps and interest rate forwards to hedge forecasted fixed-rate borrowings.
In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net investment gains (losses).income. These amounts were $57($5) million and $58 million for the three months and six months ended$1 million June 30, 2019, respectively, and $6 million for both the three months ended March 31, 2020 and six months ended June 30, 2018.2019, respectively.
At June 30, 2019March 31, 2020 and December 31, 2018,2019, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed nine years and foureight years, respectively.
At June 30, 2019March 31, 2020 and December 31, 2018,2019, the balance in AOCI associated with cash flow hedges was $2.76.3 billion and $2.1$2.2 billion, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
At June 30, 2019March 31, 2020, the Company expected to reclassify $115($19) million of deferred net gains (losses) on derivatives in AOCI to earnings within the next 12 months.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

NIFO Hedges
The Company uses foreign currency exchange rate derivatives, which may include foreign currency forwards and currency options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company also designates a portion of its foreign-denominated debt as a non-derivative hedging instrument of its net investments in foreign operations. The Company assesses hedge effectiveness of its derivatives based upon the change in forward rates and assesses

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

its non-derivative hedging instruments based on changesupon the change in spot rates. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
When net investments in foreign operations are sold or substantially liquidated, the amounts in AOCI are reclassified to the statement of operations.
At June 30, 2019March 31, 2020 and December 31, 2018,2019, the cumulative foreign currency translation gain (loss) recorded in AOCI related to NIFO hedges was $134$256 million and $184$148 million, respectively. At June 30, 2019March 31, 2020 and December 31, 2018,2019, the carrying amount of debt designated as a non-derivative hedging instrument was $390$389 million and $0,$387 million, respectively. See Note 10 for additional information on foreign-denominated debt.
Credit Derivatives
In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company’s maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $12.3$11.4 billion and $11.4$11.5 billion at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps. At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company would have received $256paid $60 million and $82received $271 million, respectively, to terminate all of these contracts.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
Rating Agency Designation of Referenced
Credit Obligations (1)
 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)		 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)		 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)		 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)
 (Dollars in millions) (Dollars in millions)
Aaa/Aa/A                        
Single name credit default swaps (3) $5
 $386
 1.5
 $4
 $354
 1.7
 $3
 $241
 2.0
 $4
 $298
 1.7
Credit default swaps referencing indices 38
 2,504
 2.4
 28
 2,154
 2.5
 —
 2,259
 2.1
 35
 2,175
 2.2
Subtotal 43
 2,890
 2.3
 32
 2,508
 2.4
 3
 2,500
 2.1
 39
 2,473
 2.2
Baa                        
Single name credit default swaps (3) 3
 368
 1.3
 3
 482
 1.5
 (1) 289
 1.9
 3
 216
 1.5
Credit default swaps referencing indices 185
 8,742
 5.1
 40
 8,056
 5.0
 (42) 8,245
 5.2
 203
 8,539
 5.0
Subtotal 188
 9,110
 4.9
 43
 8,538
 4.8
 (43) 8,534
 5.1
 206
 8,755
 4.9
Ba                        
Single name credit default swaps (3) —
 10
 1.0
 —
 15
 2.0
 (2) 24
 2.7
 —
 9
 5.0
Credit default swaps referencing indices —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Subtotal —
 10
 1.0
 —
 15
 2.0
 (2) 24
 2.7
 —
 9
 5.0
B                        
Single name credit default swaps (3) —
 —
 —
 —
 —
 —
 —
 24
 2.9
 —
 10
 0.5
Credit default swaps referencing indices 25
 330
 5.0
 7
 330
 5.0
 (18) 271
 4.8
 26
 273
 5.0
Subtotal 25
 330
 5.0
 7
 330
 5.0
 (18) 295
 4.7
 26
 283
 4.8
Total $256
 $12,340
 4.3
 $82
 $11,391
 4.3
 $(60) $11,353
 4.4
 $271
 $11,520
 4.3
__________________

52
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

(1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”) and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.
(2)The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.
(3)Single name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals.
Credit Risk on Freestanding Derivatives
The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.
The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. Substantially allAll of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.
See Note 8 for a description of the impact of credit risk on the valuation of derivatives.

53
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement  Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities
 (In millions) (In millions)
Gross estimated fair value of derivatives:                
OTC-bilateral (1) $10,134
 $3,224
 $8,805
 $3,758
 $17,682
 $4,247
 $9,574
 $3,624
OTC-cleared (1) 588
 32
 245
 33
 1,315
 612
 606
 81
Exchange-traded 4
 28
 18
 80
 34
 24
 15
 11
Total gross estimated fair value of derivatives presented on the interim condensed consolidated balance sheets (1) 10,726
 3,284
 9,068
 3,871
 19,031
 4,883
 10,195
 3,716
Gross amounts not offset on the interim condensed consolidated balance sheets:                
Gross estimated fair value of derivatives: (2)                
OTC-bilateral (2,453) (2,453) (2,570) (2,570) (3,329) (3,329) (2,664) (2,664)
OTC-cleared (12) (12) (25) (25) (410) (410) (38) (38)
Exchange-traded —
 —
 (1) (1) (2) (2) (2) (2)
Cash collateral: (3), (4)                
OTC-bilateral (4,476) —
 (4,709) —
 (11,556) —
 (5,317) —
OTC-cleared (540) (4) (145) —
 (471) (38) (560) (4)
Exchange-traded —
 (15) —
 (57) —
 (13) —
 (5)
Securities collateral: (5)                
OTC-bilateral (3,002) (738) (1,266) (1,134) (2,563) (881) (1,521) (935)
OTC-cleared —
 (10) —
 (8) —
 (164) —
 (39)
Exchange-traded —
 (13) —
 (7) —
 (8) —
 (4)
Net amount after application of master netting agreements and collateral $243
 $39
 $352
 $69
 $700
 $38
 $93
 $25
__________________
(1)At June 30, 2019March 31, 2020 and December 31, 2018,2019, derivative assets included income or (expense) accruals reported in accrued investment income or in other liabilities of $95$162 million and $99$111 million, respectively, and derivative liabilities included (income) or expense accruals reported in accrued investment income or in other liabilities of ($39)$34 million and ($59)21) million, respectively.
(2)Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.
(3)Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the centralized clearinghouse treats variation margin as collateral, is included in cash and cash equivalents, short-term investments or in fixed maturity securities AFS, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

51
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

(4)The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company received excess cash collateral of $221$285 million and $135$389 million, respectively, and provided excess cash collateral of $274$456 million and $226$266 million, respectively, which is not included in the table above due to the foregoing limitation.

54
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

(5)
Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at June 30, 2019, noneMarch 31, 2020, NaN of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities AFS on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company received excess securities collateral with an estimated fair value of $153$336 million and $70$156 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At June 30, 2019March 31, 2020 and December 31, 2018,2019, the Company provided excess securities collateral with an estimated fair value of $104$355 million and $212$189 million, respectively, for its OTC-bilateral derivatives, and $730 million$2.2 billion and $601 million,$1.0 billion, respectively, for its OTC-cleared derivatives, and $126$158 million and $90$143 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.
The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches a minimum transfer amount. Substantially allAll of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s credit or financial strength rating, as applicable, were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of MetLife, Inc. and/or the counterparty. At June 30, 2019,March 31, 2020, the amount of collateral not provided by the Company due to the existence of these thresholds was $15 million.
The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that were in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. OTC-bilateral derivatives that are not subject to collateral agreements are excluded from this table.
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 Derivatives
Subject to
Credit-
Contingent
Provisions		 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total 
Derivatives
Subject to
Credit-
Contingent
Provisions
 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total Derivatives
Subject to
Credit-
Contingent
Provisions		 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total 
Derivatives
Subject to
Credit-
Contingent
Provisions
 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total
 (In millions) (In millions)
Estimated Fair Value of Derivatives in a Net Liability Position (1) $757
 $14
 $771
 $1,148
 $40
 $1,188
 $694
 $224
 $918
 $874
 $85
 $959
Estimated Fair Value of Collateral Provided:                        
Fixed maturity securities AFS $822
 $—
 $822
 $1,218
 $9
 $1,227
 $874
 $222
 $1,096
 $983
 $80
 $1,063
Cash $—
 $—
 $—
 $6
 $—
 $6
__________________
(1)After taking into consideration the existence of netting agreements.
Embedded Derivatives
The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, GMABs and certain GMIBs; ceded reinsurance of guaranteed minimum benefits related to certain GMIBs; assumed reinsurance of guaranteed minimum benefits related to GMWBs and GMABs; funds withheld on ceded reinsurance and fixed annuities with equity-indexed returns.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:
 Balance Sheet Location June 30, 2019 December 31, 2018 Balance Sheet Location March 31, 2020 December 31, 2019
 (In millions) (In millions)
Embedded derivatives within asset host contracts:        
Ceded guaranteed minimum benefits Premiums, reinsurance and other receivables $75
 $71
 Premiums, reinsurance and other receivables $76
 $60
Embedded derivatives within liability host contracts:        
Direct guaranteed minimum benefits Policyholder account balances $323
 $298
 Policyholder account balances $1,721
 $312
Assumed guaranteed minimum benefits Policyholder account balances 441
 495
 Policyholder account balances 532
 312
Funds withheld on ceded reinsurance Other liabilities 39
 (41) Other liabilities (38) 36
Fixed annuities with equity indexed returns Policyholder account balances 107
 58
 Policyholder account balances 62
 130
Other guarantees Policyholder account balances 31
 12
Embedded derivatives within liability host contractsEmbedded derivatives within liability host contracts $910
 $810
Embedded derivatives within liability host contracts $2,308
 $802

8. Fair Value
When developing estimated fair values, considerableConsiderable judgment is often required in interpreting the market data used to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

5653
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Recurring Fair Value MeasurementsFreestanding Derivatives
Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.
Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivative’s carrying value in other invested assets or other liabilities.
If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses) except as follows:
Statement of Operations Presentation:Derivative:
Policyholder benefits and claims•Economic hedges of variable annuity guarantees included in future policy benefits
Net investment income•Economic hedges of equity method investments in joint ventures
•Derivatives held within Unit-linked investments
Hedge Accounting
To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. Hedge designation and financial statement presentation of changes in estimated fair value of the hedging derivatives are as follows:
•
Fair value hedge - a hedge of the estimated fair value of a recognized asset or liability - in the same line item as the earnings effect of the hedged item. The carrying value of the hedged recognized asset or liability is adjusted for changes in its estimated fair value due to the hedged risk.
•
Cash flow hedge - a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability - in OCI and reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.
•
Net investment in a foreign operation (“NIFO”) hedge - in OCI, consistent with the translation adjustment for the hedged net investment in the foreign operation.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The assetschanges in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported on the statement of operations within interest income or interest expense to match the location of the hedged item. Accruals on derivatives in net investment hedges are recognized in OCI.
In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and liabilities measuredsets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. Assessments of hedge effectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income.
The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, (ii) the derivative expires, is sold, terminated, or exercised, (iii) it is no longer probable that the hedged forecasted transaction will occur, or (iv) the derivative is de-designated as a hedging instrument.
When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurring, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.
When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded in OCI pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable of occurring are recognized immediately in net investment gains (losses).
In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).
Embedded Derivatives
The Company issues certain products, which include variable annuities and investment contracts, and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:
the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;
the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and
a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.
Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses). If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation. At inception, the Company attributes to the embedded derivative a recurring basisportion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent “excess” fees and their corresponding placementare reported in universal life and investment-type product policy fees.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

See Note 8 for information about the fair value hierarchy for derivatives.
Derivative Strategies
The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.
Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.
Interest Rate Derivatives
The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships.
The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. government and agency, or other fixed maturity securities AFS. Structured interest rate swaps are included in interest rate swaps and are not designated as hedging instruments.
Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships.
The Company purchases interest rate caps primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, and interest rate floors primarily to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships.
In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.
The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow and nonqualifying hedging relationships.
A synthetic guaranteed interest contract (“GIC”) is a contract that simulates the performance of a traditional GIC through the use of financial instruments. The contractholder owns the underlying assets, and the Company provides a guarantee (or “wrap”) on the participant funds for an annual risk charge. The Company’s maximum exposure to loss on synthetic GICs is the notional amount, in the event the values of all of the underlying assets were reduced to zero. The Company’s risk is substantially lower due to contractual provisions that limit the portfolio to high quality assets, which are pre-approved and monitored for compliance, as well as the collection of risk charges. In addition, the crediting rates reset periodically to amortize market value gains and losses over a period equal to the duration of the wrapped portfolio, subject to a 0% floor. While plan participants may transact at book value, contractholder withdrawals may only occur immediately at market value, or at book value paid over a period of time per contract provisions. Synthetic GICs are not designated as hedging instruments.
Foreign Currency Exchange Rate Derivatives
The Company uses foreign currency exchange rate derivatives, including foreign currency swaps, foreign currency forwards, currency options and exchange-traded currency futures, to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency derivatives to hedge the foreign currency exchange rate risk associated with certain of its net investments in foreign operations.
In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow and nonqualifying hedging relationships.
In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company utilizes foreign currency forwards in fair value, NIFO hedges and nonqualifying hedging relationships.
The Company enters into currency options that give it the right, but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign currency exchange rate and the strike price. The Company uses currency options to hedge against the foreign currency exposure inherent in certain of its variable annuity products. The Company also uses currency options as an economic hedge of foreign currency exposure related to the Company’s non-U.S. subsidiaries. The Company utilizes currency options in NIFO hedges and nonqualifying hedging relationships.
To a lesser extent, the Company uses exchange-traded currency futures to hedge currency mismatches between assets and liabilities, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded currency futures in nonqualifying hedging relationships.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Credit Derivatives
The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations and involuntary restructuring for corporate obligors, as well as repudiation, moratorium or governmental intervention for sovereign obligors. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships.
The Company enters into written credit default swaps to synthetically create credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency, or other fixed maturity securities AFS. These credit default swaps are not designated as hedging instruments.
The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these transactions as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships.
Equity Derivatives
The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps.
Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the underlying equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.
Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.
In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships.
In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to synthetically create investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Primary Risks Managed by Derivatives
The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at:
    March 31, 2020 December 31, 2019
  Primary Underlying Risk Exposure Gross
Notional
Amount		 Estimated Fair Value Gross
Notional
Amount		 Estimated Fair Value
  Assets Liabilities Assets Liabilities
    (In millions)
Derivatives Designated as Hedging Instruments:            
Fair value hedges:              
Interest rate swaps Interest rate $3,240
 $3,394
 $10
 $2,369
 $2,667
 $2
Foreign currency swaps Foreign currency exchange rate 1,304
 71
 —
 1,304
 16
 17
Foreign currency forwards Foreign currency exchange rate 2,236
 11
 26
 2,336
 1
 40
Subtotal   6,780
 3,476
 36
 6,009
 2,684
 59
Cash flow hedges:              
Interest rate swaps Interest rate 5,084
 181
 27
 3,675
 145
 27
Interest rate forwards Interest rate 7,239
 1,037
 —
 7,364
 83
 144
Foreign currency swaps Foreign currency exchange rate 37,187
 4,141
 2,359
 36,983
 1,627
 1,430
Subtotal   49,510
 5,359
 2,386
 48,022
 1,855
 1,601
NIFO hedges:              
Foreign currency forwards Foreign currency exchange rate 1,059
 67
 2
 1,059
 —
 10
Currency options Foreign currency exchange rate 3,200
 65
 —
 4,200
 33
 91
Subtotal   4,259
 132
 2
 5,259
 33
 101
Total qualifying hedges 60,549
 8,967
 2,424
 59,290
 4,572
 1,761
Derivatives Not Designated or Not Qualifying as Hedging Instruments:            
Interest rate swaps Interest rate 70,027
 5,127
 711
 58,083
 2,867
 185
Interest rate floors Interest rate 12,701
 424
 —
 12,701
 155
 —
Interest rate caps Interest rate 55,630
 22
 —
 42,622
 18
 5
Interest rate futures Interest rate 2,514
 1
 5
 2,423
 2
 3
Interest rate options Interest rate 27,600
 1,269
 —
 27,344
 764
 1
Interest rate forwards Interest rate 130
 1
 2
 129
 1
 2
Interest rate total return swaps Interest rate 1,048
 180
 —
 1,048
 5
 49
Synthetic GICs Interest rate 33,588
 —
 —
 30,341
 —
 —
Foreign currency swaps Foreign currency exchange rate 13,807
 1,119
 788
 13,699
 644
 461
Foreign currency forwards Foreign currency exchange rate 13,376
 193
 428
 13,507
 50
 393
Currency futures Foreign currency exchange rate 927
 5
 —
 880
 7
 —
Currency options Foreign currency exchange rate 1,800
 1
 —
 1,801
 —
 —
Credit default swaps — purchased Credit 2,919
 43
 68
 2,944
 4
 102
Credit default swaps — written Credit 11,353
 30
 90
 11,520
 272
 1
Equity futures Equity market 2,586
 28
 19
 4,540
 6
 8
Equity index options Equity market 25,181
 1,237
 303
 27,105
 694
 677
Equity variance swaps Equity market 937
 34
 11
 1,115
 23
 19
Equity total return swaps Equity market 761
 188
 —
 761
 —
 70
Total non-designated or nonqualifying derivatives 276,885
 9,902
 2,425
 252,563
 5,512
 1,976
Total   $337,434
 $18,869
 $4,849
 $311,853
 $10,084
 $3,737


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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both March 31, 2020 and December 31, 2019. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules, (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship, (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income, and (iv) written credit default swaps and interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.

45
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The Effects of Derivatives on the Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
The following table presents the consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow, NIFO, nonqualifying hedging relationships and embedded derivatives:
  Three Months Ended March 31, 2020
  
Net
Investment
Income
 
Net
Investment
Gains
(Losses)
 
Net
Derivative
Gains
(Losses)
 
Policyholder
Benefits and
Claims
 
Interest
Credited to
Policyholder
Account
Balances
 
Other
Expenses
 OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(11) $—
 $—
 $774
 $—
 $—
 N/A
Hedged items 5
 —
 —
 (769) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) 72
 12
 —
 —
 —
 —
 N/A
Hedged items (65) (10) —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (20) —
 —
 —
 —
 N/A
Subtotal 1

(18)
—

5
 —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $2,011
Amount of gains (losses) reclassified from AOCI into income 6
 6
 —
 —
 —
 1
 (13)
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 1,614
Amount of gains (losses) reclassified from AOCI into income —
 (451) —
 —
 —
 —
 451
Foreign currency transaction gains (losses) on hedged items —
 453
 —
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 62
Amount of gains (losses) reclassified from AOCI into income —
 —
 —
 —
 —
 —
 —
Subtotal 6
 8
 —
 —
 —
 1
 4,125
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 110
Non-derivative hedging instruments N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (2)
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 108
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (4) —
 4,177
 48
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 135
 (8) —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 73
 —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 (311) —
 —
 —
 N/A
Equity derivatives (1) —
 —
 1,559
 208
 —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (157) —
 —
 —
 N/A
Subtotal (4) —
 5,476
 248
 —
 —
 N/A
Earned income on derivatives 77
 —
 147
 39
 (44) —
 —
Embedded derivatives (2) N/A
 N/A
 (1,422) —
 N/A
 N/A
 N/A
Total $80
 $(10) $4,201
 $292
 $(44) $1
 $4,233


46
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

  Three Months Ended March 31, 2019
  
Net
Investment
Income
 
Net
Investment
Gains
(Losses)
 
Net
Derivative
Gains
(Losses)
 
Policyholder
Benefits and
Claims
 
Interest
Credited to
Policyholder
Account
Balances
 
Other
Expenses
 OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(3) $—
 $—
 $127
 $—
 $—
 N/A
Hedged items 3
 —
 —
 (128) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) (30) (14) —
 —
 —
 —
 N/A
Hedged items 29
 12
 —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (16) —
 —
 —
 —
 N/A
Subtotal (1) (18) —
 (1) —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI NA
 NA
 NA
 NA
 NA
 NA
 $252
Amount of gains (losses) reclassified from AOCI into income 5
 (6) —
 —
 —
 1
 —
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI NA
 NA
 NA
 NA
 NA
 NA
 (241)
Amount of gains (losses) reclassified from AOCI into income (2) 25
 —
 —
 —
 —
 (23)
Foreign currency transaction gains (losses) on hedged items —
 (35) —
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI NA
 NA
 NA
 NA
 NA
 NA
 —
Amount of gains (losses) reclassified from AOCI into income —
 1
 —
 —
 —
 —
 (1)
Subtotal 3
 (15) —
 —
 —
 1
 (13)
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (6)
Non-derivative hedging instruments N/A

 N/A

 N/A

 N/A

 N/A

 N/A

 —
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (6)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (1) —
 409
 19
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 (142) 3
 —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 (15) —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 136
 —
 —
 —
 N/A
Equity derivatives (1) —
 —
 (667) (96) —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 82
 —
 —
 —
 N/A
Subtotal (1) —
 (197) (74) —
 —
 N/A
Earned income on derivatives 56
 —
 119
 32
 (32) —
 —
Embedded derivatives (2) N/A
 N/A
 193
 —
 N/A
 N/A
 N/A
Total $57
 $(33) $115
 $(43) $(32) $1
 $(19)
__________________
(1)Excludes earned income on derivatives.
(2)The valuation of guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $185 million and ($62) million for the three months ended March 31, 2020 and 2019, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Fair Value Hedges
The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities, (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities, and (iii) foreign currency forwards to hedge the foreign currency fair value exposure of foreign currency denominated investments.
The following table presents the balance sheet classification, carrying amount and cumulative fair value hedging adjustments for items designated and qualifying as hedged items in fair value hedges:
Balance Sheet Line Item 
Carrying Amount
 of the Hedged
Assets/(Liabilities)
 Cumulative Amount
of Fair Value Hedging Adjustments
Included in the Carrying Amount of Hedged
Assets/(Liabilities) (1)
  March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
  (In millions)
Fixed maturity securities AFS $2,662
 $2,736
 $(1) $(1)
Mortgage loans $1,048
 $1,159
 $16
 $2
Future policy benefits $(5,705) $(4,475) $(1,677) $(908)
__________________
(1)At both March 31, 2020 and December 31, 2019, the hedging adjustments on discontinued hedging relationships includes ($1) million.
For the Company’s foreign currency forwards, the change in the estimated fair value of the derivative related to the changes in the difference between the spot price and the forward price is excluded from the assessment of hedge effectiveness. The Company has elected to record changes in estimated fair value of excluded components in earnings. For all other derivatives, all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities, (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and liabilities, (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments, (iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments, and (v) interest rate swaps and interest rate forwards to hedge forecasted fixed-rate borrowings.
In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into income. These amounts were ($5) millionand $1 millionfor the three months ended March 31, 2020 and 2019, respectively.
At March 31, 2020 and December 31, 2019, the maximum length of time over which the Company has electedwas hedging its exposure to variability in future cash flows for forecasted transactions did not exceed nine years and eight years, respectively.
At March 31, 2020 and December 31, 2019, the FVO,balance in AOCI associated with cash flow hedges was $6.3 billion and $2.2 billion, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
AtMarch 31, 2020, the Company expected to reclassify ($19) millionof deferred net gains (losses) on derivatives in AOCI to earnings within the next 12 months.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

NIFO Hedges
The Company uses foreign currency exchange rate derivatives, which may include foreign currency forwards and currency options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company also designates a portion of its foreign-denominated debt as a non-derivative hedging instrument of its net investments in foreign operations. The Company assesses hedge effectiveness of its derivatives based upon the change in forward rates and assesses its non-derivative hedging instruments based upon the change in spot rates. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
When net investments in foreign operations are presented belowsold or substantially liquidated, the amounts in AOCI are reclassified to the statement of operations.
At March 31, 2020 and December 31, 2019, the cumulative foreign currency translation gain (loss) recorded in AOCI related to NIFO hedges was $256 million and $148 million, respectively. At March 31, 2020 and December 31, 2019, the carrying amount of debt designated as a non-derivative hedging instrument was $389 million and $387 million, respectively.
Credit Derivatives
In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company’s maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $11.4 billion and $11.5 billion at March 31, 2020 and December 31, 2019, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps. At March 31, 2020 and December 31, 2019, the Company would have paid $60 million and received $271 million, respectively, to terminate all of these contracts.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at:
  June 30, 2019
  Fair Value Hierarchy  
  Level 1 Level 2 Level 3 Total
Estimated
Fair Value
  (In millions)
Assets        
Fixed maturity securities AFS:        
U.S. corporate $—
 $79,372
 $4,340
 $83,712
Foreign government —
 67,411
 143
 67,554
Foreign corporate —
 55,131
 7,267
 62,398
U.S. government and agency 20,447
 19,556
 —
 40,003
RMBS 20
 25,846
 3,183
 29,049
ABS —
 13,130
 582
 13,712
Municipals —
 12,248
 7
 12,255
CMBS —
 9,616
 390
 10,006
Total fixed maturity securities AFS 20,467
 282,310
 15,912
 318,689
Equity securities 917
 102
 457
 1,476
Unit-linked and FVO Securities (1) 10,513
 1,993
 494
 13,000
Short-term investments (2) 783
 1,233
 123
 2,139
Residential mortgage loans — FVO —
 —
 262
 262
Other investments 76
 145
 232
 453
Derivative assets: (3)        
Interest rate —
 6,546
 103
 6,649
Foreign currency exchange rate —
 2,892
 79
 2,971
Credit —
 238
 36
 274
Equity market 4
 683
 50
 737
Total derivative assets 4
 10,359
 268
 10,631
Embedded derivatives within asset host contracts (4) —
 —
 75
 75
Separate account assets (5) 88,675
 101,657
 932
 191,264
Total assets (6) $121,435
 $397,799
 $18,755
 $537,989
Liabilities        
Derivative liabilities: (3)        
Interest rate $—
 $182
 $19
 $201
Foreign currency exchange rate 6
 2,196
 50
 2,252
Credit —
 75
 —
 75
Equity market 22
 679
 94
 795
Total derivative liabilities 28
 3,132
 163
 3,323
Embedded derivatives within liability host contracts (4) —
 —
 910
 910
Separate account liabilities (5) 2
 33
 7
 42
Total liabilities $30
 $3,165
 $1,080
 $4,275
  March 31, 2020 December 31, 2019
Rating Agency Designation of Referenced
Credit Obligations (1)
 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)		 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)
  (Dollars in millions)
Aaa/Aa/A            
Single name credit default swaps (3) $3
 $241
 2.0
 $4
 $298
 1.7
Credit default swaps referencing indices —
 2,259
 2.1
 35
 2,175
 2.2
Subtotal 3
 2,500
 2.1
 39
 2,473
 2.2
Baa            
Single name credit default swaps (3) (1) 289
 1.9
 3
 216
 1.5
Credit default swaps referencing indices (42) 8,245
 5.2
 203
 8,539
 5.0
Subtotal (43) 8,534
 5.1
 206
 8,755
 4.9
Ba            
Single name credit default swaps (3) (2) 24
 2.7
 —
 9
 5.0
Credit default swaps referencing indices —
 —
 —
 —
 —
 —
Subtotal (2) 24
 2.7
 —
 9
 5.0
B            
Single name credit default swaps (3) —
 24
 2.9
 —
 10
 0.5
Credit default swaps referencing indices (18) 271
 4.8
 26
 273
 5.0
Subtotal (18) 295
 4.7
 26
 283
 4.8
Total $(60) $11,353
 4.4
 $271
 $11,520
 4.3
__________________
(1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”) and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.
(2)The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.
(3)Single name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals.
Credit Risk on Freestanding Derivatives
The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.
The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. All of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.
See Note 8 for a description of the impact of credit risk on the valuation of derivatives.
The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
  March 31, 2020 December 31, 2019
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement  Assets Liabilities Assets Liabilities
  (In millions)
Gross estimated fair value of derivatives:        
OTC-bilateral (1) $17,682
 $4,247
 $9,574
 $3,624
OTC-cleared (1) 1,315
 612
 606
 81
Exchange-traded 34
 24
 15
 11
Total gross estimated fair value of derivatives presented on the interim condensed consolidated balance sheets (1) 19,031
 4,883
 10,195
 3,716
Gross amounts not offset on the interim condensed consolidated balance sheets:        
Gross estimated fair value of derivatives: (2)        
OTC-bilateral (3,329) (3,329) (2,664) (2,664)
OTC-cleared (410) (410) (38) (38)
Exchange-traded (2) (2) (2) (2)
Cash collateral: (3), (4)        
OTC-bilateral (11,556) —
 (5,317) —
OTC-cleared (471) (38) (560) (4)
Exchange-traded —
 (13) —
 (5)
Securities collateral: (5)        
OTC-bilateral (2,563) (881) (1,521) (935)
OTC-cleared —
 (164) —
 (39)
Exchange-traded —
 (8) —
 (4)
Net amount after application of master netting agreements and collateral $700
 $38
 $93
 $25
__________________
(1)At March 31, 2020 and December 31, 2019, derivative assets included income (expense) accruals reported in accrued investment income or in other liabilities of $162 million and $111 million, respectively, and derivative liabilities included (income) expense accruals reported in accrued investment income or in other liabilities of $34 million and ($21) million, respectively.
(2)Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.
(3)Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the centralized clearinghouse treats variation margin as collateral, is included in cash and cash equivalents, short-term investments or in fixed maturity securities AFS, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

(4)The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2020 and December 31, 2019, the Company received excess cash collateral of $285 million and $389 million, respectively, and provided excess cash collateral of $456 million and $266 million, respectively, which is not included in the table above due to the foregoing limitation.
(5)
Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2020, NaN of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities AFS on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2020 and December 31,2019, the Company received excess securities collateral with an estimated fair value of $336 million and $156 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At March 31, 2020 and December 31, 2019, the Company provided excess securities collateral with an estimated fair value of $355 million and $189 million, respectively, for its OTC-bilateral derivatives, and $2.2 billion and $1.0 billion, respectively, for its OTC-cleared derivatives, and $158 million and $143 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.
The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches a minimum transfer amount. All of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s credit or financial strength rating, as applicable, were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of MetLife, Inc. and/or the counterparty. At March 31, 2020, the amount of collateral not provided by the Company due to the existence of these thresholds was $15 million.
The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that were in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged.
  March 31, 2020 December 31, 2019
  Derivatives
Subject to
Credit-
Contingent
Provisions		 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total 
Derivatives
Subject to
Credit-
Contingent
Provisions
 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total
  (In millions)
Estimated Fair Value of Derivatives in a Net Liability Position (1) $694
 $224
 $918
 $874
 $85
 $959
Estimated Fair Value of Collateral Provided:            
Fixed maturity securities AFS $874
 $222
 $1,096
 $983
 $80
 $1,063
__________________
(1)After taking into consideration the existence of netting agreements.
Embedded Derivatives
The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:
  Balance Sheet Location March 31, 2020 December 31, 2019
    (In millions)
Embedded derivatives within asset host contracts:      
Ceded guaranteed minimum benefits Premiums, reinsurance and other receivables $76
 $60
Embedded derivatives within liability host contracts:      
Direct guaranteed minimum benefits Policyholder account balances $1,721
 $312
Assumed guaranteed minimum benefits Policyholder account balances 532
 312
Funds withheld on ceded reinsurance Other liabilities (38) 36
Fixed annuities with equity indexed returns Policyholder account balances 62
 130
Other guarantees Policyholder account balances 31
 12
Embedded derivatives within liability host contracts $2,308
 $802

8. Fair Value
Considerable judgment is often required in interpreting the market data used to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

  December 31, 2018
  Fair Value Hierarchy  
  Level 1 Level 2 Level 3 Total
Estimated
Fair Value
  (In millions)
Assets        
Fixed maturity securities AFS:        
U.S. corporate $—
 $74,874
 $4,074
 $78,948
Foreign government —
 62,150
 138
 62,288
Foreign corporate —
 50,310
 6,393
 56,703
U.S. government and agency 19,656
 19,666
 —
 39,322
RMBS —
 24,734
 3,227
 27,961
ABS —
 11,775
 697
 12,472
Municipals —
 11,533
 —
 11,533
CMBS —
 8,696
 342
 9,038
Total fixed maturity securities AFS 19,656
 263,738
 14,871
 298,265
Equity securities 916
 105
 419
 1,440
Unit-linked and FVO Securities (1) 10,216
 1,995
 405
 12,616
Short-term investments (2) 1,470
 1,746
 33
 3,249
Residential mortgage loans — FVO —
 —
 299
 299
Other investments 80
 118
 39
 237
Derivative assets: (3)        
Interest rate 1
 4,809
 33
 4,843
Foreign currency exchange rate 4
 2,922
 52
 2,978
Credit —
 91
 29
 120
Equity market 13
 956
 59
 1,028
Total derivative assets 18
 8,778
 173
 8,969
Embedded derivatives within asset host contracts (4) —
 —
 71
 71
Separate account assets (5) 79,726
 94,886
 944
 175,556
Total assets (6) $112,082
 $371,366
 $17,254
 $500,702
Liabilities        
Derivative liabilities: (3)        
Interest rate $3
 $194
 $218
 $415
Foreign currency exchange rate —
 2,660
 89
 2,749
Credit —
 48
 4
 52
Equity market 77
 550
 87
 714
Total derivative liabilities 80
 3,452
 398
 3,930
Embedded derivatives within liability host contracts (4) —
 —
 810
 810
Separate account liabilities (5) 1
 20
 7
 28
Total liabilities $81
 $3,472
 $1,215
 $4,768
__________________
(1)Unit-linked and FVO Securities were primarily comprised of Unit-linked investments at both June 30, 2019 and December 31, 2018.
(2)Short-term investments as presented in the tables above differ from the amounts presented on the consolidated balance sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(3)Derivative assets are presented within other invested assets on the interim condensed consolidated balance sheets and derivative liabilities are presented within other liabilities on the interim condensed consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the interim condensed consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.
(4)Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the interim condensed consolidated balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances and other liabilities on the interim condensed consolidated balance sheets.
(5)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets. Separate account liabilities presented in the tables above represent derivative liabilities.
(6)
Total assets included in the fair value hierarchy excluded other limited partnership interests that are measured at estimated fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient. At June 30, 2019 and December 31, 2018, the estimated fair value of such investments was $110 million and $145 million, respectively.
The following describes the valuation methodologies used to measure assets and liabilities at fair value.
Investments
Securities, Short-term Investments and Other Investments
When available, the estimated fair value of these financial instruments is based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not involve management’s judgment.
When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. When observable inputs are not available, the market standard valuation methodologies rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs can be based in large part on management’s judgment or estimation and cannot be supported by reference to market activity. Even though these inputs are unobservable, management believes they are consistent with what other market participants would use when pricing such securities and are considered appropriate given the circumstances.
The estimated fair value of other investments is determined on a basis consistent with the methodologies described herein for securities.
The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below. The primary valuation approaches are the market approach, which considers recent prices from market transactions involving identical or similar assets or liabilities, and the income approach, which converts expected future amounts (i.e., cash flows) to a single current, discounted amount. The valuation of most instruments listed below is determined using independent pricing sources, matrix pricing, discounted cash flow methodologies or other similar techniques that use either observable market inputs or unobservable inputs.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

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

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Instrument
Level 2
Observable Inputs
Level 3
Unobservable Inputs
Equity securities
Valuation Approaches: Principally the market approach.Valuation Approaches: Principally the market and income approaches.
Key Input:Key Inputs:
•quoted prices in markets that are not considered active•credit ratings; issuance structures
•quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
•independent non-binding broker quotations
Unit-linked and FVO Securities, Short-term investments and Other investments
•Unit-linked and FVO Securities include mutual fund interests without readily determinable fair values given prices are not published publicly. Valuation of these mutual funds is based upon quoted prices or reported NAV provided by the fund managers, which were based on observable inputs.•Unit-linked and FVO Securities, short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and unobservable inputs used in their valuation are also similar to those described above.
•Short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and observable inputs used in their valuation are also similar to those described above.
Residential mortgage loans — FVO
•N/AValuation Approaches: Principally the market approach.
Valuation Techniques and Key Inputs: These investments are based primarily on matrix pricing or other similar techniques that utilize inputs from mortgage servicers that are unobservable or cannot be derived principally from, or corroborated by, observable market data.
Separate account assets and Separate account liabilities (1)
Mutual funds and hedge funds without readily determinable fair values as prices are not published publicly
Key Input:•N/A
•quoted prices or reported NAV provided by the fund managers
Other limited partnership interests
•

N/AValued giving consideration to the underlying holdings of the partnerships and adjusting, if appropriate.
Key Inputs:
•liquidity; bid/ask spreads; performance record of the fund manager
•other relevant variables that may impact the exit value of the particular partnership interest
__________________
(1)Estimated fair value equals carrying value, based on the value of the underlying assets, including: mutual fund interests, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. Fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents are similar in nature to the instruments described under “— Securities, Short-term Investments and Other Investments” and “— Derivatives — Freestanding Derivatives.”

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Derivatives
The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives, or through the use of pricing models for OTC-bilateral and OTC-cleared derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models.
The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.
Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.
The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.
Freestanding Derivatives
Freestanding derivatives are carried on the Company’s balance sheet either as assets within other invested assets or as liabilities within other liabilities at estimated fair value. The Company does not offset the estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.
Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the derivative’s carrying value in other invested assets or other liabilities.
If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are reported in net derivative gains (losses) except as follows:
Statement of Operations Presentation:Derivative:
Policyholder benefits and claims•Economic hedges of variable annuity guarantees included in future policy benefits
Net investment income•Economic hedges of equity method investments in joint ventures
•Derivatives held within Unit-linked investments
Hedge Accounting
To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge. Hedge designation and financial statement presentation of changes in estimated fair value of the hedging derivatives are as follows:
•
Fair value hedge - a hedge of the estimated fair value of a recognized asset or liability - in the same line item as the earnings effect of the hedged item. The carrying value of the hedged recognized asset or liability is adjusted for changes in its estimated fair value due to the hedged risk.
•
Cash flow hedge - a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability - in OCI and reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.
•
Net investment in a foreign operation (“NIFO”) hedge - in OCI, consistent with the translation adjustment for the hedged net investment in the foreign operation.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The changes in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported on the statement of operations within interest income or interest expense to match the location of the hedged item. Accruals on derivatives in net investment hedges are recognized in OCI.
In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. Assessments of hedge effectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income.
The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, (ii) the derivative expires, is sold, terminated, or exercised, (iii) it is no longer probable that the hedged forecasted transaction will occur, or (iv) the derivative is de-designated as a hedging instrument.
When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized in net derivative gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurring, the changes in estimated fair value of derivatives recorded in OCI related to discontinued cash flow hedges are released into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.
When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried on the balance sheet at its estimated fair value, with changes in estimated fair value recognized currently in net derivative gains (losses). Deferred gains and losses of a derivative recorded in OCI pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable of occurring are recognized immediately in net investment gains (losses).
In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value on the balance sheet, with changes in its estimated fair value recognized in the current period as net derivative gains (losses).
Embedded Derivatives
The Company issues certain products, which include variable annuities and investment contracts, and is a party to certain reinsurance agreements that have embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if:
the combined instrument is not accounted for in its entirety at estimated fair value with changes in estimated fair value recorded in earnings;
the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and
a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.
Such embedded derivatives are carried on the balance sheet at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivative gains (losses). If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation. At inception, the Company attributes to the embedded derivative a portion of the projected future guarantee fees to be collected from the policyholder equal to the present value of projected future guaranteed benefits. Any additional fees represent “excess” fees and are reported in universal life and investment-type product policy fees.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

See Note 8 for information about the fair value hierarchy for derivatives.
Derivative Strategies
The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.
Derivatives are financial instruments with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available in the cash markets.
Interest Rate Derivatives
The Company uses a variety of interest rate derivatives to reduce its exposure to changes in interest rates, including interest rate swaps, interest rate total return swaps, caps, floors, swaptions, futures and forwards.
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and nonqualifying hedging relationships.
The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. government and agency, or other fixed maturity securities AFS. Structured interest rate swaps are included in interest rate swaps and are not designated as hedging instruments.
Interest rate total return swaps are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate total return swaps are used by the Company to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). The Company utilizes interest rate total return swaps in nonqualifying hedging relationships.
The Company purchases interest rate caps primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities, and interest rate floors primarily to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in nonqualifying hedging relationships.
In exchange-traded interest rate (Treasury and swap) futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring, to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded interest rate futures in nonqualifying hedging relationships.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in nonqualifying hedging relationships. Swaptions are included in interest rate options.
The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow and nonqualifying hedging relationships.
A synthetic guaranteed interest contract (“GIC”) is a contract that simulates the performance of a traditional GIC through the use of financial instruments. The contractholder owns the underlying assets, and the Company provides a guarantee (or “wrap”) on the participant funds for an annual risk charge. The Company’s maximum exposure to loss on synthetic GICs is the notional amount, in the event the values of all of the underlying assets were reduced to zero. The Company’s risk is substantially lower due to contractual provisions that limit the portfolio to high quality assets, which are pre-approved and monitored for compliance, as well as the collection of risk charges. In addition, the crediting rates reset periodically to amortize market value gains and losses over a period equal to the duration of the wrapped portfolio, subject to a 0% floor. While plan participants may transact at book value, contractholder withdrawals may only occur immediately at market value, or at book value paid over a period of time per contract provisions. Synthetic GICs are not designated as hedging instruments.
Foreign Currency Exchange Rate Derivatives
The Company uses foreign currency exchange rate derivatives, including foreign currency swaps, foreign currency forwards, currency options and exchange-traded currency futures, to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency derivatives to hedge the foreign currency exchange rate risk associated with certain of its net investments in foreign operations.
In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow and nonqualifying hedging relationships.
In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company utilizes foreign currency forwards in fair value, NIFO hedges and nonqualifying hedging relationships.
The Company enters into currency options that give it the right, but not the obligation, to sell the foreign currency amount in exchange for a functional currency amount within a limited time at a contracted price. The contracts may also be net settled in cash, based on differentials in the foreign currency exchange rate and the strike price. The Company uses currency options to hedge against the foreign currency exposure inherent in certain of its variable annuity products. The Company also uses currency options as an economic hedge of foreign currency exposure related to the Company’s non-U.S. subsidiaries. The Company utilizes currency options in NIFO hedges and nonqualifying hedging relationships.
To a lesser extent, the Company uses exchange-traded currency futures to hedge currency mismatches between assets and liabilities, and to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded currency futures in nonqualifying hedging relationships.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Credit Derivatives
The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations and involuntary restructuring for corporate obligors, as well as repudiation, moratorium or governmental intervention for sovereign obligors. In each case, payout on a credit default swap is triggered only after the Credit Derivatives Determinations Committee of the International Swaps and Derivatives Association, Inc. (“ISDA”) deems that a credit event has occurred. The Company utilizes credit default swaps in nonqualifying hedging relationships.
The Company enters into written credit default swaps to synthetically create credit investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and one or more cash instruments, such as U.S. government and agency, or other fixed maturity securities AFS. These credit default swaps are not designated as hedging instruments.
The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these transactions as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships.
Equity Derivatives
The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and equity total return swaps.
Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the underlying equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in nonqualifying hedging relationships.
Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. The Company utilizes equity variance swaps in nonqualifying hedging relationships.
In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts and to pledge initial margin based on futures exchange requirements. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge minimum guarantees embedded in certain variable annuity products issued by the Company. The Company utilizes exchange-traded equity futures in nonqualifying hedging relationships.
In an equity total return swap, the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and a benchmark interest rate, calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses equity total return swaps to hedge its equity market guarantees in certain of its insurance products. Equity total return swaps can be used as hedges or to synthetically create investments. The Company utilizes equity total return swaps in nonqualifying hedging relationships.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Primary Risks Managed by Derivatives
The following table presents the primary underlying risk exposure, gross notional amount, and estimated fair value of the Company’s derivatives, excluding embedded derivatives, held at:
    March 31, 2020 December 31, 2019
  Primary Underlying Risk Exposure Gross
Notional
Amount		 Estimated Fair Value Gross
Notional
Amount		 Estimated Fair Value
  Assets Liabilities Assets Liabilities
    (In millions)
Derivatives Designated as Hedging Instruments:            
Fair value hedges:              
Interest rate swaps Interest rate $3,240
 $3,394
 $10
 $2,369
 $2,667
 $2
Foreign currency swaps Foreign currency exchange rate 1,304
 71
 —
 1,304
 16
 17
Foreign currency forwards Foreign currency exchange rate 2,236
 11
 26
 2,336
 1
 40
Subtotal   6,780
 3,476
 36
 6,009
 2,684
 59
Cash flow hedges:              
Interest rate swaps Interest rate 5,084
 181
 27
 3,675
 145
 27
Interest rate forwards Interest rate 7,239
 1,037
 —
 7,364
 83
 144
Foreign currency swaps Foreign currency exchange rate 37,187
 4,141
 2,359
 36,983
 1,627
 1,430
Subtotal   49,510
 5,359
 2,386
 48,022
 1,855
 1,601
NIFO hedges:              
Foreign currency forwards Foreign currency exchange rate 1,059
 67
 2
 1,059
 —
 10
Currency options Foreign currency exchange rate 3,200
 65
 —
 4,200
 33
 91
Subtotal   4,259
 132
 2
 5,259
 33
 101
Total qualifying hedges 60,549
 8,967
 2,424
 59,290
 4,572
 1,761
Derivatives Not Designated or Not Qualifying as Hedging Instruments:            
Interest rate swaps Interest rate 70,027
 5,127
 711
 58,083
 2,867
 185
Interest rate floors Interest rate 12,701
 424
 —
 12,701
 155
 —
Interest rate caps Interest rate 55,630
 22
 —
 42,622
 18
 5
Interest rate futures Interest rate 2,514
 1
 5
 2,423
 2
 3
Interest rate options Interest rate 27,600
 1,269
 —
 27,344
 764
 1
Interest rate forwards Interest rate 130
 1
 2
 129
 1
 2
Interest rate total return swaps Interest rate 1,048
 180
 —
 1,048
 5
 49
Synthetic GICs Interest rate 33,588
 —
 —
 30,341
 —
 —
Foreign currency swaps Foreign currency exchange rate 13,807
 1,119
 788
 13,699
 644
 461
Foreign currency forwards Foreign currency exchange rate 13,376
 193
 428
 13,507
 50
 393
Currency futures Foreign currency exchange rate 927
 5
 —
 880
 7
 —
Currency options Foreign currency exchange rate 1,800
 1
 —
 1,801
 —
 —
Credit default swaps — purchased Credit 2,919
 43
 68
 2,944
 4
 102
Credit default swaps — written Credit 11,353
 30
 90
 11,520
 272
 1
Equity futures Equity market 2,586
 28
 19
 4,540
 6
 8
Equity index options Equity market 25,181
 1,237
 303
 27,105
 694
 677
Equity variance swaps Equity market 937
 34
 11
 1,115
 23
 19
Equity total return swaps Equity market 761
 188
 —
 761
 —
 70
Total non-designated or nonqualifying derivatives 276,885
 9,902
 2,425
 252,563
 5,512
 1,976
Total   $337,434
 $18,869
 $4,849
 $311,853
 $10,084
 $3,737


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both March 31, 2020 and December 31, 2019. The Company’s use of derivatives includes (i) derivatives that serve as macro hedges of the Company’s exposure to various risks and that generally do not qualify for hedge accounting due to the criteria required under the portfolio hedging rules, (ii) derivatives that economically hedge insurance liabilities that contain mortality or morbidity risk and that generally do not qualify for hedge accounting because the lack of these risks in the derivatives cannot support an expectation of a highly effective hedging relationship, (iii) derivatives that economically hedge embedded derivatives that do not qualify for hedge accounting because the changes in estimated fair value of the embedded derivatives are already recorded in net income, and (iv) written credit default swaps and interest rate swaps that are used to synthetically create investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these nonqualified derivatives, changes in market factors can lead to the recognition of fair value changes on the statement of operations without an offsetting gain or loss recognized in earnings for the item being hedged.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The Effects of Derivatives on the Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
The following table presents the consolidated financial statement location and amount of gain (loss) recognized on fair value, cash flow, NIFO, nonqualifying hedging relationships and embedded derivatives:
  Three Months Ended March 31, 2020
  
Net
Investment
Income
 
Net
Investment
Gains
(Losses)
 
Net
Derivative
Gains
(Losses)
 
Policyholder
Benefits and
Claims
 
Interest
Credited to
Policyholder
Account
Balances
 
Other
Expenses
 OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(11) $—
 $—
 $774
 $—
 $—
 N/A
Hedged items 5
 —
 —
 (769) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) 72
 12
 —
 —
 —
 —
 N/A
Hedged items (65) (10) —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (20) —
 —
 —
 —
 N/A
Subtotal 1

(18)
—

5
 —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 $2,011
Amount of gains (losses) reclassified from AOCI into income 6
 6
 —
 —
 —
 1
 (13)
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 1,614
Amount of gains (losses) reclassified from AOCI into income —
 (451) —
 —
 —
 —
 451
Foreign currency transaction gains (losses) on hedged items —
 453
 —
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 62
Amount of gains (losses) reclassified from AOCI into income —
 —
 —
 —
 —
 —
 —
Subtotal 6
 8
 —
 —
 —
 1
 4,125
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 110
Non-derivative hedging instruments N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (2)
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 108
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (4) —
 4,177
 48
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 135
 (8) —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 73
 —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 (311) —
 —
 —
 N/A
Equity derivatives (1) —
 —
 1,559
 208
 —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 (157) —
 —
 —
 N/A
Subtotal (4) —
 5,476
 248
 —
 —
 N/A
Earned income on derivatives 77
 —
 147
 39
 (44) —
 —
Embedded derivatives (2) N/A
 N/A
 (1,422) —
 N/A
 N/A
 N/A
Total $80
 $(10) $4,201
 $292
 $(44) $1
 $4,233


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

  Three Months Ended March 31, 2019
  
Net
Investment
Income
 
Net
Investment
Gains
(Losses)
 
Net
Derivative
Gains
(Losses)
 
Policyholder
Benefits and
Claims
 
Interest
Credited to
Policyholder
Account
Balances
 
Other
Expenses
 OCI
  (In millions)
Gain (Loss) on Fair Value Hedges:              
Interest rate derivatives:              
Derivatives designated as hedging instruments (1) $(3) $—
 $—
 $127
 $—
 $—
 N/A
Hedged items 3
 —
 —
 (128) —
 —
 N/A
Foreign currency exchange rate derivatives:              
Derivatives designated as hedging instruments (1) (30) (14) —
 —
 —
 —
 N/A
Hedged items 29
 12
 —
 —
 —
 —
 N/A
Amount excluded from the assessment of hedge effectiveness —
 (16) —
 —
 —
 —
 N/A
Subtotal (1) (18) —
 (1) —
 —
 N/A
Gain (Loss) on Cash Flow Hedges:              
Interest rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI NA
 NA
 NA
 NA
 NA
 NA
 $252
Amount of gains (losses) reclassified from AOCI into income 5
 (6) —
 —
 —
 1
 —
Foreign currency exchange rate derivatives: (1)              
Amount of gains (losses) deferred in AOCI NA
 NA
 NA
 NA
 NA
 NA
 (241)
Amount of gains (losses) reclassified from AOCI into income (2) 25
 —
 —
 —
 —
 (23)
Foreign currency transaction gains (losses) on hedged items —
 (35) —
 —
 —
 —
 —
Credit derivatives: (1)              
Amount of gains (losses) deferred in AOCI NA
 NA
 NA
 NA
 NA
 NA
 —
Amount of gains (losses) reclassified from AOCI into income —
 1
 —
 —
 —
 —
 (1)
Subtotal 3
 (15) —
 —
 —
 1
 (13)
Gain (Loss) on NIFO Hedges:              
Foreign currency exchange rate derivatives (1) N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (6)
Non-derivative hedging instruments N/A

 N/A

 N/A

 N/A

 N/A

 N/A

 —
Subtotal N/A
 N/A
 N/A
 N/A
 N/A
 N/A
 (6)
Gain (Loss) on Derivatives Not Designated or Not Qualifying as Hedging Instruments:              
Interest rate derivatives (1) (1) —
 409
 19
 —
 —
 N/A
Foreign currency exchange rate derivatives (1) —
 —
 (142) 3
 —
 —
 N/A
Credit derivatives — purchased (1) —
 —
 (15) —
 —
 —
 N/A
Credit derivatives — written (1) —
 —
 136
 —
 —
 —
 N/A
Equity derivatives (1) —
 —
 (667) (96) —
 —
 N/A
Foreign currency transaction gains (losses) on hedged items —
 —
 82
 —
 —
 —
 N/A
Subtotal (1) —
 (197) (74) —
 —
 N/A
Earned income on derivatives 56
 —
 119
 32
 (32) —
 —
Embedded derivatives (2) N/A
 N/A
 193
 —
 N/A
 N/A
 N/A
Total $57
 $(33) $115
 $(43) $(32) $1
 $(19)
__________________
(1)Excludes earned income on derivatives.
(2)The valuation of guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses) in connection with this adjustment were $185 million and ($62) million for the three months ended March 31, 2020 and 2019, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

Fair Value Hedges
The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities, (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated assets and liabilities, and (iii) foreign currency forwards to hedge the foreign currency fair value exposure of foreign currency denominated investments.
The following table presents the balance sheet classification, carrying amount and cumulative fair value hedging adjustments for items designated and qualifying as hedged items in fair value hedges:
Balance Sheet Line Item 
Carrying Amount
 of the Hedged
Assets/(Liabilities)
 Cumulative Amount
of Fair Value Hedging Adjustments
Included in the Carrying Amount of Hedged
Assets/(Liabilities) (1)
  March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
  (In millions)
Fixed maturity securities AFS $2,662
 $2,736
 $(1) $(1)
Mortgage loans $1,048
 $1,159
 $16
 $2
Future policy benefits $(5,705) $(4,475) $(1,677) $(908)
__________________
(1)At both March 31, 2020 and December 31, 2019, the hedging adjustments on discontinued hedging relationships includes ($1) million.
For the Company’s foreign currency forwards, the change in the estimated fair value of the derivative related to the changes in the difference between the spot price and the forward price is excluded from the assessment of hedge effectiveness. The Company has elected to record changes in estimated fair value of excluded components in earnings. For all other derivatives, all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities, (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and liabilities, (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments, (iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments, and (v) interest rate swaps and interest rate forwards to hedge forecasted fixed-rate borrowings.
In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into income. These amounts were ($5) millionand $1 millionfor the three months ended March 31, 2020 and 2019, respectively.
At March 31, 2020 and December 31, 2019, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed nine years and eight years, respectively.
At March 31, 2020 and December 31, 2019, the balance in AOCI associated with cash flow hedges was $6.3 billion and $2.2 billion, respectively.
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
AtMarch 31, 2020, the Company expected to reclassify ($19) millionof deferred net gains (losses) on derivatives in AOCI to earnings within the next 12 months.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

NIFO Hedges
The Company uses foreign currency exchange rate derivatives, which may include foreign currency forwards and currency options, to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company also designates a portion of its foreign-denominated debt as a non-derivative hedging instrument of its net investments in foreign operations. The Company assesses hedge effectiveness of its derivatives based upon the change in forward rates and assesses its non-derivative hedging instruments based upon the change in spot rates. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
When net investments in foreign operations are sold or substantially liquidated, the amounts in AOCI are reclassified to the statement of operations.
At March 31, 2020 and December 31, 2019, the cumulative foreign currency translation gain (loss) recorded in AOCI related to NIFO hedges was $256 million and $148 million, respectively. At March 31, 2020 and December 31, 2019, the carrying amount of debt designated as a non-derivative hedging instrument was $389 million and $387 million, respectively.
Credit Derivatives
In connection with synthetically created credit investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the nonqualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the Company paying the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company’s maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $11.4 billion and $11.5 billion at March 31, 2020 and December 31, 2019, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps. At March 31, 2020 and December 31, 2019, the Company would have paid $60 million and received $271 million, respectively, to terminate all of these contracts.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at:
  March 31, 2020 December 31, 2019
Rating Agency Designation of Referenced
Credit Obligations (1)
 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)		 
Estimated
Fair Value
of Credit
Default
Swaps
 Maximum
Amount of Future
Payments under
Credit Default
Swaps		 Weighted
Average
Years to
Maturity (2)
  (Dollars in millions)
Aaa/Aa/A            
Single name credit default swaps (3) $3
 $241
 2.0
 $4
 $298
 1.7
Credit default swaps referencing indices —
 2,259
 2.1
 35
 2,175
 2.2
Subtotal 3
 2,500
 2.1
 39
 2,473
 2.2
Baa            
Single name credit default swaps (3) (1) 289
 1.9
 3
 216
 1.5
Credit default swaps referencing indices (42) 8,245
 5.2
 203
 8,539
 5.0
Subtotal (43) 8,534
 5.1
 206
 8,755
 4.9
Ba            
Single name credit default swaps (3) (2) 24
 2.7
 —
 9
 5.0
Credit default swaps referencing indices —
 —
 —
 —
 —
 —
Subtotal (2) 24
 2.7
 —
 9
 5.0
B            
Single name credit default swaps (3) —
 24
 2.9
 —
 10
 0.5
Credit default swaps referencing indices (18) 271
 4.8
 26
 273
 5.0
Subtotal (18) 295
 4.7
 26
 283
 4.8
Total $(60) $11,353
 4.4
 $271
 $11,520
 4.3
__________________
(1)The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”), S&P Global Ratings (“S&P”) and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.
(2)The weighted average years to maturity of the credit default swaps is calculated based on weighted average gross notional amounts.
(3)Single name credit default swaps may be referenced to the credit of corporations, foreign governments, or municipals.
Credit Risk on Freestanding Derivatives
The Company may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of the Company’s derivatives is limited to the net positive estimated fair value of derivatives at the reporting date after taking into consideration the existence of master netting or similar agreements and any collateral received pursuant to such agreements.
The Company manages its credit risk related to derivatives by entering into transactions with creditworthy counterparties and establishing and monitoring exposure limits. The Company’s OTC-bilateral derivative transactions are governed by ISDA Master Agreements which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties in the event of early termination of a transaction, which includes, but is not limited to, events of default and bankruptcy. In the event of an early termination, the Company is permitted to set off receivables from the counterparty against payables to the same counterparty arising out of all included transactions. All of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

50
Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.
See Note 8 for a description of the impact of credit risk on the valuation of derivatives.
The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:
  March 31, 2020 December 31, 2019
Derivatives Subject to a Master Netting Arrangement or a Similar Arrangement  Assets Liabilities Assets Liabilities
  (In millions)
Gross estimated fair value of derivatives:        
OTC-bilateral (1) $17,682
 $4,247
 $9,574
 $3,624
OTC-cleared (1) 1,315
 612
 606
 81
Exchange-traded 34
 24
 15
 11
Total gross estimated fair value of derivatives presented on the interim condensed consolidated balance sheets (1) 19,031
 4,883
 10,195
 3,716
Gross amounts not offset on the interim condensed consolidated balance sheets:        
Gross estimated fair value of derivatives: (2)        
OTC-bilateral (3,329) (3,329) (2,664) (2,664)
OTC-cleared (410) (410) (38) (38)
Exchange-traded (2) (2) (2) (2)
Cash collateral: (3), (4)        
OTC-bilateral (11,556) —
 (5,317) —
OTC-cleared (471) (38) (560) (4)
Exchange-traded —
 (13) —
 (5)
Securities collateral: (5)        
OTC-bilateral (2,563) (881) (1,521) (935)
OTC-cleared —
 (164) —
 (39)
Exchange-traded —
 (8) —
 (4)
Net amount after application of master netting agreements and collateral $700
 $38
 $93
 $25
__________________
(1)At March 31, 2020 and December 31, 2019, derivative assets included income (expense) accruals reported in accrued investment income or in other liabilities of $162 million and $111 million, respectively, and derivative liabilities included (income) expense accruals reported in accrued investment income or in other liabilities of $34 million and ($21) million, respectively.
(2)Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.
(3)Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives, where the centralized clearinghouse treats variation margin as collateral, is included in cash and cash equivalents, short-term investments or in fixed maturity securities AFS, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

(4)The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At March 31, 2020 and December 31, 2019, the Company received excess cash collateral of $285 million and $389 million, respectively, and provided excess cash collateral of $456 million and $266 million, respectively, which is not included in the table above due to the foregoing limitation.
(5)
Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at March 31, 2020, NaN of the collateral had been sold or re-pledged. Securities collateral pledged by the Company is reported in fixed maturity securities AFS on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At March 31, 2020 and December 31,2019, the Company received excess securities collateral with an estimated fair value of $336 million and $156 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At March 31, 2020 and December 31, 2019, the Company provided excess securities collateral with an estimated fair value of $355 million and $189 million, respectively, for its OTC-bilateral derivatives, and $2.2 billion and $1.0 billion, respectively, for its OTC-cleared derivatives, and $158 million and $143 million, respectively, for its exchange-traded derivatives, which are not included in the table above due to the foregoing limitation.
The Company’s collateral arrangements for its OTC-bilateral derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the collateral amount owed by that counterparty reaches a minimum transfer amount. All of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade credit rating from each of Moody’s and S&P. If a party’s credit or financial strength rating, as applicable, were to fall below that specific investment grade credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives. A small number of these arrangements also include credit-contingent provisions that include a threshold above which collateral must be posted. Such agreements provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of MetLife, Inc. and/or the counterparty. At March 31, 2020, the amount of collateral not provided by the Company due to the existence of these thresholds was $15 million.
The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that were in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged.
  March 31, 2020 December 31, 2019
  Derivatives
Subject to
Credit-
Contingent
Provisions		 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total 
Derivatives
Subject to
Credit-
Contingent
Provisions
 Derivatives
Not Subject
to Credit-
Contingent
Provisions		 Total
  (In millions)
Estimated Fair Value of Derivatives in a Net Liability Position (1) $694
 $224
 $918
 $874
 $85
 $959
Estimated Fair Value of Collateral Provided:            
Fixed maturity securities AFS $874
 $222
 $1,096
 $983
 $80
 $1,063
__________________
(1)After taking into consideration the existence of netting agreements.
Embedded Derivatives
The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives.

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Table of Contents
MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
7. Derivatives (continued)

The following table presents the estimated fair value and balance sheet location of the Company’s embedded derivatives that have been separated from their host contracts at:
  Balance Sheet Location March 31, 2020 December 31, 2019
    (In millions)
Embedded derivatives within asset host contracts:      
Ceded guaranteed minimum benefits Premiums, reinsurance and other receivables $76
 $60
Embedded derivatives within liability host contracts:      
Direct guaranteed minimum benefits Policyholder account balances $1,721
 $312
Assumed guaranteed minimum benefits Policyholder account balances 532
 312
Funds withheld on ceded reinsurance Other liabilities (38) 36
Fixed annuities with equity indexed returns Policyholder account balances 62
 130
Other guarantees Policyholder account balances 31
 12
Embedded derivatives within liability host contracts $2,308
 $802

8. Fair Value
Considerable judgment is often required in interpreting the market data used to develop estimates of fair value, and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Recurring Fair Value Measurements
The assets and liabilities measured at estimated fair value on a recurring basis and their corresponding placement in the fair value hierarchy, including those items for which the Company has elected the FVO, are presented below at:
  March 31, 2020
  Fair Value Hierarchy  
  Level 1 Level 2 Level 3 Total
Estimated
Fair Value
  (In millions)
Assets        
Fixed maturity securities AFS:        
U.S. corporate $—
 $75,876
 $9,195
 $85,071
Foreign government —
 64,740
 104
 64,844
Foreign corporate —
 48,581
 10,614
 59,195
U.S. government and agency 21,060
 26,899
 —
 47,959
RMBS 161
 27,676
 2,632
 30,469
ABS —
 13,878
 960
 14,838
Municipals —
 13,871
 —
 13,871
CMBS —
 10,016
 422
 10,438
Total fixed maturity securities AFS 21,221
 281,537
 23,927
 326,685
Equity securities 547
 131
 372
 1,050
Unit-linked and FVO Securities (1) 8,812
 1,816
 517
 11,145
Short-term investments (2) 2,917
 2,150
 368
 5,435
Residential mortgage loans — FVO —
 —
 180
 180
Other investments 65
 157
 475
 697
Derivative assets: (3)        
Interest rate 1
 10,417
 1,218
 11,636
Foreign currency exchange rate 5
 5,651
 17
 5,673
Credit —
 53
 20
 73
Equity market 28
 1,392
 67
 1,487
Total derivative assets 34
 17,513
 1,322
 18,869
Embedded derivatives within asset host contracts (4) —
 —
 76
 76
Separate account assets (5) 73,366
 94,027
 1,061
 168,454
Total assets (6) $106,962
 $397,331
 $28,298
 $532,591
Liabilities        
Derivative liabilities: (3)        
Interest rate $5
 $748
 $2
 $755
Foreign currency exchange rate —
 3,354
 249
 3,603
Credit —
 137
 21
 158
Equity market 19
 303
 11
 333
Total derivative liabilities 24
 4,542
 283
 4,849
Embedded derivatives within liability host contracts (4) —
 —
 2,308
 2,308
Separate account liabilities (5) 4
 46
 15
 65
Total liabilities $28
 $4,588
 $2,606
 $7,222

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

  December 31, 2019
  Fair Value Hierarchy  
  Level 1 Level 2 Level 3 Total
Estimated
Fair Value
  (In millions)
Assets        
Fixed maturity securities AFS:        
U.S. corporate $—
 $81,501
 $6,252
 $87,753
Foreign government —
 67,112
 117
 67,229
Foreign corporate —
 56,188
 7,977
 64,165
U.S. government and agency 21,058
 21,026
 —
 42,084
RMBS 3
 25,682
 2,862
 28,547
ABS —
 13,326
 1,216
 14,542
Municipals —
 13,046
 7
 13,053
CMBS —
 10,067
 380
 10,447
Total fixed maturity securities AFS 21,061
 287,948
 18,811
 327,820
Equity securities 794
 118
 430
 1,342
Unit-linked and FVO Securities (1) 10,598
 1,879
 625
 13,102
Short-term investments (2) 2,042
 1,108
 32
 3,182
Residential mortgage loans — FVO —
 —
 188
 188
Other investments 74
 160
 455
 689
Derivative assets: (3)        
Interest rate 2
 6,616
 89
 6,707
Foreign currency exchange rate 7
 2,336
 35
 2,378
Credit —
 244
 32
 276
Equity market 6
 686
 31
 723
Total derivative assets 15
 9,882
 187
 10,084
Embedded derivatives within asset host contracts (4) —
 —
 60
 60
Separate account assets (5) 86,790
 100,668
 987
 188,445
Total assets (6) $121,374
 $401,763
 $21,775
 $544,912
Liabilities        
Derivative liabilities: (3)        
Interest rate $3
 $220
 $195
 $418
Foreign currency exchange rate —
 2,324
 118
 2,442
Credit —
 102
 1
 103
Equity market 8
 747
 19
 774
Total derivative liabilities 11
 3,393
 333
 3,737
Embedded derivatives within liability host contracts (4) —
 —
 802
 802
Separate account liabilities (5) 1
 14
 7
 22
Total liabilities $12
 $3,407
 $1,142
 $4,561
__________________
(1)Unit-linked and FVO Securities were primarily comprised of Unit-linked investments at both March 31, 2020 and December 31, 2019.
(2)Short-term investments as presented in the tables above differ from the amounts presented on the interim condensed consolidated balance sheets because certain short-term investments are not measured at estimated fair value on a recurring basis.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(3)Derivative assets are presented within other invested assets on the interim condensed consolidated balance sheets and derivative liabilities are presented within other liabilities on the interim condensed consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation on the interim condensed consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables.
(4)Embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables and other invested assets on the interim condensed consolidated balance sheets. Embedded derivatives within liability host contracts are presented within policyholder account balances and other liabilities on the interim condensed consolidated balance sheets.
(5)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets. Separate account liabilities presented in the tables above represent derivative liabilities.
(6)
Total assets included in the fair value hierarchy exclude other limited partnership interests that are measured at estimated fair value using the net asset value (“NAV”) per share (or its equivalent) practical expedient. At March 31, 2020 and December 31, 2019, the estimated fair value of such investments was $92 million and $95 million, respectively.
The following describes the valuation methodologies used to measure assets and liabilities at fair value.
Investments
Securities, Short-term Investments and Other Investments
When available, the estimated fair value of these financial instruments is based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not involve management’s judgment.
When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies, giving priority to observable inputs. The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. When observable inputs are not available, the market standard valuation methodologies rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs can be based in large part on management’s judgment or estimation and cannot be supported by reference to market activity. Even though these inputs are unobservable, management believes they are consistent with what other market participants would use when pricing such securities and are considered appropriate given the circumstances.
The estimated fair value of other investments is determined on a basis consistent with the methodologies described herein for securities.
The valuation approaches and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy are presented below. The primary valuation approaches are the market approach, which considers recent prices from market transactions involving identical or similar assets or liabilities, and the income approach, which converts expected future amounts (e.g. cash flows) to a single current, discounted amount. The valuation of most instruments listed below is determined using independent pricing sources, matrix pricing, discounted cash flow methodologies or other similar techniques that use either observable market inputs or unobservable inputs.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

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

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Instrument
Level 2
Observable Inputs
Level 3
Unobservable Inputs
Equity securities
Valuation Approaches: Principally the market approach.Valuation Approaches: Principally the market and income approaches.
Key Input:Key Inputs:
•quoted prices in markets that are not considered active•credit ratings; issuance structures
•quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
•independent non-binding broker quotations
Unit-linked and FVO Securities, Short-term investments and Other investments
•Unit-linked and FVO Securities include mutual fund interests without readily determinable fair values given prices are not published publicly. Valuation of these mutual funds is based upon quoted prices or reported NAV provided by the fund managers, which were based on observable inputs.•Unit-linked and FVO Securities, short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and unobservable inputs used in their valuation are also similar to those described above.
•Short-term investments and other investments are of a similar nature and class to the fixed maturity securities AFS and equity securities described above; accordingly, the valuation approaches and observable inputs used in their valuation are also similar to those described above.
Residential mortgage loans — FVO
•N/AValuation Approaches: Principally the market approach.
Valuation Techniques and Key Inputs: These investments are based primarily on matrix pricing or other similar techniques that utilize inputs from mortgage servicers that are unobservable or cannot be derived principally from, or corroborated by, observable market data.
Separate account assets and Separate account liabilities (1)
Mutual funds and hedge funds without readily determinable fair values as prices are not published publicly
Key Input:•N/A
•quoted prices or reported NAV provided by the fund managers
Other limited partnership interests
•

N/AValued giving consideration to the underlying holdings of the partnerships and adjusting, if appropriate.
Key Inputs:
•liquidity; bid/ask spreads; performance record of the fund manager
•other relevant variables that may impact the exit value of the particular partnership interest
__________________
(1)Estimated fair value equals carrying value, based on the value of the underlying assets, including: mutual fund interests, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. Fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents are similar in nature to the instruments described under “— Securities, Short-term Investments and Other Investments” and “— Derivatives — Freestanding Derivatives.”

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Derivatives
The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives, or through the use of pricing models for OTC-bilateral and OTC-cleared derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that management believes are consistent with what other market participants would use when pricing such instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk, nonperformance risk, volatility, liquidity and changes in estimates and assumptions used in the pricing models.
The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Certain OTC-bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.
Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.
The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is, in part, due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.
Freestanding Derivatives
Level 2 Valuation Approaches and Key Inputs:
This level includes all types of derivatives utilized by the Company with the exception of exchange-traded derivatives included within Level 1 and those derivatives with unobservable inputs as described in Level 3.
Level 3 Valuation Approaches and Key Inputs:
These valuation methodologies generally use the same inputs as described in the corresponding sections for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Freestanding derivatives are principally valued using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. Key inputs are as follows:
Instrument Interest Rate 
Foreign Currency
Exchange Rate
 Credit Equity Market
Inputs common to Level 2 and Level 3 by instrument type•swap yield curves•swap yield curves•swap yield curves•swap yield curves
•basis curves•basis curves•credit curves•spot equity index levels
•interest rate volatility (1)•currency spot rates•recovery rates•dividend yield curves
   •cross currency basis curves  •equity volatility (1)
   •currency volatility (1)    
Level 3•swap yield curves (2)•swap yield curves (2)•swap yield curves (2)•dividend yield curves (2)
 •basis curves (2)•basis curves (2)•credit curves (2)•equity volatility (1), (2)
 •repurchase rates•cross currency basis curves (2)
•

credit spreads•correlation between model inputs (1)
   •currency correlation•repurchase rates  
   •currency volatility (1)
•

independent non-binding broker quotations  
__________________
(1)Option-based only.
(2)Extrapolation beyond the observable limits of the curve(s).
Embedded Derivatives
Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, annuity contracts, and thoseinvestment risk within funds withheld related to funds withheld on cededcertain reinsurance agreements. Embedded derivatives are recorded at estimated fair value with changes in estimated fair value reported in net income.
The Company issues certain variable annuity products with guaranteed minimum benefits. GMWBs, GMABs and certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.
The Company calculates the fair value of these embedded derivatives, which areis estimated as the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations concerning policyholder behavior. The calculation is based on in-force business, projecting future cash flows from the embedded derivative over multiple risk neutral stochastic scenarios using observable risk-free rates.
Capital market assumptions, such as risk-free rates and implied volatilities, are based on market prices for publicly traded instruments to the extent that prices for such instruments are observable. Implied volatilities beyond the observable period are extrapolated based on observable implied volatilities and historical volatilities. Actuarial assumptions, including mortality, lapse, withdrawal and utilization, are unobservable and are reviewed at least annually based on actuarial studies of historical experience.
The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.’s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries as compared to MetLife, Inc.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income.
The Company ceded the risk associated with certain of the GMIBs previously described. These reinsurance agreements contain embedded derivatives which are included within premiums, reinsurance and other receivables on the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses) or policyholder benefits and claims depending on the statement of operations classification of the direct risk. The value of the embedded derivatives on the ceded risk is determined using a methodology consistent with that described previously for the guarantees directly written by the Company with the exception of the input for nonperformance risk that reflects the credit of the reinsurer.
The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as described in “— Investments — Securities, Short-term Investments and Other Investments.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.
The Company issues certain annuity contracts which allow the policyholder to participate in returns from equity indices. These equity indexed features are embedded derivatives which are measured at estimated fair value separately from the host fixed annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the interim condensed consolidated balance sheets.
The estimated fair value of the embedded equity indexed derivatives, based on the present value of future equity returns to the policyholder using actuarial and present value assumptions including expectations concerning policyholder behavior, is calculated by the Company’s actuarial department. The calculation is based on in-force business and uses standard capital market techniques, such as Black-Scholes, to calculate the value of the portion of the embedded derivative for which the terms are set. The portion of the embedded derivative covering the period beyond where terms are set is calculated as the present value of amounts expected to be spent to provide equity indexed returns in those periods. The valuation of these embedded derivatives also includes the establishment of a risk margin, as well as changes in nonperformance risk.
Embedded Derivatives Within Asset and Liability Host Contracts
Level 3 Valuation Approaches and Key Inputs:
Direct and assumed guaranteed minimum benefits
These embedded derivatives are principally valued using the income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curves, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curves and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, nonperformance risk and cost of capital for purposes of calculating the risk margin.
Reinsurance ceded on certain guaranteed minimum benefits
These embedded derivatives are principally valued using the income approach. The valuation techniques and significant market standard unobservable inputs used in their valuation are similar to those described above in “— Direct and assumed guaranteed minimum benefits” and also include counterparty credit spreads.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Transfers between Levels
Overall, transfers between levels occur when there are changes in the observability of inputs and market activity.
Transfers into or out of Level 3:
Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)
The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:
 June 30, 2019 December 31, 2018 Impact of
Increase in Input
on Estimated
Fair Value (2)		 March 31, 2020 December 31, 2019 Impact of
Increase in Input
on Estimated
Fair Value (2)
Valuation
Techniques		 Significant
Unobservable Inputs		 Range Weighted
Average (1)		 Range Weighted
Average (1)		 Valuation
Techniques		 Significant
Unobservable Inputs		 Range Weighted
Average (1)		 Range Weighted
Average (1)		 
Fixed maturity securities AFS (3)Fixed maturity securities AFS (3) Fixed maturity securities AFS (3) 
U.S. corporate and foreign corporate•Matrix pricing •Offered quotes (4) 63-142 111 85-134 104 Increase•Matrix pricing •Offered quotes (4) —-191 104 5-145 110 Increase
•Market pricing •Quoted prices (4) 25-434 116 25-638 110 Increase•Market pricing •Quoted prices (4) 20-130 96 25-131 100 Increase
•Consensus pricing •Offered quotes (4) 98-110 102 100-110 102 Increase•Consensus pricing •Offered quotes (4) 50-108 99 81-109 102 Increase
RMBS•Market pricing •Quoted prices (4) —-111 95 —-106 94 Increase (5)•Market pricing •Quoted prices (4) —-126 89 —-119 95 Increase (5)
ABS•Market pricing •Quoted prices (4) 3-121 98 3-116 97 Increase (5)•Market pricing •Quoted prices (4) 3-109 91 3-119 98 Increase (5)
•Consensus pricing •Offered quotes (4) 100-105 102 100-103 101 Increase (5)•Consensus pricing •Offered quotes (4) 100-100 100 99-104 100 Increase (5)
Derivatives 
  
 
Interest rate•Present value techniques •Swap yield (6) 197-259 268-317 Increase (7)•Present value techniques •Swap yield (6) 66-147 117 190-251 Increase (7)
 •Repurchase rates (8) (25)-1  (5)-6 Decrease (7) •Repurchase rates (8) (18)-— (10) (6)-6 Decrease (7)
Foreign currency exchange rate•Present value techniques •Swap yield (6) (64)-328  (20)-328 Increase (7)•Present value techniques •Swap yield (6) (224)-328 (131) (125)-328 Increase (7)
Credit•Present value techniques •Credit spreads (9) 96-100 97-103 Decrease (7)•Present value techniques •Credit spreads (9) 98-104 100 96-100 Decrease (7)
•Consensus pricing •Offered quotes (10) 
 •Consensus pricing •Offered quotes (10) 
   
Equity market•Present value techniques or option pricing models •Volatility (11) 16%-23% 21%-26% Increase (7)•Present value techniques or option pricing models •Volatility (11) 21%-56% 35% 14%-23% Increase (7)
 •Correlation (12) 10%-30% 10%-30%  •Correlation (12) 10%-30% 13% 10%-30% 
Embedded derivativesEmbedded derivatives Embedded derivatives 
Direct, assumed and ceded guaranteed minimum benefits•Option pricing techniques •Mortality rates: •Option pricing techniques •Mortality rates: 
�� Ages 0 - 40 0%-0.18% 0%-0.18% Decrease (13) Ages 0 - 40 0%-0.18% 0% 0%-0.18% Decrease (13)
 Ages 41 - 60 0.03%-0.80% 0.03%-0.80% Decrease (13) Ages 41 - 60 0.03%-0.80% 0.30% 0.03%-0.80% Decrease (13)
 Ages 61 - 115 0.12%-100% 0.12%-100% Decrease (13) Ages 61 - 115 0.13%-100% 1.90% 0.13%-100% Decrease (13)
 •Lapse rates:  •Lapse rates: 
 
 Durations 1 - 10 0.25%-100% 0.25%-100% Decrease (14) Durations 1 - 10 0.25%-100% 7.90% 0.25%-100% Decrease (14)
 Durations 11 - 20 2%-100% 2%-100% Decrease (14) Durations 11 - 20 0.50%-100% 6.40% 0.50%-100% Decrease (14)
 Durations 21 - 116 1.25%-100% 1.25%-100% Decrease (14) Durations 21 - 116 0.50%-100% 6.40% 0.50%-100% Decrease (14)
 •Utilization rates 0%-25% 0%-25% Increase (15) •Utilization rates 0%-22% 0.90% 0%-22% Increase (15)
 •Withdrawal rates 0%-20% 0%-20% (16) •Withdrawal rates 0%-20% 4.23% 0%-20% (16)
 •Long-term equity volatilities 6.13%-30% 7.16%-30% Increase (17) •Long-term equity volatilities 7.39%-30% 18.30% 6.01%-30% Increase (17)
 •Nonperformance risk spread 0.03%-1.35% 0.04%-1.77% Decrease (18) •Nonperformance risk spread 0.08%-1.69% 0.49% 0.03%-1.30% Decrease (18)
__________________

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(1)The weighted average for fixed maturity securities AFS and derivatives is determined based on the estimated fair value of the securities. The weighted average for embedded derivatives is determined based on a combination of account values and experience data.
(2)The impact of a decrease in input would have resulted in the opposite impact on estimated fair value. For embedded derivatives, changes to direct and assumed guaranteed minimum benefits are based on liability positions; changes to ceded guaranteed minimum benefits are based on asset positions.
(3)Significant increases (decreases) in expected default rates in isolation would have resulted in substantially lower (higher) valuations.
(4)Range and weighted average are presented in accordance with the market convention for fixed maturity securities AFS of dollars per hundred dollars of par.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(5)Changes in the assumptions used for the probability of default would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumptions used for prepayment rates.
(6)Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curves are utilized among different types of derivatives to project cash flows, as well as to discount future cash flows to present value. Since this valuation methodology uses a range of inputs across a yield curve to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.
(7)Changes in estimated fair value are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.
(8)Ranges represent different repurchase rates utilized as components within the valuation methodology and are presented in basis points.
(9)Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps.
(10)At both June 30, 2019March 31, 2020 and December 31, 2018,2019, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value.
(11)Ranges represent the underlying equity volatility quoted in percentage points. Since this valuation methodology uses a range of inputs across multiple volatility surfaces to value the derivative, presenting a range is more representative of the unobservable input used in the valuation.
(12)Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting a range of correlation factors is more representative of the unobservable input used in the valuation. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.
(13)Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.
(14)Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.
(15)The utilization rate assumption estimates the percentage of contractholders with a GMIB or lifetime withdrawal benefit who will elect to utilize the benefit upon becoming eligible. The rates may vary by the type of guarantee, the amount by which the guaranteed amount is greater than the account value, the contract’s withdrawal history and by the age of the policyholder. For any given contract, utilization rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(16)The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.
(17)Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.
(18)Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

The following is a summary of the valuation techniques and significant unobservable inputs used in the fair value measurementGenerally, all other classes of assets and liabilities classified within Level 3 that are not included in the preceding table. Generally, all other classes of securities classified within Level 3, including those within separate account assets, embedded derivatives within funds withheld related to certain ceded reinsurance, and other investments,table use the same valuation techniques and significant unobservable inputs as previously described for Level 3 securities. This includes matrix pricing and discounted cash flow methodologies, inputs such as quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, as well as independent non-binding broker quotations. The residential mortgage loans — FVO are valued using independent non-binding broker quotations and internal models including matrix pricing and discounted cash flow methodologies using current interest rates.3. The sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in nature to that described in the preceding table.
The following tables summarize the change of all assets and (liabilities) measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3):
  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
  Fixed Maturity Securities AFS    
  Corporate (1) Foreign
Government		 
Structured
Securities
 Municipals 
Equity
Securities
 
Unit-linked and FVO
Securities
  (In millions)
Three Months Ended June 30, 2019            
Balance, beginning of period $10,962
 $157
 $4,069
 $—
 $434
 $457
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) —
 —
 12
 —
 (2) 10
Total realized/unrealized gains (losses) included in AOCI 226
 (1) 41
 —
 —
 —
Purchases (4) 705
 2
 401
 7
 41
 38
Sales (4) (264) (5) (205) —
 (16) (5)
Issuances (4) —
 —
 —
 —
 —
 —
Settlements (4) —
 —
 —
 —
 —
 —
Transfers into Level 3 (5) 104
 12
 6
 —
 —
 1
Transfers out of Level 3 (5) (126) (22) (169) —
 —
 (7)
Balance, end of period $11,607
 $143
 $4,155
 $7
 $457
 $494
Three Months Ended June 30, 2018            
Balance, beginning of period $10,810
 $179
 $4,582
 $—
 $422
 $286
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) 1
 1
 21
 —
 (5) (11)
Total realized/unrealized gains (losses) included in AOCI (369) (9) (12) —
 —
 —
Purchases (4) 806
 —
 998
 8
 7
 84
Sales (4) (512) (14) (275) —
 (16) (81)
Issuances (4) —
 —
 —
 —
 —
 —
Settlements (4) —
 —
 —
 —
 —
 —
Transfers into Level 3 (5) 1
 —
 2
 —
 —
 —
Transfers out of Level 3 (5) (116) (1) (639) —
 —
 (9)
Balance, end of period $10,621
 $156
 $4,677
 $8
 $408
 $269
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2019 (6) $(3) $1
 $11
 $—
 $(3) $10
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2018 (6) $1
 $—
 $19
 $—
 $—
 $(10)

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

  Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
  
Short-term
Investments
 
Residential
Mortgage
Loans — FVO
 Other Investments 
Net
Derivatives (7)
 
Net Embedded
Derivatives (8)
 Separate
Accounts (9)
  (In millions)
Three Months Ended June 30, 2019            
Balance, beginning of period $138
 $276
 $168
 $(69) $(605) $897
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) —
 4
 —
 75
 (146) 2
Total realized/unrealized gains (losses) included in AOCI —
 —
 —
 136
 (15) —
Purchases (4) 15
 —
 64
 4
 —
 101
Sales (4) (25) (9) —
 —
 —
 (75)
Issuances (4) —
 —
 —
 (1) —
 3
Settlements (4) —
 (9) —
 (40) (69) (3)
Transfers into Level 3 (5) 2
 —
 —
 —
 —
 —
Transfers out of Level 3 (5) (7) —
 —
 —
 —
 —
Balance, end of period $123
 $262
 $232
 $105
 $(835) $925
Three Months Ended June 30, 2018            
Balance, beginning of period $615
 $438
 $—
 $(182) $(328) $1,224
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) —
 1
 —
 (106) 152
 (1)
Total realized/unrealized gains (losses) included in AOCI (3) —
 —
 (19) 13
 —
Purchases (4) 4
 —
 —
 4
 —
 270
Sales (4) (33) (17) —
 —
 —
 (323)
Issuances (4) —
 —
 —
 —
 —
 (2)
Settlements (4) —
 (17) —
 36
 (77) 2
Transfers into Level 3 (5) —
 —
 —
 —
 —
 71
Transfers out of Level 3 (5) (24) —
 —
 —
 —
 (103)
Balance, end of period $559
 $405
 $—
 $(267) $(240) $1,138
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2019 (6) $—
 $1
 $—
 $69
 $(146) $—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2018 (6) $—
 $(1) $—
 $(86) $153
 $—


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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
 Fixed Maturity Securities AFS     Fixed Maturity Securities AFS    
 Corporate (1) Foreign
Government		 
Structured
Securities
 Municipals 
Equity
Securities
 
Unit-linked and FVO
Securities
 Corporate (6) Foreign
Government		 
Structured
Products
 Municipals 
Equity
Securities
 
Unit-linked
and FVO
Securities
 (In millions) (In millions)
Six Months Ended June 30, 2019            
Three Months Ended March 31, 2020            
Balance, beginning of period $10,467
 $138
 $4,266
 $—
 $419
 $405
 $14,229
 $117
 $4,458
 $7
 $430
 $625
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) 6
 1
 25
 —
 28
 29
Total realized/unrealized gains (losses) included in net income (loss) (1), (2) (60) (2) 10
 —
 (28) (63)
Total realized/unrealized gains (losses) included in AOCI 595
 (2) 62
 —
 —
 —
 (1,200) (7) (311) —
 —
 —
Purchases (4)(3) 1,030
 3
 592
 7
 48
 70
 2,392
 32
 372
 —
 2
 140
Sales (4)(3) (351) (6) (335) —
 (38) (7) (565) (3) (186) —
 (32) (103)
Issuances (4)(3) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Settlements (4)(3) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Transfers into Level 3 (5)(4) 245
 13
 7
 —
 —
 2
 5,503
 28
 45
 —
 —
 14
Transfers out of Level 3 (5)(4) (385) (4) (462) —
 —
 (5) (490) (61) (374) (7) —
 (96)
Balance, end of period $11,607
 $143
 $4,155
 $7
 $457
 $494
 $19,809
 $104
 $4,014
 $—
 $372
 $517
Six Months Ended June 30, 2018            
Three Months Ended March 31, 2019            
Balance, beginning of period $11,219
 $209
 $4,841
 $—
 $428
 $362
 $10,467
 $138
 $4,266
 $—
 $419
 $405
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) 9
 2
 43
 —
 (10) (6)
Total realized/unrealized gains (losses) included in net income (loss) (1), (2) 9
 —
 14
 —
 30
 14
Total realized/unrealized gains (losses) included in AOCI (433) (12) 12
 —
 —
 —
 394
 —
 22
 —
 —
 —
Purchases (4)(3) 1,321
 1
 1,022
 8
 5
 104
 463
 20
 264
 —
 6
 41
Sales (4)(3) (1,221) (16) (539) —
 (15) (141) (270) (1) (139) —
 (21) (3)
Issuances (4)(3) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Settlements (4)(3) —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Transfers into Level 3 (5)(4) 140
 —
 51
 —
 —
 —
 284
 —
 1
 —
 —
 4
Transfers out of Level 3 (5)(4) (414) (28) (753) —
 —
 (50) (385) —
 (359) —
 —
 (4)
Balance, end of period $10,621
 $156
 $4,677
 $8
 $408
 $269
 $10,962
 $157
 $4,069
 $—
 $434
 $457
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2019 (6) $(4) $1
 $25
 $—
 $15
 $29
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2018 (6) $2
 $1
 $39
 $—
 $—
 $(7)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2020 (5) $(59) $(2) $11
 $—
 $(12) $(65)
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2019 (5) $(1) $—
 $13
 $—
 $23
 $15
Changes in unrealized gains (losses) included in AOCI for the instruments still held at March 31, 2020 (5) $(1,201) $(7) (312) $—
 $—
 $—

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

 Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
 
Short-term
Investments
 
Residential
Mortgage
Loans — FVO
 Other Investments 
Net
Derivatives (7)
 
Net Embedded
Derivatives (8)
 Separate
Accounts (9)		 
Short-term
Investments
 
Residential
Mortgage
Loans — FVO
 
Other
Investments
 
Net
Derivatives (7)
 
Net Embedded
Derivatives (8)
 Separate
Accounts (9)
 (In millions) (In millions)
Six Months Ended June 30, 2019            
Three Months Ended March 31, 2020            
Balance, beginning of period $33
 $299
 $39
 $(225) $(739) $937
 $32
 $188
 $455
 $(146) $(742) $980
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) 1
 6
 —
 125
 47
 6
Total realized/unrealized gains (losses) included in net income (loss) (1), (2) —
 2
 4
 71
 (1,422) (8)
Total realized/unrealized gains (losses) included in AOCI (1) —
 —
 223
 (8) —
 (1) —
 —
 1,200
 (4) —
Purchases (4)(3) 119
 —
 193
 4
 —
 124
 354
 —
 16
 (10) —
 144
Sales (4)(3) (31) (25) —
 —
 —
 (140) (8) (5) —
 —
 —
 (62)
Issuances (4)(3) —
 —
 —
 (1) —
 2
 —
 —
 —
 —
 —
 (1)
Settlements (4)(3) —
 (18) —
 (21) (135) (2) —
 (5) —
 (76) (64) —
Transfers into Level 3 (5)(4) 2
 —
 —
 —
 —
 —
 5
 —
 —
 —
 —
 10
Transfers out of Level 3 (5)(4) —
 —
 —
 —
 —
 (2) (14) —
 —
 —
 —
 (17)
Balance, end of period $123
 $262
 $232
 $105
 $(835) $925
 $368
 $180
 $475
 $1,039
 $(2,232) $1,046
Six Months Ended June 30, 2018            
Three Months Ended March 31, 2019            
Balance, beginning of period $33
 $520
 $—
 $(132) $(274) $959
 $33
 $299
 $39
 $(225) $(739) $937
Total realized/unrealized gains (losses) included in net income (loss) (2), (3) —
 3
 —
 (94) 188
 1
Total realized/unrealized gains (losses) included in net income (loss) (1), (2) —
 2
 —
 70
 193
 3
Total realized/unrealized gains (losses) included in AOCI (3) —
 —
 (123) (3) —
 1
 —
 —
 97
 7
 —
Purchases (4)(3) 560
 —
 —
 4
 —
 307
 110
 —
 129
 —
 —
 80
Sales (4)(3) (11) (81) —
 —
 —
 (147) (6) (16) —
 —
 —
 (122)
Issuances (4)(3) —
 —
 —
 —
 —
 (3) —
 —
 —
 —
 —
 2
Settlements (4)(3) —
 (37) —
 78
 (151) 1
 —
 (9) —
 (11) (66) (1)
Transfers into Level 3 (5)(4) —
 —
 —
 —
 —
 99
 —
 —
 —
 —
 —
 —
Transfers out of Level 3 (5)(4) (20) —
 —
 —
 —
 (79) —
 —
 —
 —
 —
 (2)
Balance, end of period $559
 $405
 $—
 $(267) $(240) $1,138
 $138
 $276
 $168
 $(69) $(605) $897
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2019 (6) $1
 $1
 $—
 $104
 $46
 $—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at June 30, 2018 (6) $—
 $(8) $—
 $(18) $184
 $—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2020 (5) $—
 $—
 $—
 $40
 $(1,422) $—
Changes in unrealized gains (losses) included in net income (loss) for the instruments still held at March 31, 2019 (5) $—
 $—
 $—
 $69
 $192
 $—
Changes in unrealized gains (losses) included in AOCI for the instruments still held at March 31, 2020 (5) $(1) $—
 $—
 $1,122
 $(4) $—
__________________
(1)Comprised of U.S. and foreign corporate securities.
(2)Amortization of premium/accretion of discount is included within net investment income. Impairments charged to net income (loss) on securities are included in net investment gains (losses), while changes in estimated fair value of residential mortgage loans — FVO are included in net investment income. Lapses associated with net embedded derivatives are included in net derivative gains (losses). Substantially all realized/unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).
(3)(2)Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.
(4)(3)Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.
(5)(4)Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(6)(5)Changes in unrealized gains (losses) included in net income (loss) and included in AOCI relate to assets and liabilities still held at the end of the respective periods. Substantially all changes in unrealized gains (losses) included in net income (loss) for net derivatives and net embedded derivatives are reported in net derivative gains (losses).

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

(6)Comprised of U.S. and foreign corporate securities.
(7)Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.
(8)Embedded derivative assets and liabilities are presented net for purposes of the rollforward.
(9)Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders within separate account liabilities. Therefore, such changes in estimated fair value are not recorded in net income (loss). For the purpose of this disclosure, these changes are presented within net investment gains (losses). Separate account assets and liabilities are presented net for the purposes of the rollforward.
Fair Value Option
The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis. The following table presents information for residential mortgage loans, which are accounted for under the FVO and were initially measured at fair value.
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
 (In millions) (In millions)
Unpaid principal balance $309
 $344
 $196
 $209
Difference between estimated fair value and unpaid principal balance (47) (45) (16) (21)
Carrying value at estimated fair value $262
 $299
 $180
 $188
Loans in nonaccrual status $71
 $89
 $43
 $47
Loans more than 90 days past due $28
 $41
 $18
 $18
Loans in nonaccrual status or more than 90 days past due, or both — difference between aggregate estimated fair value and unpaid principal balance $(33) $(36) $(16) $(19)

Fair Value of Financial Instruments Carried at Other Than Fair Value
The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions, short-term debt and those short-term investments that are not securities, such as time deposits, and therefore are not included in the three-level hierarchy table disclosed in the “— Recurring Fair Value Measurements” section. The estimated fair valueCompany believes that due to the short-term nature of thethese excluded financial instruments,assets, which are primarily classified in Level 2, the estimated fair value approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality.value. All remaining balance sheet amounts excluded from the tables below are not considered financial instruments subject to this disclosure.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
8. Fair Value (continued)

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:
 June 30, 2019 March 31, 2020
   Fair Value Hierarchy     Fair Value Hierarchy  
 Carrying
Value		 Level 1 Level 2 Level 3 Total
Estimated
Fair Value		 Carrying
Value		 Level 1 Level 2 Level 3 Total
Estimated
Fair Value
 (In millions) (In millions)
Assets                    
Mortgage loans $77,735
 $—
 $—
 $80,295
 $80,295
 $81,164
 $—
 $—
 $83,138
 $83,138
Policy loans $9,705
 $—
 $336
 $11,382
 $11,718
 $9,638
 $—
 $330
 $11,935
 $12,265
Other invested assets $1,172
 $—
 $800
 $372
 $1,172
 $1,188
 $—
 $849
 $340
 $1,189
Premiums, reinsurance and other receivables $3,773
 $—
 $1,039
 $2,923
 $3,962
 $3,648
 $—
 $1,121
 $2,713
 $3,834
Other assets $311
 $—
 $162
 $177
 $339
 $314
 $—
 $110
 $186
 $296
Liabilities                    
Policyholder account balances $118,190
 $—
 $—
 $121,897
 $121,897
 $118,419
 $—
 $—
 $126,635
 $126,635
Long-term debt $13,332
 $—
 $15,387
 $—
 $15,387
 $14,385
 $—
 $15,966
 $—
 $15,966
Collateral financing arrangement $1,026
 $—
 $—
 $836
 $836
 $981
 $—
 $—
 $790
 $790
Junior subordinated debt securities $3,149
 $—
 $4,154
 $—
 $4,154
 $3,151
 $—
 $3,749
 $—
 $3,749
Other liabilities $3,229
 $—
 $1,616
 $2,362
 $3,978
 $4,167
 $—
 $2,660
 $2,717
 $5,377
Separate account liabilities $114,106
 $—
 $114,106
 $—
 $114,106
 $100,410
 $—
 $100,410
 $—
 $100,410
 December 31, 2018 December 31, 2019
   Fair Value Hierarchy     Fair Value Hierarchy  
 Carrying
Value		 Level 1 Level 2 Level 3 Total
Estimated
Fair Value		 Carrying
Value		 Level 1 Level 2 Level 3 Total
Estimated
Fair Value
 (In millions) (In millions)
Assets                    
Mortgage loans $75,453
 $—
 $—
 $76,379
 $76,379
 $80,341
 $—
 $—
 $83,079
 $83,079
Policy loans $9,699
 $—
 $338
 $11,028
 $11,366
 $9,680
 $—
 $326
 $11,329
 $11,655
Other invested assets $1,177
 $—
 $793
 $383
 $1,176
 $1,183
 $—
 $809
 $374
 $1,183
Premiums, reinsurance and other receivables $3,658
 $—
 $903
 $2,894
 $3,797
 $3,678
 $—
 $1,178
 $2,706
 $3,884
Other assets $326
 $—
 $164
 $186
 $350
 $318
 $—
 $131
 $188
 $319
Liabilities                    
Policyholder account balances $114,040
 $—
 $—
 $114,924
 $114,924
 $119,262
 $—
 $—
 $122,998
 $122,998
Long-term debt $12,820
 $—
 $13,611
 $—
 $13,611
 $13,336
 $—
 $15,830
 $—
 $15,830
Collateral financing arrangement $1,060
 $—
 $—
 $853
 $853
 $993
 $—
 $—
 $810
 $810
Junior subordinated debt securities $3,147
 $—
 $3,738
 $—
 $3,738
 $3,150
 $—
 $4,405
 $—
 $4,405
Other liabilities $2,963
 $—
 $1,324
 $2,194
 $3,518
 $2,045
 $—
 $540
 $2,279
 $2,819
Separate account liabilities $104,010
 $—
 $104,010
 $—
 $104,010
 $110,837
 $—
 $110,837
 $—
 $110,837


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

9. Leases
The Company, as lessee, has entered into various lease and sublease agreements for office space and other equipment. At contract inception, the Company determines that an arrangement contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. For contracts that contain a lease, the Company recognizes the ROU asset in Other assets and the lease liability in Other liabilities. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are determined using the Company’s incremental borrowing rate based upon information available at commencement date to recognize the present value of lease payments over the lease term. The ROU asset also includes lease payments and excludes lease incentives. Lease terms may include options to extend or terminate the lease and are included in the lease measurement when it is reasonably certain that the Company will exercise that option.
The Company has lease agreements with lease and non-lease components. The Company elected the practical expedient to not separate lease and non-lease components and accounted for these items as a single lease component for all asset classes.
The majority of the Company’s leases and subleases are operating leases related to office space. The Company recognizes lease expense for operating leases on a straight-line basis over the lease term.
The Company has operating leases with remaining lease terms of less than one year to 12 years. The remaining lease terms for the subleases are less than one year to 10 years.
ROU Asset andLease Liability
The ROU assets and lease liabilities for operating leases were:


June 30, 2019


(In millions)
ROU asset (1)
$1,494
Lease liability (1)
$1,660
__________________
(1)Assets and liabilities include amounts recognized upon adoption of new guidance. See Note 1.
Lease Costs
The components of operating lease costs were as follows:


Three Months
Ended
June 30,		 Six Months
Ended
June 30,
  2019


(In millions)
Operating lease cost
$72
 $144
Variable lease cost
15
 23
Sublease income
(22) (43)
Net lease cost
$65
 $124

Operating lease expense was $85 million and $171 million for the three months and six months ended June 30, 2018, respectively. Non-cancelable sublease income was $18 million and $30 million for the three months and six months ended June 30, 2018, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
9. Leases (continued)


Other Information
Supplemental other information related to operating leases was as follows:
  June 30, 2019
  (Dollars in millions)
Cash paid for amounts included in the measurement of lease liability - operating cash flows $135
ROU assets obtained in exchange for new lease liabilities $216
Weighted-average remaining lease term 8 years
Weighted-average discount rate 3.3%

Maturities of Lease Liabilities
Maturities of operating lease liabilities were as follows:
  June 30, 2019
  (In millions)
Remainder of 2019 $154
2020 274
2021 247
2022 213
2023 201
Thereafter 832
Total undiscounted cash flows 1,921
Less: interest 261
Present value of lease liability $1,660

Future minimum gross rental payments relating to lease arrangements in effect as determined prior to the adoption of ASU 2016-02 are as follows:
  December 31, 2018
  (In millions)
2019 $292
2020 282
2021 260
2022 224
2023 209
Thereafter 859
Total $2,126

See Note 6 for information about the Company’s investments in leased real estate, leveraged and direct financing leases.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

10. Long Term Debt
Senior Notes
In June 2019,March 2020, MetLife, Inc. redeemed for cash and canceled its £400 million ($509 million at repayment) aggregate principal amount 5.250%issued $1.0 billion of senior notes due June 2020 and the remaining $368 million aggregate principal amount of its 4.750% senior notes due February 2021. The Company recordedMarch 2030 which bear interest at a premium of $40 million paid in excess of the debt principal and accrued and unpaid interest to other expenses for the three months and six months ended June 30, 2019.
In May 2019, MetLife, Inc. issued the following fixed rate senior notes (“Senior Notes”)of 4.550%, the interest on which is payable semi-annually beginning in November 2019:
¥25.2 billion ($230 million at issuance) due May 2026 which bear interest annually at 0.495%;
¥64.9 billion ($591 million at issuance) due May 2029 which bear interest annually at 0.769%;
¥10.7 billion ($98 million at issuance) due May 2031 which bear interest annually at 0.898%;
¥26.5 billion ($241 million at issuance) due May 2034 which bear interest annually at 1.189%; and
¥24.4 billion ($222 million at issuance) due May 2039 which bear interest annually at 1.385%.
semi-annually. In connection with the issuances,issuance, MetLife, Inc. incurred $9$6 million of related costs which arewill be amortized over the applicable term of each series of the Senior Notes. MetLife, Inc. may redeem each series of the Senior Notes at its option, in whole, but not in part, at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest thereon, if certain events occur affecting the U.S. tax treatment of the Senior Notes.senior notes.
11.10. Equity
Preferred Stock
Preferred stock authorized, issued and outstanding was as follows at bothfollows:
  March 31, 2020 December 31, 2019
Series Shares
Authorized		 Shares
Issued		 Shares
Outstanding		 Shares
Authorized		 Shares
Issued		 Shares
Outstanding
Floating Rate Non-Cumulative Preferred Stock, Series A 27,600,000
 24,000,000
 24,000,000
 27,600,000
 24,000,000
 24,000,000
5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C 1,500,000
 1,500,000
 1,500,000
 1,500,000
 1,500,000
 1,500,000
5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D 500,000
 500,000
 500,000
 500,000
 500,000
 500,000
5.625% Non-Cumulative Preferred Stock, Series E 32,200
 32,200
 32,200
 32,200
 32,200
 32,200
4.75% Non-Cumulative Preferred Stock, Series F 40,000
 40,000
 40,000
 —
 —
 —
Series A Junior Participating Preferred Stock 10,000,000
 —
 —
 10,000,000
 —
 —
Not designated 160,327,800
 —
 —
 160,367,800
 —
 —
Total 200,000,000
 26,072,200
 26,072,200
 200,000,000
 26,032,200
 26,032,200

On January 15, 2020, MetLife, Inc. issued 40,000 shares of 4.75% Non-Cumulative Preferred Stock, Series F (the “Series F preferred stock”) with a $0.01 par value per share and a liquidation preference of $25,000 per share, for aggregate net proceeds of $972 million. MetLife, Inc. deposited the Series F preferred stock under a deposit agreement with a depositary, which issued interests in fractional shares of the Series F preferred stock in the form of depositary shares (“Series F Depositary Shares”) evidenced by depositary receipts; each Series F Depositary Share representing 1/1,000th interest in a share of the Series F preferred stock. In connection with the offering of the Series F Depositary Shares, MetLife, Inc. incurred approximately $28 million of issuance costs which have been recorded as a reduction of additional paid-in capital.
MetLife, Inc. will pay dividends on the Series F preferred stock only when, as and if declared by MetLife, Inc.’s Board of Directors (or a duly authorized committee thereof), out of funds legally available for the payment of dividends. Any such dividends will be payable on a non-cumulative basis from the date of original issue, quarterly in arrears on the 15th day of March, June, 30, 2019September and December 31, 2018:of each year, commencing on June 15, 2020.

Series Shares
Authorized		 Shares
Issued		 Shares
Outstanding
Floating Rate Non-Cumulative Preferred Stock, Series A 27,600,000
 24,000,000
 24,000,000
5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C 1,500,000
 1,500,000
 1,500,000
5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D 500,000
 500,000
 500,000
5.625% Non-Cumulative Preferred Stock, Series E 32,200
 32,200
 32,200
Series A Junior Participating Preferred Stock 10,000,000
 —
 —
Not designated 160,367,800
 —
 —
Total 200,000,000
 26,032,200
 26,032,200
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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
10. Equity (continued)

MetLife, Inc. may, at its option, redeem the Series F preferred stock, (i) in whole but not in part at any time prior to March 15, 2025, within 90 days after the occurrence of a “rating agency event,” at a redemption price equal to $25,500 per share of Series F preferred stock (equivalent to $25.50 per Series F Depositary Share), plus an amount equal to any accrued and unpaid dividends per share that have accrued but have not been declared and paid for the then-current dividend period to, but excluding, the redemption date, (ii) in whole but not in part, at any time prior to March 15, 2025, within 90 days after the occurrence of a “regulatory capital event,” and (iii) in whole or in part, at any time or from time to time, on or after March 15, 2025, in the case of (ii) or (iii), at a redemption price equal to $25,000 per share of Series F preferred stock (equivalent to $25 per Series F Depositary Share), plus an amount equal to any dividends per share that have accrued but not been declared and paid for the then-current dividend period to, but excluding, such redemption date. A “rating agency event” means that any nationally recognized statistical rating organization that then publishes a rating for MetLife, Inc. amends, clarifies or changes the criteria used to assign equity credit to securities like the Series F preferred stock, which results in the lowering of the equity credit assigned to the Series F preferred stock or shortens the length of time that the Series F preferred stock is assigned a particular level of equity credit. A “regulatory capital event” could occur as a result of a change or proposed change in capital adequacy rules (or the interpretation or application thereof) of any capital regulator, including but not limited to the Board of Governors of the Federal Reserve System (“Federal Reserve Board”), the Federal Insurance Office, the National Association of Insurance Commissioners or any state insurance regulator as may then have group-wide oversight of MetLife, Inc.’s regulatory capital, from rules (or the interpretation or application thereof) in effect as of January 15, 2020, that would create a more than insubstantial risk, as determined by MetLife, Inc., that the Series F preferred stock would not be treated as “Tier 1 capital” or as capital with attributes similar to those of Tier 1 capital, except that a “regulatory capital event” will not include a change or proposed change (or the interpretation or application thereof) that would result in the adoption of any criteria substantially the same as the criteria in the capital adequacy rules of the Federal Reserve Board applicable to bank holding companies as of January 15, 2020.
The declaration, record and payment dates, as well as per share and aggregate dividend amounts, for MetLife, Inc.’s preferred stock were as follows for the sixthree months ended June 30, 2019March 31, 2020 and 2018:2019:
Declaration Date Record Date Payment Date Preferred Stock Dividend Record Date Payment Date Preferred Stock Dividend
Series A Series C Series D Series ESeries A Series C Series D Series E Series F
Per
Share
 Aggregate Per
Share		 Aggregate Per
Share		 Aggregate Per
Share		 Aggregate
Per
Share
 Aggregate Per
Share		 Aggregate Per
Share		 Aggregate Per
Share		 Aggregate Per
Share		 Aggregate
 (In millions, except per share data)   (In millions, except per share data)    
May 15, 2019
 
May 31, 2019
 
June 17, 2019
 $0.261
 $6
 $26.250
 $39
 $—
 $—
 $351.563
 $12
March 5, 2020
 
March 1, 2020
 
March 16, 2020
 $0.253
 $6
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $—
February 18, 2020
 
February 29, 2020
 
March 16, 2020
 —
 —
 —
 —
 29.375
 15
 351.563
 11
 —
 —
Total $0.253
 $6

$—
 $—
 $29.375
 $15
 $351.563
 $11
 $—
 $—
                    
March 5, 2019
 
February 28, 2019
 
March 15, 2019
 0.250
 6
 —
 —
 —
 —
 —
 —
 
February 28, 2019
 
March 15, 2019
 $0.250
 $6
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $—
February 15, 2019
 
February 28, 2019
 
March 15, 2019
 —
 —
 —
 —
 29.375
 15
 351.563
 11
 
February 28, 2019
 
March 15, 2019
 —
 —
 —
 —
 29.375
 15
 351.563
 11
 —
 —
Total $0.511
 $12

$26.250
 $39
 $29.375
 $15
 $703.126
 $23
 $0.250
 $6
 $—
 $—
 $29.375
 $15
 $351.563
 $11
 $—
 $—
                
May 15, 2018
 
May 31, 2018
 
June 15, 2018
 $0.256
 $7
 $26.250
 $39
 $—
 $—
 $—
 $—
March 5, 2018
 
February 28, 2018
 
March 15, 2018
 0.250
 6
 —
 —
 —
 —
 —
 —
Total $0.506
 $13
 $26.250
 $39
 $—
 $—
 $—
 $—


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
11. Equity (continued)

Common Stock
For the sixthree months ended June 30, 2019March 31, 2020 and 2018,2019, MetLife, Inc. repurchased 26,954,93510,664,608 shares and 45,540,49111,198,634 shares of its common stock, respectively, through open market purchases for $1.3 billion and $2.2 billion, respectively.$500 million in each of the periods.
MetLife, Inc. announced that its Board of Directors authorized common stock repurchases as follows:
   Authorization Remaining at   Authorization Remaining at
Announcement Date Authorization Amount June 30, 2019 Authorization Amount March 31, 2020
 (In millions) (In millions)
July 31, 2019 $2,000
 $485
November 1, 2018 $2,000
 $20
 $2,000
 $—
May 22, 2018 $1,500
 $—
November 1, 2017 $2,000
 $—


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
10. Equity (continued)

Under these authorizations, MetLife, Inc. may purchase its common stock from the MetLife Policyholder Trust, in the open market (including pursuant to the terms of a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934 (“Exchange Act”)), and in privately negotiated transactions. Common stock repurchases are subject to the discretion of MetLife, Inc.’s Board of Directors and will depend upon the Company’s capital position, liquidity, financial strength and credit ratings, general market conditions, the market price of MetLife, Inc.’s common stock compared to management’s assessment of the stock’s underlying value, applicable regulatory approvals, and other legal and accounting factors.
See Note 17 for information on a subsequent common stock repurchase authorization.
The declaration, record and payment dates, as well as per share and aggregate dividend amounts, for MetLife, Inc.’s common stock were as follows for the sixthree months ended June 30, 2019March 31, 2020 and 2018:2019:
Declaration Date Record Date Payment Date Common Stock Dividend Record Date Payment Date Common Stock Dividend
Per Share AggregatePer Share Aggregate
 (In millions, except per share data) (In millions, except per share data)
April 23, 2019
 
May 7, 2019
 
June 13, 2019
 $0.440
 $419
January 7, 2020
 
February 4, 2020
 
March 13, 2020
 $0.440
 404
    
January 7, 2019
 
February 5, 2019
 
March 13, 2019
 $0.420
 405
 
February 5, 2019
 
March 13, 2019
 $0.420
 405
   $824
    
April 24, 2018
 
May 7, 2018
 
June 13, 2018
 $0.420
 $428
January 5, 2018
 
February 5, 2018
 
March 13, 2018
 $0.400
 416
   $844

See Note 1716 for information on a common stock dividend declared subsequent to June 30, 2019.March 31, 2020.
Stock-Based Compensation Plans
Performance Shares and Performance Units
Final Performance Shares are paid in shares of MetLife, Inc. common stock. Final Performance Units are payable in cash equal to the closing price of MetLife, Inc. common stock on a date following the last day of the three-year performance period. The performance factor for the January 1, 20162017 – December 31, 20182019 performance period was 87.7%91.4%, which was determined within a possible range from 0% to 175%. This factor has been applied to the 1,594,8461,068,099 Performance Shares and 212,464166,191 Performance Units associated with that performance period that vested on December 31, 2018.2019. As a result, in the first quarter of 2019,2020, MetLife, Inc. issued 1,398,680976,242 shares of its common stock (less withholding for taxes and other items, as applicable), excluding shares that payees choose to defer, and MetLife, Inc. or its affiliates paid the cash value of 186,331151,899 Performance Units (less withholding for taxes and other items, as applicable).

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
11.10. Equity (continued)

Dividend Restrictions
Insurance Operations
For the six months ended June 30, 2019, American Life Insurance Company paid a dividend of $600 million to MetLife, Inc., for which regulatory approval was obtained as required.
See Note 15 of the Notes to Consolidated Financial Statements included in the 2018 Annual Report for additional information on dividend restrictions.
Accumulated Other Comprehensive Income (Loss)
Information regarding changes in the balances of each component of AOCI attributable to MetLife, Inc. was as follows:
  Three Months
Ended
June 30, 2019
  
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
 
Unrealized
Gains (Losses)
on Derivatives
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit
Plans
Adjustment
 Total
  (In millions)
Balance, beginning of period $12,248
 $1,614
 $(4,947) $(2,004) $6,911
OCI before reclassifications 5,478
 658
 174
 (3) 6,307
Deferred income tax benefit (expense) (1,289) (153) 7
 —
 (1,435)
AOCI before reclassifications, net of income tax 16,437
 2,119
 (4,766) (2,007) 11,783
Amounts reclassified from AOCI (127) (92) —
 30
 (189)
Deferred income tax benefit (expense) 30
 14
 —
 (7) 37
Amounts reclassified from AOCI, net of income tax (97) (78) —
 23
 (152)
Balance, end of period $16,340
 $2,041
 $(4,766) $(1,984) $11,631
 
  Three Months
Ended
June 30, 2018
  
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
 
Unrealized
Gains (Losses)
on Derivatives
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit
Plans
Adjustment
 Total
  (In millions)
Balance, beginning of period $10,864
 $683
 $(3,707) $(2,206) $5,634
OCI before reclassifications (3,096) 141
 (969) 3
 (3,921)
Deferred income tax benefit (expense) 706
 41
 6
 (1) 752
AOCI before reclassifications, net of income tax 8,474
 865
 (4,670) (2,204) 2,465
Amounts reclassified from AOCI 83
 470
 —
 31
 584
Deferred income tax benefit (expense) (19) (170) —
 (6) (195)
Amounts reclassified from AOCI, net of income tax 64
 300
 —
 25
 389
Balance, end of period $8,538
 $1,165
 $(4,670) $(2,179) $2,854



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

 Three Months
Ended
March 31, 2020
 
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
 
Unrealized
Gains (Losses)
on Derivatives
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit
Plans
Adjustment
 Total
 (In millions)
Balance, beginning of period $18,283
 $1,698
 $(4,927) $(2,002) $13,052
OCI before reclassifications (3,619) 3,687
 (674) —
 (606)
Deferred income tax benefit (expense) 927
 (810) (26) —
 91
AOCI before reclassifications, net of income tax 15,591
 4,575
 (5,627) (2,002) 12,537
Amounts reclassified from AOCI (187) 438
 —
 21
 272
Deferred income tax benefit (expense) 48
 (96) —
 (4) (52)
Amounts reclassified from AOCI, net of income tax (139) 342
 —
 17
 220
Balance, end of period $15,452
 $4,917
 $(5,627) $(1,985) $12,757
          
 Six Months
Ended
June 30, 2019		 Three Months
Ended
March 31, 2019
 
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
 
Unrealized
Gains (Losses)
on Derivatives
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit
Plans
Adjustment
 Total 
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
 
Unrealized
Gains (Losses)
on Derivatives
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit
Plans
Adjustment
 Total
 (In millions) (In millions)
Balance, beginning of period $7,042
 $1,613
 $(4,905) $(2,028) $1,722
 $7,042
 $1,613
 $(4,905) $(2,028) $1,722
OCI before reclassifications 12,199
 647
 138
 (2) 12,982
 6,721
 (11) (36) 1
 6,675
Deferred income tax benefit (expense) (2,805) (147) 1
 —
 (2,951) (1,516) 6
 (6) —
 (1,516)
AOCI before reclassifications, net of income tax 16,436
 2,113
 (4,766) (2,030) 11,753
 12,247
 1,608
 (4,947) (2,027) 6,881
Amounts reclassified from AOCI (129) (116) —
 59
 (186) (2) (24) —
 29
 3
Deferred income tax benefit (expense) 30
 26
 —
 (13) 43
 —
 12
 —
 (6) 6
Amounts reclassified from AOCI, net of income tax (99) (90) —
 46
 (143) (2) (12) —
 23
 9
Cumulative effects of changes in accounting principles 4
 22
 —
 —
 26
 4
 22
 —
 —
 26
Deferred income tax benefit (expense), cumulative effects of changes in accounting principles (1) (4) —
 —
 (5) (1) (4) —
 —
 (5)
Cumulative effects of changes in accounting principles, net of income tax (2) 3
 18
 —
 —
 21
 3
 18
 —
 —
 21
Balance, end of period $16,340
 $2,041
 $(4,766) $(1,984) $11,631
 $12,248
 $1,614
 $(4,947) $(2,004) $6,911
          
 Six Months
Ended
June 30, 2018
 
Unrealized
Investment Gains
(Losses), Net of
Related Offsets (1)
 
Unrealized
Gains (Losses)
on Derivatives
 
Foreign
Currency
Translation
Adjustments
 
Defined
Benefit
Plans
Adjustment
 Total
 (In millions)
Balance, beginning of period $12,757
 $905
 $(4,390) $(1,845) $7,427
OCI before reclassifications (6,907) (211) (417) (1) (7,536)
Deferred income tax benefit (expense) 1,541
 99
 9
 —
 1,649
AOCI before reclassifications, net of income tax 7,391
 793
 (4,798) (1,846) 1,540
Amounts reclassified from AOCI 128
 305
 —
 62
 495
Deferred income tax benefit (expense) (29) (143) —
 (13) (185)
Amounts reclassified from AOCI, net of income tax 99
 162
 —
 49
 310
Cumulative effects of changes in accounting principles (425) —
 —
 —
 (425)
Deferred income tax benefit (expense), cumulative effects of changes in accounting principles 1,473
 210
 36
 (382) 1,337
Cumulative effects of changes in accounting principles, net of income tax (3) 1,048
 210
 36
 (382) 912
Sale of subsidiary (4) —
 —
 92
 —
 92
Balance, end of period $8,538
 $1,165
 $(4,670) $(2,179) $2,854
__________________
(1)See Note 6 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI, and the policyholder dividend obligation.
(2)See Note 1 for further information on adoption of new accounting pronouncements.
(3)See Note 1 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for further information on adoption of new accounting pronouncements.
(4)See Note 3 of the Notes to the Consolidated Financial Statements included in the 2018 Annual Report.

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

Information regarding amounts reclassified out of each component of AOCI was as follows:
 Three Months
Ended
March 31,		 
 2020
2019 
AOCI Components Amounts Reclassified from AOCI 
Consolidated Statements of
Operations and
Comprehensive Income (Loss)
Locations
 Amounts Reclassified from AOCI Consolidated Statements of
Operations and
Comprehensive Income (Loss)
Locations
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		  
 2019 2018 2019
2018 
 (In millions)  (In millions) 
Net unrealized investment gains (losses):              
Net unrealized investment gains (losses) $140
 $(36) $116
 $(137) Net investment gains (losses) $204
 $(24) Net investment gains (losses)
Net unrealized investment gains (losses) (7) (3) (3) —
 Net investment income (11) 4
 Net investment income
Net unrealized investment gains (losses) (6) (44) 16
 9
 Net derivative gains (losses) (6) 22
 Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax 127
 (83) 129
 (128)  187
 2
 
Income tax (expense) benefit (30) 19
 (30) 29
  (48) —
 
Net unrealized investment gains (losses), net of income tax 97
 (64) 99
 (99)  139
 2
 
Unrealized gains (losses) on derivatives - cash flow hedges:              
Interest rate derivatives 6
 6
 11
 10
 Net investment income 6
 5
 Net investment income
Interest rate derivatives 4
 —
 (2) —
 Net investment gains (losses) 6
 (6) Net investment gains (losses)
Interest rate derivatives —
 (1) —
 20
 Net derivative gains (losses) 1
 1
 Other expenses
Interest rate derivatives —
 1
 1
 1
 Other expenses
Foreign currency exchange rate derivatives (1) (1) (3) (1) Net investment income
Foreign currency exchange rate derivatives 83
 —
 108
 —
 Net investment gains (losses)
Foreign currency exchange rate derivatives —
 (475) —
 (336) Net derivative gains (losses) —
 (2) Net investment income
Foreign currency exchange rate derivatives 1
 —
 1
 1
 Other expenses (451) 25
 Net investment gains (losses)
Credit derivatives (1) —
 —
 —
 Net investment gains (losses) —
 1
 Net investment gains (losses)
Gains (losses) on cash flow hedges, before income tax 92
 (470) 116
 (305)  (438) 24
 
Income tax (expense) benefit (14) 170
 (26) 143
  96
 (12) 
Gains (losses) on cash flow hedges, net of income tax 78
 (300) 90
 (162)  (342) 12
 
Defined benefit plans adjustment: (1)              
Amortization of net actuarial gains (losses) (36) (35) (72) (71)  (26) (36) 
Amortization of prior service (costs) credit 6
 4
 13
 9
  5
 7
 
Amortization of defined benefit plan items, before income tax (30) (31) (59) (62)  (21) (29) 
Income tax (expense) benefit 7
 6
 13
 13
  4
 6
 
Amortization of defined benefit plan items, net of income tax (23) (25) (46) (49)  (17) (23) 
Total reclassifications, net of income tax $152
 $(389) $143
 $(310)  $(220) $(9) 
__________________
(1)These AOCI components are included in the computation of net periodic benefit costs. See Note 13.12.

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

12.11. Other Revenues and Other Expenses
Other Revenues
Information on other revenues, which primarily includes fees related to service contracts from customers, was as follows:
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2019 2018 2020 2019
 (In millions) (In millions)
Prepaid legal plans $86
 $73
 $172
 $146
 $101
 $86
Fee-based investment management 69
 74
 146
 145
 79
 77
Recordkeeping and administrative services (1) 52
 56
 102
 114
 49
 50
Administrative services-only contracts 53
 53
 106
 109
 56
 53
Other revenue from service contracts from customers 64
 72
 135
 136
 60
 71
Total revenues from service contracts from customers 324
 328
 661
 650
 345
 337
Other 154
 147
 311
 299
 94
 157
Total other revenues $478
 $475
 $972
 $949
 $439
 $494
__________________
(1)Related to products and businesses no longer actively marketed by the Company.
Other Expenses
Information on other expenses was as follows:
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2019 2018 2020 2019
 (In millions) (In millions)
Employee related costs $916
 $894
 $1,838
 $1,831
Employee-related costs (1) $869
 $922
Third party staffing costs 420
 402
 789
 782
 348
 369
General and administrative expenses 237
 351
 460
 594
 190
 223
Pension, postretirement and postemployment benefit costs 57
 47
 113
 96
 39
 56
Premium taxes, other taxes, and licenses & fees 174
 187
 344
 366
 193
 170
Commissions and other variable expenses 1,470
 1,438
 2,919
 2,854
 1,408
 1,449
Capitalization of DAC (837) (834) (1,649) (1,630) (774) (812)
Amortization of DAC and VOBA 689
 707
 1,313
 1,400
 788
 624
Amortization of negative VOBA (10) (16) (20) (38) (10) (10)
Interest expense on debt 274
 309
 508
 595
 222
 234
Total other expenses $3,390
 $3,485
 $6,615
 $6,850
 $3,273
 $3,225

__________________
(1)Includes $40 million and ($76) million for the three months ended March 31, 2020 and 2019, respectively, for the net change in cash surrender value of investments in certain life insurance policies, net of premiums paid.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
12.11. Other Revenues and Other Expenses (continued)

Restructuring Charges
TheIn December 2019, the Company commenced in 2016 aincurred the remaining restructuring charges related to its unit cost improvement program related to the Company’s refreshed enterprise strategy. This global strategy focuses on transforming the Company to become more digital, driving efficiencies and innovation to achieve competitive advantage, and simplified, decreasing the costs and risks associated with the Company’s highly complex industry to customers and shareholders. Restructuring charges related toprogram. During this program areperiod, restructuring charges were included in other expenses. As the expenses relate to an enterprise-wide initiative, they areand reported in Corporate & Other. Such restructuring charges were as follows:
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2019 2018 2020 2019
 Severance Severance
 (In millions) (In millions)
Balance, beginning of period $17
 $19
 $23
 $22
 $57
 $23
Restructuring charges 14
 9
 21
 18
 —
 7
Cash payments (11) (8) (24) (20) (35) (13)
Balance, end of period $20
 $20
 $20
 $20
 $22
 $17
Total restructuring charges incurred since inception of initiative $157
 $91
 $157
 $91
Total severance charges incurred since inception of initiative $244
 $143

Management anticipates further restructuring charges through the year ending December 31, 2019. However, such restructuring plans were not sufficiently developed to enable management to make an estimate of such restructuring charges at June 30, 2019.
13.12. Employee Benefit Plans
Pension and Other Postretirement Benefit Plans
Certain subsidiaries of MetLife, Inc. sponsor and/or administer a U.S. qualified and various U.S. and non-U.S. nonqualified defined benefit pension plans and other postretirement employee benefit plans covering employees who meet specified eligibility requirements. These subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance benefits for U.S. and non-U.S. retired employees.
The components of net periodic benefit costs, reported in other expenses, were as follows:
  Three Months
Ended
June 30,
  2019 2018
  
Pension
Benefits
 
Other
Postretirement
Benefits
 
Pension
Benefits
 
Other
Postretirement
Benefits
  (In millions)
Service costs $57
 $1
 $58
 $2
Interest costs 104
 13
 96
 15
Expected return on plan assets (123) (18) (134) (18)
Amortization of net actuarial (gains) losses 48
 (12) 44
 (9)
Amortization of prior service costs (credit) (4) (2) —
 (4)
Net periodic benefit costs (credit) $82
 $(18) $64
 $(14)
 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2020 2019
 
Pension
Benefits
 
Other
Postretirement
Benefits
 
Pension
Benefits
 
Other
Postretirement
Benefits
 
Pension
Benefits
 
Other
Postretirement
Benefits
 
Pension
Benefits
 
Other
Postretirement
Benefits
 (In millions) (In millions)
Service costs $115
 $2
 $118
 $3
 $62
 $1
 $58

$1
Interest costs 208
 26
 192
 26
 89
 10
 104
 13
Expected return on plan assets (245) (34) (267) (36) (132) (15) (122) (16)
Amortization of net actuarial (gains) losses 96
 (24) 88
 (17) 45
 (19) 48
 (12)
Amortization of prior service costs (credit) (8) (5) —
 (9) (4) (1) (4) (3)
Net periodic benefit costs (credit) $166

$(35)
$131

$(33) $60
 $(24) $84
 $(17)

14.13. Income Tax
For the three months and six months ended June 30, 2019,March 31, 2020, the effective tax rate on income (loss) before provision for income tax was 24% and 23%, respectively.22%. The Company’s effective tax rate for both periodsthe three months ended March 31, 2020 differed from the U.S. statutory rate primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, and the impact from the definitive agreement to sell MetLife Hong Kong, partially offset by tax benefits related to non-taxable investment income, tax credits and tax credits.the finalization of bankruptcy proceedings for a leveraged lease investment.
For the three months ended June 30,March 31, 2018,2019, the effective tax rate on income (loss) before provision for income tax was 19%and the U.S. statutory rate were both 21%. The Company’s effective tax rate differed fromfor the U.S. statutory rate primarily due tothree months endedMarch 31,2019includes tax benefits related to non-taxable investment income and tax credits, and a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent, partiallylargely offset by the tax charges from foreign earnings taxed at different rates than the U.S. statutory rate and a non-deductible loss incurred on the mark-to-market and disposition of FVO Brighthouse Common Stock. For the six months endedJune 30,2018, the effective tax rate on income (loss) before provision for income tax was 22%. The Company’s effective tax rate differed from the U.S. statutory rate primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, a non-deductible loss incurred on the mark-to-market and disposition of FVO Brighthouse Common Stock and a tax adjustment in Chile. These tax charges were partially offset by tax benefits related to non-taxable investment income, tax credits and a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent.rate.

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

15.14. Earnings Per Common Share
The following table presents the weighted average shares, basic earnings per common share and diluted earnings per common share:
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months
Ended
March 31,
 2019 2018 2019
2018 2020
2019
 (In millions, except per share data) (In millions, except per share data)
Weighted Average Shares:            
Weighted average common stock outstanding - basic 946.2
 1,015.6
 951.3
 1,025.7
 914.1
 956.5
Incremental common shares from assumed exercise or issuance of stock-based awards 6.7
 8.2
 6.8
 8.3
 5.9
 6.8
Weighted average common stock outstanding - diluted 952.9
 1,023.8
 958.1
 1,034.0
 920.0
 963.3
Net Income (Loss):            
Net income (loss) $1,746
 $894
 $3,131
 $2,151
 $4,401
 $1,385
Less: Net income (loss) attributable to noncontrolling interests 5
 3
 9
 7
 3
 4
Less: Preferred stock dividends 57
 46
 89
 52
 32
 32
Net income (loss) available to MetLife, Inc.’s common shareholders $1,684
 $845
 $3,033
 $2,092
 $4,366
 $1,349
Basic $1.78
 $0.83
 $3.19
 $2.04
 $4.78
 $1.41
Diluted $1.77
 $0.83
 $3.17
 $2.02
 $4.75
 $1.40


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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

16.15. Contingencies, Commitments and Guarantees
Contingencies
Litigation
The Company is a defendant in a large number of litigation matters. Putative or certified class action litigation and other litigation and claims and assessments against the Company, in addition to those discussed below and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, mortgage lending bank, employer, investor, investment advisor, broker-dealer, and taxpayer.
The Company also receives and responds to subpoenas or other inquiries seeking a broad range of information from state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the U.S. Securities and Exchange Commission (“SEC”);Commission; federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority, as well as from local and national regulators and government authorities in jurisdictions outside the United States where the Company conducts business. The issues involved in information requests and regulatory matters vary widely, but can include inquiries or investigations concerning the Company’s compliance with applicable insurance and other laws and regulations. The Company cooperates in these inquiries.
In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
15. Contingencies, Commitments and Guarantees (continued)

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. The Company establishes liabilities for litigation and regulatory loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities have been established for a number of the matters noted below. It is possible that some of the matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be reasonably estimated at June 30, 2019.March 31, 2020. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known to management, management does not believe any such charges are likely to have a material effect on the Company’s financial position. Given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.
Matters as to Which an Estimate Can Be Made
For some of the matters disclosed below, the Company is able to estimate a reasonably possible range of loss. For matters where a loss is believed to be reasonably possible, but not probable, the Company has not made an accrual. As of June 30, 2019,March 31,2020, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued for these matters to be $0 to $300$250 million.
Matters as to Which an Estimate Cannot Be Made
For other matters disclosed below, the Company is not currently able to estimate the reasonably possible loss or range of loss. The Company is often unable to estimate the possible loss or range of loss until developments in such matters have provided sufficient information to support an assessment of the range of possible loss, such as quantification of a damage demand from plaintiffs, discovery from other parties and investigation of factual allegations, rulings by the court on motions or appeals, analysis by experts, and the progress of settlement negotiations. On a quarterly and annual basis, the Company reviews relevant information with respect to litigation contingencies and updates its accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such reviews.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
16. Contingencies, Commitments and Guarantees (continued)

Asbestos-Related Claims
MLIC is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual and punitive damages. MLIC has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products nor has MLIC issued liability or workers’ compensation insurance to companies in the business of manufacturing, producing, distributing or selling asbestos or asbestos-containing products. The lawsuits principally have focused on allegations with respect to certain research, publication and other activities of one or more of MLIC’s employees during the period from the 1920’s through approximately the 1950’s and allege that MLIC learned or should have learned of certain health risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. MLIC believes that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however, is uncertain and can be impacted by numerous variables, including differences in legal rulings in various jurisdictions, the nature of the alleged injury and factors unrelated to the ultimate legal merit of the claims asserted against MLIC. MLIC employs a number of resolution strategies to manage its asbestos loss exposure, including seeking resolution of pending litigation by judicial rulings and settling individual or groups of claims or lawsuits under appropriate circumstances.
Claims asserted against MLIC have included negligence, intentional tort and conspiracy concerning the health risks associated with asbestos. MLIC’s defenses (beyond denial of certain factual allegations) include that: (i) MLIC owed no duty to the plaintiffs— it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs;plaintiffs, (ii) plaintiffs did not rely on any actions of MLIC;MLIC, (iii) MLIC’s conduct was not the cause of the plaintiffs’ injuries;injuries, (iv) plaintiffs’ exposure occurred after the dangers of asbestos were known;known, and (v) the applicable time with respect to filing suit has expired. During the course of the litigation, certain trial courts have granted motions dismissing claims against MLIC, while other trial courts have denied MLIC’s motions. There can be no assurance that MLIC will receive favorable decisions on motions in the future. While most cases brought to date have settled, MLIC intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
15. Contingencies, Commitments and Guarantees (continued)

As reported in the 20182019 Annual Report, MLIC received approximately 3,3593,187 asbestos-related claims in 2018.2019. For the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, MLIC received approximately 1,705596 and 1,754843 new asbestos-related claims, respectively. See Note 2021 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for historical information concerning asbestos claims and MLIC’s update in its recorded liability at December 31, 2018.2019. The number of asbestos cases that may be brought, the aggregate amount of any liability that MLIC may incur, and the total amount paid in settlements in any given year are uncertain and may vary significantly from year to year.
The ability of MLIC to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against MLIC when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse verdicts and their amounts.
The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company’s judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company’s total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material effect on the Company’s financial position.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
16. Contingencies, Commitments and Guarantees (continued)

The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. MLIC’s recorded asbestos liability is based on its estimation of the following elements, as informed by the facts presently known to it, its understanding of current law and its past experiences: (i) the probable and reasonably estimable liability for asbestos claims already asserted against MLIC, including claims settled but not yet paid;paid, (ii) the probable and reasonably estimable liability for asbestos claims not yet asserted against MLIC, but which MLIC believes are reasonably probable of assertion;assertion, and (iii) the legal defense costs associated with the foregoing claims. Significant assumptions underlying MLIC’s analysis of the adequacy of its recorded liability with respect to asbestos litigation include: (i) the number of future claims;claims, (ii) the cost to resolve claims;claims, and (iii) the cost to defend claims.
MLIC reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims filed against it and other defendants and the jurisdictions in which claims are pending. Based upon its regular reevaluation of its exposure from asbestos litigation, MLIC has updated its liability analysis for asbestos-related claims through June 30, 2019.
In the Matter of Chemform, Inc. Site, Pompano Beach, Broward County, Florida
In July 2010, the Environmental Protection Agency (“EPA”) alleged that MLIC, as successor to New England Mutual Life Insurance Company, and a third party owed costs under 1989 and 1992 agreements for the oversight and cleanup of a Superfund site in Florida (the “Chemform Site”). In September 2012, the EPA, MLIC and the third party executed an agreement under which MLIC and the third party agreed to be responsible for certain on-going environmental testing at the Chemform Site. On July 19, 2019, the EPA, MLIC and the third party executed a settlement agreement to resolve the EPA’s claims for costs incurred through that date in connection with the Chemform Site.
Sun Life Assurance Company of Canada Indemnity Claim
In 2006, Sun Life Assurance Company of Canada (“Sun Life”), as successor to the purchaser of MLIC’s Canadian operations, filed a lawsuit in Toronto, seeking a declaration that MLIC remains liable for “market conduct claims” related to certain individual life insurance policies sold by MLIC that were subsequently transferred to Sun Life. In January 2010, the court found that Sun Life had given timely notice of its claim for indemnification but, because it found that Sun Life had not yet incurred an indemnifiable loss, granted MLIC’s motion for summary judgment. In September 2010, Sun Life notified MLIC that a purported class action lawsuit was filed against Sun Life in Toronto alleging sales practices claims regarding the policies sold by MLIC and transferred to Sun Life (the “Ontario Litigation”). On August 30, 2011, Sun Life notified MLIC that another purported class action lawsuit was filed against Sun Life in Vancouver, BC alleging sales practices claims regarding certain of the same policies sold by MLIC and transferred to Sun Life. Sun Life contends that MLIC is obligated to indemnify Sun Life for some or all of the claims in these lawsuits. In September 2018, the Court of Appeal for Ontario affirmed the lower court’s decision to not certify the sales practices claims in the Ontario Litigation. These sales practices cases against Sun Life are ongoing, and the Company is unable to estimate the reasonably possible loss or range of loss arising from this litigation.March 31, 2020.
City of Westland Police and Fire Retirement System v. MetLife, Inc., et. al. (S.D.N.Y., filed January 12, 2012)
Plaintiff filed this class action on behalf of a class of persons who either purchased MetLife, Inc. common shares between February 9, 2011, and October 6, 2011, or purchased or acquired MetLife, Inc. common stock in the Company’s August 3, 2010 offering or the Company’s March 4, 2011 offering. Plaintiff alleges that MetLife, Inc. and several current and former directors and executive officers of MetLife, Inc. violated the Securities Act of 1933, as well as the Exchange Act and Rule 10b-5 promulgated thereunder by issuing, or causing MetLife, Inc. to issue, materially false and misleading statements concerning MetLife, Inc.’s potential liability for millions of dollars in insurance benefits that should have purportedly been paid to beneficiaries or escheated to the states. Plaintiff seeks unspecified compensatory damages and other relief. The defendants intend to defend this action vigorously.

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Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
16.15. Contingencies, Commitments and Guarantees (continued)

Owens v. Metropolitan Life Insurance Company (N.D. Ga., filed April 17, 2014)
Plaintiff filed this class action lawsuit on behalf of persons for whom MLIC established a Total Control Account (“TCA”) to pay death benefits under an Employee Retirement Income Security Act of 1974 (“ERISA”) plan. The action alleges that MLIC’s use of the TCA as the settlement option for life insurance benefits under some group life insurance policies violates MLIC’s fiduciary duties under ERISA. As damages, plaintiff seeks disgorgement of profits that MLIC realized on accounts owned by members of the class. In addition, plaintiff, on behalf of a subgroup of the class, seeks interest under Georgia’s delayed settlement interest statute, alleging that the use of the TCA as the settlement option did not constitute payment. On September 27, 2016, the court denied MLIC’s summary judgment motion in full and granted plaintiff’s partial summary judgment motion. On September 29, 2017, the court certified a nationwide class. The court also certified a Georgia subclass. On July 29, 2019, the court preliminarily approved a proposed settlement in which MLIC has agreed to pay $80 million to resolve the claims of all class members. The settlement does not include or constitute an admission, concession, or finding of any fault, liability, or wrongdoing by MLIC. The Company accrued the full amount of the settlement payment in prior periods.
Martin v. Metropolitan Life Insurance Company (Superior Court of the State of California, County of Contra Costa, filed December 17, 2015)
Plaintiffs filed this putative class action lawsuit on behalf of themselves and all California persons who have been charged compound interest by MLIC in life insurance policy and/or premium loan balances within the last four years. Plaintiffs allege that MLIC has engaged in a pattern and practice of charging compound interest on life insurance policy and premium loans without the borrower authorizing such compounding, and that this constitutes an unlawful business practice under California law. Plaintiffs assert causes of action for declaratory relief, violation of California’s Unfair Competition Law and Usury Law, and unjust enrichment. Plaintiffs seek declaratory and injunctive relief, restitution of interest, and damages in an unspecified amount. On April 12, 2016, the court granted MLIC’s motion to dismiss. Plaintiffs appealed this ruling to the United States Court of Appeals for the Ninth Circuit. The Company intends to defend this action vigorously.
Newman v. Metropolitan Life Insurance Company (N.D. Ill., filed March 23, 2016)
Plaintiff filed this putative class action alleging causes of action for breach of contract, fraud, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, on behalf of herself and all persons over age 65 who selected a Reduced Pay at Age 65 payment feature on their long-term care insurance policies and whose premium rates were increased after age 65. Plaintiff seeks unspecified compensatory, statutory and punitive damages, as well as recessionary and injunctive relief. On April 12, 2017, the court granted MLIC’s motion to dismiss the action. Plaintiff appealed this ruling and the United States Court of Appeals for the Seventh Circuit reversed and remanded the case to the district court for further proceedings. On February 20, 2020, the district court approved a nationwide class settlement of the case. The Company intends to defend this action vigorously.accrued the full amount of the expected settlement payment in prior periods.
Julian & McKinney v. Metropolitan Life Insurance Company (S.D.N.Y., filed February 9, 2017)
Plaintiffs filed this putative class and collective action on behalf of themselves and all current and former long-term disability (“LTD”) claims specialists between February 2011 and the present for alleged wage and hour violations under the Fair Labor Standards Act, the New York Labor Law, and the Connecticut Minimum Wage Act. The suit alleges that MLIC improperly reclassified the plaintiffs and similarly situated LTD claims specialists from non-exempt to exempt from overtime pay in November 2013. As a result, they and members of the putative class were no longer eligible for overtime pay even though they allege they continued to work more than 40 hours per week. Plaintiffs seek unspecified compensatory and punitive damages, as well as other relief. On March 22, 2018, the Courtcourt conditionally certified the case as a collective action, requiring that notice be mailed to LTD claims specialists who worked for the CompanyMLIC from February 8, 2014 to the present. The CompanyMLIC intends to defend this action vigorously.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
16. Contingencies, Commitments and Guarantees (continued)

Total Asset Recovery Services, LLC. v. MetLife, Inc., et al. (Supreme Court of the State of New York, County of New York, filed December 27, 2017)
Total Asset Recovery Services (“The Relator”) brought an action under the qui tam provision of the New York False Claims Act (the “Act”) on behalf of itself and the State of New York. The Relator originally filed this action under seal in 2010, and the complaint was unsealed on December 19, 2017. The Relator alleges that MetLife, Inc., MLIC, and several other insurance companies violated the Act by filing false unclaimed property reports with the State of New York from 1986 to 2017, to avoid having to escheat the proceeds of more than 25,000 life insurance policies, including policies for which the defendants escheated funds as part of their demutualizations in the late 1990s. The Relator seeks treble damages and other relief. On April 3, 2019, the Courtcourt granted MetLife, Inc.’s and MLIC’s motion to dismiss and dismissed the complaint in its entirety. The Relator filed a notice ofan appeal with the Appellate Division of the New York State Supreme Court, First Division.
Regulatory and Litigation Matters Related to Group Annuity Benefits and Assumed Variable Annuity Guarantee Reserves
In 2018, the Company announced that it identified atwo material weaknessweaknesses in its internal control over financial reporting related to the practices and procedures for estimating reserves for certain group annuity benefits.benefits and the calculation of reserves associated with certain variable annuity guarantees assumed from the former operating joint venture in Japan. Several regulators have made inquiries into these issues and it is possible that other jurisdictions may pursue similar investigations or inquiries. The Company is exposed to lawsuits, and regulatory investigations, and could be exposed to additional legal actions relating to these issues. These may result in payments, including damages, fines, penalties, interest and other amounts assessed or awarded by courts or regulatory authorities under applicable escheat, tax, securities, ERISA,Employee Retirement Income Security Act of 1974, or other laws or regulations. The Company could incur significant costs in connection with these actions.
Regulatory Matters
The Division of Enforcement of the SEC is investigating this issue and several additional regulators have made similar inquiries. It is possible that other jurisdictions may pursue similar investigations or inquiries.
Litigation Matters
Parchmann v. MetLife, Inc., et. al. (E.D.N.Y., filed February 5, 2018)
Plaintiff filed this putative class action seeking to represent a class of persons who purchased MetLife, Inc. common stock from February 27, 2013 through January 29, 2018. Plaintiff alleges that MetLife, Inc., its Chief Executive Officer and Chairman of the Board, and its Chief Financial Officer violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder by issuing materially false and/or misleading financial statements. Plaintiff alleges that MetLife’s practices and procedures for estimating reserves for certain group annuity benefits were inadequate, and that MetLife had inadequate internal control over financial reporting. Plaintiff seeks unspecified compensatory damages and other relief. Defendants intend to defend this action vigorously.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
15. Contingencies, Commitments and Guarantees (continued)

Atkins et. al. v. MetLife, Inc., et. al. (D.Nev., filed November 18, 2019)
Plaintiffs filed this putative class action on behalf of all persons due benefits under group annuity contracts but who did not receive the entire amount to which they were entitled. Plaintiffs assert claims for breach of contract, breach of fiduciary duty, breach of implied covenant of good faith and fair dealing, unjust enrichment, and conversion based on allegations that the defendants failed to timely pay annuity benefits to certain group annuitants. Plaintiffs seek declaratory and injunctive relief, as well as unspecified compensatory and punitive damages, and other relief. On April 17, 2020, the parties filed a stipulation of voluntarily dismissal of the action without prejudice.
Derivative Actions and Demands
Shareholders, seeking to sue derivatively on behalf of MetLife, Inc., commenced three separate actions against certain current and former members of the MetLife, Inc. Board of Directors and/or certain current and former officers of MetLife, Inc., alleging that, among other things, they breached their fiduciary and other duties to the Company. In Kates v. Kandarian, et al. (E.D.N.Y., filed January 18, 2019, transferred to D. Del. July 8, 2019) and Felt, et al. v. Grise, et al. (D. Del., filed April 29, 2019), plaintiffs allege that the defendants disseminated or approved public statements that failed to disclose that MetLife’s practices and procedures for estimating reserves for certain group annuity benefits were inadequate and that MetLife had inadequate internal control over financial reporting. In Lifschitz v. Kandarian, et al. (Del. Ch., filed June 19, 2019), plaintiff alleges that the MetLife, Inc. Board of Directors knew or should have known that MetLife’s practices and procedures for estimating reserves for certain group annuity benefits were inadequate.FeltandLifschitzhave been consolidated in the Court of Chancery in Delaware under the captionIn re: MetLife, Inc. Derivative Litigation.In all threeof these actions, plaintiffs allege that because of the defendants’ breaches of duty, MetLife, Inc. has incurred damage to its reputation and has suffered other unspecified damages. The defendants intend to defend this actionthese actions vigorously.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
16. Contingencies, Commitments and Guarantees (continued)

The MetLife, Inc. Board of Directors received fivesix letters, dated March 28, 2018, May 11, 2018, July 16, 2018, December 20, 2018, and February 5, 2019, and April 7, 2020, written on behalf of individual stockholders, demanding that MetLife, Inc. take action against current and former directors and officers for alleged breaches of fiduciary duty and/or investigate, remediate, and recover damages allegedly suffered by the Company as a result of (i) the Company’s allegedly inadequate practices and procedures for estimating reserves for certain group annuity benefits, (ii) the Company’s allegedly inadequate internal controls over financial reporting and corporate governance practices and procedures, and (iii) the alleged dissemination of false or misleading information related to these issues. The MetLife, Inc. Board of Directors appointed a special committee to investigate the allegations set forth in these fivesix letters.
Regulatory Inquiry Related to Assumed Variable Annuity Guarantee Reserves
In 2018, the Company announced that it identified a material weakness in its internal control over financial reporting related to the calculation of reserves associated with certain variable annuity guarantees assumed from the former operating joint venture in Japan. The Division of Enforcement of the SEC is investigating this issue and the Company has informed other regulators. It is possible that other regulators may pursue similar investigations or inquiries. The Company is exposed to lawsuits and regulatory investigations, and could be exposed to additional legal actions relating to these issues. These may result in payments, including damages, fines, penalties, interest and other amounts assessed or awarded by courts or regulatory authorities under applicable laws or regulations. The Company could incur significant costs in connection with these actions.
Commitments
Mortgage Loan Commitments
The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $3.9$2.7 billion and $4.0$4.1 billion at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
Commitments to Fund Partnership Investments, Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments
The Company commits to fund partnership investments and to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of these unfunded commitments were $7.7$8.0 billionand $8.1 billionat both June 30, 2019March 31, 2020 and December 31, 2018.2019, respectively.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)
15. Contingencies, Commitments and Guarantees (continued)

Guarantees
In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties such that it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third-party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from less than $1 million to $329 million, with a cumulative maximum of $766$528 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or commitments.
In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.
The Company also has minimum fund yield requirements on certain pension funds. Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future.
The Company’s recorded liabilities were $7$6 million at both June 30, 2019March 31, 2020 and December 31, 20182019, for indemnities, guarantees and commitments.

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MetLife, Inc.
Notes to the Interim Condensed Consolidated Financial Statements (Unaudited) — (continued)

17.16. Subsequent Events
Common Stock Repurchase Authorization
On July 31, 2019, MetLife, Inc. announced that its Board of Directors authorized an additional $2.0 billion of common stock repurchases.
Common Stock Dividend
On July 8, 2019April 28, 2020, the MetLife, Inc. Board of Directors declared a thirdsecond quarter 20192020 common stock dividend of $0.44$0.46 per share payable on September 13, 2019June 12, 2020 to shareholders of record as of August 6, 2019May 8, 2020. The Company estimates that the aggregate dividend payment will be $413$419 million.

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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
9283
Executive Summary
9283
Industry Trends
9486
Summary of Critical Accounting Estimates
9889
Economic Capital
9891
Acquisitions and Dispositions
9991
Results of Operations
10092
Investments
123108
Derivatives
135124
Off-Balance Sheet Arrangements
137126
Policyholder Liabilities
138127
Liquidity and Capital Resources
146136
Adoption of New Accounting Pronouncements
157145
Future Adoption of New Accounting Pronouncements
157145
Non-GAAP and Other Financial Disclosures
157145
Subsequent Events
159147

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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, 20182019 (the “2018“2019 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” 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. Management continues to evaluate the Company’s segment performance and allocated resources and may adjust related measurements in the future to better reflect segment profitability.
See “— Consolidated Company Outlook” for a discussion of the impact of the novel coronavirus COVID-19 pandemic (the “COVID-19 Pandemic”) on the Company.
Current Period Highlights
During the three months ended June 30, 2019,March 31, 2020, overall sales decreasedadjusted premiums, fees and other revenues improved slightly compared to the prior period primarily from lower sales in our Retirement and Income Solutions (“RIS”) businessfirst quarter of 2019 as a result of a large pension risk transfer transactiongrowth in the prior period.our U.S., Latin America and EMEA segments. Positive net flows drove an increase in our investment portfolio andportfolio; however, investment yields improved, however,declined. Expenses, including interest credited rates were higher for the majority of our businesses.expense, also declined. Underwriting experience was mixed, but overall, was unfavorable compared to the prior period. A favorable change in net derivative gains (losses) was primarily the result of a decline in interest rates. A favorableAn unfavorable change in net investment gains (losses) was primarily due to prior periodreflects mark-to-market losses on fair value option (“FVO”) Brighthouse Financial, Inc. common stock (“FVO Brighthouse Common Stock”) disposed of in June 2018, as well as higher gains on sales of fixed maturity securities available-for-sale (“AFS”) in the current period versus the prior period, partially offset by lower gains on sales of real estate joint ventures.equity securities.

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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, 2019:March 31, 2020:
segmentcharta03.jpgsegmentcharta07.jpg
__________________    
(1)Excludes Corporate & Other adjusted loss available to common shareholders of $307$131 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.
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
 
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Consolidated Results - Highlights
 Net income (loss) available to MetLife, Inc.’s common shareholders up $839 million:$3.0 billion:
   
 •
Favorable change in net derivative gains (losses) of $783 million$4.1 billion ($619 million,3.2 billion, net of income tax)


 
 
   
 •
FavorableUnfavorable change in net investment gains (losses) of $288$303 million ($228239 million, net of income tax)

   
 •Adjusted earnings available to common shareholders up $25 million
 (1) See “— Results of Operations — Consolidated Results” and “— Non-GAAP and Other Financial Disclosures” for reconciliations and definitions of non-GAAP financial measures.
 Consolidated Results - Adjusted Earnings Highlights
 Adjusted earnings available to common shareholders remained relatively flat.up $25 million:
 •Our results for
The primary drivers of the three months ended June 30, 2019 included the following:
•
increase in adjusted earnings were higher net investment income due to a higher asset base, a decrease in expenses, associated with our previously announced unit cost initiative of $70 million, net of income tax

including interest credited expense, and higher asset-based fees, partially offset by lower investment yields, higherdeferred policy acquisition costs (“DAC”) amortization and unfavorable underwriting.
 •
Our results for the three months ended June 30, 2018March 31, 2019 included the following:
•expenses associated with our previously announced unit cost initiative of $62$55 million, net of income tax

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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.”
Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
ytdbarchartv2.jpg
Consolidated Results - Highlights
Net income (loss) available to MetLife, Inc.’s common shareholders up $941 million:
•
Favorable change in net investment gains (losses) of $636 million ($502 million, net of income tax)

•
Favorable change in net derivative gains (losses) of $549 million ($434 million, net of income tax)


(1) See “— Results of Operations — Consolidated Results” and “— Non-GAAP and Other Financial Disclosures” for reconciliations and definitions of non-GAAP financial measures.
Consolidated Results - Adjusted Earnings Highlights
Adjusted earnings available to common shareholders remained relatively flat.
•Our results for the six months ended June 30, 2019 included the following:
•
expenses associated with our previously announced unit cost initiative of $125 million, net of income tax

•
Our results for the six months ended June 30, 2018 included the following:
•
expenses associated with our previously announced unit cost initiative of $96 million, net of income tax

•favorable reserve adjustment of $62 million, net of income tax, relating to certain variable annuity guarantees assumed from a former joint venture in Japan

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.”
Consolidated Company Outlook
The following information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary — Consolidated Company Outlook” included in Part II, Item 7, of the 20182019 Annual Report. There have been no material changes to our consolidated company outlook from that previously discussed in the 20182019 Annual Report except as noted below.
AssumingWe are closely monitoring developments relating to the COVID-19 Pandemic and assessing its impact on our business. The COVID-19 Pandemic has had a major impact on the global economy and financial markets. Governments and businesses have taken numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, social distancing, shelter in place or total lock down orders, and business limitations and shutdowns. These measures have disrupted and will continue to disrupt business activity and have resulted in economic slowdown and significant volatility in the financial markets, to which central banks around the world are responding with unprecedented fiscal and monetary policies. See “— Industry Trends — Financial and Economic Environment.” The COVID-19 Pandemic and these actions have significantly increased economic uncertainty and reduced economic activity. In addition, a prolonged low, zero, or negative interest rate environment remains possible. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment” included in the 2019 Annual Report for discussion of the mitigating actions the Company has taken to reduce interest rate sensitivity as market interest rates are a key driver of our results.
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 controls over financial reporting and disclosure controls and procedures.
Events related to the COVID-19 Pandemic could materially adversely affect our business operations, investment portfolio, financial results or financial condition. We will continue reviewing accounting estimates, asset valuations and various financial scenarios for capital and liquidity; however, in light of evolving health, economic, social, regulatory, and other factors, the potential impact of the COVID-19 Pandemic and actions taken in response to it on our business operations, investment portfolio, financial results and financial condition remains uncertain. See “— Industry Trends — Regulatory Developments,” “— Investments — Current Environment” and “Risk Factors” for additional information.
During the first quarter of 2020, MetLife, Inc. proactively raised $2.0 billion from the capital markets ($1.0 billion of preferred stock and $1.0 billion of senior debt), providing us with additional capital flexibility in dealing with cash flow volatility related to the current environment, as well as demonstrating our ongoing access to capital markets. As of March 31, 2020, we had $5.3 billion of cash and liquid assets at the holding companies. See Notes 9 and 10 of the Notes to the Interim Condensed Consolidated Financial Statements.
Our capital stress testing and longstanding commitment to liquidity, position us to withstand the current crisis. We do not expect any material liquidity deficiencies, and we expect to remain able to comply with the financial covenants of our credit agreements. See “— Liquidity and Capital Resources.”
As noted in our 2019 Annual Report, we expected (i) the average annual ratio of free cash flow to adjusted earnings over the two-year period of 2020 and 2021 to be 65% to 75%, assuming interest rates follow the observable forward yield curves, as of the year ended December 31, 2018,2019, including a 10-year U.S. Treasury rate between 1.5% and 4.5%, and (ii) to generate approximately $20.0 billion of free cash flow over the next five years. However, with recent macroeconomic changes and significant equity market volatility, our ability to meet these targets could be challenged. Assuming (i) interest rates follow the observable forward yield curves as of March 31, 2020, including a 10-year U.S. Treasury rate of 0.67% at March 31, 2020, 0.82% at December 31, 2020 and 0.96% at December 31, 2021, (ii) a 20% S&P Global Ratings (“S&P”) 500 equity index decline for the full year 2020, and (iii) a 5% S&P 500 equity index increase for the full year 2021, we expect the average annual ratio of free cash flow to adjusted earnings over the two-year period of 2019 and 2020 to be 65% to 75%,. Over the two-year period of 2020 and 2021, our average annual ratio of free cash flow to adjusted earnings could be 40% to 60% reflecting the impact of regulatory cash flow testing on our New York domiciled insurance entity, Metropolitan Life Insurance Company, and the related impact of the COVID-19 Pandemic on investment credit losses.

We continue to target an adjusted return on equity, excluding accumulated other comprehensive income (“AOCI”) other than foreign currency translation adjustments (“FCTA”) of 12% to 14% over the near-term under non-recessionary market conditions. However, with recent macroeconomic changes and significant equity market volatility, and assuming a(i) interest rates follow the observable forward yield curves as of March 31, 2020, including our updated ranges for the 10-year U.S. Treasury rate between 1.5%rates noted above, (ii) a 20% S&P 500 equity index decline for the full year 2020, and 4.5%.(iii) our expectation of high single digit to low double digit negative private equity returns in the second quarter of 2020 decreasing our variable investment income, we would expect to be below the low end of this range in 2020. This target range of 12% to 14% also included the completion of restructuring charges related to our unit cost improvement program which, as we noted in our 2019 Annual Report, is expected to result in an approximately $900 million of pre-tax expense margin expansion in 2020, or approximately a 12.3% direct expense ratio, excluding total notable items related to direct expenses and pension risk transfers, in 2020. We believe that free cash flow is a key determinantremain committed to achieving this direct expense ratio in 2020 while creating additional capacity to fund over $1.0 billion in incremental technology and innovative investments to accelerate our growth over the next five years or to manage expense margins in more challenging environments.
Furthermore, we remain fully committed to our Next Horizon Strategy, which was introduced at our December 2019 Investor Day.
Our outlook relies on the accuracy of common stock dividendsour assumptions about future economic and common stock repurchases.business conditions, which can be affected by known and unknown risks and other uncertainties, such as those posed by the COVID-19 Pandemic. Due to the evolving and highly uncertain nature of the COVID-19 Pandemic, we are continually reviewing our assumptions, implementing plans, and taking precautions. As we obtain more information regarding the effects of the COVID-19 Pandemic, the effect and efficacy of efforts taken to respond to it, and the impact of these events on our business operations, investment portfolio, financial results and financial condition, we may revise our outlook. Additional guidance from the U.S. Treasury, the U.S. Securities and Exchange Commission (the “SEC”) or the Financial Accounting Standards Board may also require us to revise our outlook in future periods.
Industry Trends
The following information on industry trends should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends” in Part II, Item 7, of the 20182019 Annual Report.
We continue to be impacted by the changing global financial and economic environment that has been affecting the industry.

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Financial and Economic Environment
Our business and results of operations are materially affected by conditions in the global capital markets and the economy generally. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors. See “Risk Factors — Economic Environment and Capital Markets Risks — Difficult Economic Conditions May Adversely AffectHarm Our Business,Businesses, Results of Operations andor Financial Condition” and “Risk Factors — Business Risks — Catastrophes May Adversely Impact Liabilities for Policyholder Claims and Reinsurance Availability” included in the 20182019 Annual Report.
We have market presence in numerous countries and, therefore, our business operations are exposed to risks posed by local and regional economic conditions. For example, MetLife is the largest provider of benefits to Mexican federal government personnel and public officials, however, the new administration of President López Obrador of Mexico is implementing an austerity plan which, among other measures, has eliminated benefits such as major medical insurance and contributions to additional savings benefit insurance for such individuals. See “Business — Regulation — Fiscal Measures” and “Risk Factors — Economic Environment and Capital Markets Risks — Difficult Economic Conditions May Adversely AffectHarm Our Business,Businesses, Results of Operations andor Financial Condition — Currency Exchange Rate Risk” included in the 20182019 Annual Report.
We are closely monitoring political and economic conditions that might contribute to global market volatility and impact our business operations, investment portfolio and derivatives. For example, events followingmeasures taken by governments and businesses as a result of the United Kingdom’s (“U.K.”) referendum on June 23, 2016COVID-19 Pandemic to respond to the spread of the virus, have disrupted business activity and have resulted in an economic slowdown and significant volatility in financial markets. Governmental and non-governmental organizations may not effectively respond to the uncertainties, including foreign currency exchange risks, associated with its planned withdrawal fromspread and severity of the European Union (“EU”), have contributed to global market volatility. These factors could contribute to weakening Gross Domestic Product growth, primarily inCOVID-19 Pandemic, increasing the U.K. and, to a lesser degree, in continental Europe and beyond. The magnitude and longevity of the potential negative economic impacts would depend onimpacts. We cannot yet determine or estimate the detailed agreements reached by the U.K.actions that will be taken, including governmental laws, regulations or orders, and the EU as a result of the negotiations regarding future tradeextent to which these actions have affected or will affect our business operations, investment portfolio, financial results, or financial condition. See “— Executive Summary — Consolidated Company Outlook” and other arrangements. See “— Investments — Current Environment — Selected Country and Sector Investments.Environment.”

We are also monitoring the imposition of tariffs or other barriers to international trade, changes to international trade agreements, and their potential impacts on our business, results of operations and financial condition. In addition, the possibility of additional government shutdowns or a failure to raise the debt ceiling, due to a policy impasse or otherwise, could adversely impact our business and liquidity. See “Business — Regulation — Cross-Border Trade” and “Business — Regulation — Fiscal Measures” included in the 20182019 Annual Report. See also “Risk Factors — Economic Environment and Capital Markets Risks — Difficult Economic Conditions May Adversely AffectHarm Our Business,Businesses, Results of Operations andor Financial Condition” and “Risk Factors — Business Risks — The Global Nature of Our Operations Exposes Us to a Variety of Political, Legal, Operational, Economic and Other Risks” included in the 20182019 Annual Report.
Central banks around the world are usingresponding to the COVID-19 Pandemic with unprecedented fiscal and monetary policypolicies, which are expected to address regional economic conditions.have significant and ongoing effects on financial markets and the global economy. In the United States, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”), which had been previously tightening monetary policy by raising the federal funds rate and shrinking the balance sheet, now has loweredtaken a number of actions to lower rates to sustainand has implemented additional stimulus measures, including a near zero rate on borrowing for commercial banks, quantitative easing, and the economic expansion. Similarly,easing of bank lending regulations. Additionally, the Federal Reserve Board has initiated a number of financing facilities, credit purchase programs, and reinstituted quantitative easing of U.S. Treasury securities and mortgages. The European Central Bank ended quantitative easing in December 2018has significantly increased the size of its asset purchase program, reduced constraints on what and left interest rates unchanged, but is now considering additional easing, if required.how much it can purchase, and launched new funding facilities for European area banks. Additionally, a number of European area countries have announced fiscal stimulus programs, as well as the provision of guarantees and loans for private sector companies. In Japan, the Japanese government and the Bank of Japan are maintaininghas accelerated its purchases of interests in index-linked securities and real estate investments, increased the annual limit on purchases of commercial paper and bonds, and introduced new measures to facilitate corporate financing, including a new lending program for businesses impacted by the COVID-19 Pandemic. In addition, the Japanese government recently approved additional stimulus measures, in orderincluding provisions for cash payouts to boost inflation expectationsindividuals and achieve sustainable economic growth in Japan. Such measures include the imposition of a negative rate on commercial bank deposits, continued government bond purchases andbusiness owners, tax reform, including the lowering of the Japanese corporate tax rate and the delay until October 2019 of an increase in the consumption tax to 10%. Going forward, Japan’s structural and demographic challenges may continue to limit its potential growth unless reforms that boost productivity are put into place. Japan’s high public sector debt levels are mitigated by low refinancing risks. Further actions by central banks in the future may affect interest rates and risk markets in the U.S., Europe, Japan and other developed and emerging economies, and may ultimately result in market volatility.zero-interest loans. We cannot predict with certainty the actions that will be taken, effect of these actions or the impact on our business operations, investment portfolio, financial results, or derivatives.financial condition. See “— Investments — Current Environment.”
Impact of a Sustained Low Interest Rate Environment
During sustained periods of low interest rates, we may have to invest insurance cash flows and reinvest the cash flows we received as interest or return of principal on our investments in lower yielding instruments. Moreover, borrowers may prepay or redeem the fixed income securities, mortgage loans and mortgage-backed securities in our investment portfolio with greater frequency in order to borrow at lower market rates. Therefore, some of our products expose us to the risk that a reduction in interest rates will reduce the difference between the amounts that we are required to credit on contracts in our general account and the rate of return we are able to earn on investments intended to support obligations under these contracts. This difference between interest earned and interest credited, or margin, is a key metric for the management of, and reporting for, many of our businesses.

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Our expectations regarding future margins are an important component impacting the amortization of certain intangible assets such as deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”). Significantly lower margins may cause us to accelerate the amortization, thereby reducing net income in the affected reporting period. Additionally, lower margins may also impact the recoverability of intangible assets such as goodwill, require the establishment of additional liabilities or trigger loss recognition events on certain policyholder liabilities. We review this long-term margin assumption, along with other assumptions, as part of our annual actuarial assumption review.
Some of our separate account products, including variable annuities, have certain minimum guarantee benefits. Declining interest rates increase the reserves we need to set up to protect the guarantee benefits, thereby reducing net income in the affected reporting period.
In formulating economic assumptions for our insurance contract assumptions, we use projections that we make regarding interest rates. Included in these assumptions is the projection that the 10-year Treasury rate will rise to 4.25% by 2026. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the 2018 Annual Report for further information.
Competitive Pressures
The life insurance industry remains highly competitive. See “Business — Competition” included in the 20182019 Annual Report. Product development is focused on differentiation leading to more intense competition with respect to product features and services. Several of the industry’s products can be quite homogeneous and subject to intense price competition. Cost reduction efforts are a priority for industry players, with benefits resulting in price adjustments to favor customers and reinvestment capacity. Larger companies have the ability to invest in brand equity, product development, technology optimization, risk management, and innovation, which are among the fundamentals for sustained profitable growth in the life insurance industry. Insurers are focused on their core businesses, specifically in markets where they can achieve scale. Insurers are increasingly seeking alternative sources of revenue; there is a focus on monetization of assets, fee-based services, and opportunities to offer comprehensive solutions, which include providing value-added services along with traditional products. Financial strength and flexibility and technology modernization are prerequisites for sustainable growth in the life insurance industry. Larger market participants tend to have the capacity to invest in analytics, distribution, and information technology and have the capabilityability to engage withleverage the capabilities of new digital entrants. There is a shift in distribution from proprietary to third party models in mature markets, due to the lower cost structure. Evolving customer expectations are having a significant impact on the competitive environment as insurers strive to offer the superior customer service demanded by an increasingly sophisticated industry client base. We believe that the continued volatility of the financial markets and its impact on the capital position of many competitors will continue to strain the competitive environment. Legislative and other changes affecting the regulatory environment can also affect the competitive environment within the life insurance industry and within the broader financial services industry. See “— Industry Trends — Regulatory Developments,” as well as “Business — Regulation” included in the 20182019 Annual Report, as amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Regulatory Developments.” We believe that the aforementioned factors have highlightedcurrent low interest rate environment and increased volatility of the financial markets, as a result of the COVID-19 Pandemic, will continue to strain the life insurance industry, as well as the broader financial services industry. In addition to financial strength, technologytechnological efficiency and organizational agility, aswe believe that the most significant differentiators and,ability to adapt to changes in the competitive environment as a result of the COVID-19 Pandemic is a significant differentiator to success in the life insurance industry and the broader financial services industry, and we believe the Company isare well positioned to compete in this environment.
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 20182019 Annual Report, as amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Regulatory Developments.”


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Insurance Regulation
NAIC
The National Association of Insurance Commissioners (“NAIC”) has approved a new valuation manual containing a principle-based approach toIn March 2020, many U.S. state governors and insurance regulators began issuing regulations, bulletins, directives and guidance in connection with the calculation ofCOVID-19 Pandemic. These encourage, request or direct health, life, insurance reserves. Principle-based reserving is designed to better address reserving for products, including the current generation of products for which the current formulaic basis for reserve determination does not work effectively. The principle-based approach became effective on January 1, 2017 in the states where it had been adopted, to be followed by a three-year phase- in period (at the option ofand property and casualty insurance companies to waive cost-sharing for coronavirus COVID-19 testing, cover telehealth services, provide extended grace periods for premium payments, forbear on a product-by-product basis) for new business since it was enacted into law by the required numbercancellation or non-renewal of state legislatures. To date, principle-based reserving has been adopted by allpolicies due to non-payment of the states where our insurance subsidiaries are domiciled.premium, and provide other policyholder accommodations. For example, on March 30, 2020, New York has enacted legislation that will require principle-based reserving by no later than January 1, 2020. In May 2019, the New YorkState Department of Financial Services (“NYDFS”) formally adoptedEmergency Insurance Regulation 216 required life insurance- or annuity- authorized insurers to extend premium and fee payment grace periods to 90 days for policyholders who demonstrate COVID-19 Pandemic-related financial hardship. New York licensed insurers also may not impose any late fees on or report such a regulation, which was initially promulgatedpolicyholder to a credit reporting or debt collection agency for failure to timely pay any life or annuity premiums and must allow the policyholder to pay the premium over a 12-month period. An insurer must accept a policyholder’s written attestation as an emergency regulationproof of financial hardship as a result of the COVID-19 Pandemic.
In addition, several non-U.S. insurance regulators began issuing statements urging insurance companies to preserve funds during the COVID-19 Pandemic. For example, the European Insurance and Occupational Pensions Authority suggested insurance companies temporarily suspend discretionary dividends during the COVID-19 Pandemic. Similarly, the Mexican insurance regulator, the Comisión Nacional de Seguros y Fienzas, recommended limiting dividends for fiscal years 2019 and 2020. MetLife Mexico has reminded its regulator that it has historically exceeded regulatory capital minimums and expects to pay dividends as appropriate to its circumstances.
Other regulators have delayed, or considered delaying, implementing a variety of changes. The Basel Committee on Banking Supervision and the International Organization of Securities Commissions postponed new initial margin requirement rules for non-centrally cleared derivatives for one year in December 2018,light of the challenges posed by the COVID-19 Pandemic, citing companies’ focus on managing risks associated with current market volatility.
Some governmental decision-makers are not able to take action on certain regulatory priorities as a result of the COVID-19 Pandemic. For example, in January 2020, the Chilean lower house approved the pension reform bill introduced by President Sebastian Piñera in November 2018. The Senate started to discuss the bill in March 2020, but the COVID-19 Pandemic and the economic priorities have delayed pension reform.
On March 27, 2020, President Trump signed into law the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) to provide economic assistance in response to the COVID-19 Pandemic. Among other things, the CARES Act added certain tax-favored withdrawals and increased loan withdrawal limitations from eligible retirement plans, and temporarily waived required minimum distribution rules for qualified retirement plan participants and Individual Retirement Accounts owners.
See “Risk Factors” in the 2019 Annual Report, as amended or supplemented in our Quarterly Reports on Form 10-Q under whichthe caption “Risk Factors — The Course of the Novel Coronavirus (COVID-19) Pandemic, and Responses to It, Are Uncertain and Difficult to Predict, But Have Adversely Affected and May Continue to Adversely Affect Our Business, Results of Operations, and Financial Condition.”
National Association of Insurance Commissioners
On February 26, 2020, the NYDFS is authorizedamended Regulation 213 relating to deviate from the reserve standards and valuation methods set forth in the NAIC Valuation Manual (the “Valuation Manual”principle-based reserving (“PBR”), if the NYDFS determines that an alternative requirement would be in the best interest of the policyholders of New York.. The NYDFS is currently developing an amended version of the regulation that will contain deviationsamendment deviates from the Valuation Manual formulaic floorand is likely to cause variable annuity reserve and capital requirement increases. Based on conditions at March 31, 2020, we estimate that will be a requirement in New York.
ERISA, Fiduciary Considerations, and Other Pension and Retirement Regulation
The U.S. Department of Labor (“DOL”) issued regulations that largely were applicable in 2017 that expanded the definition of “investment advice” and required an advisor to meet an impartial or “best interests” standard (“BICE”), but the regulations were formally vacated by the U.S. Court of Appeals for the Fifth Circuit in 2018. The Court of Appeals decision also vacated certain DOL amendments to prohibited transaction exemptions. The DOL has announced that it plans to issue revised fiduciary investment advice regulations in December 2019. At this time, we cannot predict what form those regulations may take or their potential impact on us.
In June 2019, the U.S Securities and Exchange Commission (“SEC”) adopted rules and interpretations addressing the standards of conduct applicable to broker-dealers and investment advisers and their associated persons. The conduct standards apply when providing brokerage and advisory products and services to benefit plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and Individual Retirement Accounts (“IRAs”), as well as non-benefit plan retail clients. Under the SEC rules, broker-dealers are not deemed to be fiduciaries to their clients by virtue of making recommendations but must act in the best interest of individual investor retail clients when making a recommendation. The SEC’s best interest standard is not intended to track the DOL’s former BICE standard. Unlike the DOL rule that was vacated in 2018, there is no private right of action for violation of these SEC rules. The DOL is expected to adopt a new rule that will be consistent with the SEC’s rules, including the new best interest standard.PBR rules have increased our statutory reserves by approximately $1.6 billion and our statutory capital requirements by $0.6 billion over the prior reserve and capital requirements. However, as permitted, we expect to grade these effects into our statutory financial statements over a period of at least three years.
State regulators and legislatures in Nevada, New Jersey, Maryland and New York have proposed measures that would make broker-dealers, sales agents, and investment advisers and their representatives subject to a fiduciary duty when providing products and services to customers, including pension plans and IRAs. The SEC did not indicate an intent to pre-empt state regulation in this area, and someCross-Border Trade
Each of the state proposals would allow for a private right of action. As a result of these developments, it is possibleUnited States, Canada and Mexico ratified the United States-Mexico-Canada Agreement and provided notice that it may become more costly to provide our products and services to pension plans and IRAs operating in the states subject to the new rules.they completed domestic implementation. The agreement will go into effect on July 1, 2020.
In October 2018, Chilean President Sebastien Piñera submitted to Congress a new pension reform bill. In June 2019, the government agreed with the opposition party to introduce an amendment to the bill which would establish a single state-run entity to manage new 4% mandatory employer contributions through third-party financial institutions. While the proposed amendments would not impact the 10% mandatory employee contributions managed by our pension administration business in Chile, we are not able to predict with certainty the terms of the final bill and cannot currently identify all of the risks or opportunities, if any, that may be posed to our business in Chile. While President Piñera’s administration has emphasized the importance of accelerating debate on the pension reform bill, we expect that the Congressional debate may last through most of 2019.

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Derivatives Regulation
In June 2019, the SEC adopted a set of rules that establish capital and margin requirements for security-based swaps. The rules are part of the larger regulatory framework that the SEC is establishing over security-based swap dealers and major security-based swap participants that imposes registration, disqualification, recordkeeping and reporting requirements, and cross-border regulation. The rules will become effective 18 months after the adoption by the SEC of rules on recordkeeping and cross-border regulation of security-based swap dealers and major security-based swap participants, which have been proposed and are pending. We are monitoring these developments and evaluating the potential effect these rules might have on our business.
Securities, Broker-Dealer and Investment Adviser Regulation
In June 2019, the SEC adopted rules and interpretations addressing the standards of conduct applicable to broker-dealers and investment advisers and their associated persons, including Regulation Best Interest, which are primarily focused on offerings of products and services to retail customers. As a result of the new rules, beginning June 30, 2020, broker-dealers recommending our variable products to retail customers will be required to comply with a “best interest” standard, which the SEC did not define but did confirm would be higher than the current suitability standard but not rise to the level of being a fiduciary, and provide disclosures about their standard of conduct and conflicts of interest, including on new Form CRS. Investment advisers to retail clients will also be required to file new Form CRS with the SEC and deliver copies of the Form to their retail clients. As noted above, the SEC rules do not include a private right of action. We are monitoring these developments and cannot at this time predict the effect they might have on our business.

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 DAC and the establishment and amortization of VOBA;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 above 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 20182019 Annual Report. Effective January 1, 2020, the Company adopted new accounting pronouncements related to the measurement of credit loss on financial instruments and simplifying the test for goodwill impairment, as described below and in Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.
Investment Allowance for Credit Loss and Impairments
The significant estimates related to our evaluation of credit loss and impairments on our investment portfolio are summarized below. In addition, information about the evaluation processes and measurement methodologies and changes thereto from the implementation of new guidance on January 1, 2020, is contained in Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements.
Fixed Maturity Securities AFS
The assessment of whether a credit loss has occurred is based on our case-by-case evaluation of whether the net amount expected to be collected is less than the amortized cost basis. We consider a wide range of factors about the security issuer and use our best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. In accordance with new guidance adopted January 1, 2020, we evaluate credit loss by considering information about past events, current and forecasted economic conditions, and we measure credit loss by estimating recovery value using a discounted cash flow analysis. These evaluations are revised as conditions change and new information becomes available.
In accordance with previous guidance, which was an incurred loss model, the credit loss evaluation process and the measurement of credit loss were generally similar.

Mortgage Loans
The ACL is established both for pools of loans with similar risk characteristics and for 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 credit loss in an amount that represents the portion of the amortized cost basis of mortgage loans that we do not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. In accordance with new guidance adopted January 1, 2020, to determine the mortgage loan ACL, we estimate lifetime credit loss expected over the contractual term of our mortgage loans adjusted for expected prepayments and any extensions; and we consider past events, current economic conditions and forecasts of future economic conditions. Our estimates are revised as conditions change and new information becomes available.
In accordance with previous guidance, which was an incurred loss model, the credit loss evaluation process and the measurement of credit loss were generally similar.
Real Estate, Leases and Other Asset Classes
The determination of the amount of ACL and impairments on real estate, leases and the remaining invested asset classes is highly subjective and is based upon our quarterly evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available.
Goodwill
Goodwill is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test.
For purposes of goodwill impairment testing, if the carrying value of a reporting unit exceeds its estimated fair value, an impairment charge would be recognized for the amount by which the carrying value exceeds the reporting unit’s fair value; however, the loss recognized would not exceed the total amount of goodwill allocated to that reporting unit. Additionally, the Company will consider income tax effects from any tax deductible goodwill on the carrying value of the reporting unit when measuring the goodwill impairment loss, if applicable. The key inputs, judgments and assumptions necessary in determining estimated fair value of the reporting units include projected adjusted earnings, current book value, the level of economic capital required to support the mix of business, long-term growth rates, comparative market multiples, the account value of in-force business, projections of new and renewed business, as well as margins on such business, interest rate levels, credit spreads, equity market levels, and the discount rate that we believe is appropriate for the respective reporting unit.
We apply significant judgment when determining the estimated fair value of our reporting units and when assessing the relationship of market capitalization to the aggregate estimated fair value of our reporting units. The valuation methodologies utilized are subject to key judgments and assumptions that are sensitive to change. Estimates of fair value are inherently uncertain and represent only management’s reasonable expectation regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood differ in some respects from actual future results. Declines in the estimated fair value of our reporting units could result in goodwill impairments in future periods which could materially adversely affect our results of operations or financial position.
In the first quarter of 2020, the Company performed interim goodwill impairment testing on all of its reporting units due to the recent economic impacts caused by the COVID-19 Pandemic. The interim goodwill impairment testing was conducted by measuring the estimated fair value of the reporting unit and comparing such estimated fair value to the carrying value of the reporting unit. The result of the interim goodwill impairment testing was that the estimated fair value exceeded the carrying value of its reporting units and the Company determined that its goodwill in the current quarter was not impaired, although the amount of excess of estimated fair value above the carrying value for the reporting units has decreased significantly since the previous annual test. The excess of estimated fair value over carrying value in the Asia and EMEA reporting units has decreased below what would be considered a substantial margin.

Economic Capital
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in our business.

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Our economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. Economic capital-based risk estimation is an evolving science and industry best practices have emerged and continue to evolve. Areas of evolving industry best practices include stochastic liability valuation techniques, alternative methodologies for the calculation of diversification benefits, and the quantification of appropriate shock levels. MetLife’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.
For further information, see “Financial Measures and Segment net investment income is credited or charged based on the level of allocated equity; however, changesAccounting Policies” in allocated equity do not impact our consolidated net investment income, net income (loss), or adjusted earnings.
Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios adjusted for allocated equity. Other costs are allocated to eachNote 2 of the segments based upon: (i) a review ofNotes to the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.Interim Condensed Consolidated Financial Statements.
Acquisitions and Dispositions
Acquisition of PetFirst
In January 2020, the Company completed the acquisition of PetFirst Healthcare, LLC (“PetFirst”), a fast-growing pet health insurance administrator.
Pending Disposition of MetLife Hong Kong
For information regarding the Company'sCompany’s definitive agreement to sell its two wholly-owned subsidiaries, MetLife Limited and Metropolitan Life Insurance Company of Hong Kong Limited (collectively, “MetLife Hong Kong”), see Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements. See also Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for information on divested businesses.

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Results of Operations
Consolidated Results
Business Overview. Overall sales for the three months ended June 30, 2019 decreased from prior period levels despite higher sales in many of our businesses, due to a large pension risk transfer transaction in the prior period in our RIS business. Excluding this transaction, sales in our U.S. segment improved primarily as a result of an increase in funding agreement issuances, partially offset by lower sales of stable value products. In addition, sales improved in our Group Benefits business. Lower sales of foreign currency-denominated annuity products, partially offset by higher accident & health product sales, both in Japan, was the primary driver of lower sales in our Asia segment. Sales in our Latin America segment improved as a result of higher sales of individual and group life products in Brazil, Mexico and Chile and higher sales of individual accident & health and retirement products in Chile. In our EMEA segment, sales improved as a result of increases in our employee benefits business in the U.K. and Egypt and our credit life business in Turkey.
 Three Months
Ended
June 30,		 Six Months
Ended
June 30,		 Three Months Ended March 31, 
 2019 2018 2019 2018 2020 2019 
 (In millions) (In millions)
Revenues             
Premiums $10,129
 $15,153
 $19,534
 $24,331
 $9,466
 $9,405
 
Universal life and investment-type product policy fees 1,412
 1,370
 2,777
 2,762
 1,431
 1,365
 
Net investment income 4,693
 4,473
 9,601
 8,218
 3,061
 4,908
 
Other revenues 478
 475
 972
 949
 439
 494
 
Net investment gains (losses) 61
 (227) 76
 (560) (288) 15
 
Net derivative gains (losses) 724
 (59) 839
 290
 4,201
 115
 
Total revenues 17,497
 21,185
 33,799
 35,990
 18,310
 16,302
 
Expenses             
Policyholder benefits and claims and policyholder dividends 10,295
 15,175
 19,667
 24,190
 9,314
 9,372
 
Interest credited to policyholder account balances 1,515
 1,424
 3,476
 2,193
 80
 1,961
 
Capitalization of DAC (837) (834) (1,649) (1,630) (774) (812) 
Amortization of DAC and VOBA 689
 707
 1,313
 1,400
 788
 624
 
Amortization of negative VOBA (10) (16) (20) (38) (10) (10) 
Interest expense on debt 274
 309
 508
 595
 222
 234
 
Other expenses 3,274
 3,319
 6,463
 6,523
 3,047
 3,189
 
Total expenses 15,200
 20,084
 29,758
 33,233
 12,667
 14,558
 
Income (loss) before provision for income tax 2,297
 1,101
 4,041
 2,757
 5,643
 1,744
 
Provision for income tax expense (benefit) 551
 207
 910
 606
 1,242
 359
 
Net income (loss) 1,746
 894
 3,131
 2,151
 4,401
 1,385
 
Less: Net income (loss) attributable to noncontrolling interests 5
 3
 9
 7
 3
 4
 
Net income (loss) attributable to MetLife, Inc. 1,741
 891
 3,122
 2,144
 4,398
 1,381
 
Less: Preferred stock dividends 57
 46
 89
 52
 32
 32
 
Net income (loss) available to MetLife, Inc.’s common shareholders $1,684
 $845
 $3,033
 $2,092
 $4,366
 $1,349
 
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
During the three months ended June 30, 2019,March 31, 2020, net income (loss) increased $852 million$3.0 billion from the prior period, primarily driven by a favorable changeschange in net derivative gains (losses) and net investment gains (losses).

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Management of Investment Portfolio and Hedging Market Risks with Derivatives. 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 net investment income and risk-adjusted total return. Our investment portfolio is heavily weighted toward fixed income investments, with over 80% 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. In addition, our general account investment portfolio includes, within contractholder-directed equity securities and FVOfair value option securities (collectively, “Unit-linked and (“FVO Securities”), contractholder-directed equity securities supporting unit-linked variable annuity type liabilities (“Unit-linked investments”), which do not qualify as separate account assets. Returns on these Unit-linked investments, which can vary significantly from period to period, include changes in estimated fair value subsequent to purchase, inure to contractholders and are offset in earnings by a corresponding change in policyholder account balances through interest credited to policyholder account balances.

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 bothprovision for credit loss and impairments andon our investment portfolio, as well as realized gains and losses on investments sold.
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. OngoingWe continuously review and refine our strategy and ongoing refinement of the strategy may be required to take advantage of NAICthe National Association of Insurance Commissioners (“NAIC”) rules related to a statutory accounting election for derivatives that mitigate interest rate sensitivity related to variable annuity guarantees. The restructured hedge strategy is classified as aOur macro hedge program, included in the non-VA program derivatives section of the table below, to protectprotects our overall statutory capital from significant adverse economic conditions. 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.

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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,Three Months Ended March 31,
2019 20182020 2019
(In millions)(In millions)
Non-VA program derivatives      
Interest rate$884
 $(2)$4,218
 $427
Foreign currency exchange rate56
 2
25
 (2)
Credit64
 (4)(224) 137
Equity(52) (18)515
 (226)
Non-VA embedded derivatives(47) (2)125
 (83)
Total non-VA program derivatives905
 (24)4,659
 253
VA program derivatives      
Market risks in embedded derivatives(19) 256
(1,487) 385
Nonperformance risk adjustment on embedded derivatives(13) (25)185
 (62)
Other risks in embedded derivatives(67) (78)(245) (47)
Total embedded derivatives(99) 153
(1,547) 276
Freestanding derivatives hedging embedded derivatives(82) (188)1,089
 (414)
Total VA program derivatives(181) (35)(458) (138)
Net derivative gains (losses)$724
��$(59)$4,201
 $115

The favorable change in net derivative gains (losses) on non-VA program derivatives was $929 million$4.4 billion ($734 million,3.5 billion, net of income tax). This was primarily due to long-term U.S. interest rates decreasing more in the current period than in the prior period, favorably impacting interest rate options, receive fixed interest rate swaps and total rate of return swaps. In addition, key equity markets decreasing in the current period versus increasing in the prior period, favorably impacted equity options in our macro hedge program. There was also a change in the value of the underlying assets, favorably impacting receive fixed interest ratenon-VA embedded derivatives related to funds withheld on a certain reinsurance agreement. These favorable impacts were partially offset by credit spreads widening in the current period and narrowing in the prior period, unfavorably impacting written credit default swaps and options.used in replications. 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.
The unfavorable change in net derivative gains (losses) on VA program derivatives was $146$320 million ($115253 million, net of income tax). This was due to (i) an unfavorable change of $169$369 million ($134292 million, net of income tax) in market risks in embedded derivatives, net ofpartially offset by freestanding derivatives hedging market risks in embedded derivatives, and (ii) an unfavorable change of $198 million, ($156 million, net of income tax) in other risks in embedded derivatives. These unfavorable variances were partially offset by a favorable change of $12$247 million ($9195 million, net of income tax) in the nonperformance risk adjustment on embedded derivatives, and a favorable change of $11 million, ($9 million, net of income tax) in other risks in embedded derivatives. Other risks relate primarily to the impact of policyholder behavior and other non-market risks that generally cannot be hedged.
The aforementioned $169$369 million ($134292 million, net of income tax) unfavorable change reflects a $275 million$1.9 billion ($217 million,1.5 billion, net of income tax) unfavorable change in market risks in embedded derivatives, partially offset by a $106 million$1.5 billion ($84 million,1.2 billion, net of income tax) favorable change in freestanding derivatives hedging market risks in embedded derivatives.
The primary changes in market factors are summarized as follows:
Long-term U.S. interest rates decreased more in the current period and increasedthan in the prior period, contributing to a favorable change in our freestanding derivatives and an unfavorable change in our embedded derivatives. For example, the 30-year U.S. swap rate decreased 37121 basis points in the current period and increased 11decreased 26 basis points in the prior period.
Changes in foreign currency exchange rates contributed to a favorable change in our freestanding derivatives and an unfavorable change in our embedded derivatives related to the assumed variable annuity guarantees from our former operating joint venture in Japan. For example, the Japanese yen strengthened against the U.S. dollarBritish pound by 3%7% in the current period and weakened by 4%3% in the prior period.
Key equity index levels decreased in the current period and increased in the prior period, contributing to a favorable change in our freestanding derivatives and an unfavorable change in our embedded derivatives. For example, the S&P 500 index decreased 20% in the current period and increased 13% in the prior period.
The aforementioned $11$198 million ($9156 million, net of income tax) favorableunfavorable change in other risks in embedded derivatives reflects actuarial assumption updates and a combination of factors, which include fees being deducted from accounts, changes in the benefit base, premiums, lapses, withdrawals and deaths.

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deaths, in addition to changes to cross-effect, basis mismatch, risk margin and fund allocation.
The aforementioned $12$247 million ($9195 million, net of income tax) favorable change in the nonperformance risk adjustment on embedded derivatives resulted from a favorable change of $34$144 million, before income tax, as a result ofrelated to model changes and changes in capital market inputs, such as long-term interest rates and key equity index levels, on variable annuity guarantees, partially offset by an unfavorablein addition to a favorable change of $22$103 million, before income tax, related to changes in our own credit spread.
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 yields 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 yields 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 favorableunfavorable change in net investment gains (losses) of $288$303 million ($228239 million, net of income tax) primarily reflects prior periodmark-to-market losses on FVO Brighthouse Common Stock disposed of in June 2018, as well as higher gains on sales of fixed maturityequity securities AFS in the current period, versus thewhich are measured at estimated fair value through net income, and a prior period gain on a renewable energy partnership. These unfavorable changes were partially offset by lower gainsimpairments on sales of real estate joint ventures.tax credit partnerships and higher foreign currency transaction gains.
Divested Businesses. Income (loss) before provision for income tax related to the divested businesses, excluding net investment gains (losses) and net derivative gains (losses), increased $77$5 million ($616 million, net of income tax) to a lossincome of $6$5 million ($56 million, net of income tax) in the current period from a loss of $83 million ($66 million, net of income tax)zero in the prior period. Included in this increase was a decreasean increase in total revenues of $56 million, before income tax, and an increase in total expenses of $77$51 million, before income tax. Divested businesses primarily include activity related to the separationpending disposition of Brighthouse Financial, Inc. (the “Separation”).MetLife Hong Kong.
Taxes. For the three months ended June 30, 2019,March 31, 2020, our effective tax rate on income (loss) before provision for income tax was 24%22%. Our effective tax rate 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, and the impact from the definitive agreement to sell MetLife Hong Kong, partially offset by tax benefits related to non-taxable investment income, tax credits and tax credits.the finalization of bankruptcy proceedings for a leveraged lease investment. For the three months ended June 30, 2018,March 31, 2019, our effective tax rate on income (loss) before provision for income tax was 19%and the U.S. statutory rate were both 21%. Our effective tax rate differed from the U.S. statutory rate primarily due toincluded tax benefits primarily related to non-taxable investment income and tax credits, and a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent, partiallylargely offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate and a non-deductible loss incurred on the mark-to-market and disposition of FVO Brighthouse Common Stock.rate.
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 $7increased $25 million, net of income tax, to $1,319$1,449 million, net of income tax, for the three months ended June 30, 2019March 31, 2020 from $1,326$1,424 million, net of income tax, for the three months ended June 30, 2018.March 31, 2019.

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Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
During the six months ended June 30, 2019, net income (loss) increased $980 million from the prior period, primarily driven by favorable changes in net investment gains (losses) and net derivative gains (losses).
Net Derivative Gains (Losses).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,
 2019 2018
 (In millions)
Non-VA program derivatives   
Interest rate$1,311

$(99)
Foreign currency exchange rate54

289
Credit201

(33)
Equity(278)
(1)
Non-VA embedded derivatives(130)
24
Total non-VA program derivatives1,158
 180
VA program derivatives


Market risks in embedded derivatives366

252
Nonperformance risk adjustment on embedded derivatives(75)
(5)
Other risks in embedded derivatives(114)
(83)
Total embedded derivatives177
 164
Freestanding derivatives hedging embedded derivatives(496)
(54)
Total VA program derivatives(319) 110
Net derivative gains (losses)$839
 $290
The favorable change in net derivative gains (losses) on non-VA program derivatives was $978 million ($773 million, net of income tax). This was primarily due to a favorable change in interest rate impact due to: (i) long-term U.S. interest rates decreasing in the current period and increasing in the prior period, favorably impacting receive fixed interest rate swaps, options and total rate of return swaps; and (ii) mid-term rates decreasing in the current period and increasing in the prior period, negatively impacting interest rate caps. In addition, credit spreads narrowed in the current period and widened in the prior period, favorably impacting written credit default swaps used in replications. These favorable impacts were partially offset by the unfavorable impact of equity markets increasing more in the current period versus the prior period, unfavorably impacting equity options acquired primarily as part of our macro hedge program. Also, the weakening of the U.S. dollar in the current period versus the prior period relative to certain foreign currencies, unfavorably impacted foreign currency swaps and forwards that primarily hedge foreign currency-denominated bonds. There was also a change in the value of the underlying assets, unfavorably impacting non-VA embedded derivatives related to funds withheld on a certain reinsurance agreement. 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.
The unfavorable change in net derivative gains (losses) on VA program derivatives was $429 million ($339 million, net of income tax). This was due to an unfavorable change of $328 million ($259 million, net of income tax) in freestanding derivatives hedging market risks in embedded derivatives, net of market risks in embedded derivatives, an unfavorable change of $70 million ($55 million, net of income tax) in the nonperformance risk adjustment on embedded derivatives, and an unfavorable change of $31 million, ($24 million, net of income tax) in other risks in embedded derivatives. Other risks relate primarily to the impact of policyholder behavior and other non-market risks that generally cannot be hedged.
The aforementioned $328 million ($259 million, net of income tax) unfavorable change reflects a $442 million ($349 million, net of income tax) unfavorable change in freestanding derivatives hedging market risks in embedded derivatives, partially offset by a $114 million ($90 million, net of income tax) favorable change in market risks in embedded derivatives.

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The primary changes in market factors are summarized as follows:
Key equity index levels increased more in the current period versus the prior period, contributing to an unfavorable change in our freestanding derivatives and a favorable change in our embedded derivatives. For example, the S&P 500 Index increased 17% in the current period and 2% in the prior period.
Long-term U.S. interest rates decreased in the current period and increased in the prior period, contributing to a favorable change in our freestanding derivatives and an unfavorable change in our embedded derivatives. For example, the 30-year U.S. swap rate decreased 62 basis points in the current period and increased 39 basis points in the prior period.
Changes in foreign currency exchange rates contributed to an unfavorable change in our freestanding derivatives and a favorable change in our embedded derivatives related to the assumed variable annuity guarantees from our former operating joint venture in Japan. For example, the Japanese yen strengthened against the euro by 2% in the current period and by 4% in the prior period.
The aforementioned $31 million ($24 million, net of income tax) unfavorable change in other risks in embedded derivatives reflects increased guarantee claims costs and a combination of other factors, which include fees being deducted from accounts, changes in the benefit base, premiums, lapses, withdrawals and deaths.
The aforementioned $70 million ($55 million, net of income tax) unfavorable change in the nonperformance risk adjustment on embedded derivatives resulted from an unfavorable change of $70 million, before income tax, related to changes in our own credit spread.
Net Investment Gains (Losses). The favorable change in net investment gains (losses) of $636 million ($502 million, net of income tax) primarily reflects prior period losses on FVO Brighthouse Common Stock disposed of in June 2018, as well as a decrease in mark-to-market losses on equity securities, both of which were measured at fair value through net income. Additionally, there were gains on sales of fixed maturity securities AFS in the current period versus losses in the prior period. These favorable changes were partially offset by lower gains on sales of real estate joint ventures.
Divested Businesses. Income (loss) before provision for income tax related to the divested businesses, excluding net investment gains (losses) and net derivative gains (losses), increased $79 million ($62 million, net of income tax) to a loss of $6 million ($5 million, net of income tax) in the current period from a loss of $85 million ($67 million, net of income tax) in the prior period. Included in this increase was a decrease in total revenues of $7 million, before income tax, and a decrease in total expenses of $86 million, before income tax. Divested businesses primarily include activity related to the Separation.
Taxes. For the six months ended June 30, 2019, our effective tax rate on income (loss) before provision for income tax was 23%. Our effective tax rate differed from the U.S. statutory rate primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate and the impact from the definitive agreement to sell MetLife Hong Kong, partially offset by tax benefits related to non-taxable investment income and tax credits. For the six months ended June 30, 2018, our effective tax rate on income (loss) before provision for income tax was 22%. Our effective tax rate differed from the U.S. statutory rate primarily due to tax charges from foreign earnings taxed at different rates than the U.S. statutory rate, a non-deductible loss incurred on the mark-to-market and disposition of FVO Brighthouse Common Stock and a tax adjustment in Chile. These tax charges were partially offset by tax benefits related to non-taxable investment income, tax credits and a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent.
Adjusted Earnings. Adjusted earnings available to common shareholders decreased $6 million, net of income tax, to $2,743 million, net of income tax, for the six months ended June 30, 2019 from $2,749 million, net of income tax, for the six months ended June 30, 2018.

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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,March 31, 2020
  U.S. Asia Latin America EMEA MetLife Holdings Corporate& Other Total
  (In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders$1,053
 $867
 $(213) $212
 $2,724
 $(277) $4,366
Add: Preferred stock dividends—
 —
 —
 —
 —
 32
 32
Add: Net income (loss) attributable to noncontrolling interests—
 —
 1
 1
 —
 1
 3
Net income (loss)
$1,053
 $867
 $(212) $213
 $2,724
 $(244) $4,401
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
             
Revenues:
 Net investment gains (losses)(33) 98
 (11) (6) (112) (224) (288)
 Net derivative gains (losses)439
 773
 (360) 71
 3,206
 72
 4,201
 Premiums—
 32
 —
 —
 —
 —
 32
 Universal life and investment-type product policy fees—
 21
 (3) 6
 22
 —
 46
 Net investment income(53) (241) (53) (865) (48) —
 (1,260)
 Other revenues—
 —
 —
 —
 —
 42
 42
Expenses:
 Policyholder benefits and claims and policyholder dividends(12) (34) (37) 90
 43
 (1) 49
 Interest credited to policyholder account balances4
 235
 40
 859
 —
 —
 1,138
 Capitalization of DAC—
 3
 —
 —
 —
 —
 3
 Amortization of DAC and VOBA—
 (34) —
 (1) (14) —
 (49)
 Amortization of negative VOBA—
 —
 —
 —
 —
 —
 —
 Interest expense on debt—
 —
 —
 —
 —
 —
 —
 Other expenses—
 (14) —
 (2) —
 (50) (66)
 Goodwill impairment—
 —
 —
 —
 —
 —
 —
Provision for income tax (expense) benefit(72) (322) 117
 (17) (650) 16
 (928)
Adjusted earnings$780
 $350
 $95
 $78
 $277
 $(99) $1,481
Less: Preferred stock dividends          32
 32
Adjusted earnings available to common shareholders          $(131) $1,449
               
Premiums, fees and other revenues$6,189
 $2,133
 $918
 $703
 $1,255
 $138
 $11,336
Less: adjustments to premiums, fees and other revenues—
 53
 (3) 6
 22
 42
 120
Adjusted premiums, fees and other revenues$6,189
 $2,080
 $921
 $697
 $1,233
 $96
 $11,216

Three Months Ended March 31, 2019
  U.S. Asia Latin America EMEA MetLife Holdings Corporate& Other Total
  (In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders$858
 $501
 $98
 $101
 $557
 $(431) $1,684
Add: Preferred stock dividends—
 —
 —
 —
 —
 57
 57
Add: Net income (loss) attributable to noncontrolling interests—
 —
 3
 —
 —
 2
 5
Net income (loss)
$858
 $501
 $101
 $101
 $557
 $(372) $1,746
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
             
Revenues:
 Net investment gains (losses)18
 3
 (19) 16
 86
 (43) 61
 Net derivative gains (losses)197
 329
 21
 11
 264
 (98) 724
 Premiums—
 —
 —
 —
 —
 —
 —
 Universal life and investment-type product policy fees—
 21
 —
 5
 22
 —
 48
 Net investment income(56) (21) (6) 250
 (31) 3
 139
 Other revenues—
 2
 —
 —
 —
 69
 71
Expenses:
 Policyholder benefits and claims and policyholder dividends(6) (3) (62) (2) (42) 3
 (112)
 Interest credited to policyholder account balances6
 (5) (10) (242) —
 —
 (251)
 Capitalization of DAC—
 —
 —
 —
 —
 —
 —
 Amortization of DAC and VOBA—
 (19) —
 1
 26
 —
 8
 Amortization of negative VOBA—
 —
 —
 —
 —
 —
 —
 Interest expense on debt—
 —
 —
 —
 —
 —
 —
 Other expenses—
 —
 3
 (4) —
 (81) (82)
 Goodwill impairment—
 —
 —
 —
 —
 —
 —
Provision for income tax (expense) benefit(33) (165) 15
 (11) (67) 25
 (236)
Adjusted earnings$732
 $359
 $159
 $77
 $299
 $(250) $1,376
Less: Preferred stock dividends          57
 57
Adjusted earnings available to common shareholders          $(307) $1,319

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Three Months Ended June 30, 2018
 U.S. Asia Latin America EMEA MetLife Holdings Corporate& Other Total U.S. Asia Latin America EMEA MetLife Holdings Corporate& Other Total
 (In millions) (In millions)
Net income (loss) available to MetLife, Inc.'s common shareholdersNet income (loss) available to MetLife, Inc.'s common shareholders$783
 $234
 $52
 $71
 $205
 $(500) $845
Net income (loss) available to MetLife, Inc.'s common shareholders$756
 $455
 $160
 $78
 $120
 $(220) $1,349
Add: Preferred stock dividendsAdd: Preferred stock dividends—
 —
 —
 —
 —
 46
 46
Add: Preferred stock dividends—
 —
 —
 —
 —
 32
 32
Add: Net income (loss) attributable to noncontrolling interestsAdd: Net income (loss) attributable to noncontrolling interests—
 1
 2
 1
 —
 (1) 3
Add: Net income (loss) attributable to noncontrolling interests—
 —
 2
 1
 —
 1
 4
Net income (loss)
Net income (loss)
$783
 $235
 $54
 $72
 $205
 $(455) $894
Net income (loss)
$756
 $455
 $162
 $79
 $120
 $(187) $1,385
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:             Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:             
Revenues:
Net investment gains (losses)67
 5
 1
 4
 (66) (238) (227)Net investment gains (losses)(37) 7
 31
 (11) 24
 1
 15
Net derivative gains (losses)151
 (177) (116) (2) 17
 68
 (59)Net derivative gains (losses)137
 165
 75
 (11) (220) (31) 115
Premiums—
 —
 —
 —
 —
 —
 —
Premiums—
 —
 —
 —
 —
 —
 —
Universal life and investment-type product policy fees—
 (3) —
 6
 23
 —
 26
Universal life and investment-type product policy fees—
 1
 —
 4
 22
 —
 27
Net investment income(74) 7
 (16) 269
 (40) —
 146
Net investment income(56) 113
 9
 590
 (32) 3
 627
Other revenues—
 5
 —
 —
 —
 78
 83
Other revenues—
 2
 —
 —
 —
 68
 70
Expenses:
Policyholder benefits and claims and policyholder dividends(2) 1
 2
 (24) (27) —
 (50)Policyholder benefits and claims and policyholder dividends(6) —
 (69) 21
 (77) —
 (131)
Interest credited to policyholder account balances1
 (16) —
 (252) —
 —
 (267)Interest credited to policyholder account balances3
 (133) (19) (564) —
 —
 (713)
Capitalization of DAC—
 —
 —
 —
 —
 —
 —
Capitalization of DAC—
 —
 —
 —
 —
 —
 —
Amortization of DAC and VOBA—
 1
 —
 1
 (1) —
 1
Amortization of DAC and VOBA—
 (4) —
 1
 34
 —
 31
Amortization of negative VOBA—
 —
 —
 —
 —
 —
 —
Amortization of negative VOBA—
 —
 —
 —
 —
 —
 —
Interest expense on debt—
 —
 —
 —
 —
 (30) (30)Interest expense on debt—
 —
 —
 —
 —
 —
 —
Other expenses—
 —
 2
 (12) —
 (132) (142)Other expenses—
 (1) 3
 (21) —
 (69) (88)
Goodwill impairment—
 —
 —
 —
 —
 —
 —
Goodwill impairment—
 —
 —
 —
 —
 —
 —
Provision for income tax (expense) benefitProvision for income tax (expense) benefit(31) 49
 36
 (4) 19
 (28) 41
Provision for income tax (expense) benefit(9) (51) (2) (16) 52
 2
 (24)
Adjusted earningsAdjusted earnings$671
 $363
 $145
 $86
 $280
 $(173) $1,372
Adjusted earnings$724
 $356
 $134
 $86
 $317
 $(161) $1,456
Less: Preferred stock dividendsLess: Preferred stock dividends          46
 46
Less: Preferred stock dividends          32
 32
Adjusted earnings available to common shareholdersAdjusted earnings available to common shareholders          $(219) $1,326
Adjusted earnings available to common shareholders          $(193) $1,424
                            
Adjusted earnings available to common shareholders on a constant currency basis (1)Adjusted earnings available to common shareholders on a constant currency basis (1)$671
 $352
 $135
 $77
 $280
 $(219) $1,296
Adjusted earnings available to common shareholders on a constant currency basis (1)$724
 $350
 $118
 $83
 $317
 $(193) $1,399
              
Premiums, fees and other revenuesPremiums, fees and other revenues$6,058
 $2,124
 $942
 $663
 $1,290
 $187
 $11,264
Less: adjustments to premiums, fees and other revenuesLess: adjustments to premiums, fees and other revenues—
 3
 —
 4
 22
 68
 97
Adjusted premiums, fees and other revenuesAdjusted premiums, fees and other revenues$6,058
 $2,121
 $942
 $659
 $1,268
 $119
 $11,167
              
Adjusted premiums, fees and other revenues on a constant currency basis (1)Adjusted premiums, fees and other revenues on a constant currency basis (1)$6,058
 $2,117
 $854
 $646
 $1,268
 $119
 $11,062
__________________
(1)Amounts on a reported basis 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, 2019
  U.S. Asia Latin America EMEA MetLife Holdings Corporate& Other Total
  (In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders$1,614
 $956
 $258
 $179
 $677
 $(651) $3,033
Add: Preferred stock dividends—
 —
 —
 —
 —
 89
 89
Add: Net income (loss) attributable to noncontrolling interests—
 —
 5
 1
 —
 3
 9
Net income (loss)
$1,614
 $956
 $263
 $180
 $677
 $(559) $3,131
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:
             
Revenues:
 Net investment gains (losses)(19) 10
 12
 5
 110
 (42) 76
 Net derivative gains (losses)334
 494
 96
 —
 44
 (129) 839
 Premiums—
 —
 —
 —
 —
 —
 —
 Universal life and investment-type product policy fees—
 22
 —
 9
 44
 —
 75
 Net investment income(112) 92
 3
 840
 (63) 6
 766
 Other revenues—
 4
 —
 —
 —
 137
 141
Expenses:
 Policyholder benefits and claims and policyholder dividends(12) (3) (131) 19
 (119) 3
 (243)
 Interest credited to policyholder account balances9
 (138) (29) (806) —
 —
 (964)
 Capitalization of DAC—
 —
 —
 —
 —
 —
 —
 Amortization of DAC and VOBA—
 (23) —
 2
 60
 —
 39
 Amortization of negative VOBA—
 —
 —
 —
 —
 —
 —
 Interest expense on debt—
 —
 —
 —
 —
 —
 —
 Other expenses—
 (1) 6
 (25) —
 (150) (170)
 Goodwill impairment—
 —
 —
 —
 —
 —
 —
Provision for income tax (expense) benefit(42) (216) 13
 (27) (15) 27
 (260)
Adjusted earnings$1,456
 $715
 $293
 $163
 $616
 $(411) $2,832
Less: Preferred stock dividends          89
 89
Adjusted earnings available to common shareholders          $(500) $2,743

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Six Months Ended June 30, 2018
  U.S. Asia Latin America EMEA MetLife Holdings Corporate& Other Total
  (In millions)
Net income (loss) available to MetLife, Inc.'s common shareholders$1,272
 $798
 $237
 $158
 $549
 $(922) $2,092
Add: Preferred stock dividends—
 —
 —
 —
 —
 52
 52
Add: Net income (loss) attributable to noncontrolling interests—
 1
 3
 1
 —
 2
 7
Net income (loss)
$1,272
 $799
 $240
 $159
 $549
 $(868) $2,151
Less: adjustments from net income (loss) to adjusted earnings available to common shareholders:             
Revenues:
 Net investment gains (losses)(43) 83
 4
 (2) (172) (430) (560)
 Net derivative gains (losses)97
 82
 33
 (1) 51
 28
 290
 Premiums—
 —
 —
 —
 —
 —
 —
 Universal life and investment-type product policy fees—
 (7) 7
 12
 46
 —
 58
 Net investment income(128) (79) (23) (24) (79) 5
 (328)
 Other revenues—
 9
 —
 —
 —
 157
 166
Expenses:
 Policyholder benefits and claims and policyholder dividends6
 1
 (47) (19) (38) —
 (97)
 Interest credited to policyholder account balances2
 58
 (16) 37
 —
 —
 81
 Capitalization of DAC—
 —
 1
 —
 —
 —
 1
 Amortization of DAC and VOBA—
 8
 —
 2
 (5) —
 5
 Amortization of negative VOBA—
 1
 —
 —
 —
 —
 1
 Interest expense on debt—
 —
 —
 —
 —
 (30) (30)
 Other expenses—
 (4) 2
 (16) —
 (218) (236)
 Goodwill impairment—
 —
 —
 —
 —
 —
 —
Provision for income tax (expense) benefit14
 (43) (6) 3
 41
 (10) (1)
Adjusted earnings$1,324
 $690
 $285
 $167
 $705
 $(370) $2,801
Less: Preferred stock dividends          52
 52
Adjusted earnings available to common shareholders          $(422) $2,749
               
Adjusted earnings available to common shareholders on a constant currency basis (1)$1,324
 $668
 $270
 $148
 $705
 $(422) $2,693
__________________
(1)Amounts on a reported basis for U.S., MetLife Holdings and Corporate & Other, 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 March 31, 2020 increased $49 million, or less than 1%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $154 million, or 1%, compared to the prior period, primarily due to increases in our U.S., Latin America and EMEA segments, partially offset by declines in our Asia and MetLife Holdings segments. The improvement in our U.S. segment was primarily driven by an increase in our Group Benefits business, partially offset by a decrease in our Retirement and Income Solutions (“RIS”) business. The increase in our Latin America segment was mainly driven by Mexico, Chile and Brazil. The increase in our EMEA segment was due to growth across the region. The decline in our Asia segment was primarily due to the pending disposition of MetLife Hong Kong. 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 premiums, fees and other revenues of approximately 5% per year in our MetLife Holdings segment from expected business run-off.
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Overview. AdjustedThe primary drivers of the increase in adjusted earnings remained relatively flat as compared to the prior periodwere higher net investment income due to offsetting variances as discussed below.a larger asset base, a decrease in expenses, including interest credited expenses, and higher asset-based fees, partially offset by lower investment yields, higher DAC amortization and unfavorable underwriting experience.
Foreign Currency. Changes in foreign currency exchange rates had a $30$25 million negative impact on adjusted earnings for the secondfirst quarter of 20192020 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 many of our businesses, which increased our invested asset base. Growth in the investment portfolios of our Asia U.S. and Latin AmericaU.S. segments resulted in higher net investment income. However, this was partially offset by a corresponding increaseconsistent with the growth in average invested assets, interest credited expenses on certain insurance-related liabilities.liabilities increased. Higher fee incomepremiums, fees and other revenues, net of associated policyholder benefits, in our AsiaU.S. and Latin AmericaEMEA segments was offset by lower fee income in our MetLife Holdings segment. A decreaseAn increase in expenses was primarily due to the 2019 abatement2020 reinstatement of the annual health insurer fee under the Patient Protection and Affordable Care Act (“PPACA”). The combined impact of the items affecting our business growth, partially offset by higher DAC amortization, resulted in a $60an $81 million increase in adjusted earnings.
Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency exchange rate 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 increased.decreased. Investment yields were positivelynegatively affected by higherlower returns on private equities and FVO Securities, as well as higher prepayment fees. These increases were partially offset byand lower yields on fixed income securities and lowermortgage loans. These decreases were partially offset by higher returns on private equity funds and real estate investments, and higher income from derivatives. In addition, lower earnings onNet investment income also declined as a result of the pending disposition of MetLife Hong Kong. The impact of interest rate fluctuations resulted in a decrease in our securities lending program resulted primarily from lower margins, due to a flatter yield curve. Higher average interest credited rates on our deposit-type liabilities, partially offset by lower rates on ourand long-duration liabilities, which drove a net increasedecrease in interest credited expenses. The changes in market factors discussed above and the pending disposition of MetLife Hong Kong resulted in a $24$60 million increasedecrease in adjusted earnings.
Underwriting and Other Insurance Adjustments. Unfavorable underwriting resulted in a $26$52 million decrease in adjusted earnings, primarily as a result of lessunfavorable mortality in our U.S. and MetLife Holdings segments, higher claims and lapses in our Asia segment and unfavorable morbidity in our EMEA segment. These unfavorable results were partially offset by favorable morbidity in our MetLife Holdings segment, favorable claims experience in our Group Benefits business, an increase in non-catastrophe claim costs in our Property & Casualty business and unfavorable mortality, driven by our MetLife Holdings segment. This decline in adjusted earnings was partially offset by lower catastrophe-related losses, favorable mortality in our U.S. segment and favorable morbiditymortality in our MetLife HoldingsLatin America segment. Refinements to DAC and certain insurance-related liabilities which were recorded in both periods resulted in a $31$18 million decrease in adjusted earnings, primarily in our EMEA segment.
Interest Expense on Debt. Interest expense on debt decreased $9 million, primarily due to the cancellation and repurchase of certain senior notes in 2019, partially offset by the issuance of senior notes in both periods at lower interest rates.
Expenses. Expenses decreased compared to the prior period, which resulted in a $60 million increase in adjusted earnings, primarily due to declines in our U.S. segment.
Expensescosts associated with corporate initiatives and Taxes. Expenses increased slightly as comparedprojects and lower employee-related costs, partially offset by higher interest expense on tax positions due to the prior period which reduced adjusted earnings by $6 million. audit settlements.

Taxes. For the three months ended June 30,March 31, 2020, our effective tax rate on adjusted earnings was 18%. Our effective tax rate differed from the U.S. statutory rate of 21% primarily due to tax benefits from non-taxable investment income, tax credits and the finalization of bankruptcy proceedings for a leveraged lease investment, partially offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate. For the three months ended March 31, 2019, our effective tax rate on adjusted earnings was 19%. Our effective tax rate differed from the U.S. statutory rate of 21% primarily due to tax benefits from non-taxable investment income and tax credits, partially offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate. For the three months ended June 30, 2018, our effective tax rate on adjusted earnings was 15%. Our effective tax rate differed from the U.S. statutory rate primarily due to tax benefits from non-taxable investment income, tax credits and a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent, partially offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate.
Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Overview. Adjusted earnings remained relatively flat as compared to the prior period due to offsetting variances as discussed below.
Foreign Currency. Changes in foreign currency exchange rates had a $56 million negative impact on adjusted earnings for the first six months of 2019 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.

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Business Growth. We benefited from positive net flows from many of our businesses, which increased our invested asset base. Growth in the investment portfolios of our U.S., Asia, and Latin America segments resulted in higher net investment income. However, this was partially offset by a corresponding increase in interest credited expenses on certain insurance-related liabilities. Higher fee income in our Asia and Latin America segments was offset by lower fee income in our MetLife Holdings segment. Business growth also drove an increase in commissions, which was largely offset by higher DAC capitalization. A decrease in expenses was primarily due to the 2019 abatement of the annual health insurer fee under the PPACA. The combined impact of the items affecting our business growth, partially offset by higher DAC amortization, resulted in a $138 million increase in adjusted earnings.
Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency exchange rate 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 increased. Investment yields were positively affected by higher returns on FVO Securities, higher yields on mortgage loans and higher prepayment fees. These increases were partially offset by lower income from derivatives and lower returns on real estate investments. In addition, lower earnings on our securities lending program resulted primarily from lower margins, due to a flatter yield curve. Higher investment yields were more than offset by a net increase in interest credited expenses due to the impact of interest rate fluctuations, period over period, which resulted in an increase in our average interest credited rates on deposit-type liabilities, partially offset by lower rates on long-duration liabilities. The changes in market factors discussed above, partially offset by lower DAC amortization, resulted in a $16 million decrease in adjusted earnings.
Underwriting and Other Insurance Adjustments. Favorable underwriting resulted in a slight increase in adjusted earnings primarily as a result of favorable mortality in our U.S. segment, favorable morbidity in our Group Benefits business and lower catastrophe losses, partially offset by increases in non-catastrophe claim costs in our Property & Casualty business, unfavorable claims experience in our Asia segment and unfavorable mortality in our MetLife Holdings and Latin America segments. Refinements to DAC and certain insurance-related liabilities, which were recorded in both periods, resulted in a $33 million decrease in adjusted earnings, primarily driven by our MetLife Holdings segment, partially offset by our U.S. segment.
Interest Expense on Debt. Interest expense on debt decreased by $45 million, primarily due to the exchange of senior notes for Brighthouse Financial, Inc. common stock and the redemption of senior notes for cash in 2018, partially offset by a premium paid in excess of the debt principal and accrued and unpaid interest redeemed in the current period.
Preferred Stock Dividends. Preferred stock dividends increased $37 million as a result of the issuance of Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D (“Series D preferred stock”) in March 2018 and Non-Cumulative Preferred Stock, Series E (“Series E preferred stock”) in June 2018.
Expenses. Expenses increased $17 million as a result of higher costs associated with corporate initiatives and projects, including the continued investment in our unit cost initiative, partially offset by lower interest on uncertain tax positions.
Taxes. For the six months ended June 30, 2019, our effective tax rate on adjusted earnings was 19%. Our effective tax rate differed from the U.S. statutory rate primarily due to tax benefits from non-taxable investment income and tax credits, partially offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate. For the six months ended June 30, 2018, our effective tax rate on adjusted earnings was 18%. Our effective tax rate differed from the U.S. statutory rate primarily due to tax benefits from non-taxable investment income, tax credits and a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent, partially offset by tax charges from foreign earnings taxed at different rates than the U.S. statutory rate and a tax adjustment in Chile.

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Segment Results and Corporate & Other
U.S.
Business Overview. Sales decreased for the segmentAdjusted premiums, fees and other revenues for the three months ended June 30, 2019March 31, 2020 increased $131 million, or 2%, compared to the prior period, primarily driven by a large pension risk transfer transaction in the prior period in our RIS business. Excluding this transaction, RIS sales improved primarily dueattributable to an increase in funding agreement issuances, partially offset by lower sales of stable value products. Changes in premiums for the RIS business were almost entirely offset by the related changes in policyholder benefits and claims. Sales increasedgrowth in our Group Benefits and Property & Casualty businesses, as comparedpartially offset by lower premiums in our RIS business. The increase in Group Benefits was primarily driven by improvements in both core and voluntary products. Growth in core products was driven by increases in the group life, group disability and dental businesses. Growth in voluntary products increased across the segment, driven by the impact of new sales and growth in membership in our accident & health and legal plans businesses. The increase in Property & Casualty was driven by the impact of pricing actions in the both the auto and home businesses, partially offset by a decrease in exposures in both the auto and home businesses. The decrease in RIS was mainly driven by declines in the structured settlement and income annuity businesses due to the prior period.market conditions. Changes in RIS premiums are mostly offset by a corresponding change in policyholder benefits. 
Growth in RIS’s stable value and capital market investments businesses drove an increase in policyholder account balances, resulting in higher fees and interest margins.
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)(In millions)
Adjusted revenues          
Premiums$6,234
 $11,302
 $11,801
 $16,519
$5,674
 $5,567
Universal life and investment-type product policy fees274
 262
 544
 520
275
 270
Net investment income1,795
 1,719
 3,514
 3,381
1,766
 1,719
Other revenues223
 203
 444
 407
240
 221
Total adjusted revenues8,526
 13,486
 16,303
 20,827
7,955
 7,777
Adjusted expenses          
Policyholder benefits and claims and policyholder dividends6,101
 11,233
 11,474
 16,371
5,435
 5,373
Interest credited to policyholder account balances504
 439
 1,005
 846
458
 501
Capitalization of DAC(127) (114) (241) (220)(112) (114)
Amortization of DAC and VOBA117
 114
 231
 229
119
 114
Interest expense on debt3
 4
 5
 6
2
 2
Other expenses1,009
 965
 2,002
 1,926
1,066
 993
Total adjusted expenses7,607
 12,641
 14,476
 19,158
6,968
 6,869
Provision for income tax expense (benefit)187
 174
 371
 345
207
 184
Adjusted earnings$732
 $671
 $1,456
 $1,324
$780
 $724
   
Adjusted premiums, fees and other revenues$6,189
 $6,058
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Growth. The impact of positive net flows from pension risk transfer transactions in 2019, funding agreement issuances in the current period and the impact of a large pension risk transfer transaction in the prior periodstructured settlements resulted in higher average invested assets, improving net investment income. However, consistent with the growth in average invested assets, interest credited expenses on both long-duration and deposit-type liabilities increased. Higher volume-related, and premium tax and direct expenses, driven by business growth, were partially offset by lower direct expenses, including certain employee-related expenses. This net increase in expenses, mostly offset bycoupled with the decreaseincrease due to the 2019 abatement2020 reinstatement of the annual health insurer fee under the PPACA, was 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 $46$23 million.
Market Factors. Market factors, including interest rate levels, variability in equity market returns and foreign currency exchange rate fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased slightly, primarily due to lower income from derivatives, lower yields from fixed income securities and real estate investments, and lower earnings on our securities lending program, primarily from lower margins due to a flatter yield curve. These decreases were partially offset by higher prepayment fees and higher yields on mortgage loans and private equities. However, net investment income increased slightly from the impact of an increased crediting rate on interest on economic capital. Higher average interest credited rates on our deposit-type liabilities, partially offset by lower rates on our long-duration liabilities, drove a net increase in interest credited expenses. The changes in market factors discussed above resulted in a $20 million decrease in adjusted earnings.

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Underwriting and Other Insurance Adjustments. Mortality results improved $16 million as compared to the prior period as a result of favorable claims experience in our term life and accidental death & dismemberment businesses, primarily driven by lower severity, partially offset by less favorable mortality in our universal life, pension risk transfer and structured settlement businesses. Less favorable claims experience in our Group Benefits business resulted in a $20 million decrease in adjusted earnings. This was primarily driven by unfavorable prior period development coupled with an increase in utilization in our dental business. In addition, an increase in claims severity, which was partially offset by the impact of favorable renewal results and an increase in recoveries in our group disability business, contributed to this decrease. In our Property & Casualty business, lower catastrophe-related losses were partially offset by an increase in non-catastrophe claim costs, which resulted in a $7 million increase in adjusted earnings. Non-catastrophe claim costs were driven by higher severities and frequencies in both our auto and homeowner businesses. Refinements to certain insurance and other liabilities, which were recorded in both periods, resulted in a $32 million increase in adjusted earnings.
Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Growth. The impact of positive flows from funding agreement issuances in the current period and the impact of a large pension risk transfer transaction in the prior period resulted in higher average invested assets, improving net investment income. However, consistent with the growth in average invested assets, interest credited expenses on long-duration liabilities increased. Higher volume-related and premium tax expenses were partially offset by lower direct expenses, including certain employee-related expenses. This net increase in expenses, mostly offset by the decrease due to the 2019 abatement of the annual health insurer fee under the PPACA, was 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 $90 million.
Market Factors. Market factors, including interest rate levels, variability in equity market returns and foreign currency exchange rate fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased, primarily due to lower income from derivatives, lower yields on fixed income securities private equities and lower earnings on our securities lending program, primarily from lower margins due to a flatter yield curve.mortgage loans. These decreases were partially offset by higher yieldsreturns on mortgage loans and higher prepayment fees. In addition, net investment income increased as a result of the impact of an increased crediting rate on interest on economic capital.private equity funds. The impact of interest rate fluctuations period over period, resulted in an increasea decrease in our average interest credited rates on deposit-type liabilities, partially offset by lower rates on ourand long-duration liabilities, which drove a net increasedecrease in interest credited expenses. The changes in market factors discussed above resulted in an $83a $53 million decreaseincrease in adjusted earnings.
Underwriting and Other Insurance Adjustments. Mortality results improved $48 million as compared to the prior period, as a result ofLess favorable mortality, driven by claims experience in our term life business, primarily due to lower severity in the current period and the unfavorable impact of the influenza virusincidence in the prior period, partially offset by less favorable mortalitydrove a decrease in our universal life, pension risk transfer and structured settlement businesses.adjusted earnings of $42 million. Favorable claims experience and the impact of growth in our Group Benefits business resulted in a $27an $11 million increase in adjusted earnings. ThisThe increase was primarily driven by lower claim severity,(i) favorable renewal results and an increase in recoveriesclaims experience in our group disability business. Thebusiness and (ii) the impact of growth in the business and favorable claims experience in both our accident & health and individual disabilitycritical illness businesses, also contributed to the increase in adjusted earnings. These favorable results were partially offset by less favorable individual disability and dental results. Mortality in our RIS business was flat, with favorable mortality in our pension risk transfer business offset by less favorable results driven by an increase in utilization and the impact of unfavorable prior period development in the current period.our specialized benefit resource business. In our Property & Casualty business, adjusted earnings increased slightly as a result of lower catastrophe-related losses were largelynon-catastrophe claims costs, mostly offset by adverse prior period development. Non-catastrophe claims costs declined as a result of lower frequencies primarily in our auto business, partially offset by higher non-catastrophe claims costs. Non-catastrophe claim costs were driven by higher severities in both our auto and homeowner businesses. Refinements to certain insurance and other liabilities, which were recorded in both periods, resulted in a $54 million increase in adjusted earnings.severity.

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Asia
Business Overview. SalesAdjusted premiums, fees and other revenues for the three months ended June 30, 2019March 31, 2020 decreased $41 million, or 2%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, decreased $37 million, or 2%, compared to the prior period, primarily driven by lower salesmainly due to the pending disposition of foreign currency-denominated annuityMetLife Hong Kong and a decrease in premiums from yen-denominated life products, partially offset by highergrowth in accident & health product sales, bothand foreign currency-denominated life products in Japan.Japan, as well as business growth in other markets.
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		Three Months Ended March 31,
2019
2018 2019 20182020
2019
(In millions)(In millions)
Adjusted revenues          
Premiums$1,631
 $1,654
 $3,330
 $3,402
$1,636
 $1,699
Universal life and investment-type product policy fees419
 399
 825
 793
430
 406
Net investment income944
 839
 1,824
 1,634
937
 880
Other revenues13
 13
 29
 28
14
 16
Total adjusted revenues3,007
 2,905
 6,008
 5,857
3,017
 3,001
Adjusted expenses          
Policyholder benefits and claims and policyholder dividends1,279
 1,237
 2,598
 2,580
1,321
 1,319
Interest credited to policyholder account balances424
 362
 827
 713
445
 403
Capitalization of DAC(472) (495) (951) (960)(421) (479)
Amortization of DAC and VOBA312
 313
 619
 627
315
 307
Amortization of negative VOBA(7) (12) (16) (27)(8) (9)
Other expenses955
 976
 1,910
 1,928
874
 955
Total adjusted expenses2,491
 2,381
 4,987
 4,861
2,526
 2,496
Provision for income tax expense (benefit)157
 161
 306
 306
141
 149
Adjusted earnings$359
 $363
 $715
 $690
$350
 $356
   
Adjusted earnings on a constant currency basis$350
 $350
   
Adjusted premiums, fees and other revenues$2,080
 $2,121
Adjusted premiums, fees and other revenues on a constant currency basis

$2,080
 $2,117

Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Foreign Currency.Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $11$6 million for the secondfirst quarter of 20192020 compared to the prior period, primarily due to the weakening of the Japanese yenAustralian dollar and Korean won 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 GrowthGrowth. . Asia’s premiums, fees and other revenues increased slightly as compared to the prior period as higher sales of accident & health and fee-based foreign currency-denominated life products were largely offset by a decline in sales of premium-based yen-denominated life products. The decrease in premiums from yen-denominated life products was partially offset by a related decline in policyholder benefits. 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. Asia’s premiums, fees and other revenues decreased compared to the prior period as discussed above; however, this was more than offset by a related decline in policyholder benefits which resulted in a slight increase to adjusted earnings. The combined impact of the items affecting our business growth improved adjusted earnings by $22$50 million.
Market FactorsFactors.. 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 resultsyields were favorably impacted by higher earnings from our operating joint venture in China (mainly driven by a regulatory change),derivative income, and higher returns from hedge funds and real estate investments, and higher derivative income.investments. These increases were partially offset by lower returns on private equities, lower prepayment fees and lower yields on fixed income securities supporting U.S. dollar-denominated and, to a lesser extent, Japanese yen-denominated products, both sold in Japan. The decrease in net investment income due to the pending disposition of MetLife Hong Kong more than offset the increase in investment yields. The changes in market factors and the pending disposition of MetLife Hong Kong discussed above increaseddecreased adjusted earnings by $18$17 million.
Underwriting and Other Insurance Adjustments. Higher claims in Japan and lapses in Korea decreased adjusted earnings by $11 million. Refinements to certain insurance liabilities and other liabilities which were recorded in both periods resulted in a $14 million decrease in adjusted earnings. Our prior period results include a favorable liability refinement of $20 million in Japan, partially offset by an unfavorable liability refinement of $10 million in Bangladesh.

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Expenses and Taxes. Expenses increased slightly as compared to the prior period. Our current period results include a charge of $4 million related to a withholding tax provision on dividends from our operating joint venture in China.
Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
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 2019 compared to the prior period, primarily due to the weakening of the Japanese yen and Korean won 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. Asia’s premiums, fees and other revenues increased slightly from the prior period mainly driven by growth in accident & health and foreign currency-denominated life products in Japan, as well as business growth across most Asia countries, partially offset by a decrease in premiums from yen-denominated life products. The decrease in premiums from yen-denominated life products was partially offset by a related decline in policyholder benefits. 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 improved adjusted earnings by $66 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 results were favorably impacted by higher earnings from our operating joint venture in China (mainly driven by a regulatory change), higher derivative income and higher returns from real estate investments and hedge funds. In addition, an increase in higher-yielding fixed income securities supporting U.S. dollar-denominated products sold in Japan, partially offset by lower yields on fixed income securities in Korea, improved net investment income. These increases were partially offset by lower returns on private equities. The changes in market factors discussed above increased adjusted earnings by $40 million.
Underwriting and Other Insurance Adjustments.Higher claims and lapses in Japan decreased adjusted earnings by $35$24 million. Refinements to certain insurance liabilities and other liabilities in both periods resulted in an $18a $4 million decrease in adjusted earnings. Our prior period results include a favorable liability refinement of $20 million in Japan, partially offset by an unfavorable liability refinement of $10 million in Bangladesh.
Expenses and Taxes.Expenses. ExpensesCorporate overhead expenses increased slightly as compared to the prior period, which reduced adjusted earnings by $5 million. Our current period results include a charge of $4 million related to a withholding tax provision on dividends from our operating joint venture in China.

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Latin America
Business Overview. SalesAdjusted premiums, fees and other revenues for the three months ended June 30, 2019March 31, 2020 decreased $21 million, or 2%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $67 million, or 8%, compared to the prior period, primarilymainly driven by higher major medical sales of individual and groupuniversal life productsfee growth in Brazil, Mexico, and Chile and higher sales of individualimproved market participation for accident & health and retirement products in Chile.Chile and increased retirement product sales in Brazil.
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)(In millions)
Adjusted revenues          
Premiums$773
 $688
 $1,419
 $1,387
$640
 $646
Universal life and investment-type product policy fees280
 275
 564
 557
270
 284
Net investment income360
 327
 656
 603
218
 296
Other revenues11
 9
 23
 17
11
 12
Total adjusted revenues1,424
 1,299
 2,662
 2,564
1,139
 1,238
Adjusted expenses          
Policyholder benefits and claims and policyholder dividends790
 660
 1,387
 1,306
610
 597
Interest credited to policyholder account balances86
 95
 180
 193
70
 94
Capitalization of DAC(100) (91) (194) (185)(100) (94)
Amortization of DAC and VOBA79
 71
 157
 131
74
 78
Interest expense on debt1
 1
 2
 3
1
 1
Other expenses352
 363
 718
 701
345
 366
Total adjusted expenses1,208
 1,099
 2,250
 2,149
1,000
 1,042
Provision for income tax expense (benefit)57
 55
 119
 130
44
 62
Adjusted earnings$159
 $145
 $293
 $285
$95
 $134
   
Adjusted earnings on a constant currency basis$95
 $118
   
Adjusted premiums, fees and other revenues$921
 $942
Adjusted premiums, fees and other revenues on a constant currency basis

$921
 $854
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $10$16 million for the secondfirst quarter of 20192020 compared to the prior period, mainly due to the weakening of the ArgentinianChilean and ChileanMexican pesos 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. Latin America experienced growth across several lines of business, primarily within ChileMexico and Mexico.Chile. This growth resulted in increased premiums and policy fee income, which was partiallylargely offset by related changes in policyholder benefits. Positive net flows, primarily from Chile and Argentina, partially offset by Mexico, resulted in an increase in average invested assets and generated slightly higher net investment income. Although business growth drove an increase in commissions, net of DAC capitalization, this was more than offset by higher DAC capitalization and decreases in interest credited expense on certain insurance liabilities and other variable expenses. The combined impact of the items affecting business growth, partially offset by higher DAC amortization, increased adjusted earnings by $23$3 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 increased,decreased, driven by higherlower yields on FVO Securities, due to the favorableunfavorable impact of equity markets on our Chilean encaje.encaje, as well as lower returns on derivatives in Chile and Mexico. These increasesdecreases in investment yields were partially offset by lower derivative income in Mexico and Chile and lowerhigher yields on mortgage loansfixed income securities and higher returns in Chile.other investments, both in Chile, as well as a decrease in interest credited expense. The changes in market factors discussed above increaseddecreased adjusted earnings by $14$39 million.

Underwriting and Other Insurance Adjustments. UnfavorableFavorable underwriting resulted in a $7$9 million decreaseincrease to adjusted earnings primarily driven by higherlower claims experience across the region.in Mexico and Chile. Refinements to certain insurance liabilities and other adjustments in both periods, primarily in Mexico,Chile and Brazil, and Chile, resulted in a $4 million decreaseslight increase to adjusted earnings.
Expenses and Taxes. Expenses increased slightly as compared to the prior period, which reduced adjusted earningsA slight increase in expenses was primarily driven by $5 million. Certain tax-relatedhigher legal charges and various other expenses. Tax-related adjustments in both periods resulted in a net increase in adjusted earnings of $4 million.

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Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $15 million for the first six months of 2019 compared to the prior period mainly due to the weakening of the Argentinian and Chilean pesos 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. Latin America experienced growth across several lines of business primarily within Chile and Mexico. This growth resulted in increased premiums and policy fee income, which was partially offset by related changes in policyholder benefits. Positive net flows, primarily from Chile and Argentina, resulted in an increase in average invested assets and generated higher net investment income. Although business growth drove an increase in commissions, net of DAC capitalization, this was more than offset by decreases in interest credited expense on certain insurance liabilities and other variable expenses. The combined impact of the items affecting business growth, partially offset by higher DAC amortization, increased adjusted earnings by $37 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 increased, driven by higher yields on FVO Securities, due to the favorable impact of equity markets on our Chilean encaje, and fixed income securities in Mexico and Argentina. These increases in investment yields were partially offset by lower derivative income in Mexico and Chile and lower yields on mortgage loans in Chile. The changes in market factors discussed above increased adjusted earnings by $44 million.
Underwriting and Other Insurance Adjustments. Unfavorable underwriting resulted in a $14 million decrease to adjusted earnings primarily driven by higher claims experience across the region. Refinements to certain insurance liabilities and other adjustments in both periods, primarily in Brazil, Chile and Mexico, resulted in a slight decrease to adjusted earnings.
Expenses and Taxes. A $50 million increase in expenses was primarily the result of a prior period reduction of a litigation reserve in Argentina, along with various other expense increases. Tax-related adjustments in both periods, primarily related to foreign exchange volatility in Argentina, resulted in a net decrease in adjusted earnings of $15 million. Prior period results also include tax expenses of $23 million primarily driven by a $17 million tax charge related to a tax adjustment in Chile and a $5 million tax charge in Colombia to establish a deferred tax liability due to a change in tax status.

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EMEA
Business Overview. SalesAdjusted premiums, fees and other revenues for the three months ended June 30, 2019March 31, 2020 increased $38 million, or 6%, compared to the prior period. Adjusted premiums, fees and other revenues, net of foreign currency fluctuations, increased $51 million, or 8%, compared to the prior period primarily driven by increasesdue to growth across the region, mainly in our credit life business in Turkey, our variable life business in the Gulf and our employee benefits business in the U.K. and Egypt, as well as our credit life business in Turkey.Egypt.
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)(In millions)
Adjusted revenues          
Premiums$551
 $546
 $1,093
 $1,097
$568
 $542
Universal life and investment-type product policy fees105
 107
 208
 219
116
 103
Net investment income73
 73
 147
 148
69
 74
Other revenues13
 20
 27
 36
13
 14
Total adjusted revenues742
 746
 1,475
 1,500
766
 733
Adjusted expenses          
Policyholder benefits and claims and policyholder dividends292
 286
 576
 580
310
 284
Interest credited to policyholder account balances23
 26
 47
 51
27
 24
Capitalization of DAC(126) (121) (243) (239)(130) (117)
Amortization of DAC and VOBA107
 108
 199
 214
130
 92
Amortization of negative VOBA(3) (4) (4) (10)(2) (1)
Other expenses350
 339
 688
 690
332
 338
Total adjusted expenses643
 634
 1,263
 1,286
667
 620
Provision for income tax expense (benefit)22
 26
 49
 47
21
 27
Adjusted earnings$77
 $86
 $163
 $167
$78
 $86
   
Adjusted earnings on a constant currency basis$78
 $83
   
Adjusted premiums, fees and other revenues$697
 $659
Adjusted premiums, fees and other revenues on a constant currency basis$697
 $646
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $9 million for the second quarter of 2019 as compared to the prior period, primarily driven by the strengthening of the U.S. dollar against the Turkish lira and the euro. 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 from our accident & health and credit life businesses in Turkey and across several European markets, partially offset by a decrease in our pensions business in Romania due to regulatory changes, increased adjusted earnings by $2 million.
Underwriting and Other Insurance Adjustments. Favorable underwriting, primarily in our accident & health and employee benefits businesses in the Gulf, increased adjusted earnings by $6 million. Refinements to certain insurance-related assets and liabilities that were recorded in both periods resulted in a $4 million increase in adjusted earnings.
Expenses. Adjusted earnings decreased by $13 million, primarily due to the prior period release of provisions arising from the finalization of historic corporate tax filings.
Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Foreign Currency. Changes in foreign currency exchange rates decreased adjusted earnings by $19$3 million for the first six monthsquarter of 20192020 as compared to the prior period, primarily driven by the strengthening of the U.S. dollar against the Turkish lira, the euro the British pound and the Polish zloty. 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 from our accident & health and credit life businessesbusiness in Turkey and across several European markets, partially offset by a decrease in our pensionsvariable life business in Romania due to regulatory changes,the Gulf increased adjusted earnings by $6$10 million.

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Market Factorsfactors.. Market factors, including interest rate levels, and variability in equity market returns, impactedand foreign currency exchange rate fluctuations, continued to impact our results favorably by $7 million primarily due to higherresults. DAC amortization increased in our variable life businesses. In addition, investment yields were lower in Turkey, Ukraine and Ukraine.several European markets. The changes in market factors discussed above resulted in a $15 million decrease in adjusted earnings.

Underwriting and Other Insurance Adjustments. FavorableAdjusted earnings decreased by $9 million as a result of unfavorable underwriting primarilyexperience in (i) our ordinary life business in the Gulf, France and Portugal, (ii) our credit life business in Turkey, and (iii) our accident & health business in the Gulf and Turkey, as well asGreece, partially offset by favorable underwritingexperience in our employee benefits business in the Gulf, increased adjusted earnings by $14 million.United Kingdom (“U.K.”). Refinements to certain insurance-related assets and liabilities that were recorded in both periods resulted in a $7$19 million increasedecrease in adjusted earnings.earnings due to increased amortization of DAC and VOBA in our variable life business, as well as prior period refinements to certain liabilities in our life business in Czech Republic.
Expenses and Taxes.Adjusted earnings decreasedincreased by $15$24 million, mainly driven by lower compensation-related expenses, lower costs associated with enterprise-wide initiatives and various other expense decreases. Adjusted earnings increased by $4 million primarily due to the prior period release of provisions arising from the finalization of historic corporate tax filings. Adjusted earnings decreased by $4 million due to an unfavorable revision to a tax asset in Greece.
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 premiums, fees and other revenues of approximately 5% 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,		Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)(In millions)
Adjusted revenues          
Premiums$924
 $957
 $1,851
 $1,907
$904
 $927
Universal life and investment-type product policy fees286
 301
 560
 615
294
 274
Net investment income1,338
 1,329
 2,625
 2,681
1,315
 1,287
Other revenues65
 68
 132
 135
35
 67
Total adjusted revenues2,613
 2,655
 5,168
 5,338
2,548
 2,555
Adjusted expenses          
Policyholder benefits and claims and policyholder dividends1,703
 1,706
 3,351
 3,256
1,661
 1,648
Interest credited to policyholder account balances227
 235
 453
 471
218
 226
Capitalization of DAC(8) (10) (14) (20)(5) (6)
Amortization of DAC and VOBA80
 101
 143
 201
100
 63
Interest expense on debt2
 2
 4
 4
2
 2
Other expenses237
 275
 464
 551
228
 227
Total adjusted expenses2,241
 2,309
 4,401
 4,463
2,204
 2,160
Provision for income tax expense (benefit)73
 66
 151
 170
67
 78
Adjusted earnings$299
 $280
 $616
 $705
$277
 $317
   
Adjusted premiums, fees and other revenues$1,233
 $1,268
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018March 31, 2019
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Growth. The negativeNegative net flows infrom our deferred annuities business and a decrease in universal life deposits resulted in lower fee income. Slightly lowerThis decrease was slightly offset by higher net investment income, resulting from a reducedhigher invested asset base. The higher invested asset base also decreased adjusted earnings.was primarily the result of positive net flows in our long-term care business. The combined impact of the items affecting our business growth partially offset by lower DAC amortization, resulted in a $24$25 million decrease in adjusted earnings.

Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency exchange rate fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields increased primarily due to higher returns on private equities and FVO Securities, as well as increased prepayments. The increase in investment yields wasequity funds, partially offset by a decline inlower yields on fixed income securities and lower returns on real estate investments.securities. In our deferred annuity business, higher equity returns drove an increase in asset-based fee income.income, increasing adjusted earnings. These favorable earnings impacts were more than offset by higher costs associated with our variable annuity guaranteed minimum death benefits (“GMDBs”) and DAC amortization. The changes in market factors discussed above resulted in a $9 million increase in adjusted earnings.

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Underwriting and Other Insurance Adjustments. Adjusted earnings decreased $14 million, primarily driven by less favorable underwriting in our traditional life business. Refinements to DAC that were recorded in the current period resulted in a $13 million increase in adjusted earnings.
Expenses. Adjusted earnings increased by $33 million as a result of lower expenses, primarily as a result of enterprise-wide initiatives, as well as declines in employee-related costs.
Six Months Ended June 30, 2019 Compared with the Six Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Growth. The negative net flows in our deferred annuities business and a decrease in universal life deposits resulted in lower fee income. Lower net investment income, resulting from a reduced invested asset base, primarily in fixed income securities, decreased adjusted earnings. The reduced invested asset base is primarily the result of negative net flows in our deferred annuities and life businesses. This decline was partially offset by invested asset growth from our long-term care business. The combined impact of the items affecting our business growth, partially offset by lower DAC amortization, resulted in a $51 million decrease in adjusted earnings.
Market Factors. Market factors, including interest rate levels, variability in equity market returns, and foreign currency exchange rate fluctuations, continued to impact our results; however, certain impacts were mitigated by derivatives used to hedge these risks. Investment yields decreased primarily due to lower yields on fixed income securities and lower returns on real estate investments. The decline in investment yields was partially offset by increased prepayment fees and higher returns on FVO Securities. The changes in market factors discussed above, partially offset by lower DAC amortization, resulted in a $14$16 million decrease in adjusted earnings.
Underwriting and Other Insurance Adjustments. Adjusted earnings decreased $31 million, primarily drivenFavorable underwriting in our long-term care business was largely offset by less favorable underwriting in our universal life and traditional life and annuity businesses. Refinements to DAC and certain insurance-related liabilities that were recordedRun-off of our closed block, as well as a reduction in both periods resulted in an $75 million decrease in adjusted earnings. This includes a prior period favorable reserve adjustment relating to certain variable annuity guarantees assumed from a former joint venture in Japan.
Expenses. Adjusted earnings increased by $73 millionour dividend scale as a result of the sustained low interest rate environment, contributed to lower expenses, primarily due to declinesdividend expense and resulted in employee-related costs, as well asa slight increase in adjusted earnings. The impact of this dividend action was more than offset by lower expenses as a result of enterprise-wide initiatives.net investment income.
Corporate & Other
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)(In millions)
Adjusted revenues          
Premiums$16
 $6
 $40
 $19
$12
 $24
Universal life and investment-type product policy fees—
 —
 1
 —
—
 1
Net investment income44
 40
 69
 99
16
 25
Other revenues82
 79
 176
 160
84
 94
Total adjusted revenues142
 125
 286
 278
112
 144
Adjusted expenses          
Policyholder benefits and claims and policyholder dividends18
 3
 38
 —
26
 20
Capitalization of DAC(4) (3) (6) (5)(3) (2)
Amortization of DAC and VOBA2
 1
 3
 3
1
 1
Interest expense on debt268
 272
 497
 552
217
 229
Other expenses289
 259
 511
 491
136
 222
Total adjusted expenses573
 532
 1,043
 1,041
377
 470
Provision for income tax expense (benefit)(181) (234) (346) (393)(166) (165)
Adjusted earnings(250) (173) (411) (370)(99) (161)
Less: Preferred stock dividends57
 46
 89
 52
32
 32
Adjusted earnings available to common shareholders$(307) $(219) $(500) $(422)$(131) $(193)
   
Adjusted premiums, fees and other revenues$96
 $119

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The table below presents adjusted earnings available to common shareholders by source:
Three Months
Ended
June 30,		 Six Months
Ended
June 30,		Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)(In millions)
Business activities$12
 $12
 $25
 $18
$18
 $13
Net investment income46
 50
 75
 107
17
 29
Interest expense on debt(280) (282) (519) (575)(229) (239)
Corporate initiatives and projects(117) (97) (217) (136)(31) (100)
Other(92) (90) (121) (177)(40) (29)
Provision for income tax (expense) benefit and other tax-related items

181
 234
 346
 393
166
 165
Preferred stock dividends(57) (46) (89) (52)(32) (32)
Adjusted earnings available to common shareholders$(307) $(219) $(500) $(422)$(131) $(193)
Three Months Ended June 30, 2019March 31, 2020 Compared with the Three Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Interest Expense on Debt. Interest expense on debt decreased slightly, primarily due to the exchange of senior notes for FVO Brighthouse Common Stock and the redemption of senior notes for cash in 2018, largely offset by a premium paid in excess of the debt principal and accrued and unpaid interest redeemed in the current period.
Corporate Initiatives and Projects. Adjusted earnings decreased $16 million due to higher expenses associated with corporate initiatives and projects, most notably, costs associated with the continued investment in our unit cost initiative, partially offset by lower costs associated with certain other enterprise-wide initiatives.
Provision for Income Tax (Expense) Benefit and Other Tax-Related Items. An unfavorable change in Corporate & Other’s effective tax rate was primarily due to a prior period tax benefit related to a non-cash transfer of assets from a wholly-owned U.K. investment subsidiary to its U.S. parent and 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.
Other. Adjusted earnings decreased slightly, primarily as a result of a loss related to the sale of a run-off business that was previously reinsured and increases in certain corporate-related and legal expenses, partially offset by lower interest expenses on tax positions.
Preferred Stock Dividends. Preferred stock dividends increased $11 million as a result of the issuance of Series E preferred stock in June 2018.
Six Months Ended June 30,March 31, 2019 Compared with the Six Months Ended June 30, 2018
Unless otherwise stated, all amounts discussed below are net of income tax.
Business Activities. Adjusted earnings from business activities increased $6$4 million. This was primarily related to improved results from certain of our start-up operations.businesses.
Net Investment Income. Higher losses on tax credit partnerships and lowerVariability in equity market results decreased returns on private equities, hedge funds and real estate investments unfavorablyour equity sensitive investments. In addition, decreased income on fixed income securities negatively impacted net investment income. These decreases were partially offset by an increase in incomethe favorable impact of higher returns on fixed income securities,private equities and real estate investments, resulting in a decrease of $25$9 million in net investment income.
Interest Expense on Debt. Interest expense on debt decreased by $44$8 million, primarily due to the exchangecancellation and repurchase of certain senior notes in 2019, partially offset by the issuance of senior notes for FVO Brighthouse Common Stock and the redemption of senior notes for cash in 2018, partially offset by a premium paid in excess of the debt principal and accrued and unpaidboth periods at lower interest redeemed in the current period.rates.
Corporate Initiatives and ProjectsProjects.. Adjusted earnings decreased $64increased $55 million due to higherlower expenses associated with corporate initiatives and projects, most notably,primarily due to prior period costs associated with the continued investment inrelated to our unit cost initiative, partially offset by lower costs associated with certain other enterprise-wide initiatives.initiative.
Provision for Income Tax (Expense) Benefit and Other Tax-Related Items. An unfavorableA favorable change in Corporate & Other’s effective tax rate was primarily due to the finalization of bankruptcy proceedings for a prior period tax benefit related to a non-cash transfer of assets from a wholly-owned U.K.leveraged lease investment, subsidiary to its U.S. parent andpartially offset by lower utilization of tax preferenced items, which include non-taxable investment income and tax credits, taxes on stock compensation and foreign earnings taxed at different rates than the U.S. statutory rate.

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Other. Adjusted earnings increased $44decreased $9 million, primarily as a result of lowerhigher interest expenses on tax positions due to prior period audit settlements, lower legal expensesearnings related to reinsurance activity and declines in various otherhigher legal expenses, partially offset by a loss related to the sale of a run-off business that was previously reinsured,lower employee-related costs, as well as increasesdecreases in certain corporate-related expenses.
Preferred Stock Dividends. Preferred stock dividends increased $37 million as a result of the issuance of Series D preferred stock in March 2018 and Series E preferred stock in June 2018.

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Investments
Investment Risks
Our primary investment objective is to optimize, net of income tax, risk-adjusted net investment income and risk-adjusted total return while ensuring that assets and liabilities are managed on a cash flow and duration basis. The Investments Department, led by the Chief Investment Officer, manages investment risks through the Investments Risk Committee using a risk control framework comprised of policies, procedures and limits. This committee reviewsThe Investment Risk Committee and Asset-Liability Steering Committee review and monitors investment risk limits and tolerances. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Investment Risks” included in the 20182019 Annual Report for an explanation of investment risks and our risk control framework.
Current Environment
As a global insurance company, we continue to be impacted by the changing global financial and economic environment, as well as the fiscal and monetary policy of central banks around the world.world and government measures. The COVID-19 Pandemic has had a major impact on the global economy and financial markets and has caused significant volatility in the global equity, credit and real estate markets. See “— Industry Trends — Financial and Economic Environment.” Measures taken by
Governments and central banks around the world are responding to the COVID-19 Pandemic with unprecedented fiscal and monetary policies, which are expected to have significant and ongoing effects on financial markets and the global economy. These policy responses include fiscal and monetary stimulus measures, including, with respectbut not limited to, financial assistance, liquidity programs, new financing facilities and reductions in the level of interest rates to near zero, zero and in some markets, negative. As time progresses we will know more about the efficacy of these policies and what they may have anmean for the outlook for the global economy and financial markets, but currently there are too many factors, to reliably estimate the duration and severity of the impact onof the pricing levels of risk-bearing investments and may adversely impactCOVID-19 Pandemic to adequately determine its impacts on our business operations, investment portfolio and derivatives.
As a result of the impact of the COVID-19 Pandemic on the global economy and the markets, in the first quarter of 2020 there was an economic slowdown and significant volatility in the financial markets, including, liquidity driven price dislocation and credit spread widening. As a result, in the first quarter of 2020, the value of certain investments within our portfolio decreased, however, some of those effects were mitigated by an increase in the value of certain freestanding derivatives that hedge such market risks. These conditions 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.

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, as well as those resulting from the COVID-19 Pandemic. Our investment portfolio in the following Non-U.S. countries are currently the most affected by these conditions. The following table presents a summary of selected country fixed maturity securities AFS, at estimated fair value. The information below is presented on a “country of risk basis” (e.g. where the issuer primarily conducts business). Sovereign includes government and agency.
 Selected Country Fixed Maturity Securities AFS at March 31, 2020
 Sovereign   Financial
Services		 Non-Financial
Services		 Structured Total (1)
 (Dollars in millions)
United Kingdom$25
 $4,841
 $11,193
 $117
 $16,176
Mexico2,245
 879
 1,902
 54
 5,080
China351
 5
 425
 —
 781
Italy38
 73
 542
 —
 653
Hong Kong SAR67
 32
 277
 —
 376
Turkey187
 1
 36
 20
 244
Argentina164
 2
 16
 —
 182
Lebanon4
 —
 —
 —
 4
Total$3,081
 $5,833
 $14,391
 $191
 $23,496
Investment grade %88.5% 98.4% 94.0% 83.2% 94.3%
__________________
(1)The par value, amortized cost net of ACL, and estimated fair value net of purchased credit default swaps of these selected country fixed maturity securities AFS was $22.8 billion, $23.9 billion and $23.2 billion, respectively, at March 31, 2020. The notional value and estimated fair value of the purchased credit default swaps was $343 million and $17 million, respectively, at March 31, 2020. The sovereign securities amounts for Argentina and Lebanon are net of ACL of $123 million and $13 million, respectively, at March 31, 2020. See “— Investment Allowance for Credit Loss and Impairments - Overview.”
Selected Sectors: As a result of current economic conditions including the effects on the global economy and financial markets from the COVID-19 Pandemic, certain sectors of our investment portfolio experienced stress during the first quarter of 2020. Our fixed maturities securities AFS exposure to stressed sectors is summarized below:
 Selected Sectors at March 31, 2020
SectorsBook Value (1)    Investment Grade % % of Total Investments
 (Dollars in millions)
Energy$8,696
 85% 1.7%
Airports3,489
 93% 0.7%
Airlines556
 78% 0.1%
Cruise Lines / Leisure504
 86% 0.1%
Restaurants415
 89% 0.1%
Lodging307
 77% 0.1%
Fixed Maturity Securities AFS Exposure to Stressed Sectors (2)$13,967
   2.8%
Total Investments (3)$507,205
    
_________

(1)Fixed maturity securities AFS at amortized cost, net of ACL.
(2)The estimated fair value of these fixed maturity securities AFS was $13.0 billion at March 31, 2020.
(3)Represents total cash, cash equivalents and invested assets.
We maintain a diversified energy sector fixed maturity securities AFS portfolio across sub-sectors and issuers. This portfolio is primarily invested in higher quality, highly rated investment grade securities and is defensively positioned in sub-sectors which are less impacted by low oil prices. During the three months ended March 31, 2020, we reduced our exposure to such securities by 5%. Through our energy sector securities, we have exposure to the volatility in, and current low level of oil prices, largely as a result of the COVID-19 Pandemic. As a result, this securities portfolio decreased in value during the first quarter of 2020, from an unrealized gain at December 31, 2019 of $849 million to an unrealized loss of $892 million at March 31, 2020.
In addition to the above information, we have included additional disclosures later in this section for asset types within our investment portfolio that may be impacted by the COVID-19 Pandemic, including fixed maturity securities AFS, including below investment grade securities and structured products, equity securities, Unit-linked investments, FVO Securities, mortgage loans, real estate and real estate joint ventures, private equity funds and hedge funds.
We manage direct and indirect investment exposure in the selected countries, sectors and asset types through fundamental analysis and we continually monitor and adjust our level of investment exposure.
Investment Allowance for Credit Loss and Impairments - Overview
On January 1, 2020, we adopted the new expected credit loss guidance. See “— Summary of Critical Accounting Estimates — Investment Allowance for Credit Loss and Impairments” and “— Industry Trends — Financial and Economic Environment.” For our mortgage loans and leveraged and direct financing leases, this new guidance requires that we incorporate the impact of both current and forecasted economic conditions and estimate lifetime expected credit loss in determining the ACL. Upon adoption of this new guidance, our ACL reflected the then current and forecasted economic conditions and our estimate of lifetime expected credit loss. We incorporated changes for the effects of the COVID-19 Pandemic into our economic forecast, using available information at that time, to reflect our best estimate, in determining the level of our ACL for mortgage loans and leveraged and direct financing leases at March 31, 2020.
Upon adoption of the new expected credit loss guidance, we increased our mortgage loan and lease ACL and liability for unfunded mortgage loan commitments by $141 million, or 40%. During the three months ended March 31, 2020, we increased our mortgage loan and lease ACL and liability for unfunded mortgage loan commitments by $39 million. Our mortgage loan and lease ACL and liability for unfunded mortgage loan commitments totaled $530 million at March 31, 2020, an increase of 50% from December 31, 2019.
During the three months ended March 31, 2020, we recorded an ACL for our fixed maturity securities AFS of $187 million. As a result, our total investments-related ACL and liability for unfunded mortgage loan commitments totaled $717 million at March 31, 2020. During the three months ended March 31, 2020, we recorded a charge for provisions for credit loss and impairments of $267 million.
The determination of the amount of our ACL and impairments on our investment portfolio is highly subjective. Our ACL is revised as conditions change and new information becomes available. Provisions for credit loss and impairments recognized in future quarters on our investment portfolio will depend primarily on future economic fundamentals, including the evolving impact of the COVID-19 Pandemic, performance of our issuers, borrowers, tenants and lessees, changes in credit ratings, collateral valuation, and changes in estimated fair value. In upcoming periods, if there are adverse changes in the above factors, provisions for credit loss and impairments may be recorded, as well as changes in the ACL for which a provision for credit loss was previously recorded.
Investment Outlook
Our investment outlook can be affected by known and unknown risks and other uncertainties, such as those posed by the COVID-19 Pandemic. Due to the evolving and highly uncertain nature of the COVID-19 Pandemic and the economic slowdown and significant volatility in the equity, credit and real estate markets, we are continually reviewing our assumptions, implementing plans and taking precautions. As we obtain more information regarding the effect of the COVID-19 Pandemic, the effect and efficacy of efforts taken to respond to it, and the impact of these events on our investment portfolio and derivatives, we may revise our outlook.

We anticipate that the current low interest rate environment continuesand the significant volatility in the equity, credit and real estate markets will continue in 2020, and potentially longer. We expect these market-related effects to have an impact across our investment portfolio, including but not limited to, fixed maturity securities AFS, including below investment grade securities and structured products, equity securities, Unit-linked investments, FVO Securities, mortgage loans, real estate and real estate joint ventures, private equity funds and hedge funds. These conditions could continue to impact our level of net investment income and the related yields, net investment gains (losses), net derivative gains (losses), level of unrealized gains (losses) within the various asset classes in our investment portfolio, and level of ACL, as well as our level of investment in lower yielding cash equivalents, short-term investments and government securities. See “Risk Factors“— Executive Summary — Economic EnvironmentConsolidated Company Outlook.”
In light of the current market conditions, including the effects of the COVID-19 Pandemic, cash flows will be invested prudently in appropriate assets over time in accordance with our ALM discipline. However, in light of uncertain global economic conditions and Capital Markets Risks — Difficult Economic Conditions May Adversely Affect Our Business, Results of Operations and Financial Condition” included in the 2018 Annual Report.
European Investments
To support our European insurance operations and related policyholder liabilities, we maintain general account investments in Europe and certain of our non-European operations invest in Europe for diversification. We have proactively mitigated risk in both direct and indirect European exposures by investing in a diversified portfolio of high quality investments with a focusimpacts on the higher-rated countries, including the U.K., France, Germany, the Netherlands, Poland, Ireland and Switzerland. The sovereign and agency debt of these countries have investment grade credit ratings from major rating agencies. European sovereign and agency fixed maturity securities AFS and perpetual hybrid securities classified as non-redeemable preferred stock are invested inglobal financial markets, we may maintain a diversified portfolio of primarily non-financial services securities. At June 30, 2019, our exposure to such securities, including loan-backed securities, totaled $43.3 billion, at estimated fair value, of which $8.5 billion was in sovereign and agency fixed maturity securities AFS. See “— Fixed Maturity Securities AFS and Equity Securities,” as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Current Environment — European Investments” included in the 2018 Annual Report for further information.
Selected Country and Sector Investments
We have exposure to country-specific volatility from both maintaining general account investments to support our insurance operations and related policyholder liabilities where we operate and through our global portfolio diversification. This includes exposure to country-specific volatility in the U.K., China, Argentina and Turkey. Our investment in sovereign fixed maturity securities AFS of these countries was $897 million at estimated fair value, at June 30, 2019. Our exposure to sovereign fixed maturity securities AFS of these countries net of purchased credit default swaps was $855 million at June 30, 2019. The notional value and estimated fair value of the sovereign purchased credit default swaps was $48 million and $6 million, respectively, at June 30, 2019. Our exposure to total fixed maturity securities AFS on a country of risk basis, to those countries, including corporate and loan-backed securities was $17.7 billion, at estimated fair value, and $17.5 billion, at amortized cost, at June 30, 2019.
We also have sector specific exposure to volatility, including the impact of variability in oil prices on the energy sector. Our investment in energy sector fixed maturity securities AFS was $9.5 billion, at estimated fair value, and $8.8 billion, at amortized cost, at June 30, 2019. Our exposure to energy sector fixed maturity securities AFS inclusive of sold credit default swaps was $9.5 billion at June 30, 2019. The notional value and estimated fair value of the energy sector sold credit default swaps was $30 million and lessslightly higher than $1 million, respectively, at June 30, 2019.
We manage direct and indirect investment exposure in the selected countries and the energy sector through fundamental credit analysis and we continually monitor and adjust ournormal level of short-term liquidity. Net investment exposure. We do not expect that our general account investments in these countriesincome may be adversely affected if the reinvestment process occurs over an extended period due to challenging market conditions or the energy sector will have a material adverse effect on our results of operations or financial condition.asset availability.

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Investment Portfolio Results
The reconciliation of net investment income under GAAP to net investment income, as reported on an adjusted earnings basis, is presented below.
For the Three Months Ended June 30, For the Six Months Ended June 30,For the Three Months Ended March 31,
2019 2018 2019 20182020 2019
(In millions)    (In millions)
Net investment income — GAAP basis$4,693
 $4,473
 $9,601
 $8,218
$3,061
 $4,908
Investment hedge adjustments118
 119
 223
 229
138
 105
Unit-linked contract income(261) (286) (997) 67
1,140
 (736)
Other4
 21
 8
 32
(18) 4
Net investment income, as reported on an adjusted basis (1)$4,554
 $4,327
 $8,835
 $8,546
$4,321
 $4,281
__________________
(1)See “— Non-GAAP“Financial Measures and OtherSegment Accounting Policies” in Note 2 of the Notes to the Interim Condensed Consolidated Financial Disclosures — Adjusted earnings and related measures — Adjusted revenues and adjusted expenses — Net investment income”Statements for a discussion of the adjustments made to net investment income under GAAP in calculating net investment income, as reported on an adjusted basis.
The following yield table presents our investment portfolio results for the periods indicated. We calculate yields on our investment portfolio using the non-GAAP performance metric of net investment income, as reported on an adjusted basis. Net investment income, as reported on an adjusted basis, includes the impact of changes in foreign currency exchange rates. This 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 March 31,
 2020 2019
 Yield % (1)     Amount         Yield % (1)     Amount        
 (Dollars in millions)
Fixed maturity securities AFS (2), (3)3.82
%$2,739
 4.23
%$2,902
Mortgage loans (3)4.37
%884
 4.73
%912
Real estate and real estate joint ventures2.95
%81
 2.04
%50
Policy loans5.23
%126
 5.28
%128
Equity securities5.43
%14
 5.43
%16
Other limited partnership interests16.22
%323
 7.59
%127
Cash and short-term investments1.73
%44
 3.08
%79
Other invested assets  266
   203
Investment income4.30
%4,477
 4.44
%4,417
Investment fees and expenses(0.13)%(134) (0.14)%(136)
Net investment income including divested businesses (4)4.17
%4,343
 4.30
%4,281
Less: net investment income from divested businesses (4)  22
   —
Net investment income, as reported on an adjusted basis   $4,321
   $4,281
 For the Three Months Ended June 30, For the Six Months Ended June 30,
 2019 2018 2019 2018
 Yield % (1)     Amount         Yield % (1)     Amount         Yield % (1) Amount Yield % (1) Amount
 (Dollars in millions)
Fixed maturity securities AFS (2), (3)4.30
%$2,975
 4.30
%$2,945
 4.27
%$5,877
 4.24
%$5,784
Mortgage loans (3)4.82
%943
 4.59
%815
 4.77
%1,855
 4.56
%1,607
Real estate and real estate joint ventures3.62
%92
 4.46
%109
 2.84
%142
 3.93
%192
Policy loans5.34
%129
 5.21
%127
 5.31
%257
 5.16
%251
Equity securities5.15
%16
 4.94
%15
 5.29
%32
 4.28
%31
Other limited partnership interests14.28
%247
 9.48
%141
 10.99
%374
 12.26
%360
Cash and short-term investments2.39
%65
 2.30
%61
 2.73
%144
 2.09
%107
Other invested assets  225
   231
 

 428
 

 459
Investment income4.66
%4,692
 4.54
%4,444
 4.55
%9,109
 4.52 %%8,791
Investment fees and expenses(0.14)%(138) (0.12)%(117) (0.14)%(274) (0.13)%(245)
Net investment income, as reported on an adjusted basis4.52
%$4,554
 4.42
%$4,327
 4.41
%8,835
 4.39
%8,546
__________________

(1)Yields are calculated as investment income as a percent ofWe calculate yields using average quarterly asset carrying values. Investment income excludesYields exclude recognized gains (losses) and losses.include the impact of changes in foreign currency exchange rates. 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, the effects of consolidating under GAAP certain variable interest entities (“VIEs”) under GAAP that are treated as consolidated securitization entities (“CSEs”) and Unit-linked investments.contractholder-directed equity securities. 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 AFS includes amounts from FVO Securities of $38($78) million and $93$55 million for the three months ended March 31, 2020 and six months endedJune 30, 2019,, respectively, and $8 millionand$14 millionfor thethree monthsandsix months endedJune 30, 2018, respectively.
(3)Investment income from fixed maturity securities AFS and mortgage loans includes prepayment fees.

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(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.
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, 2019 December 31, 2018 March 31, 2020 December 31, 2019 
Estimated Fair Value % of Total Estimated Fair Value % of Total Estimated Fair Value % of Total Estimated Fair Value % of Total 
(Dollars in millions) (Dollars in millions) 
Fixed maturity securities AFS        
Publicly-traded$263,923
 82.8%$249,595
 83.7%$268,666
 82.2%$267,617
 81.6%
Privately-placed54,766
 17.2 48,670
 16.3 58,019
 17.8 60,203
 18.4 
Total fixed maturity securities AFS$318,689
 100.0%$298,265
 100.0%$326,685
 100.0%$327,820
 100.0%
Percentage of cash and invested assets66.5% 66.0% 64.4% 66.8% 
Equity securities        
Publicly-traded$1,290
 87.4%$1,282
 89%$860
 81.9%$1,156
 86.1%
Privately-held186
 12.6 158
 11 190
 18.1 186
 13.9 
Total equity securities$1,476
 100.0%$1,440
 100.0%$1,050
 100.0%$1,342
 100.0%
Percentage of cash and invested assets0.3% 0.3% 0.2% 0.3% 
Perpetual and redeemable securities

        
Perpetual securities included within fixed maturity securities AFS and equity securities$371
 $367
 $335
 $363
 
Redeemable preferred stock with a stated maturity included within fixed maturity securities AFS$526
 $911
 $513
 $960
 
Included within fixed maturity securities AFS are structured securities including residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”) and commercial mortgage-backed securities (“CMBS”) (collectively, “Structured Securities”Products”).
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 also “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 20182019 Annual Report for further information on the processes used to value securities and the related controls.

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TableIn the first quarter of Contents

2020, the COVID-19 Pandemic contributed to financial market volatility, credit spread widening, and equity market declines. As a result, in the first quarter of 2020, the net unrealized gain on our fixed maturity securities AFS decreased $5.9 billion, from $30.1 billion at December 31, 2019 to $24.2 billion at March 31, 2020, partially offset by the increase in the value of certain freestanding derivatives that hedge market risks. In addition, in the first quarter of 2020, the value of our equity securities decreased, resulting in a mark-to-market loss of $292 million in net investment gains (losses), as the change in estimated fair value on these securities is recorded in net income.
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 are as follows:
June 30, 2019March 31, 2020
Fixed Maturity
Securities AFS		 
Equity
Securities
Fixed Maturity
Securities AFS		 
Equity
Securities
(Dollars in millions) (Dollars in millions) 
Level 1        
Quoted prices in active markets for identical assets$20,467
 6.4% $917
 62.1%$21,221
 6.5% $547
 52.1%
Level 2        
Independent pricing sources280,281
 88.0 66
 4.5 280,578
 85.8 77
 7.4 
Internal matrix pricing or discounted cash flow techniques2,029
 0.6 36
 2.4 959
 0.3 54
 5.1 
Significant other observable inputs282,310
 88.6 102
 6.9 281,537
 86.1 131
 12.5 
Level 3        
Independent pricing sources11,738
 3.7 341
 23.1 20,475
 6.3 243
 23.1 
Internal matrix pricing or discounted cash flow techniques3,813
 1.2 95
 6.5 2,948
 0.9 128
 12.2 
Independent broker quotations361
 0.1 21
 1.4 504
 0.2 1
 0.1 
Significant unobservable inputs15,912
 5.0 457
 31.0 23,927
 7.4 372
 35.4 
Total estimated fair value$318,689
 100.0% $1,476
 100.0%$326,685
 100.0% $1,050
 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.
The majority of the Level 3 fixed maturity securities AFS and equity securities were concentrated in three sectors at June 30, 2019:March 31, 2020: foreign corporate securities, U.S. corporate securities and RMBS. During thethree months endedJune 30, 2019, March 31, 2020, Level 3 fixed maturity securities AFS increased by $724 million,$5.1 billion, or 5%27%. The increase was driven by purchases in excess of sales, transfers into Level 3 in excess of transfers out of Level 3 and by an increase in estimated fair value recognized in other comprehensive income (loss) (“OCI”), partially offset by. The increase in transfers out ofinto Level 3, in excesspart, was from current market conditions including decreased liquidity, decreased transparency of transfers into Level 3. During thesix months endedJune 30, 2019, Level 3 fixed maturity securities AFSvaluations and an increased by $1.0 billion, or 7%. The increase was driven by purchases in excessuse of salesunobservable inputs, principally for U.S. and by an increase in estimated fair value recognized in OCI, partially offset by transfers out of Level 3 in excess of transfers into Level 3.foreign corporate securities.
See Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements for 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. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations — SummaryInvestments — Fixed Maturity Securities AFS and Equity Securities — Valuation of Critical Accounting Estimates — Estimated Fair Value of Investments”Securities” included in the 20182019 Annual Report for further information on the estimates and assumptions that affect the amounts reported above.
Fixed Maturity Securities AFS
See Note 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, evaluation for other-than-temporary impairment (“OTTI”), evaluation of temporarily impaired securities, OTTI losses incurred and gross gains and gross losses on sales and disposals.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 20182019 Annual Report for a discussion of the credit quality ratings assigned by Nationally Recognized Statistical Rating Organizations (“NRSRO”), credit quality designations assigned by and methodologies used by the Securities Valuation Office of the NAIC for fixed maturity securities AFS and the revised methodologies adopted by the NAIC for certain Structured Securities.

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Products.
The following table presents total fixed maturity securities AFS by NRSRO rating and the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations, except for certain Structured Securities,non-agency RMBS and CMBS, which are presented using the revised NAIC methodologies, as well as the percentage, based on estimated fair value that each NAIC designation is comprisedcomprised. NRSRO ratings are as of at:the dates shown below. Over time, credit ratings can migrate, up or down, through the continuous monitoring process of the NRSROs. As of March 31, 2020, securities are presented net of ACL, reflecting the adoption of new guidance on January 1, 2020 regarding expected credit loss. As of December 31, 2019, securities are presented at amortized cost in accordance with prior guidance. See Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for further information.
   June 30, 2019 December 31, 2018    March 31, 2020 December 31, 2019 
NAIC
Designation
 NRSRO Rating 
Amortized
Cost
 
Unrealized
Gain (Loss)
 
Estimated
Fair
Value
 
% of
Total
 
Amortized
Cost
 
Unrealized
Gain (Loss)
 
Estimated
Fair
Value
 
% of
Total
  NRSRO Rating 
Amortized
Cost net of ACL
 
Unrealized
Gain (Loss)
 
Estimated
Fair
Value
 
% of
Total
 
Amortized
Cost
 
Unrealized
Gain (Loss)
 
Estimated
Fair
Value
 
% of
Total
 
   (Dollars in millions)    (Dollars in millions) 
1 Aaa/Aa/A $201,799
 $21,795
 $223,594
 70.2% $197,604
 $11,202
 $208,806
 70.0% Aaa/Aa/A $211,478
 $24,172
 $235,650
 72.1% $207,742
 $22,966
 $230,708
 70.4%
2 Baa 73,519
 5,424
 78,943
 24.8 72,482
 659
 73,141
 24.5  Baa 74,745
 1,494
 76,239
 23.3 74,568
 6,857
 81,425
 24.8 
 Subtotal investment grade 275,318

27,219

302,537
 95.0 270,086
 11,861
 281,947
 94.5  Subtotal investment grade 286,223

25,666

311,889
 95.4 282,310
 29,823
 312,133
 95.2 
3 Ba 11,173
 317
 11,490
 3.6 11,249
 (91) 11,158
 3.7  Ba 11,865
 (866) 10,999
 3.4 11,210
 442
 11,652
 3.6 
4 B 4,223
 (47) 4,176
 1.3 4,745
 (247) 4,498
 1.6  B 3,613
 (412) 3,201
 1.0 3,297
 40
 3,337
 1.0 
5 Caa and lower 482
 (31) 451
 0.1 720
 (73) 647
 0.2  Caa and lower 694
 (130) 564
 0.2 832
 (139) 693
 0.2 
6 In or near default 33
 2
 35
 — 16
 (1) 15
 —  In or near default 42
 (10) 32
 — 6
 (1) 5
 — 
 Subtotal below investment  grade 15,911

241

16,152
 5.0 16,730
 (412) 16,318
 5.5  Subtotal below investment  grade 16,214

(1,418)
14,796
 4.6 15,345
 342
 15,687
 4.8 
 Total fixed maturity securities AFS $291,229

$27,460

$318,689
 100.0% $286,816
 $11,449
 $298,265
 100.0% Total fixed maturity securities AFS $302,437

$24,248

$326,685
 100.0% $297,655
 $30,165
 $327,820
 100.0%
As a result of current economic conditions including the effects of the COVID-19 Pandemic which caused increased concerns over more highly leveraged issuers and downgrade risk, our below investment grade securities decreased in value during the first quarter of 2020, from an unrealized gain position at December 31, 2019 of $342 million to an unrealized loss position of $1.4 billion at March 31, 2020. Foreign government securities, acquired to support our local insurance operations and related policyholder liabilities, represented $2.9 billion, or 19% of our $14.8 billion below investment grade securities, at estimated fair value, at March 31, 2020. U.S. corporate and foreign corporate securities comprise the vast majority of the remaining below investment grade securities. We have been actively repositioning our corporate below investment grade portfolios, including our syndicated bank loan portfolio, into higher quality, higher rated securities and with an increased allocation to privately-placed securities that include covenant protections.

The following tables present total fixed maturity securities AFS, based on estimated fair value, by sector classification and by NRSRO rating and the applicable NAIC designations from the NAIC published comparison of NRSRO ratings to NAIC designations, except for certain Structured Securities,non-agency RMBS and CMBS, which are presented using the revised NAIC methodologies:
 Fixed Maturity Securities AFS — by Sector & Credit Quality Rating
NAIC Designation:1 2 3 4 5 6 
Total
Estimated
Fair Value
NRSRO Rating:Aaa/Aa/A Baa Ba B Caa and Lower 
In or Near
Default
 
 (Dollars in millions)
June 30, 2019             
U.S. corporate$37,966
 $36,948
 $5,779
 $2,601
 $418
 $—
 $83,712
Foreign government58,832
 5,672
 2,229
 817
 3
 1
 67,554
Foreign corporate25,046
 33,711
 2,920
 697
 24
 —
 62,398
U.S. government and agency39,575
 428
 —
 —
 —
 —
 40,003
RMBS28,255
 586
 136
 35
 4
 33
 29,049
ABS12,292
 1,047
 344
 26
 2
 1
 13,712
Municipals11,756
 467
 32
 —
 —
 —
 12,255
CMBS9,872
 84
 50
 —
 —
 —
 10,006
Total fixed maturity securities AFS$223,594

$78,943

$11,490

$4,176

$451

$35

$318,689
Percentage of total70.2% 24.8% 3.6% 1.3% 0.1% —% 100.0%
              
December 31, 2018             
U.S. corporate$34,363
 $35,081
 $5,850
 $3,102
 $544
 $8
 $78,948
Foreign government54,149
 5,140
 2,389
 604
 5
 1
 62,288
Foreign corporate22,602
 30,849
 2,534
 669
 49
 —
 56,703
U.S. government and agency38,915
 407
 —
 —
 —
 —
 39,322
RMBS27,370
 350
 138
 94
 3
 6
 27,961
ABS11,467
 772
 204
 26
 3
 —
 12,472
Municipals11,056
 439
 38
 —
 —
 —
 11,533
CMBS8,884
 103
 5
 3
 43
 —
 9,038
Total fixed maturity securities AFS$208,806

$73,141

$11,158

$4,498

$647

$15

$298,265
Percentage of total70.0% 24.5% 3.7% 1.6% 0.2% —% 100.0%

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 Fixed Maturity Securities AFS — by Sector & Credit Quality Rating
NAIC Designation:1 2 3 4 5 6 
Total
Estimated
Fair Value
NRSRO Rating:Aaa/Aa/A Baa Ba B Caa and Lower 
In or Near
Default
 
 (Dollars in millions)
March 31, 2020             
U.S. corporate$41,777
 $35,629
 $5,207
 $2,075
 $382
 $1
 $85,071
Foreign government56,047
 5,929
 2,327
 378
 134
 29
 64,844
Foreign corporate23,718
 31,847
 3,045
 544
 41
 —
 59,195
U.S. government and agency47,435
 524
 —
 —
 —
 —
 47,959
RMBS29,823
 419
 151
 67
 6
 3
 30,469
ABS13,466
 1,173
 175
 23
 1
 —
 14,838
Municipals13,250
 600
 21
 —
 —
 —
 13,871
CMBS10,134
 118
 73
 113
 —
 —
 10,438
Total fixed maturity securities AFS$235,650

$76,239

$10,999

$3,200

$564

$33

$326,685
Percentage of total72.1% 23.3% 3.4% 1.0% 0.2% —% 100.0%
              
December 31, 2019             
U.S. corporate$41,504
 $37,915
 $5,760
 $2,199
 $374
 $1
 $87,753
Foreign government58,325
 5,866
 2,383
 392
 263
 —
 67,229
Foreign corporate26,078
 34,674
 2,810
 556
 47
 —
 64,165
U.S. government and agency41,577
 507
 —
 —
 —
 —
 42,084
RMBS27,957
 403
 102
 75
 7
 3
 28,547
ABS12,727
 1,339
 448
 25
 2
 1
 14,542
Municipals12,397
 624
 32
 —
 —
 —
 13,053
CMBS10,143
 97
 117
 90
 —
 —
 10,447
Total fixed maturity securities AFS$230,708

$81,425

$11,652

$3,337

$693

$5

$327,820
Percentage of total70.4% 24.8% 3.6% 1.0% 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 does not have any exposure to any single issuer in excess of 1% of total investments and the top 10 holdings comprised 1% and 2% of total investments at both June 30, 2019March 31, 2020 and December 31, 2018.2019, respectively. The tables below present our U.S. and foreign corporate securities holdings by industry at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Estimated
Fair
Value
 
% of
Total
 
Estimated
Fair
Value
 
% of
Total
Estimated
Fair
Value
 
% of
Total
 
Estimated
Fair
Value
 
% of
Total
(Dollars in millions)(Dollars in millions)
Industrial$44,006
 30.1% $40,556
 29.9%$42,391
 29.4% $46,018
 30.3%
Finance33,080
 22.7
 30,546
 22.5
32,934
 22.8
 34,776
 22.9
Consumer32,083
 22.0
 30,140
 22.2
30,064
 20.8
 31,952
 21.0
Utility24,010
 16.4
 22,206
 16.4
25,637
 17.8
 25,763
 17.0
Communications10,989
 7.5
 10,406
 7.7
11,062
 7.7
 11,471
 7.5
Other1,942
 1.3
 1,797
 1.3
2,178
 1.5
 1,938
 1.3
Total$146,110
 100.0% $135,651
 100.0%$144,266
 100.0% $151,918
 100.0%

As a result of current economic conditions, including the effects of the COVID-19 Pandemic, we have experienced stress within certain sub-sectors of our industrial and consumer corporate securities portfolios, principally in Energy, Airports, Airlines, Cruise Lines / Leisure, Restaurants and Lodging, as summarized in “— Current Environment — Selected Country and Sector Investments.”
Structured SecuritiesProducts 
We held $52.8$55.7 billion and $49.5$53.5 billion of Structured Securities,Products, at estimated fair value, at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, as presented in the RMBS, ABS 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, 2019 December 31, 2018March 31, 2020 December 31, 2019
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
 
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
 
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
(Dollars in millions)(Dollars in millions)
By security type:                      
Collateralized mortgage obligations$16,183
 55.7% $1,229
 $15,302
 54.7% $726
$16,447
 54.0% $676
 $16,315
 57.2% $1,185
Pass-through mortgage-backed securities12,866
 44.3
 185
 12,659
 45.3
 (174)14,022
 46.0
 551
 12,232
 42.8
 311
Total RMBS$29,049
 100.0% $1,414
 $27,961
 100.0% $552
$30,469
 100.0% $1,227
 $28,547
 100.0% $1,496
By risk profile:                      
Agency$20,390
 70.2% $693
 $19,834
 70.9% $5
$21,853
 71.7% $1,371
 $19,563
 68.5% $797
Prime1,164
 4.0
 69
 1,123
 4.0
 47
1,418
 4.7
 (86) 1,142
 4.0
 48
Alt-A3,261
 11.2
 348
 3,361
 12.0
 277
2,935
 9.6
 3
 3,323
 11.7
 347
Sub-prime4,234
 14.6
 304
 3,643
 13.1
 223
4,263
 14.0
 (61) 4,519
 15.8
 304
Total RMBS$29,049
 100.0% $1,414
 $27,961
 100.0% $552
$30,469
 100.0% $1,227
 $28,547
 100.0% $1,496
Ratings profile:                      
Rated Aaa/AAA$21,862
 75.3%   $20,666
 73.9%  $23,447
 77.0%   $21,122
 74.0%  
Designated NAIC 1$28,255
 97.3%   $27,370
 97.9%  $29,823
 97.9%   $27,957
 97.9%  
See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Investments — Fixed Maturity Securities AFS and Equity Securities — Structured SecuritiesProducts — RMBS” included in the 20182019 Annual Report for further information about collateralized mortgage obligations and pass-through mortgage-backed securities, as well as agency, prime, alternative (“Alt-A”) and sub-prime RMBS.

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TableAs result of Contents

concerns about general economic conditions, including increased unemployment levels as result of the COVID-19 Pandemic, the unrealized gain on our RMBS holdings decreased during the first quarter of 2020, from an unrealized gain of $1.5 billion at December 31, 2019 to an unrealized gain of $1.2 billion at March 31, 2020. Our RMBS holdings were comprised of 72% Agency securities that were all designated NAIC 1 and 28% of non-Agency securities, of which 97% were designated NAIC 1, at March 31, 2020. Our non-agency RMBS portfolio is defensively positioned with most of the portfolio concentrated in senior tranches with strong structural protections including credit enhancement in the form of capital structure subordination that is available to absorb losses before they impact the securities we own.
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 after 2012 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). At June 30, 2019 and December 31, 2018, the estimated fair value of our sub-prime RMBS holdings purchased since 2012 was $4.0 billion and $3.4 billion and unrealized gains (losses) were $277 million and $201 million, respectively.

ABS
Our ABS portfolio is diversified by collateral type and issuer. The following table presents our ABS portfolio by collateral type and ratings profile at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
 
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
 
Estimated
Fair
Value
 
% of
Total
 
Net
Unrealized
Gains (Losses)
(Dollars in millions)(Dollars in millions)
By collateral type:                      
Collateralized obligations (1)$7,377
 53.8% $(46) $6,724
 53.9% $(112)$7,801
 52.6% $(773) $7,974
 54.8% $(54)
Student loans1,497
 10.9
 11
 1,256
 10.1
 13
1,319
 8.9
 (52) 1,350
 9.3
 (5)
Consumer loans1,153
 7.8
 (126) 1,181
 8.1
 9
Foreign residential loans1,054
 7.7
 18
 1,066
 8.5
 11
1,013
 6.8
 2
 1,088
 7.5
 14
Automobile loans965
 7.0
 8
 895
 7.2
 1
1,001
 6.7
 (11) 813
 5.6
 7
Credit card loans603
 4.4
 3
 668
 5.3
 —
818
 5.5
 (2) 454
 3.1
 4
Consumer loans708
 5.2
 13
 580
 4.7
 4
Other loans1,508
 11.0
 18
 1,283
 10.3
 3
1,733
 11.7
 (70) 1,682
 11.6
 20
Total$13,712
 100.0% $25
 $12,472
 100.0% $(80)$14,838
 100.0% $(1,032) $14,542
 100.0% $(5)
Ratings profile:                      
Rated Aaa/AAA$7,769
 56.7%   $7,142
 57.3%  $8,831
 59.5%   $7,711
 53.0%  
Designated NAIC 1$12,292
 89.6%   $11,467
 91.9%  $13,466
 90.8%   $12,727
 87.5%  
__________________
(1) Includes primarily collateralized loan obligations and collateralized debt obligations.

As a result of current economic conditions including the effects of the COVID-19 Pandemic, causing increased concerns over leveraged lending, our $7.8 billion collateralized obligations securities portfolio, at estimated fair value, decreased in value during the first quarter of 2020, from an unrealized loss position of $54 million at December 31, 2019 to an unrealized loss position of $773 million at March 31, 2020. We have been actively repositioning this portfolio into higher quality, higher rated securities primarily collateralized by first lien senior secured loans. As a result, this portfolio includes strong structural protections, primarily credit enhancement in the form of capital structure subordination that is available to absorb losses before they impact the securities we own. We do not own equity tranches of such securities or combination notes in this portfolio. As we invest primarily in securities rated AAA, AA or A, 98% of this portfolio was investment grade rated at March 31, 2020.
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CMBS
Our CMBS portfolio is comprised primarily of securities collateralized by multiple propertiescommercial mortgage loans and our portfolio is diversified by property type, borrower, geography and vintage year. The following tables present our CMBS portfolio by NRSRO rating and vintage year at:year. As of March 31, 2020, securities are presented net of ACL, reflecting the adoption of new guidance on January 1, 2020 regarding expected credit loss. As of December 31, 2019, securities are presented at amortized cost in accordance with the prior guidance. See Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for further information.
June 30, 2019March 31, 2020
Aaa Aa A Baa 
Below
Investment
Grade
 TotalAaa Aa A Baa 
Below
Investment
Grade
 Total
Amortized
Cost
 
Estimated
Fair
Value
 
Amortized
Cost
 
Estimated
Fair
Value
 
Amortized
Cost
 
Estimated
Fair
Value
 
Amortized
Cost
 
Estimated
Fair
Value
 
Amortized
Cost
 
Estimated
Fair
Value
 
Amortized
Cost
 
Estimated
Fair
Value
Amortized
Cost net of ACL
 
Estimated
Fair
Value
 
Amortized
Cost net of ACL
 
Estimated
Fair
Value
 
Amortized
Cost net of ACL
 
Estimated
Fair
Value
 
Amortized
Cost net of ACL
 
Estimated
Fair
Value
 
Amortized
Cost net of ACL
 
Estimated
Fair
Value
 
Amortized
Cost net of ACL
 
Estimated
Fair
Value
(Dollars in millions)(Dollars in millions)
2003-2012$432
 $458
 $343
 $348
 $126
 $129
 $7
 $7
 $—
 $—
 $908
 $942
2013713
 753
 645
 676
 280
 286
 —
 —
 55
 41
 1,693
 1,756
2003-2013$1,147
 $1,177
 $1,007
 $996
 $360
 $326
 $37
 $32
 $41
 $30
 $2,592
 $2,561
2014385
 387
 496
 486
 112
 100
 —
 —
 —
 —
 993
 973
2015431
 424
 64
 63
 31
 28
 6
 5
 —
 —
 532
 520
2016283
 286
 71
 67
 55
 46
 —
 —
 —
 —
 409
 399
2017656
 650
 556
 528
 162
 130
 —
 —
 —
 —
 1,374
 1,308
20181,715
 1,796
 696
 674
 240
 195
 22
 23
 —
 —
 2,673
 2,688
2019930
 931
 161
 138
 649
 532
 —
 —
 —
 —
 1,740
 1,601
2020198
 187
 129
 114
 83
 59
 28
 28
 —
 —
 438
 388
Total$5,745

$5,838

$3,180

$3,066

$1,692

$1,416

$93

$88

$41

$30

$10,751

$10,438
Ratings Distribution  55.9%   29.4%   13.6%   0.8%   0.3%   100.0%
                       
December 31, 2019
Aaa Aa A Baa 
Below
Investment
Grade
 Total
Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value
(Dollars in millions)
2003 - 2013$1,109
 $1,169
 $973
 $1,007
 $368
 $376
 $37
 $36
 $52
 $41
 $2,539
 $2,629
2014380
 396
 487
 503
 128
 132
 —
 —
 —
 —
 995
 1,031
372
 389
 486
 502
 114
 119
 —
 —
 —
 —
 972
 1,010
2015439
 457
 89
 93
 34
 36
 —
 —
 —
 —
 562
 586
419
 436
 65
 67
 31
 33
 —
 —
 —
 —
 515
 536
2016311
 323
 73
 75
 35
 36
 —
 —
 —
 —
 419
 434
285
 298
 71
 73
 55
 56
 —
 —
 —
 —
 411
 427
2017825
 847
 639
 657
 183
 185
 40
 40
 —
 —
 1,687
 1,729
668
 689
 589
 608
 181
 182
 —
 —
 —
 —
 1,438
 1,479
20181,647
 1,745
 695
 732
 284
 300
 22
 23
 —
 —
 2,648
 2,800
1,713
 1,804
 704
 739
 240
 249
 22
 22
 —
 —
 2,679
 2,814
2019438
 447
 75
 75
 201
 206
 —
 —
 —
 —
 714
 728
744
 754
 143
 143
 652
 655
 —
 —
 —
 —
 1,539
 1,552
Total$5,185

$5,426

$3,046

$3,159

$1,271

$1,310

$69

$70

$55

$41

$9,626

$10,006
$5,310

$5,539

$3,031

$3,139

$1,641

$1,670

$59

$58

$52

$41

$10,093

$10,447
Ratings Distribution  54.2%   31.6%   13.1%   0.7%   0.4%   100.0%  53.0%   30.0%   16.0%   0.6%   0.4%   100.0%
                       
December 31, 2018
Aaa Aa A Baa 
Below
Investment
Grade
 Total
Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value		 Amortized
Cost		 Estimated
Fair
Value
(Dollars in millions)
2003 - 2012$488
 $508
 $266
 $264
 $229
 $227
 $7
 $6
 $—
 $—
 $990
 $1,005
2013723
 746
 644
 655
 279
 277
 —
 —
 59
 43
 1,705
 1,721
2014381
 379
 488
 485
 128
 127
 —
 —
 —
 —
 997
 991
2015523
 514
 81
 80
 34
 34
 —
 —
 —
 —
 638
 628
2016345
 339
 84
 80
 46
 46
 —
 —
 —
 —
 475
 465
2017862
 851
 666
 654
 234
 228
 39
 39
 —
 —
 1,801
 1,772
20181,434
 1,445
 690
 695
 292
 293
 23
 23
 —
 —
 2,439
 2,456
Total$4,756

$4,782

$2,919

$2,913

$1,242

$1,232

$69

$68

$59

$43

$9,045

$9,038
Ratings Distribution  52.9%   32.2%   13.6%   0.8%   0.5%   100.0%
The tables above reflect NRSRO ratings including Moody’s Investors Service, S&P, Fitch Ratings and Morningstar, Inc. CMBS designated NAIC 1 were 98.7% and 98.3%97.1% of total CMBS at June 30, 2019both March 31, 2020 and December 31, 2018, respectively.2019.
Evaluation of Fixed Maturity Securities AFS for OTTICredit Loss and Evaluating Temporarily ImpairedEvaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position
See NoteNotes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information about the evaluation of fixed maturity securities AFS for OTTIcredit loss and evaluation of temporarily impaired fixed maturity securities AFS.AFS in an unrealized loss position without an ACL at March 31, 2020.
OTTI LossesCredit 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 OTTI losses andthe rollforward of the ACL for the three months ended March 31, 2020, as well as gross gains and gross losses on fixed maturity securities AFS sold.

Overview of Credit Loss on Fixed Maturity SecuritySecurities AFS OTTI Losses Recognized in Earnings
Total impairments and credit-related impairments ofOverall credit loss on fixed maturity securities AFS were $0 andwas $215 million for the three months ended March 31, 2020 as compared to $10 million for the three months ended March 31, 2019. The most significant increases in credit loss was in foreign government securities, U.S. corporate securities and six months ended June 30, 2019, respectively, and less than $1 million for both the three months and six months ended June 30, 2018.

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Overall OTTI losses recognized in earnings on fixed maturityforeign corporate securities, AFSwhich were $0 and $10$215 million for the three months and six months ended June 30, 2019, respectively, as compared to less than $1March 31, 2020. An increase of $205 million for both the three months and six months ended June 30, 2018. The most significant increase in OTTI lossescredit loss was in U.S. corporate securities, which comprised $8 million for the six months ended June 30, 2019, concentrated in Argentine sovereign securities, from issuer specific factors, and for industrial securities.securities, from market driven and issuer specific factors, primarily in the energy sector in 2020.
See Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information on new guidance adopted on January 1, 2020 affecting the credit loss evaluation process and the measurement of credit loss; and a summary of the similarities and the differences of this new guidance with the previous guidance on recognition of credit loss.
Future Impairments
Future OTTIProvisions for credit loss recognized on fixed maturity securities AFS will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), and changes in credit ratings, and collateral valuation and foreign currency exchange rates. If economic fundamentals deteriorate orvaluation. In upcoming periods, if there are adverse changes in the above factors, OTTIprovisions for credit loss may be incurredrecorded, as well as changes in upcoming periods. See Note 1 of the Notes to the Interim Condensed Consolidated Financial StatementsACL on securities for which a description of new guidance to be adopted in 2020 regarding the measurement ofprovision for credit losses on financial instruments.loss was previously recorded.
Contractholder-Directed Equity Securities and Fair Value Option Securities
The estimated fair value of these investments, which are primarily comprised of Unit-linked investments, was $13.0$11.1 billion and $12.6$13.1 billion, or 2.7%2.2% and 2.8%2.7% of cash and invested assets, at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. See Notes 6 and 8 of the Notes to the Interim Condensed Consolidated Financial Statements for a description of this portfolio, its 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.
In the first quarter of 2020, the COVID-19 Pandemic contributed to financial market volatility, credit spread widening, and equity market declines. As a result, in the first quarter of 2020, the value of our Unit-linked investments and FVO Securities decreased, resulting in a mark-to-market loss of $1.2 billion in net investment income, as the change in estimated fair value on these investments is recorded in net investment income.
Securities Lending, Repurchase Agreements and RepurchaseFederal Home Loan Bank (“FHLB”) of Boston Advance Agreements
We participate in a securities lending program whereby securities are loaned to third parties, primarily brokerage firms and commercial banks. In addition, we participate in short-term repurchase agreement transactions with unaffiliated financial institutions.
In addition, a subsidiary of the Company has entered into short-term advance agreements with the FHLB of Boston. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Securities Lending” “— Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Repurchase Agreements” and Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding our securities lending program and our repurchase agreement transactions.
FHLB of Boston Advance Agreements
A subsidiary of the Company has entered into short-term advance agreements with the Federal Home Loan Bank of Boston (“FHLB of Boston”).
See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding our FHLB of Boston advance agreement transactions.further information.
Mortgage Loans
Our mortgage loans held for investment are principally collateralized by commercial, agricultural and residential properties. Mortgage loans held for investment are carried at amortized cost and the related valuation allowancesACL are summarized as follows at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
 
Recorded
Investment
 
% of
Total
 
Valuation
Allowance
 
% of
Recorded Investment
 
Recorded
Investment
 
% of
Total
 
Valuation
Allowance
 
% of
Recorded Investment
 Amortized Cost 
% of
Total
 ACL 
% of
Amortized Cost
 Amortized Cost 
% of
Total
 ACL 
% of
Amortized Cost
 (Dollars in millions) (Dollars in millions)
Commercial $49,570
 63.5% $246
 0.5% $48,463
 63.9% $238
 0.5% $50,077
 61.3% $143
 0.3% $49,624
 61.5% $246
 0.5%
Agricultural 15,334
 19.6
 48
 0.3% 14,905
 19.7
 46
 0.3% 16,788
 20.6
 84
 0.5% 16,695
 20.7
 52
 0.3%
Residential 13,188
 16.9
 63
 0.5% 12,427
 16.4
 58
 0.5% 14,763
 18.1
 237
 1.6% 14,316
 17.8
 55
 0.4%
Total $78,092
 100.0% $357
 0.5% $75,795
 100.0% $342
 0.5% $81,628
 100.0% $464
 0.6% $80,635
 100.0% $353
 0.4%
The carrying value of all mortgage loans, net of valuation allowance,ACL, was 16.3%16.0% and 16.8%16.4% of cash and invested assets at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.


131
TableOur commercial, agricultural and residential mortgage loan portfolios are subject to uncertain market conditions, including the effects of Contents

the COVID-19 Pandemic and related economic slowdown. See “— Commercial Mortgage Loans by Geographic Region and Property Type” for information regarding the expected impact on our commercial mortgage loan portfolio. The U.S. agricultural sector may experience supply chain disruptions, reduced demand for ethanol, and labor constraints from workplace social distancing measures. We expect an increase in residential mortgage loan borrower requests for short-term accommodations (e.g., payment deferrals) as a result of current economic conditions, such as increased unemployment levels.
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, 84% are collateralized by properties located in the United States, with the remaining 16% collateralized by properties located outside the United States, which includedincludes 5% of properties located in the U.K., and 4% of properties located in Mexico, at June 30, 2019.March 31, 2020. The carrying values of our commercial and agricultural mortgage loans held-for-investment located in California, New York and Texas were 18%17%, 11%10% and 7%, respectively, of total commercial and agricultural mortgage loans held for investment at June 30, 2019.March 31, 2020. 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 91%94% collateralized by properties located in the United States, and the remaining 9%6% collateralized by properties located outside the United States at June 30, 2019.March 31, 2020. The carrying values of our residential mortgage loans located in California, Florida, and New York were 32%35%, 9%, and 6%, respectively, of total residential mortgage loans at June 30, 2019.March 31, 2020.
Commercial Mortgage Loans by Geographic Region and Property Type. Commercial mortgage loans are the largest component of the mortgage loan invested asset class. The tables below present the diversification across geographic regions and property types of commercial mortgage loans held-for-investment at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
Amount 
% of
Total
 Amount 
% of
Total
Amount 
% of
Total
 Amount 
% of
Total
(Dollars in millions)(Dollars in millions)
Region              
Pacific$10,511  21.2% $10,884  22.5%$10,183  20.3% $10,169  20.5%
Non-U.S.9,463  19.1
 9,281  19.1
9,424  18.8
 10,093  20.3
Middle Atlantic7,952  16.0
 7,911  16.3
7,967  15.9
 8,302  16.7
South Atlantic6,459  13.0
 6,347  13.1
6,461  12.9
 6,487  13.1
West South Central4,386  8.9
 3,951  8.1
3,970  7.9
 4,255  8.6
East North Central3,245  6.6
 2,840  5.9
2,183  4.4
 3,066  6.2
Mountain1,755  3.5
 1,602  3.2
New England1,628  3.3
 1,481  3.1
1,670  3.3
 1,433  2.9
Mountain1,729  3.5
 1,387  2.9
West North Central593  1.2
 594  1.2
635  1.3
 607  1.2
East South Central563  1.1
 564  1.2
483  1.0
 502  1.0
Multi-Region and Other3,041  6.1
 3,223  6.6
5,346  10.7
 3,108  6.3
Total recorded investment49,570  100.0% 48,463  100.0%
Less: valuation allowances246    238   
Carrying value, net of valuation allowances$49,324    $48,225   
Total amortized cost50,077  100.0% 49,624  100.0%
Less: ACL143    246   
Carrying value, net of ACL$49,934    $49,378   
Property Type              
Office$23,755  47.9% $23,995  49.5%$22,857  45.6% $22,925  46.2%
Retail9,577  19.3
 9,089  18.7
8,842  17.7
 9,052  18.2
Apartment6,960  14.1
 7,018  14.5
8,869  17.7
 8,212  16.6
Industrial3,748  7.6
 3,719  7.7
4,101  8.2
 3,985  8.0
Hotel3,688  7.4
 3,479  7.2
3,328  6.6
 3,471  7.0
Other1,842  3.7
 1,163  2.4
2,080  4.2
 1,979  4.0
Total recorded investment49,570  100.0% 48,463  100.0%
Less: valuation allowances246    238   
Carrying value, net of valuation allowances$49,324    $48,225   
Total amortized cost50,077  100.0% 49,624  100.0%
Less: ACL143    246   
Carrying value, net of ACL$49,934    $49,378   

As a result of current economic conditions including shelter-in-place orders as a result of the COVID-19 Pandemic, we have begun to receive requests for short-term accommodations (e.g., payment deferrals) from some commercial loan borrowers, principally in the hotel and retail sectors. 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 and lower loan-to-value ratios. See “— Mortgage Loan Credit Quality - Monitoring Process” for further information. Over 99% of our commercial mortgage loan portfolio was current and 100% of our hotel and retail commercial mortgage loan portfolio was current at March 31, 2020.
Mortgage Loan Credit Quality - Monitoring Process. We monitor our mortgage loan investments on an ongoing basis, including a review of 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, and impaired mortgage loans, and carrying value of foreclosed mortgage loans.

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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, loan-to-value ratios, debt service coverage ratios and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher loan-to-value ratios and lower debt service coverage ratios. The monitoring process for agricultural mortgage loans is generally similar, with a focus on higher risk loans, such as loans with higher loan-to-value 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, loan-to-value ratios and borrower creditworthiness, including reviews on a geographic and sectorproperty-type basis. We review our residential mortgage loans on an ongoing basis.basis, with a focus on higher risk loans, such as nonperforming loans. See Note 8Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements included in the 2018 Annual Report for information on our evaluation of residential mortgage loans and related valuation allowanceACL methodology.
Loan-to-value ratios and debt service coverage ratios are common measures in the assessment of the quality of commercial mortgage loans. Loan-to-value ratios are a common measure in the assessment of the quality of agricultural mortgage loans. Loan-to-value ratios compare the amount of the loan to the estimated fair value of the underlying collateral. A loan-to-value ratio greater than 100% indicates that the loan amount is greater than the collateral value. A loan-to-value ratio of less than 100% indicates an excess of collateral value over the loan amount. Generally, the higher the loan-to-value ratio, the higher the risk of experiencing a credit loss. The debt service coverage ratio compares a property’s net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the debt service coverage ratio, the higher the risk of experiencing a credit loss. For our commercial mortgage loans, our average loan-to-value ratio was 55% at both June 30, 2019March 31, 2020 and December 31, 20182019, and our average debt service coverage ratio was2.4x and 2.5x for June 30, 2019at both March 31, 2020 and December 31, 2018, respectively.2019. The debt service coverage ratio as well asand the values utilized in calculating the ratio isare updated annually, on a rolling basis, with a portion of the portfolio updated each quarter.routinely. In addition, the loan-to-value 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 loan-to-value ratio was 46% and 47% at both June 30, 2019March 31, 2020 and December 31, 2018.2019, respectively. The values utilized in calculating theour agricultural mortgage loan loan-to-value ratio are developed in connection with the ongoing review of theour agricultural loan portfolio and are routinely updated.
Mortgage Loan Valuation AllowancesAllowance for Credit Loss.. Our valuation allowances areACL is established both on a loan specific basis for those loans considered impaired where a property specific or market specific risk has been identified that could likely result in a future loss, as well as forboth pools of loans with similar risk characteristics whereand for mortgage loans with dissimilar risk characteristics, collateral dependent loans and reasonably expected troubled debt restructurings, individually on a propertyloan specific or market specific risk hasbasis. We record an allowance for expected credit loss in an amount that represents the portion of the amortized cost basis of mortgage loans that the Company does not been identified, but for which we expect to incur a loss. Accordingly, a valuation allowance is providedcollect, resulting in mortgage loans being presented at the net amount expected to absorb these estimated probablebe collected.
In determining our ACL, management (i) pools mortgage loans that share similar risk characteristics, (ii) considers lifetime credit losses.
The determinationloss expected over the contractual term of our mortgage loans, as adjusted for expected prepayments and any extensions, and (iii) considers past events, current economic conditions and forecasts of future economic conditions. Actual credit loss realized could be different from the amount of valuation allowances is based upon our periodic evaluation and assessment of known and inherent risks associated with our loan portfolios. Such evaluations and assessments are based upon several factors, including our experience for loan losses, defaults and loss severity, and loss expectations for loans with similar risk characteristics.the ACL recorded. These evaluations and assessments are revised as conditions change and new information becomes available, which can cause the valuation allowancesACL 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 valuation allowance.ACL. Positive credit migration, including an actual or expected decrease in the level of problem loans, will result in a decrease in the valuation allowance.
ACL. See NoteNotes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information abouton how valuation allowances arethe ACL is established and monitored, and activity in and balances of the valuation allowance,ACL, as of and for the sixthree months ended June 30, 2019March 31, 2020 and 2018.2019.

See Notes 1 and 6 of the Notes to the Interim Condensed Consolidated Financial Statements for information on the new guidance adopted in 2020 affecting the credit loss evaluation process and the measurement of credit loss effective January 1, 2020; and a summary of the similarities and the differences of this new guidance with the previous guidance on recognition of credit loss.
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 a runoff portfolio. The carrying value of real estate and real estate joint ventures was $11.3 billion and $10.7 billion, or 2.2% and 2.2% of cash and invested assets, at March 31, 2020 and December 31, 2019, respectively.
As a result of current economic conditions as a result of the COVID-19 Pandemic, we expect certain of our real estate investments to experience a reduction in income, while shelter-in-place orders are in effect, principally hotel and some retail properties. 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 since acquisition to March 31, 2020 to a $6.1 billion unrealized gain position that is available to absorb valuation declines from the current economic conditions. We continuously monitor expected future cash flows of our real estate investments and incorporate them into our periodic impairment analyses. As a result of the COVID-19 Pandemic, we performed an impairment analyses in the first quarter of 2020, which included updated estimates of expected future cash flows. As a result of our impairment analyses, we recorded one impairment during the three months ended March 31, 2020 for $13 million. This impairment was recorded in net investment income as the investment is in a real estate fund. There were no impairments recognized in net investment gains (losses) on real estate and real estate joint ventures for either the three months ended March 31, 2020 or 2019 .
We diversify our real estate investments by both geographic region and property type to reduce risk of concentration. The carrying value of real estate and real estate joint ventures was $10.3 billion and $9.7 billion, or 2.2% and 2.1% of cash and invested assets, at June 30, 2019 and December 31, 2018, respectively. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for a summary of real estate investments and income earned, as well as for the portion of our real estate investments leased under operating leases, a summary of the leased real estate investments, by property type, and the related operating lease income earned.

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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, 2019March 31, 2020 and December 31, 2018,2019, the carrying value of other limited partnership interests was $7.1$8.2 billion and $6.6$7.7 billion, which included $578$580 million and $634$575 million of hedge funds, respectively. Other limited partnership interests were 1.5%1.6% of cash and invested assets at both June 30, 2019March 31, 2020 and December 31, 2018.2019. 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.
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, declines in the equity markets, which can impact the underlying results of these private equity funds, are recorded in our net investment income on a three-month lag. For a discussion of our expectation of the impact of the equity market decline in the first quarter of 2020 on our private equity returns in the second quarter of 2020, see “— Executive Summary — Consolidated Company Outlook.”

Other Invested Assets
The following table presents the carrying value of our other invested assets by type at:
 June 30, 2019
December 31, 2018
 Carrying
Value
% of
Total
Carrying
Value
% of Total
 (In millions)
 
(In millions)

Freestanding derivatives with positive estimated fair values$10,631

53.1%
$8,969

49.3%
Tax credit and renewable energy partnerships2,274

11.3

2,457

13.5
Direct financing leases1,317

6.6

1,192

6.5
Annuities funding structured settlement claims1,278

6.4

1,279

7.0
Leveraged leases1,123

5.6

1,108

6.1
Operating joint ventures841

4.2

796

4.4
FHLB common stock800

4.0

793

4.4
Funds withheld461

2.3

416

2.3
Other1,311

6.5

1,180

6.5
Total$20,036

100.0%
$18,190

100.0%
Percentage of cash and invested assets4.2%


4.0%

For the three months and six months ended June 30, 2019, tax credit partnership impairment losses were $14 million and $92 million, respectively, and renewable energy partnership disposal gains were $46 million for the six months ended June 30, 2019.
Renewable energy partnership disposal losses were $83 million for both the three months and six months ended June 30, 2018 and leveraged lease impairment losses were $105 million for the six months ended June 30, 2018.
 March 31, 2020
December 31, 2019
 Carrying
Value
% of
Total
Carrying
Value
% of
Total
 (Dollars in millions)
Freestanding derivatives with positive estimated fair values$18,869

67.8%
$10,084

53.0%
Tax credit and renewable energy partnerships1,948

7.0

1,993

10.5
Annuities funding structured settlement claims1,270

4.6

1,271

6.7
Direct financing leases1,118

4.0

1,247

6.6
Leveraged leases901

3.3

1,052

5.5
Operating joint ventures1,007

3.6

838

4.4
FHLB common stock849

3.0

809

4.3
Funds withheld503

1.8

470

2.5
Other1,374

4.9

1,251

6.6
Total$27,839

100.0%
$19,015

100.1%
Percentage of cash and invested assets5.5%


3.9%

See Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2018 Annual Report for information regarding the components of other invested assets. See Notes 7 and 8Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements for further information about freestanding derivatives with positive estimated fair valueson the new guidance adopted in 2020 affecting the credit loss evaluation process and lease investments.the measurement of credit loss, including direct financing and leveraged leases effective January 1, 2020.

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Derivatives
Derivative Risks
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. 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, 2019March 31, 2020 and December 31, 2018.2019.
•
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 ended March 31, 2020and six months endedJune 30, 2019 and 2018.2019.
See “Quantitative and Qualitative Disclosures About Market Risk — Management of Market Risk Exposures — Hedging Activities” included in the 20182019 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, 2019March 31, 2020 include: interest rate forwards with maturities which extend beyond the observable portion of the yield curve; interest rate total return swaps with unobservable repurchase rates; foreign currency swaps and forwards with certain unobservable inputs, including the unobservable portion of the yield curve; credit default swaps priced using unobservable credit spreads, or that are priced through independent broker quotations; equity variance swaps with unobservable volatility inputs; and equity index options with unobservable correlation inputs. At June 30, 2019,March 31, 2020, 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.
The gain (loss) on Level 3 derivatives primarily relates to interest rate total return swaps with unobservable repurchase rates and foreign currency swaps and forwards that are valued using an unobservable portion of the swap yield curves.rates. Other significant inputs, which are observable, include equity index levels and equity volatility, and the swap yield curves.partially offset by currency volatility in foreign currency derivatives. We validate the reasonableness of these inputs by valuing the positions using internal models and comparing the results to broker quotations.

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The gain (loss) on Level 3 derivatives, percentage of gain (loss) attributable to observable and unobservable inputs, and the primary drivers of observable gain (loss) are summarized as follows:
  Three Months
Ended
June 30, 2019		 Six Months
Ended
June 30, 2019
Gain (loss) recognized in net income (loss) $75 million $125 million
Approximate percentage of gain (loss) attributable to observable inputs 72% 50%
Primary drivers of observable gain (loss) Decreases in interest rates on interest rate total return swaps, partially offset by increases in certain equity index levels on equity derivatives. Decreases in interest rates on interest rate total return swaps, partially offset by increases in certain equity index levels on equity derivatives.
Approximate percentage of gain (loss) attributable to unobservable inputs 28% 50%
Three Months
Ended
March 31, 2020
Gain (loss) recognized in net income (loss) (in millions)$71
Approximate percentage of gain (loss) attributable to observable inputs57%
Primary drivers of observable gain (loss)Decreases in interest rates on interest rate total return swaps and decreases in certain equity index levels on equity derivatives.
Approximate percentage of gain (loss) attributable to unobservable inputs43%
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates — Derivatives” included in the 20182019 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.
Credit Derivatives
The following table presents the gross notional amount and estimated fair value of credit default swaps at:
 June 30, 2019 December 31, 2018 March 31, 2020 December 31, 2019
Credit Default Swaps 
Gross
Notional
Amount
 
Estimated
Fair Value
 
Gross
Notional
Amount
 
Estimated
Fair Value
 
Gross
Notional
Amount
 
Estimated
Fair Value
 
Gross
Notional
Amount
 
Estimated
Fair Value
 (In millions) (In millions)
Purchased $2,483
 $(57) $1,903
 $(14) $2,919
 $(25) $2,944
 $(98)
Written 12,340
 256
 11,391
 82
 11,353
 (60) 11,520
 271
Total $14,823
 $199
 $13,294
 $68
 $14,272
 $(85) $14,464
 $173
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,		 Three Months
Ended
March 31,
 2019 2018 2019 2018 2020 2019
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)
 
Gross
Gains
 
Gross
Losses
 
Net
Gains
(Losses)
 
Gross
Gains
 
Gross
Losses
 
Net
Gains
(Losses)
 (In millions) (In millions)(In millions)
Purchased (1) $—
 $(5) $(5) $14
 $—
 $14
 $3
 $(23) $(20) $13
 $(2) $11
 $78
 $(5) $73
 $3
 $(18) $(15)
Written (1) 52
 (2) 50
 —
 (35) (35) 189
 (3) 186
 —
 (79) (79) 2
 (313) (311) 137
 (1) 136
Total $52
 $(7) $45
 $14
 $(35) $(21) $192
 $(26) $166
 $13
 $(81) $(68) $80
 $(318) $(238) $140
 $(19) $121
__________________
(1)Gains (losses) do not include earned income (expense) on credit default swaps.

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The unfavorable change in net gains (losses) on purchased credit default swaps of $31 million for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was due to certain credit spreads on credit default swaps hedging certain bonds narrowing in the current period as compared to widening in the prior period. The favorable changes in net gains (losses) on written credit default swaps of $85 million and $265$447 million for the three months and six months ended June 30, 2019March 31, 2020 compared to the three months and six months ended June 30, 2018, respectively, wereMarch 31, 2019 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 default swaps of $88 million for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 was due to certain credit spreads on certain credit default swaps widening in the current periodsperiod as compared to wideningnarrowing in the prior periods.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.
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.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates — Derivatives” included in the 20182019 Annual Report for further information on the estimates and assumptions that affect embedded derivatives.
Off-Balance Sheet Arrangements
Credit and Committed Facilities
We maintain an unsecured revolving credit facility, andas well as certain committed facilities, with various financial institutions. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital Sources — Global Funding Sources — Credit and Committed Facilities” for further descriptions of such arrangements. For the classification of expenses on such revolving credit and committed facilities and the nature of the associated liability for letters of credit issued and drawdowns on these credit and committed facilities, see Note 1213 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Collateral for Securities Lending, Third-Party Custodian Administered Repurchase Programs and Derivatives
We participate in a securities lending program and third-party custodian administered repurchase programs in the normal course of business for the purpose of enhancing the total return on our investment portfolio. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as “Summary of Significant Accounting Policies — Investments— Securities Lending and Repurchase Agreements” in Note 1 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for further discussion of our securities lending program and repurchase agreement transactions, the classification of revenues and expenses, and the nature of the secured financing arrangements and associated liabilities.
Securities lending: Periodically we receive non-cash collateral for securities lending from counterparties, which cannot be sold or re-pledged, and which is not reflected on our consolidated balance sheets. The amount of this non-cash collateral was $10$21 million and $78 million$0 at estimated fair value at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively.
Third-party custodian administered repurchase programs: We loan certain of our fixed maturity securities AFS to unaffiliated financial institutions and, in exchange, non-cash collateral is put on deposit by the unaffiliated financial institutions on our behalf with third-party custodians. The estimated fair value of securities loaned in connection with these transactions was $63 million$0 and $78$85 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. Non-cash collateral on deposit with third-party custodians on our behalf was $66 million$0 and $84$90 million, at estimated fair value, at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively, which cannot be sold or re-pledged, and which is not reflected on our consolidated balance sheets.

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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 consolidated balance sheets. The amount of this non-cash collateral was $3.2$2.9 billion and $1.3$1.7 billion, at estimated fair value, at June 30, 2019March 31, 2020 and December 31, 2018,2019, 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.
Lease Commitments
As lessee, we have entered into various lease and sublease agreements for office space and equipment. Our commitments under such lease agreements are included within the contractual obligations table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Contractual Obligations” in the 20182019 Annual Report. See also Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as Note 2011 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Guarantees
See “Guarantees” in Note 1615 of the Notes to the Interim Condensed Consolidated Financial Statements.
Other
We enter into the following additional 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 “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, and gains and losses from such investments. See also “— Investments — Fixed Maturity Securities AFS and Equity Securities” and “— Investments — Mortgage Loans” for information on our investments in fixed maturity securities AFS and mortgage loans. See “— Investments — Real Estate and Real Estate Joint Ventures” and “— Investments — Other Limited Partnership Interests” for information on our partnership investments.
Other than the commitments disclosed in Note 1615 of the Notes to the Interim Condensed Consolidated Financial Statements, there are no other material obligations or liabilities arising from the commitments to fund mortgage loans, partnerships, bank credit facilities, bridge loans, and private corporate bond investments.
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 20182019 Annual Report.
Due to the nature of the underlying risks and the uncertainty associated with the determination of actuarial liabilities, we cannot precisely determine the amounts that will ultimately be paid with respect to these actuarial liabilities, and the ultimate amounts may vary from the estimated amounts, particularly when payments may not occur until well into the future.
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.
We have experienced, and will likely in the future experience, catastrophe losses and possibly acts of terrorism, as well as turbulent financial markets that may have an adverse impact on our business, results of operations and financial condition. Due to their nature, we cannot predict the incidence, timing, severity or amount of losses from catastrophes and acts of terrorism, but we make broad use of catastrophic and non-catastrophic reinsurance to manage risk from these perils. We also use hedging, reinsurance and other risk management activities to mitigate financial market volatility.

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See “Business — Regulation — Insurance Regulation — Policy and Contract Reserve Adequacy Analysis” included in the 20182019 Annual Report for further information regarding required analyses of the adequacy of statutory reserves of our insurance operations.
Future Policy Benefits
We establish liabilities for amounts payable under insurance policies. See Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for additional information. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the 20182019 Annual Report and “— Variable Annuity Guarantees.” 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, as well as property and casualty policies. 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. As a result, a sustained low interest rate environment could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies, including the use of various interest rate derivative positions. The components of future policy benefits related to our property and casualty policies are liabilities for unpaid claims, estimated based upon assumptions such as rates of claim frequencies, levels of severities, inflation, judicial trends, legislative changes or regulatory decisions. Assumptions are based upon our historical experience and analysis of historical development patterns of the relationship of loss adjustment expenses to losses for each line of business, and we consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and subrogation.
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 yields 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. We mitigate our risks by applying various ALM strategies and by the use of reinsurance.
Latin America
Future policy benefits for this segment are held primarily for immediate annuities in Chile, ArgentinaMexico and MexicoArgentina and traditional life contracts mainly in Mexico, Brazil and Colombia. There are also liabilities held for total return pass-through provisions included in certain universal life and savings products in Mexico. There is limited interest rate crediting flexibility on the immediate annuity and traditional life liabilities. As a result, sustained periods of yields lower than expected yields could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies. 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 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. We mitigate our risks by having premiums which are adjustable or cancellable in some cases, applying various ALM strategies and by the use of reinsurance.

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MetLife Holdings
Future policy benefits for the life insurance business are comprised mainly of liabilities for traditional life insurance contracts. In order to manage risk, we have often reinsured a portion of the mortality risk on life insurance policies. We routinely evaluate our reinsurance programs, which may result in increases or decreases to existing coverage. We have entered into various interest rate derivative positions to mitigate the risk that investment of premiums received and reinvestment of maturing assets over the life of the policy will be at rates below those assumed in the original pricing of these 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. Other 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the 20182019 Annual Report and “— Variable Annuity Guarantees.” See also Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for additional information. 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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the risks associated with such a scenario.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Group Benefits:
June 30, 2019March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
Account
Value
 
Account
Value at
Guarantee
(In millions)(In millions)
Greater than 0% but less than 2%$4,775
 $4,653
$4,726
 $4,602
Equal to or greater than 2% but less than 4%$1,727
 $1,690
$1,669
 $1,635
Equal to or greater than 4%$747
 $717
$762
 $733

Retirement and Income Solutions
Policyholder account balances in this business are primarily comprised ofheld largely for investment-type products mainly funding agreements.agreements and also include 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) London Interbank Offered Rate or Secured Overnight Financing Rate. We are exposed to interest rate risks, as well as foreign currency exchange rate risk, when guaranteeing payment of interest and return of principal at the contractual maturity date. We may invest in floating rate assets or enter into receive-floating interest rate swaps, also tied to external indices, as well as interest rate caps, to mitigate the impact of changes in market interest rates. We also mitigate our risks by applying various ALM strategies and seek to hedge all foreign currency exchange rate risk through the use of foreign currency hedges, including cross currency swaps.

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The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for RIS:
June 30, 2019March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
Account
Value
 
Account
Value at
Guarantee
(In millions)(In millions)
Greater than 0% but less than 2%$147
 $—
$146
 $—
Equal to or greater than 2% but less than 4%$1,091
 $91
$1,067
 $101
Equal to or greater than 4%$4,591
 $4,589
$4,584
 $4,379
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We mitigate our risks by applying various ALM strategies and with reinsurance. 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, 2019March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
Account
Value
 
Account
Value at
Guarantee
(In millions)(In millions)
Annuities      
Greater than 0% but less than 2%$28,099
 $1,770
$28,094
 $1,508
Equal to or greater than 2% but less than 4%$1,153
 $203
$998
 $352
Equal to or greater than 4%$1
 $1
$1
 $1
Life & Other      
Greater than 0% but less than 2%$11,077
 $10,729
$11,746
 $11,340
Equal to or greater than 2% but less than 4%$26,142
 $9,410
$28,441
 $9,370
Equal to or greater than 4%$278
 $278
$276
 $276

Latin America
Policyholder account balances in this segment are held largely for investment-type products and universal life products in Mexico and Chile, and deferred annuities in Brazil. Some products in Chile and some of the deferred annuities in Brazil are 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, which could adversely impact liabilities and earnings in a sustained low interest rate environment.
EMEA
Policyholder account balances in this segment are held mostly for universal life, deferred annuity,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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in many of these policyholder account balances. We mitigate our risks by applying various ALM strategies. 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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the risks associated with such a scenario. 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, 2019March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
Account
Value
 
Account
Value at
Guarantee
(In millions)(In millions)
Greater than 0% but less than 2%$1,411
 $1,300
$1,314
 $1,205
Equal to or greater than 2% but less than 4%$18,329
 $15,676
$17,797
 $15,290
Equal to or greater than 4%$7,980
 $5,431
$7,793
 $5,289
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 20182019 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 Guaranteed Minimum Death Benefits (“GMDBs”),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
Future Policy
Benefits
 
Policyholder
Account Balances
June 30, 2019 December 31, 2018 June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
(In millions)(In millions)
Asia              
GMDB$3
 $3
 $—
 $—
$4
 $3
 $—
 $—
GMAB—
 —
 36
 34
—
 —
 67
 34
GMWB80
 81
 179
 143
34
 34
 208
 143
EMEA              
GMDB3
 7
 —
 —
7
 3
 —
 —
GMAB—
 —
 15
 24
—
 —
 41
 25
GMWB46
 70
 (82) (82)37
 15
 (15) (62)
MetLife Holdings              
GMDB303
 289
 —
 —
349
 335
 —
 —
GMIB774
 743
 102
 106
833
 756
 998
 110
GMAB—
 —
 1
 5
—
 —
 5
 (1)
GMWB131
 129
 513
 563
140
 125
 949
 375
Total$1,340
 $1,322
 $764
 $793
$1,404
 $1,271
 $2,253
 $624
The carrying amounts for guarantees included in policyholder account balances above include nonperformance risk adjustments of $188$333 million and $263$147 million at June 30, 2019March 31, 2020 and December 31, 2018,2019, 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 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, 2019:March 31, 2020:
Total Account Value (1)Total Account Value (1)
Asia & EMEA MetLife HoldingsAsia & EMEA MetLife Holdings
(In millions)(In millions)
Return of premium or five to seven year step-up$7,990
 $48,164
$6,776
 $40,988
Annual step-up—
 3,224
—
 2,665
Roll-up and step-up combination—
 5,821
—
 5,027
Total$7,990
 $57,209
$6,776
 $48,680
__________________
(1)Total account value excludes $244$559 million for contracts with no GMDBs. The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for GMDBs and for living benefit guarantees are not mutually exclusive.
Based on total account value, less than 19% of our GMDBs included enhanced death benefits such as the annual step-up or roll-up and step-up combination products.products at March 31, 2020. We expect the above GMDB risk profile to be relatively consistent for the foreseeable future.
Living Benefit Guarantees
The table below presents our living benefit guarantees based on total account values at June 30, 2019:March 31, 2020:
Total Account Value (1)Total Account Value (1)
Asia & EMEA MetLife HoldingsAsia & EMEA MetLife Holdings
(In millions)(In millions)
GMIB$—
 $21,826
$—
 $18,200
GMWB - non-life contingent (2)1,902
 2,631
1,067
 2,198
GMWB - life-contingent3,810
 9,579
3,050
 8,325
GMAB1,405
 322
1,626
 196
Total$7,117
 $34,358
$5,743
 $28,919
__________________
(1)Total account value excludes $23.7$21.4 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 $1.2$1.1 billion 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.

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The table below presents our GMIB associated total account values, by their guaranteed payout basis, at June 30, 2019:March 31, 2020:
Total Account ValueTotal Account Value
(In millions)(In millions)
7-year setback, 2.5% interest rate$5,912
$4,897
7-year setback, 1.5% interest rate951
804
10-year setback, 1.5% interest rate4,479
3,570
10-year mortality projection, 10-year setback, 1.0% interest rate8,863
7,564
10-year mortality projection, 10-year setback, 0.5% interest rate1,621
1,365
$21,826
$18,200
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, accompanied by an increase in the setback period from seven years to 10 years and the introduction of a 10-year mortality projection.
Additionally, 42%43% of the $21.8$18.2 billion of GMIB total account value has been invested in managed volatility funds as of June 30, 2019.March 31, 2020. 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, 2019,March 31, 2020, only 20%23% of our contracts with GMIBs were eligible for annuitization. The remaining contracts are not eligible for annuitization for an average of four 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’contractholders��� income benefits based on total account values and current annuity rates versus the guaranteed income benefits. The net amount at risk was $449 million$1.1 billion at June 30, 2019,March 31, 2020, of which $375 million$1.0 billion 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, 2019:March 31, 2020:
 
In-the-
Moneyness
 
Total
Account Value
 % of Total
 (In millions)
In-the-money30% + $363
 2%
 20% to 30% 238
 1%
 10% to 20% 461
 2%
 0% to 10% 910
 4%
   1,972
  
Out-of-the-money-10% to 0% 1,857
 9%
 -20% to -10% 3,102
 14%
 -20% + 14,895
 68%
   19,854
  
Total GMIBs  $21,826
  

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In-the-
Moneyness
 
Total
Account Value
 % of Total
 (In millions)
In-the-money30% or greater $974
 5.4%
 20% to less than 30% 780
 4.3%
 10% to less than 20% 1,476
 8.1%
 0% to less than 10% 1,829
 10.0%
   5,059
  
Out-of-the-money-10% to 0% 1,972
 10.8%
 -20% to less than -10% 4,637
 25.5%
 Greater than -20% 6,532
 35.9%
   13,141
  
Total GMIBs  $18,200
  
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, 2019 December 31, 2018 Instrument Type March 31, 2020 December 31, 2019
Primary Underlying
Risk Exposure
 
Gross Notional
Amount
 Estimated Fair Value 
Gross Notional
Amount
 Estimated Fair Value 
Gross Notional
Amount
 Estimated Fair Value 
Gross Notional
Amount
 Estimated Fair Value
Instrument Type Assets Liabilities Assets LiabilitiesInstrument Type Assets Liabilities Assets Liabilities
 (In millions) (In millions)
Interest rate Interest rate swaps $8,486
 
 $16
 $8,209
 $89
 $3
 Interest rate swaps $9,092
 
 $14
 $8,639
 $73
 $16
 Interest rate futures 1,338
 1
 —
 1,559
 1
 3
 Interest rate futures 1,790
 1
 4
 1,678
 3
 3
 Interest rate options 838
 209
 —
 838
 163
 —
 Interest rate options 838
 241
 —
 838
 209
 —
Foreign currency exchange rate Foreign currency forwards 2,248
 23
 12
 1,815
 44
 9
 Foreign currency forwards 2,225
 27
 28
 1,644
 16
 24
 Currency options —
 —
 —
 1
 —
 —
Equity market Equity futures 3,593
 2
 22
 2,730
 11
 77
 Equity futures 2,210
 28
 11
 4,127
 5
 8
 Equity index options 9,513
 417
 659
 9,933
 408
 546
 Equity index options 7,356
 541
 293
 8,775
 473
 667
 Equity variance swaps 2,173
 41
 94
 2,269
 40
 87
 Equity variance swaps 775
 34
 2
 1,115
 23
 19
 Equity total return swaps 769
 —
 13
 929
 91
 —
 Equity total return swaps 761
 188
 1
 761
 —
 70
 Total $28,958
 $760
 $816
 $28,282
 $847
 $725
 Total $25,047
 $1,138
 $353
 $27,578
 $802
 $807
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 substantially 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. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors. Changing conditions in the global capital markets and the economy, including the COVID-19 Pandemic, 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 “— Executive Summary — Consolidated Company Outlook,” “— 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.

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Short-term Liquidity
We maintain a substantial short-term liquidity position, which was $12.0$13.7 billion and $11.1$9.8 billion at June 30, 2019March 31, 2020 and December 31, 2018,2019, 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 $218.3$219.8 billion and $202.7$221.4 billion at June 30, 2019March 31, 2020 and December 31, 2018,2019, 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.
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 — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock at the Level We Wish”Stock” and Note 1516 of the Notes to the Consolidated Financial Statements included in the 20182019 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 authorization.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 2019 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,		Three Months
Ended
March 31,
2019 20182020 2019
(In millions)(In millions)
Sources:      
Operating activities, net$4,459
 $6,904
$1,847
 $2,072
Net change in policyholder account balances4,566
 1,882
4,343
 2,987
Net change in payables for collateral under securities loaned and other transactions725
 1,558
8,796
 388
Cash received for other transactions with tenors greater than three months

—
 75
50
 —
Long-term debt issued1,382
 14
1,074
 —
Financing element on certain derivative instruments and other derivative related transactions, net—
 12
Preferred stock issued, net of issuance costs—
 1,274
972
 —
Other, net—
 85
93
 4
Effect of change in foreign currency exchange rates on cash and cash equivalents47
 —
Total sources11,179
 11,804
17,175
 5,451
Uses:      
Investing activities, net5,142
 4,764
8,337
 5,699
Cash paid for other transactions with tenors greater than three months

200
 —
50
 75
Long-term debt repaid895
 200
6
 10
Collateral financing arrangement repaid34
 36
12
 12
Financing element on certain derivative instruments and other derivative related transactions, net

14
 —
167
 29
Treasury stock acquired in connection with share repurchases1,250
 2,156
500
 500
Dividends on preferred stock89
 52
32
 32
Dividends on common stock824
 844
404
 405
Other, net117
 —
Effect of change in foreign currency exchange rates on cash and cash equivalents—
 141
171
 4
Total uses8,565
 8,193
9,679
 6,766
Net increase (decrease) in cash and cash equivalents$2,614
 $3,611
$7,496
 $(1,315)

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, property and casualty, annuity and pension products, operating expenses and income tax, as well as interest expense. A primary liquidity concern with respect to these cash flows is the risk of early contractholder and policyholder withdrawal.
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. Additional cash outflows relate to 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. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.

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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 of MetLife, Inc.’s securities, withdrawals associated with policyholder account balances and the return of securities on loan. The primary liquidity concerns with respect to these cash flows are market disruption and the risk of early contractholder and policyholder withdrawal.
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 U.S Securities and Exchange Commission (“SEC”)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 1510 of the Notes to the Interim Condensed Consolidated Financial Statements and Note 16 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Common Stock
DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, MetLife, Inc. issued 4,263,1892,895,386 and 2,106,0942,766,548 new shares of its common stock, respectively, for $142$114 million and $80$92 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 Metropolitan Life Insurance Company (“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.

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”). DuringFHLB. For the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we issued $14.9$10.3 billion and $11.9$8.1 billion, respectively, and repaid $14.9$9.4 billion and $12.1$8.1 billion, respectively, underof funding agreements with certain regional FHLBs. At both June 30, 2019March 31, 2020 and December 31, 2018,2019, total obligations outstanding under these funding agreements were $15.1 billion.$16.2 billion and $15.3 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Federal Home Loan Bank Advance Agreements, Reported in Payables for Collateral Under Securities Loaned and Other Transactions
DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, we borrowed $725 million and 2018, we issued $1.5 billion and $1.5 billion,$675 million, respectively, and repaid $1.5 billion$725 million and $1.0 billion,$675 million, respectively, under advance agreements with a regional FHLB.the FHLB of Boston. At both June 30, 2019March 31, 2020 and December 31, 2018,2019, total obligations outstanding under these advance agreements were $800 million. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements.

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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 special purpose entities (“SPEs”) that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we issued $19.1$9.9 billion and $23.4$10.2 billion, respectively, and repaid $17.1$7.5 billion and $24.3$8.5 billion, respectively, under such funding agreements. At June 30, 2019March 31, 2020 and December 31, 2018,2019, total obligations outstanding under these funding agreements were $35.1$36.6 billion and $32.3$34.6 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
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 (“Farmer Mac”), as well as to certain SPEs that have issued debt securities for which payment of interest and principal is secured by such funding agreements, and such debt securities are also guaranteed as to payment of interest and principal by Farmer Mac.Corporation. The obligations under all such funding agreements are secured by a pledge of certain eligible agricultural mortgage loans. DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, we issued $575 million$0 and $625$125 million, respectively, and repaid $575 million$0 and $625$125 million, respectively, under such funding agreements. At both June 30, 2019March 31, 2020 and December 31, 2018,2019, total obligations outstanding under these funding agreements were $2.6 billion. See Note 4 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Debt Issuances
In May 2019, MetLife, Inc. issued ¥151.7 billion ($1.4 billion at issuance) of senior notes for general corporate purposes and the repayment of indebtedness, which included the early redemption of certain senior notes. See “— Liquidity and Capital Uses — Debt Repurchases, Redemptions and Exchanges” and Note 109 of the Notes to the Interim Condensed Consolidated Financial Statements.Statements for information on a senior note issuance.
Credit and Committed Facilities
At June 30, 2019,March 31, 2020, we maintained a $3.0 billion unsecured revolving credit facility and certain committed facilities aggregating $3.3 billion, of 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, 2019,March 31, 2020, we had outstanding $455$785 million in letters of credit and no drawdowns against this facility. Remaining availability was $2.5$2.2 billion at June 30, 2019.March 31, 2020.
The committed facilities are used as collateral for certain of our affiliated reinsurance liabilities. At June 30, 2019,March 31, 2020, we had outstanding $2.8$2.9 billion in letters of credit and no drawdowns against these facilities. Remaining availability was $471$434 million at June 30, 2019.March 31, 2020.
See Note 1213 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for further information about theseon 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.

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Outstanding Debt Under Global Funding Sources
The following table summarizes our outstanding debt, excluding long-term debt relating to CSEs, at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
(In millions)(In millions)
Short-term debt (1)$158
 $268
$298
 $235
Long-term debt (2)$13,341
 $12,824
$14,505
 $13,461
Collateral financing arrangement$1,026
 $1,060
$981
 $993
Junior subordinated debt securities$3,149
 $3,147
$3,151
 $3,150
__________________
(1)Includes $59$199 million and $168$136 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at June 30, 2019March 31, 2020 and December 31, 2018,2019, respectively. Certain subsidiaries have pledged assets to secure this debt.
(2)Includes $409$481 million and $422$403 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at June 30, 2019March 31, 2020 and December 31, 2018,2019, 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, 2019.March 31, 2020.
Dispositions
For information regarding the Company's definitive agreement to sell its two wholly-owned subsidiaries,pending disposition of MetLife Limited and Metropolitan Life Insurance Company of Hong Kong, Limited, 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.
Common Stock Repurchases
See Note 1110 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 duringfor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, and the amount remaining under such authorizations at June 30, 2019.
On JulyMarch 31, 2019, MetLife, Inc. announced that its Board of Directors authorized an additional $2.0 billion of common stock repurchases. See Note 17 of the Notes to the Interim Condensed Consolidated Financial Statements.2020.
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 “Business — Regulation,” “Risk Factors — Capital Risks — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock at the Level We Wish”Stock” and Note 1516 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.


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Dividends
DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, MetLife, Inc. paid dividends on its preferred stock of $89$32 million and $52$32 million, respectively. DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, MetLife, Inc. paid $824$404 million and $844$405 million, respectively, of dividends on its common stock. See Note 1110 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the calculation and timing of these dividend payments.
Dividends are paid quarterly on MetLife, Inc.’s Floating Rate Non-Cumulative Preferred Stock, Series A. Dividends are paid semi-annually on MetLife, Inc.’s 5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C, until June 15, 2020 and, thereafter, will be paid quarterly. Dividends are paid semi-annually on MetLife, Inc.’s 5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D, until March 15, 2028 and, thereafter, will be paid quarterly. Dividends are paid quarterly on MetLife, Inc.’s 5.625% Non-Cumulative Preferred Stock, Series E. Dividends are paid quarterly on MetLife, Inc.’s 4.75% Non-Cumulative Preferred Stock, Series F, commencing on June 15, 2020.
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 1516 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report for additional information. See also Note 1716 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding a common stock dividend declared subsequent to June 30, 2019.March 31, 2020.
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’“Dividend Stopper” Provisions in MetLife’s Preferred Stock and Junior Subordinated Debentures,” “Risk Factors — Capital Risks — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock at the Level We Wish”Stock” and Note 1516 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Debt Repayments
DuringFor both the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, following regulatory approval, MetLife Reinsurance Company of Charleston, a wholly-owned subsidiary of MetLife, Inc., repurchased and canceled $34$12 million, and $36 million, respectively, in aggregate principal amount of its surplus notes, which were reported in collateral financing arrangement on the consolidated balance sheets.
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.
In June 2019, MetLife, Inc. redeemed for cash and canceled its £400 million aggregate principal amount 5.250% senior notes due June 2020 and the remaining $368 million aggregate principal amount of its 4.750% senior notes due February 2021. See Note 10 of the Notes to the Interim Condensed Consolidated Financial Statements.
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 “Management’s Discussion and AnalysisNote 5 of Financial Condition and Results of Operations — Liquidity and Capital Resources —the Notes to the MetLife, Inc. — Liquidity and Capital Uses — Support Agreements”(Parent Company Only) Condensed Financial Information included in the 20182019 Annual Report.

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Insurance Liabilities
Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance, property and casualty, 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. DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, general account surrenders and withdrawals from annuity products were $911$390 million and $847$497 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, 2019March 31, 2020 there were funding agreements totaling $120$139 million that could be put back to the Company.
Pledged Collateral
We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives. At June 30, 2019March 31, 2020 and December 31, 2018,2019, we had received pledged cash collateral from counterparties of $5.2$12.3 billion and $5.0$6.3 billion, respectively. At June 30, 2019March 31, 2020 and December 31, 2018,2019, we had pledged cash collateral to counterparties of $293$507 million and $283$275 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 20182019 Annual Report.
Securities Lending and Repurchase Agreements
We participate in a securities lending program whereby securities are loaned to third parties, primarily brokerage firms and commercial banks. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the loaned securities are returned to us. Under our securities lending program, we were liable for cash collateral under our control of $17.8 billion and $18.0 billion at June 30, 2019 and December 31, 2018, respectively. Of these amounts, $3.4 billion and $2.7 billion at June 30, 2019 and December 31, 2018, respectively, were on open, meaning that the related loaned security could be returned to us on the next business day, requiring the immediate return of cash collateral we hold. The estimated fair value of the securities on loan related to the cash collateral on open at June 30, 2019 was $3.4 billion, all of which were U.S. government and agency securities which, if put to us, could be immediately sold to satisfy the cash requirement. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements.
Repurchase Agreements
We participate in short-term repurchase agreements whereby securities are loaned to unaffiliated financial institutions. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the loaned securities are returned to us. UnderThrough these repurchase agreements,arrangements, we were liable for cash collateral under our control of $1.6$22.4 billion and $1.1$19.7 billion at June 30, 2019March 31, 2020 and December 31, 2018, respectively. The estimated fair value2019, respectively, including a portion that may require the immediate return of the securities on loan at June 30, 2019 was $1.6 billion, which were primarily U.S. government and agency securities which, if put to us, could be immediately sold to satisfy the cash requirement.collateral we hold. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements.

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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 1615 of the Notes to the Interim Condensed Consolidated Financial Statements.
Contractual ObligationsCredit and Committed Facilities
We maintain an unsecured revolving credit facility, as well as certain committed facilities, with various financial institutions. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital Sources — Global Funding Sources — Credit and Committed Facilities” for descriptions of such arrangements. For the classification of expenses on such credit and committed facilities and the nature of the associated liability for letters of credit issued and drawdowns on these credit and committed facilities, see Note 13 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Collateral for Securities Lending, Third-Party Custodian Administered Repurchase Programs and Derivatives
We participate in a securities lending program and third-party custodian administered repurchase programs in the normal course of business for the purpose of enhancing the total return on our investment portfolio. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as “Summary of Significant Accounting Policies — Investments— Securities Lending and Repurchase Agreements” in Note 1 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report for further discussion of our securities lending program and repurchase agreement transactions, the classification of revenues and expenses, and the nature of the secured financing arrangements and associated liabilities.
Securities lending: Periodically we receive non-cash collateral for securities lending from counterparties, which cannot be sold or re-pledged, and which is not reflected on our consolidated balance sheets. The amount of this non-cash collateral was $21 million and $0 at estimated fair value at March 31, 2020 and December 31, 2019, respectively.
Third-party custodian administered repurchase programs: We loan certain of our fixed maturity securities AFS to unaffiliated financial institutions and, in exchange, non-cash collateral is put on deposit by the unaffiliated financial institutions on our behalf with third-party custodians. The estimated fair value of securities loaned in connection with these transactions was $0 and $85 million at March 31, 2020 and December 31, 2019, respectively. Non-cash collateral on deposit with third-party custodians on our behalf was $0 and $90 million, at estimated fair value, at March 31, 2020 and December 31, 2019, respectively, which cannot be sold or re-pledged, and which is not reflected on our consolidated balance sheets.

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 consolidated balance sheets. The amount of this non-cash collateral was $2.9 billion and $1.7 billion, at estimated fair value, at March 31, 2020 and December 31, 2019, 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.
Lease Commitments
As lessee, we have entered into various lease and sublease agreements for office space and equipment. Our commitments under such lease agreements are included within the contractual obligations table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Contractual Obligations” in the 2019 Annual Report. See also Note 11 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Guarantees
See “Guarantees” in Note 15 of the Notes to the Interim Condensed Consolidated Financial Statements.
Other
We enter into the following additional 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 “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, and gains and losses from such investments. See also “— Investments — Fixed Maturity Securities AFS and Equity Securities” and “— Investments — Mortgage Loans” for information on our investments in fixed maturity securities AFS and mortgage loans. See “— Investments — Real Estate and Real Estate Joint Ventures” and “— Investments — Other Limited Partnership Interests” for information on our partnership investments.
Other than the commitments disclosed in Note 15 of the Notes to the Interim Condensed Consolidated Financial Statements, there are no other material obligations or liabilities arising from the commitments to fund mortgage loans, partnerships, bank credit facilities, bridge loans, and private corporate bond investments.
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 2019 Annual Report.
Due to the nature of the underlying risks and the uncertainty associated with the determination of actuarial liabilities, we cannot precisely determine the amounts that will ultimately be paid with respect to these actuarial liabilities, and the ultimate amounts may vary from the estimated amounts, particularly when payments may not occur until well into the future.
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.
We have experienced, and will likely in the future experience, catastrophe losses and possibly acts of terrorism, as well as turbulent financial markets that may have an adverse impact on our business, results of operations and financial condition. Due to their nature, we cannot predict the incidence, timing, severity or amount of losses from catastrophes and acts of terrorism, but we make broad use of catastrophic and non-catastrophic reinsurance to manage risk from these perils. We also use hedging, reinsurance and other risk management activities to mitigate financial market volatility.

See “Business — Regulation — Insurance Regulation — Policy and Contract Reserve Adequacy Analysis” included in the 2019 Annual Report for further information regarding required analyses of the adequacy of statutory reserves of our insurance operations.
Future Policy Benefits
We establish liabilities for amounts payable under insurance policies. See Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report for additional information regardinginformation. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the Company’s contractual obligations.2019 Annual Report and “— Variable Annuity Guarantees.” 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, as well as property and casualty policies. 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. As a result, a sustained low interest rate environment could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies, including the use of various interest rate derivative positions. The components of future policy benefits related to our property and casualty policies are liabilities for unpaid claims, estimated based upon assumptions such as rates of claim frequencies, levels of severities, inflation, judicial trends, legislative changes or regulatory decisions. Assumptions are based upon our historical experience and analysis of historical development patterns of the relationship of loss adjustment expenses to losses for each line of business, and we consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and subrogation.
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. We mitigate our risks by applying various ALM strategies and by the use of reinsurance.
Latin America
Future policy benefits for this segment are held primarily for immediate annuities in Chile, Mexico and Argentina and traditional life contracts mainly in Mexico, Brazil and Colombia. There are also liabilities held for total return pass-through provisions included in certain universal life and savings products in Mexico. There is limited interest rate crediting flexibility on the immediate annuity and traditional life liabilities. As a result, sustained periods of lower than expected yields could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies. 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 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. We mitigate our risks by having premiums which are adjustable or cancellable in some cases, applying various ALM strategies and by the use of reinsurance.

MetLife Holdings
Future policy benefits for the life insurance business are comprised mainly of liabilities for traditional life insurance contracts. In order to manage risk, we have often reinsured a portion of the mortality risk on life insurance policies. We routinely evaluate our reinsurance programs, which may result in increases or decreases to existing coverage. We have entered into various interest rate derivative positions to mitigate the risk that investment of premiums received and reinvestment of maturing assets over the life of the policy will be at rates below those assumed in the original pricing of these 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. Other 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.
MetLife, Inc.Policyholder Account Balances
Liquidity and Capital Management
Liquidity and capitalPolicyholder account balances 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, accessgenerally equal 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 inaccount value, which includes accrued interest credited, but excludes the global financial markets through which it obtains a significant amountimpact 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 basedany applicable charge that may be incurred 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.surrender. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the 2019 Annual Report and “— Variable Annuity Guarantees.” See also Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report for additional information. 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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the risks associated with such a scenario.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Group Benefits:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Greater than 0% but less than 2%$4,726
 $4,602
Equal to or greater than 2% but less than 4%$1,669
 $1,635
Equal to or greater than 4%$762
 $733

Retirement and Income Solutions
Policyholder account balances in this business are held largely for investment-type products mainly funding agreements and also include 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) London Interbank Offered Rate or Secured Overnight Financing Rate. We are exposed to interest rate risks, as well as foreign currency exchange rate risk, when guaranteeing payment of interest and return of principal at the contractual maturity date. We may invest in floating rate assets or enter into receive-floating interest rate swaps, also tied to external indices, as well as interest rate caps, to mitigate the impact of changes in market interest rates. We also mitigate our risks by applying various ALM strategies and seek to hedge all foreign currency exchange rate risk through the use of foreign currency hedges, including cross currency swaps.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for RIS:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Greater than 0% but less than 2%$146
 $—
Equal to or greater than 2% but less than 4%$1,067
 $101
Equal to or greater than 4%$4,584
 $4,379
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We mitigate our risks by applying various ALM strategies and with reinsurance. 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:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Annuities   
Greater than 0% but less than 2%$28,094
 $1,508
Equal to or greater than 2% but less than 4%$998
 $352
Equal to or greater than 4%$1
 $1
Life & Other   
Greater than 0% but less than 2%$11,746
 $11,340
Equal to or greater than 2% but less than 4%$28,441
 $9,370
Equal to or greater than 4%$276
 $276

Latin America
Policyholder account balances in this segment are held largely for investment-type products and universal life products in Mexico and Chile, and deferred annuities in Brazil. Some products in Chile and some of the deferred annuities in Brazil are 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, which could adversely impact liabilities and earnings in a sustained low interest rate environment.
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in many of these policyholder account balances. We mitigate our risks by applying various ALM strategies. 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.
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the risks associated with such a scenario. 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:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Greater than 0% but less than 2%$1,314
 $1,205
Equal to or greater than 2% but less than 4%$17,797
 $15,290
Equal to or greater than 4%$7,793
 $5,289
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 2019 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.
The table below presents the carrying value for guarantees at: 
 
Future Policy
Benefits
 
Policyholder
Account Balances
 March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
 (In millions)
Asia       
GMDB$4
 $3
 $—
 $—
GMAB—
 —
 67
 34
GMWB34
 34
 208
 143
EMEA       
GMDB7
 3
 —
 —
GMAB—
 —
 41
 25
GMWB37
 15
 (15) (62)
MetLife Holdings       
GMDB349
 335
 —
 —
GMIB833
 756
 998
 110
GMAB—
 —
 5
 (1)
GMWB140
 125
 949
 375
Total$1,404
 $1,271
 $2,253
 $624
The carrying amounts for guarantees included in policyholder account balances above include nonperformance risk adjustments of $333 million and $147 million at March 31, 2020 and December 31, 2019, 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 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.
GMDBs
We offer a range of GMDBs to our contractholders. The table below presents GMDBs, by benefit type, at March 31, 2020:
 Total Account Value (1)
 Asia & EMEA MetLife Holdings
 (In millions)
Return of premium or five to seven year step-up$6,776
 $40,988
Annual step-up—
 2,665
Roll-up and step-up combination—
 5,027
Total$6,776
 $48,680
__________________
(1)Total account value excludes $559 million for contracts with no GMDBs. The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for GMDBs and for living benefit guarantees are not mutually exclusive.
Based on total account value, less than 19% of our GMDBs included enhanced death benefits such as the annual step-up or roll-up and step-up combination products at March 31, 2020. We expect the above GMDB risk profile to be relatively consistent for the foreseeable future.
Living Benefit Guarantees
The table below presents our living benefit guarantees based on total account values at March 31, 2020:
 Total Account Value (1)
 Asia & EMEA MetLife Holdings
 (In millions)
GMIB$—
 $18,200
GMWB - non-life contingent (2)1,067
 2,198
GMWB - life-contingent3,050
 8,325
GMAB1,626
 196
Total$5,743
 $28,919
__________________
(1)Total account value excludes $21.4 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 $1.1 billion 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 March 31, 2020:
 Total Account Value
 (In millions)
7-year setback, 2.5% interest rate$4,897
7-year setback, 1.5% interest rate804
10-year setback, 1.5% interest rate3,570
10-year mortality projection, 10-year setback, 1.0% interest rate7,564
10-year mortality projection, 10-year setback, 0.5% interest rate1,365
 $18,200
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, accompanied by an increase in the setback period from seven years to 10 years and the introduction of a 10-year mortality projection.
Additionally, 43% of the $18.2 billion of GMIB total account value has been invested in managed volatility funds as of March 31, 2020. 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 March 31, 2020, only 23% of our contracts with GMIBs were eligible for annuitization. The remaining contracts are not eligible for annuitization for an average of four 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 $1.1 billion at March 31, 2020, of which $1.0 billion 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 March 31, 2020:
 
In-the-
Moneyness
 
Total
Account Value
 % of Total
 (In millions)
In-the-money30% or greater $974
 5.4%
 20% to less than 30% 780
 4.3%
 10% to less than 20% 1,476
 8.1%
 0% to less than 10% 1,829
 10.0%
   5,059
  
Out-of-the-money-10% to 0% 1,972
 10.8%
 -20% to less than -10% 4,637
 25.5%
 Greater than -20% 6,532
 35.9%
   13,141
  
Total GMIBs  $18,200
  
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 March 31, 2020 December 31, 2019
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 $9,092
 $78
 $14
 $8,639
 $73
 $16
  Interest rate futures 1,790
 1
 4
 1,678
 3
 3
  Interest rate options 838
 241
 —
 838
 209
 —
Foreign currency exchange rate Foreign currency forwards 2,225
 27
 28
 1,644
 16
 24
  Currency options —
 —
 —
 1
 —
 —
Equity market Equity futures 2,210
 28
 11
 4,127
 5
 8
  Equity index options 7,356
 541
 293
 8,775
 473
 667
  Equity variance swaps 775
 34
 2
 1,115
 23
 19
  Equity total return swaps 761
 188
 1
 761
 —
 70
  Total $25,047
 $1,138
 $353
 $27,578
 $802
 $807
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 — The Company — Capital — Rating Agencies” included
Overview
Our business and results of operations are materially affected by conditions in the 2018 Annual Report.
Liquidity
global capital markets and the economy generally. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors. Changing conditions in the global capital markets and the economy, including the COVID-19 Pandemic, may affect our financing costs and market interest for our debt or equity securities. For a summary of MetLife, Inc.’sfurther information regarding market factors that could affect our ability to meet liquidity and capital needs, see “— TheExecutive Summary — Consolidated Company Outlook,” “— Industry Trends” and “— Investments — Liquidity.Current Environment.”
CapitalLiquidity Management
For a summaryBased 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.’s capital, see “— The Company — Capital.” See also “— The Company — 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 $13.7 billion and Capital Uses — Common Stock Repurchases” for information regarding MetLife, Inc.’s common stock repurchases.$9.8 billion at March 31, 2020 and December 31, 2019, 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
At June 30, 2019An integral part of our liquidity management includes managing our level of liquid assets, which was $219.8 billion and $221.4 billion at March 31, 2020 and December 31, 2018, MetLife, Inc., collectively with other MetLife holding companies, had $4.2 billion and $3.0 billion, respectively, in liquid assets. Of these amounts, $3.3 billion and $2.4 billion were held by MetLife, Inc. and $889 million and $607 million were held by other MetLife holding companies at June 30, 2019, and December 31, 2018, 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, and aregulatory deposits, the collateral financing arrangement.

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Liquid assetsarrangement, funding agreements and secured borrowings, as well as amounts held in non-U.S. holding companies are generated inthe closed block.
Capital Management
We have established several senior management committees as part through dividends from non-U.S. insurance operations. Such dividends are subject to local insurance regulatory requirements, as discussed in “— Liquidity and Capital Sources — Dividends from Subsidiaries.” The cumulative earnings of certain active non-U.S. operations have historically been reinvested indefinitely in such non-U.S. operations. Following a post-Separation review of our capital needsmanagement 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.
MetLife, Inc.’s Board of Directors (“Board of Directors”) and senior management are directly involved in the third quarterdevelopment and maintenance of 2017, we disclosed our intentcapital 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 repatriate approximately $3.0 billionthe annual capital plan, capital targets or capital policy, are reviewed by the Finance and Risk Committee of pre-2017 earnings. 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 — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock” and Note 1816 of the Notes to the Consolidated Financial Statements included in the 20182019 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 2019 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.
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:
 Three Months
Ended
March 31,
 2020 2019
 (In millions)
Sources:   
Operating activities, net$1,847
 $2,072
Net change in policyholder account balances4,343
 2,987
Net change in payables for collateral under securities loaned and other transactions8,796
 388
Cash received for other transactions with tenors greater than three months

50
 —
Long-term debt issued1,074
 —
Preferred stock issued, net of issuance costs972
 —
Other, net

93
 4
Total sources17,175
 5,451
Uses:   
Investing activities, net8,337
 5,699
Cash paid for other transactions with tenors greater than three months

50
 75
Long-term debt repaid6
 10
Collateral financing arrangement repaid12
 12
Financing element on certain derivative instruments and other derivative related transactions, net

167
 29
Treasury stock acquired in connection with share repurchases500
 500
Dividends on preferred stock32
 32
Dividends on common stock404
 405
Effect of change in foreign currency exchange rates on cash and cash equivalents171
 4
Total uses9,679
 6,766
Net increase (decrease) in cash and cash equivalents$7,496
 $(1,315)

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, property and casualty, annuity and pension products, operating expenses and income tax, as well as interest expense. A primary liquidity concern with respect to these cash flows is the risk of early contractholder and policyholder withdrawal.
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. Additional cash outflows relate to 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. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.
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 of MetLife, Inc.’s securities, withdrawals associated with policyholder account balances and the return of securities on loan. The primary liquidity concerns with respect to these cash flows are market disruption and the risk of early contractholder and policyholder withdrawal.
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 10 of the Notes to the Interim Condensed Consolidated Financial Statements and Note 16 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Common Stock
For the three months ended March 31, 2020 and 2019, MetLife, Inc. issued 2,895,386 and 2,766,548 new shares of its common stock, respectively, for $114 million and $92 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 Metropolitan Life Insurance Company (“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.

Federal Home Loan Bank Funding Agreements, Reported in Policyholder Account Balances
Certain of our U.S. insurance subsidiaries are members of a regional FHLB. For the three months ended March 31, 2020 and 2019, we issued $10.3 billion and $8.1 billion, respectively, and repaid $9.4 billion and $8.1 billion, respectively, of funding agreements with certain regional FHLBs. At March 31, 2020 and December 31, 2019, total obligations outstanding under these funding agreements were $16.2 billion and $15.3 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Federal Home Loan Bank Advance Agreements, Reported in Payables for Collateral Under Securities Loaned and Other Transactions
For the three months ended March 31, 2020 and 2019, we borrowed $725 million and $675 million, respectively, and repaid $725 million and $675 million, respectively, under advance agreements with the FHLB of Boston. At both March 31, 2020 and December 31, 2019, total obligations outstanding under these advance agreements were $800 million. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements.
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 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 three months ended March 31, 2020 and 2019, we issued $9.9 billion and $10.2 billion, respectively, and repaid $7.5 billion and $8.5 billion, respectively, under such funding agreements. At March 31, 2020 and December 31, 2019, total obligations outstanding under these funding agreements were $36.6 billion and $34.6 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
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. The obligations under all such funding agreements are secured by a pledge of certain eligible agricultural mortgage loans. For the three months ended March 31, 2020 and 2019, we issued $0 and $125 million, respectively, and repaid $0 and $125 million, respectively, under such funding agreements. At both March 31, 2020 and December 31, 2019, total obligations outstanding under these funding agreements were $2.6 billion. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Debt Issuances
See Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements for information on a senior note issuance.
Credit and Committed Facilities
At March 31, 2020, we maintained a $3.0 billion unsecured revolving credit facility and certain committed facilities aggregating $3.3 billion, of 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 March 31, 2020, we had outstanding $785 million in letters of credit and no drawdowns against this facility. Remaining availability was $2.2 billion at March 31, 2020.
The committed facilities are used as collateral for certain of our affiliated reinsurance liabilities. At March 31, 2020, we had outstanding $2.9 billion in letters of credit and no drawdowns against these facilities. Remaining availability was $434 million at March 31, 2020.
See Note 13 of the Notes to the Consolidated Financial Statements included in the 2019 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, excluding long-term debt relating to CSEs, at:
 March 31, 2020 December 31, 2019
 (In millions)
Short-term debt (1)$298
 $235
Long-term debt (2)$14,505
 $13,461
Collateral financing arrangement$981
 $993
Junior subordinated debt securities$3,151
 $3,150
__________________
(1)Includes $199 million and $136 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at March 31, 2020 and December 31, 2019, respectively. Certain subsidiaries have pledged assets to secure this debt.
(2)Includes $481 million and $403 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at March 31, 2020 and December 31, 2019, 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 March 31, 2020.
Dispositions
For information regarding the pending disposition of MetLife Hong Kong, 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.
Common Stock Repurchases
See Note 10 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 three months ended March 31, 2020 and 2019, and the amount remaining under such authorizations at March 31, 2020.
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 taxationpayment of such cumulative earnings. The Company repatriated $2.6 billiondividends that may arise under so-called “Dividend Stopper” provisions would also restrict MetLife, Inc.’s ability to repurchase common stock. See “Business — Regulation,” “Risk Factors — Capital Risks — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock” and Note 16 of the Notes to the Consolidated Financial Statements included in the fourth quarter2019 Annual Report.

Dividends
For the three months ended March 31, 2020 and 2019, MetLife, Inc. paid dividends on its preferred stock of 2017$32 million and $32 million, respectively. For the remaining $400three months ended March 31, 2020 and 2019, MetLife, Inc. paid $404 million and $405 million, respectively, of dividends on its common stock. See Note 10 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the calculation and timing of these dividend payments.
Dividends are paid quarterly on MetLife, Inc.’s Floating Rate Non-Cumulative Preferred Stock, Series A. Dividends are paid semi-annually on MetLife, Inc.’s 5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C, until June 15, 2020 and, thereafter, will be paid quarterly. Dividends are paid semi-annually on MetLife, Inc.’s 5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D, until March 15, 2028 and, thereafter, will be paid quarterly. Dividends are paid quarterly on MetLife, Inc.’s 5.625% Non-Cumulative Preferred Stock, Series E. Dividends are paid quarterly on MetLife, Inc.’s 4.75% Non-Cumulative Preferred Stock, Series F, commencing on June 15, 2020.
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 second quarter of 2018. As a result2019 Annual Report for additional information. See also Note 16 of the Tax Cuts and Jobs Act of 2017, we expect to repatriate future foreign earnings backNotes to the U.S. with minimal or no additional U.S. tax.Interim Condensed Consolidated Financial Statements for information regarding a common stock dividend declared subsequent to March 31, 2020.
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 — MetLife, Inc. — Liquid Assets” included in the 2018 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.
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 liquidityUses — Dividends — “Dividend Stopper” Provisions in MetLife’s Preferred Stock 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 2019 by MetLife, Inc.’s primary U.S. insurance subsidiaries without insurance regulatory approval and the actual dividends paid during the six months ended June 30, 2019:
Company Paid (1) 
Permitted Without
Approval (2)
  (In millions)
Metropolitan Life Insurance Company $2,146
 $3,065
American Life Insurance Company $600
 $—
Metropolitan Property and Casualty Insurance Company $—
 $171
Metropolitan Tower Life Insurance Company $—
 $154
__________________
(1)Reflects all amounts paid, including those where regulatory approval was obtained as required.
(2)Reflects dividend amounts that may be paid during 2019 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 2019, some or all of such dividends may require regulatory approval.
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.

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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. SeeJunior Subordinated Debentures,” “Risk Factors — Capital Risks — As a Holding Company, MetLife, Inc. Depends on the Ability of Its Subsidiaries to PayLegal and Regulatory Restrictions May Prevent Us from Paying Dividends a Major Component of Holding Company Free Cash Flow”and Repurchasing Our Stock” and Note 1516 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Short-term Debt Repayments
For both the three months ended March 31, 2020 and 2019, following regulatory approval, MetLife Reinsurance Company of Charleston, a wholly-owned subsidiary of MetLife, Inc., repurchased and canceled $12 million, in aggregate principal amount of its surplus notes, which were reported in collateral financing arrangement on the consolidated balance sheets.
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. maintains a commercial paper program,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 proceedsapplicable 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 which can be usedthe Notes to finance the general liquidity needs of MetLife, Inc. (Parent Company Only) Condensed Financial Information included in the 2019 Annual Report.

Insurance Liabilities
Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance, property and its subsidiaries.casualty, 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 Inc. had no short-term debt outstandingHoldings segment, which includes individual annuities, lapses and surrenders tend to occur in the normal course of business. For the three months ended March 31, 2020 and 2019, general account surrenders and withdrawals from annuity products were $390 million and $497 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 either June 30, 2019 orMarch 31, 2020 there were funding agreements totaling $139 million that could be put back to the Company.
Pledged Collateral
We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives. At March 31, 2020 and December 31, 2018.2019, we had received pledged cash collateral from counterparties of $12.3 billion and $6.3 billion, respectively. At March 31, 2020 and December 31, 2019, we had pledged cash collateral to counterparties of $507 million and $275 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.
Preferred StockWe 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.
For information on MetLife, Inc.’s preferred stock, see “— The Company — LiquidityWe pledge collateral from time to time in connection with funding agreements and Capital Uses — Dividends,”advance agreements. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as Note 154 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.
Securities Lending and Repurchase Agreements
We participate in a securities lending program and in short-term repurchase agreements whereby securities are loaned to unaffiliated financial institutions. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the loaned securities are returned to us. Through these arrangements, we were liable for cash collateral under our control of $22.4 billion and $19.7 billion at March 31, 2020 and December 31, 2019, 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.
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 15 of the Notes to the Interim Condensed Consolidated Financial Statements.
Credit and Committed Facilities
We maintain an unsecured revolving credit facility, as well as certain committed facilities, with various financial institutions. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital Sources — Global Funding Sources — Credit and Committed Facilities” for descriptions of such arrangements. For the classification of expenses on such credit and committed facilities and the nature of the associated liability for letters of credit issued and drawdowns on these credit and committed facilities, see Note 13 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Collateral for Securities Lending, Third-Party Custodian Administered Repurchase Programs and Derivatives
We participate in a securities lending program and third-party custodian administered repurchase programs in the normal course of business for the purpose of enhancing the total return on our investment portfolio. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements, as well as “Summary of Significant Accounting Policies — Investments— Securities Lending and Repurchase Agreements” in Note 1 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report for further discussion of our securities lending program and repurchase agreement transactions, the classification of revenues and expenses, and the nature of the secured financing arrangements and associated liabilities.
Securities lending: Periodically we receive non-cash collateral for securities lending from counterparties, which cannot be sold or re-pledged, and which is not reflected on our consolidated balance sheets. The amount of this non-cash collateral was $21 million and $0 at estimated fair value at March 31, 2020 and December 31, 2019, respectively.
Third-party custodian administered repurchase programs: We loan certain of our fixed maturity securities AFS to unaffiliated financial institutions and, in exchange, non-cash collateral is put on deposit by the unaffiliated financial institutions on our behalf with third-party custodians. The estimated fair value of securities loaned in connection with these transactions was $0 and $85 million at March 31, 2020 and December 31, 2019, respectively. Non-cash collateral on deposit with third-party custodians on our behalf was $0 and $90 million, at estimated fair value, at March 31, 2020 and December 31, 2019, respectively, which cannot be sold or re-pledged, and which is not reflected on our consolidated balance sheets.

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 consolidated balance sheets. The amount of this non-cash collateral was $2.9 billion and $1.7 billion, at estimated fair value, at March 31, 2020 and December 31, 2019, 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.
Lease Commitments
As lessee, we have entered into various lease and sublease agreements for office space and equipment. Our commitments under such lease agreements are included within the contractual obligations table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Contractual Obligations” in the 2019 Annual Report. See also Note 11 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Guarantees
See “Guarantees” in Note 15 of the Notes to the Interim Condensed Consolidated Financial Statements.
Other
We enter into the following additional 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 “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, and gains and losses from such investments. See also “— Investments — Fixed Maturity Securities AFS and Equity Securities” and “— Investments — Mortgage Loans” for information on our investments in fixed maturity securities AFS and mortgage loans. See “— Investments — Real Estate and Real Estate Joint Ventures” and “— Investments — Other Limited Partnership Interests” for information on our partnership investments.
Other than the commitments disclosed in Note 15 of the Notes to the Interim Condensed Consolidated Financial Statements, there are no other material obligations or liabilities arising from the commitments to fund mortgage loans, partnerships, bank credit facilities, bridge loans, and private corporate bond investments.
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 2019 Annual Report.
Due to the nature of the underlying risks and the uncertainty associated with the determination of actuarial liabilities, we cannot precisely determine the amounts that will ultimately be paid with respect to these actuarial liabilities, and the ultimate amounts may vary from the estimated amounts, particularly when payments may not occur until well into the future.
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.
We have experienced, and will likely in the future experience, catastrophe losses and possibly acts of terrorism, as well as turbulent financial markets that may have an adverse impact on our business, results of operations and financial condition. Due to their nature, we cannot predict the incidence, timing, severity or amount of losses from catastrophes and acts of terrorism, but we make broad use of catastrophic and non-catastrophic reinsurance to manage risk from these perils. We also use hedging, reinsurance and other risk management activities to mitigate financial market volatility.

See “Business — Regulation — Insurance Regulation — Policy and Contract Reserve Adequacy Analysis” included in the 2019 Annual Report for further information regarding required analyses of the adequacy of statutory reserves of our insurance operations.
Future Policy Benefits
We establish liabilities for amounts payable under insurance policies. See Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report for additional information. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the 2019 Annual Report and “— Variable Annuity Guarantees.” 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, as well as property and casualty policies. 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. As a result, a sustained low interest rate environment could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies, including the use of various interest rate derivative positions. The components of future policy benefits related to our property and casualty policies are liabilities for unpaid claims, estimated based upon assumptions such as rates of claim frequencies, levels of severities, inflation, judicial trends, legislative changes or regulatory decisions. Assumptions are based upon our historical experience and analysis of historical development patterns of the relationship of loss adjustment expenses to losses for each line of business, and we consider the effects of current developments, anticipated trends and risk management programs, reduced for anticipated salvage and subrogation.
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. We mitigate our risks by applying various ALM strategies and by the use of reinsurance.
Latin America
Future policy benefits for this segment are held primarily for immediate annuities in Chile, Mexico and Argentina and traditional life contracts mainly in Mexico, Brazil and Colombia. There are also liabilities held for total return pass-through provisions included in certain universal life and savings products in Mexico. There is limited interest rate crediting flexibility on the immediate annuity and traditional life liabilities. As a result, sustained periods of lower than expected yields could negatively impact earnings; however, we mitigate our risks by applying various ALM strategies. 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 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. We mitigate our risks by having premiums which are adjustable or cancellable in some cases, applying various ALM strategies and by the use of reinsurance.

MetLife Holdings
Future policy benefits for the life insurance business are comprised mainly of liabilities for traditional life insurance contracts. In order to manage risk, we have often reinsured a portion of the mortality risk on life insurance policies. We routinely evaluate our reinsurance programs, which may result in increases or decreases to existing coverage. We have entered into various interest rate derivative positions to mitigate the risk that investment of premiums received and reinvestment of maturing assets over the life of the policy will be at rates below those assumed in the original pricing of these 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. Other 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. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Industry Trends — Impact of a Sustained Low Interest Rate Environment — Low Interest Rate Scenario” included in the 2019 Annual Report and “— Variable Annuity Guarantees.” See also Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report for additional information. 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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the risks associated with such a scenario.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for Group Benefits:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Greater than 0% but less than 2%$4,726
 $4,602
Equal to or greater than 2% but less than 4%$1,669
 $1,635
Equal to or greater than 4%$762
 $733

Retirement and Income Solutions
Policyholder account balances in this business are held largely for investment-type products mainly funding agreements and also include 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) London Interbank Offered Rate or Secured Overnight Financing Rate. We are exposed to interest rate risks, as well as foreign currency exchange rate risk, when guaranteeing payment of interest and return of principal at the contractual maturity date. We may invest in floating rate assets or enter into receive-floating interest rate swaps, also tied to external indices, as well as interest rate caps, to mitigate the impact of changes in market interest rates. We also mitigate our risks by applying various ALM strategies and seek to hedge all foreign currency exchange rate risk through the use of foreign currency hedges, including cross currency swaps.
The table below presents the breakdown of account value subject to minimum guaranteed crediting rates for RIS:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Greater than 0% but less than 2%$146
 $—
Equal to or greater than 2% but less than 4%$1,067
 $101
Equal to or greater than 4%$4,584
 $4,379
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We mitigate our risks by applying various ALM strategies and with reinsurance. 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:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Annuities   
Greater than 0% but less than 2%$28,094
 $1,508
Equal to or greater than 2% but less than 4%$998
 $352
Equal to or greater than 4%$1
 $1
Life & Other   
Greater than 0% but less than 2%$11,746
 $11,340
Equal to or greater than 2% but less than 4%$28,441
 $9,370
Equal to or greater than 4%$276
 $276

Latin America
Policyholder account balances in this segment are held largely for investment-type products and universal life products in Mexico and Chile, and deferred annuities in Brazil. Some products in Chile and some of the deferred annuities in Brazil are 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, which could adversely impact liabilities and earnings in a sustained low interest rate environment.
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in many of these policyholder account balances. We mitigate our risks by applying various ALM strategies. 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.
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. A sustained low interest rate environment could adversely impact liabilities and earnings as a result of the minimum credited rate guarantees present in most of these policyholder account balances. We have various interest rate derivative positions to partially mitigate the risks associated with such a scenario. 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:
 March 31, 2020
Guaranteed Minimum Crediting Rate
Account
Value
 
Account
Value at
Guarantee
 (In millions)
Greater than 0% but less than 2%$1,314
 $1,205
Equal to or greater than 2% but less than 4%$17,797
 $15,290
Equal to or greater than 4%$7,793
 $5,289
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 2019 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.
The table below presents the carrying value for guarantees at: 
 
Future Policy
Benefits
 
Policyholder
Account Balances
 March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
 (In millions)
Asia       
GMDB$4
 $3
 $—
 $—
GMAB—
 —
 67
 34
GMWB34
 34
 208
 143
EMEA       
GMDB7
 3
 —
 —
GMAB—
 —
 41
 25
GMWB37
 15
 (15) (62)
MetLife Holdings       
GMDB349
 335
 —
 —
GMIB833
 756
 998
 110
GMAB—
 —
 5
 (1)
GMWB140
 125
 949
 375
Total$1,404
 $1,271
 $2,253
 $624
The carrying amounts for guarantees included in policyholder account balances above include nonperformance risk adjustments of $333 million and $147 million at March 31, 2020 and December 31, 2019, 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 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.
GMDBs
We offer a range of GMDBs to our contractholders. The table below presents GMDBs, by benefit type, at March 31, 2020:
 Total Account Value (1)
 Asia & EMEA MetLife Holdings
 (In millions)
Return of premium or five to seven year step-up$6,776
 $40,988
Annual step-up—
 2,665
Roll-up and step-up combination—
 5,027
Total$6,776
 $48,680
__________________
(1)Total account value excludes $559 million for contracts with no GMDBs. The Company’s annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed for GMDBs and for living benefit guarantees are not mutually exclusive.
Based on total account value, less than 19% of our GMDBs included enhanced death benefits such as the annual step-up or roll-up and step-up combination products at March 31, 2020. We expect the above GMDB risk profile to be relatively consistent for the foreseeable future.
Living Benefit Guarantees
The table below presents our living benefit guarantees based on total account values at March 31, 2020:
 Total Account Value (1)
 Asia & EMEA MetLife Holdings
 (In millions)
GMIB$—
 $18,200
GMWB - non-life contingent (2)1,067
 2,198
GMWB - life-contingent3,050
 8,325
GMAB1,626
 196
Total$5,743
 $28,919
__________________
(1)Total account value excludes $21.4 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 $1.1 billion 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 March 31, 2020:
 Total Account Value
 (In millions)
7-year setback, 2.5% interest rate$4,897
7-year setback, 1.5% interest rate804
10-year setback, 1.5% interest rate3,570
10-year mortality projection, 10-year setback, 1.0% interest rate7,564
10-year mortality projection, 10-year setback, 0.5% interest rate1,365
 $18,200
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, accompanied by an increase in the setback period from seven years to 10 years and the introduction of a 10-year mortality projection.
Additionally, 43% of the $18.2 billion of GMIB total account value has been invested in managed volatility funds as of March 31, 2020. 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 March 31, 2020, only 23% of our contracts with GMIBs were eligible for annuitization. The remaining contracts are not eligible for annuitization for an average of four 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 $1.1 billion at March 31, 2020, of which $1.0 billion 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 March 31, 2020:
 
In-the-
Moneyness
 
Total
Account Value
 % of Total
 (In millions)
In-the-money30% or greater $974
 5.4%
 20% to less than 30% 780
 4.3%
 10% to less than 20% 1,476
 8.1%
 0% to less than 10% 1,829
 10.0%
   5,059
  
Out-of-the-money-10% to 0% 1,972
 10.8%
 -20% to less than -10% 4,637
 25.5%
 Greater than -20% 6,532
 35.9%
   13,141
  
Total GMIBs  $18,200
  
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 March 31, 2020 December 31, 2019
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 $9,092
 $78
 $14
 $8,639
 $73
 $16
  Interest rate futures 1,790
 1
 4
 1,678
 3
 3
  Interest rate options 838
 241
 —
 838
 209
 —
Foreign currency exchange rate Foreign currency forwards 2,225
 27
 28
 1,644
 16
 24
  Currency options —
 —
 —
 1
 —
 —
Equity market Equity futures 2,210
 28
 11
 4,127
 5
 8
  Equity index options 7,356
 541
 293
 8,775
 473
 667
  Equity variance swaps 775
 34
 2
 1,115
 23
 19
  Equity total return swaps 761
 188
 1
 761
 —
 70
  Total $25,047
 $1,138
 $353
 $27,578
 $802
 $807
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. Stressed conditions, volatility and disruptions in global capital markets, particular markets, or financial asset classes can have an adverse effect on us, in part because we have a large investment portfolio and our insurance liabilities and derivatives are sensitive to changing market factors. Changing conditions in the global capital markets and the economy, including the COVID-19 Pandemic, 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 “— Executive Summary — Consolidated Company Outlook,” “— 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 $13.7 billion and $9.8 billion at March 31, 2020 and December 31, 2019, 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 $219.8 billion and $221.4 billion at March 31, 2020 and December 31, 2019, 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.
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 — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2019 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 2019 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.
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:
 Three Months
Ended
March 31,
 2020 2019
 (In millions)
Sources:   
Operating activities, net$1,847
 $2,072
Net change in policyholder account balances4,343
 2,987
Net change in payables for collateral under securities loaned and other transactions8,796
 388
Cash received for other transactions with tenors greater than three months

50
 —
Long-term debt issued1,074
 —
Preferred stock issued, net of issuance costs972
 —
Other, net

93
 4
Total sources17,175
 5,451
Uses:   
Investing activities, net8,337
 5,699
Cash paid for other transactions with tenors greater than three months

50
 75
Long-term debt repaid6
 10
Collateral financing arrangement repaid12
 12
Financing element on certain derivative instruments and other derivative related transactions, net

167
 29
Treasury stock acquired in connection with share repurchases500
 500
Dividends on preferred stock32
 32
Dividends on common stock404
 405
Effect of change in foreign currency exchange rates on cash and cash equivalents171
 4
Total uses9,679
 6,766
Net increase (decrease) in cash and cash equivalents$7,496
 $(1,315)

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, property and casualty, annuity and pension products, operating expenses and income tax, as well as interest expense. A primary liquidity concern with respect to these cash flows is the risk of early contractholder and policyholder withdrawal.
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. Additional cash outflows relate to 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. The primary liquidity concerns with respect to these cash flows are the risk of default by debtors and market disruption.
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 of MetLife, Inc.’s securities, withdrawals associated with policyholder account balances and the return of securities on loan. The primary liquidity concerns with respect to these cash flows are market disruption and the risk of early contractholder and policyholder withdrawal.
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 10 of the Notes to the Interim Condensed Consolidated Financial Statements and Note 16 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Common Stock
For the three months ended March 31, 2020 and 2019, MetLife, Inc. issued 2,895,386 and 2,766,548 new shares of its common stock, respectively, for $114 million and $92 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 Metropolitan Life Insurance Company (“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.

Federal Home Loan Bank Funding Agreements, Reported in Policyholder Account Balances
Certain of our U.S. insurance subsidiaries are members of a regional FHLB. For the three months ended March 31, 2020 and 2019, we issued $10.3 billion and $8.1 billion, respectively, and repaid $9.4 billion and $8.1 billion, respectively, of funding agreements with certain regional FHLBs. At March 31, 2020 and December 31, 2019, total obligations outstanding under these funding agreements were $16.2 billion and $15.3 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Federal Home Loan Bank Advance Agreements, Reported in Payables for Collateral Under Securities Loaned and Other Transactions
For the three months ended March 31, 2020 and 2019, we borrowed $725 million and $675 million, respectively, and repaid $725 million and $675 million, respectively, under advance agreements with the FHLB of Boston. At both March 31, 2020 and December 31, 2019, total obligations outstanding under these advance agreements were $800 million. See Note 6 of the Notes to the Interim Condensed Consolidated Financial Statements.
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 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 three months ended March 31, 2020 and 2019, we issued $9.9 billion and $10.2 billion, respectively, and repaid $7.5 billion and $8.5 billion, respectively, under such funding agreements. At March 31, 2020 and December 31, 2019, total obligations outstanding under these funding agreements were $36.6 billion and $34.6 billion, respectively. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
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. The obligations under all such funding agreements are secured by a pledge of certain eligible agricultural mortgage loans. For the three months ended March 31, 2020 and 2019, we issued $0 and $125 million, respectively, and repaid $0 and $125 million, respectively, under such funding agreements. At both March 31, 2020 and December 31, 2019, total obligations outstanding under these funding agreements were $2.6 billion. See Note 4 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Debt Issuances
See Note 9 of the Notes to the Interim Condensed Consolidated Financial Statements for information on a senior note issuance.
Credit and Committed Facilities
At March 31, 2020, we maintained a $3.0 billion unsecured revolving credit facility and certain committed facilities aggregating $3.3 billion, of 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 March 31, 2020, we had outstanding $785 million in letters of credit and no drawdowns against this facility. Remaining availability was $2.2 billion at March 31, 2020.
The committed facilities are used as collateral for certain of our affiliated reinsurance liabilities. At March 31, 2020, we had outstanding $2.9 billion in letters of credit and no drawdowns against these facilities. Remaining availability was $434 million at March 31, 2020.
See Note 13 of the Notes to the Consolidated Financial Statements included in the 2019 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, excluding long-term debt relating to CSEs, at:
 March 31, 2020 December 31, 2019
 (In millions)
Short-term debt (1)$298
 $235
Long-term debt (2)$14,505
 $13,461
Collateral financing arrangement$981
 $993
Junior subordinated debt securities$3,151
 $3,150
__________________
(1)Includes $199 million and $136 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at March 31, 2020 and December 31, 2019, respectively. Certain subsidiaries have pledged assets to secure this debt.
(2)Includes $481 million and $403 million of debt that is non-recourse to MetLife, Inc. and MLIC, subject to customary exceptions, at March 31, 2020 and December 31, 2019, 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 March 31, 2020.
Dispositions
For information regarding the pending disposition of MetLife Hong Kong, 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.
Common Stock Repurchases
See Note 10 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 three months ended March 31, 2020 and 2019, and the amount remaining under such authorizations at March 31, 2020.
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 “Business — Regulation,” “Risk Factors — Capital Risks — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.

Dividends
For the three months ended March 31, 2020 and 2019, MetLife, Inc. paid dividends on its preferred stock of $32 million and $32 million, respectively. For the three months ended March 31, 2020 and 2019, MetLife, Inc. paid $404 million and $405 million, respectively, of dividends on its common stock. See Note 10 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding the calculation and timing of these dividend payments.
Dividends are paid quarterly on MetLife, Inc.’s Floating Rate Non-Cumulative Preferred Stock, Series A. Dividends are paid semi-annually on MetLife, Inc.’s 5.25% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C, until June 15, 2020 and, thereafter, will be paid quarterly. Dividends are paid semi-annually on MetLife, Inc.’s 5.875% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series D, until March 15, 2028 and, thereafter, will be paid quarterly. Dividends are paid quarterly on MetLife, Inc.’s 5.625% Non-Cumulative Preferred Stock, Series E. Dividends are paid quarterly on MetLife, Inc.’s 4.75% Non-Cumulative Preferred Stock, Series F, commencing on June 15, 2020.
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 2019 Annual Report for additional information. See also Note 16 of the Notes to the Interim Condensed Consolidated Financial Statements for information regarding a common stock dividend declared subsequent to March 31, 2020.
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 — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock” and Note 16 of the Notes to the Consolidated Financial Statements included in the 2019 Annual Report.
Debt Repayments
For both the three months ended March 31, 2020 and 2019, following regulatory approval, MetLife Reinsurance Company of Charleston, a wholly-owned subsidiary of MetLife, Inc., repurchased and canceled $12 million, in aggregate principal amount of its surplus notes, which were reported in collateral financing arrangement on the consolidated balance sheets.
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 2019 Annual Report.

Insurance Liabilities
Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance, property and casualty, 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 three months ended March 31, 2020 and 2019, general account surrenders and withdrawals from annuity products were $390 million and $497 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 March 31, 2020 there were funding agreements totaling $139 million that could be put back to the Company.
Pledged Collateral
We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives. At March 31, 2020 and December 31, 2019, we had received pledged cash collateral from counterparties of $12.3 billion and $6.3 billion, respectively. At March 31, 2020 and December 31, 2019, we had pledged cash collateral to counterparties of $507 million and $275 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 2019 Annual Report.
Securities Lending and Repurchase Agreements
We participate in a securities lending program and in short-term repurchase agreements whereby securities are loaned to unaffiliated financial institutions. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the loaned securities are returned to us. Through these arrangements, we were liable for cash collateral under our control of $22.4 billion and $19.7 billion at March 31, 2020 and December 31, 2019, 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.
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 15 of the Notes to the Interim Condensed Consolidated Financial Statements.
Contractual Obligations
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Contractual Obligations” included in the 2019 Annual Report for additional information regarding the Company’s contractual obligations.

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 2019 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 March 31, 2020 and December 31, 2019, MetLife, Inc., collectively with other MetLife holding companies, had $5.3 billion and $4.2 billion, respectively, in liquid assets. Of these amounts, $4.3 billion and $3.0 billion were held by MetLife, Inc. and $1.0 billion and $1.2 billion were held by other MetLife holding companies at March 31, 2020 and December 31, 2019, 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 2019 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.
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 2020 by MetLife, Inc.’s primary U.S. insurance subsidiaries without insurance regulatory approval and the actual dividends paid for the three months ended March 31, 2020:
Company Paid (1) 
Permitted Without
Approval (2)
  (In millions)
Metropolitan Life Insurance Company $393
 $3,272
American Life Insurance Company $—
 $—
Metropolitan Property and Casualty Insurance Company $—
 $114
Metropolitan Tower Life Insurance Company $—
 $149
__________________
(1)Reflects all amounts paid, including those where regulatory approval was obtained as required.
(2)Reflects dividend amounts that may be paid during 2020 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 2020, some or all of such dividends may require regulatory approval.
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 — As a Holding Company, MetLife, Inc. Depends on the Ability of Its Subsidiaries 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 2019 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.
Long-term Debt Outstanding
The following table summarizes the outstanding long-term debt of MetLife, Inc. at:
June 30, 2019 December 31, 2018March 31, 2020 December 31, 2019
(In millions)(In millions)
Long-term debt — unaffiliated$12,370
 $11,844
$13,350
 $12,379
Long-term debt — affiliated (1)$1,993
 $1,957
$1,989
 $1,976
Junior subordinated debt securities$2,457
 $2,456
$2,459
 $2,458
(1)In July 2019, a ¥53.3 billion 1.448% senior note issued to MLIC matured and was refinanced with a ¥37.3 billion 1.602% senior note due July 2023 and a ¥16.0 billion 1.637% senior note due July 2026 issued to MLIC.
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, 2019.March 31, 2020.

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, 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 certain of its common stock and certain of its other securities, pay all general operating expenses and meet its cash needs.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
DuringFor the sixthree months ended June 30,March 31, 2020 and 2019, and 2018, MetLife, Inc. invested a net amount of $42$123 million and $713$38 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 $100 million at both June 30, 2019March 31, 2020 and December 31, 2018.

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2019.
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.”
Adoption of New Accounting Pronouncements
See Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.
Future Adoption of New 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 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.
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(i)(ii)net income (loss)
(ii)(iii)adjusted earnings available to common shareholders(ii)(iii)net income (loss) available to MetLife, Inc.’s common shareholders
(iv)net investment income, as reported on an adjusted basis(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 the results of operations, see “— Results of Operations.” 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 the various 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.

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Adjusted revenues and adjusted expenses
The financial measures of For information relating to adjusted revenues and adjusted expenses, focussee “Financial Measures and Segment Accounting Policies” in Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements.
Return on our primary businesses principally byequity, allocated equity and related measures:
MetLife, Inc.’s common stockholders’ equity, excluding AOCI other than FCTA, is defined as MetLife, Inc.’s common stockholders’ equity, excluding the impact of market volatility, which could distort trends, and revenues and costs related to non-core products and certain entities required to be consolidated under GAAP. Also, these measures exclude results of discontinued operations under GAAP and other businesses that have been or will be sold or exited by MetLife but do not meet the discontinued operations criteria under GAAP and are referred to as divested businesses. Divested businesses also includes the net impact of transactions with exited businesses that have been eliminated in consolidation under GAAP and costs relating to businesses that have been or will be sold or exited by MetLife that do not meet the criteria to be included in results of discontinued operations under GAAP. Adjusted revenues also excludes netunrealized investment gains (losses) and defined benefit plans adjustment components of AOCI, net derivative gains (losses). of income tax.
Adjusted expenses also excludes goodwill impairments.
The following additional adjustments are made to revenues, in the line items indicated, in calculating adjusted revenues:
Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB fees”);
Net investment income: (i) includes adjustments for earned incomereturn on derivatives and amortization of premium on derivatives that are hedges of investments or that are used to replicate certain investments, but do not qualify for hedge accounting treatment (“Investment hedge adjustments”), (ii) excludes post-taxMetLife, Inc.’s common stockholders’ equity is defined as adjusted earnings adjustments relatingavailable to insurance joint ventures accounted for under the equity method, (iii) excludes certain amounts related to contractholder-directed equity securities (“Unit-linked contract income”), (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP and (v) includes distributions of profits from certain other limited partnership interests that were previously accounted for under the cost method, but are now accounted for at estimated fair value, where the change in estimated fair value is recognized in net investment gains (losses) under GAAP; and
Other revenues is adjusted for settlements of foreign currency earnings hedges and excludes fees received in association with services provided under transition service agreements (“TSA fees”).
The following additional adjustments are made to expenses, in the line items indicated, in calculating adjusted expenses:
Policyholder benefits and claims and policyholder dividends excludes: (i) changes in the policyholder dividend obligation related to net investment gains (losses) and net derivative gains (losses), (ii) inflation-indexed benefit adjustments associated with contracts backedcommon shareholders divided by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass-through adjustments, (iii) benefits and hedging costs related to GMIBs (“GMIB costs”) and (iv) market value adjustments associated with surrenders or terminations of contracts (“Market value adjustments”);
Interest credited to policyholder account balances includes adjustments for earned income on derivatives and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes certain amounts related to net investment income earned on contractholder-directed equity securities;
Amortization of DAC and VOBA excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB fees and GMIB costs and (iii) Market value adjustments;
Amortization of negative VOBA excludes amounts related to Market value adjustments;
Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements and (iii) acquisition, integration and other costs. Other expenses includes TSA fees.MetLife, Inc.’s average common stockholders’ equity.
Adjusted return on MetLife, Inc.’s common stockholders’ equity, excluding AOCI other than FCTA, is defined as adjusted earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted for during the measurement period under GAAP business combination accounting guidance.
The tax impact of the adjustments mentioned above are calculated net of the U.S. or foreign statutory tax rate, which could differ from our effective tax rate. Additionally, the provision for income tax (expense) benefit also includes the impact relatedavailable to the timing of certain tax credits, as well as certain tax reforms.

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Allocated equity: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 “— Economic Capital.” Allocated equity excludes the impact of accumulated other comprehensive incomeAOCI other than foreign currency translation adjustments.FCTA.
The above measure representsmeasures 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. Also, refer to the utilization of adjusted earnings and components of, or other financial measures based on, adjusted earnings mentioned above.
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: direct expenses, on an adjusted basis, 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: direct expenses, on an adjusted basis, 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: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.
AsymmetricalNear-term represents one to three years.
We refer to observable forward yield curves as of a particular date in connection with making our estimates for future results. The observable forward yield curves at a given time are based on implied future interest rates along a range of interest rate durations. This includes the 10-year U.S. Treasury rate which we use as a benchmark rate to describe longer-term interest rates used in our estimates for future results.
Notable items represent a positive (negative) impact to adjusted earnings available to common shareholders. Notable items reflect the unexpected impact of events that affect MetLife’s results, but that were unknown and non-economic accounting refers to: (i)that MetLife could not anticipate when it devised its business plan. Notable items also include certain items regardless of the portion of net derivative gains (losses) on embedded derivatives attributable to the inclusion of our credit spreadsextent anticipated in the liability valuations, (ii) hedging activity that generates net derivative gains (losses) and creates fluctuations in net income because hedge accounting cannot be achieved and the item being hedged does notbusiness plan, to help investors have a have an offsetting gain or loss recognized in earnings, (iii) inflation-indexed benefit adjustments associated with contracts backed by inflation-indexed investments and amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets and other pass through adjustments, and (iv) impact of changes in foreign currency exchange rates on the re-measurement of foreign denominated unhedged funding agreements and financing transactions to the U.S. dollar and the re-measurement of certain liabilities from non-functional currencies to functional currencies. We believe that excluding the impact of asymmetrical and non-economic accounting from total GAAP results enhances investorbetter understanding of our performance by disclosing how these accounting practices affect reported GAAPMetLife’s results and to evaluate and forecast those results.
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.
Subsequent Events
See Note 1716 of the Notes to the Interim Condensed Consolidated Financial Statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk
We regularly analyze our exposure to interest rate, equity market price and foreign currency exchange rate risks. As a result of that analysis, we have determined that the estimated fair values of certain assets and liabilities are materially exposed to changes in interest rates, foreign currency exchange rates and changes in the equity markets. We have exposure to market risk through our insurance operations and investment activities. Our exposure is and will remain elevated due to the COVID-19 Pandemic. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Executive Summary — Consolidated Company Outlook.” We use a variety of strategies to manage interest rate, foreign currency exchange rate and equity market risk, including the use of derivatives. A description of our market risk exposures may be found under “Quantitative and Qualitative Disclosures About Market Risk” included in Part II, Item 7A, of the 20182019 Annual Report.

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Item 4. Controls and Procedures
Management, with the participation of the Chief Executive Officer (“CEO”) and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the CEO and CFO have concluded that these disclosure controls and procedures are effective.
There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the quarter ended June 30, 2019March 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II — Other Information
Item 1. Legal Proceedings
See Note 1615 of the Notes to the Interim Condensed Consolidated Financial Statements.
Item 1A. Risk Factors
Certain factors that may affect the Company’s business or operations are described under “Risk Factors” in Part I, Item 1A, of the 20182019 Annual Report, as amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q under Item 1A. Risk Factors. There
The Course of the Novel Coronavirus (COVID-19) Pandemic, and Responses to It, Are Uncertain and Difficult to Predict, But Have Adversely Affected and May Continue to Adversely Affect Our Business, Results of Operations, and Financial Condition
Major public health issues, including the COVID-19 Pandemic, have been no materialcaused and may continue to cause a large number of illnesses and deaths. Various government bodies in any number of jurisdictions, their representatives, regulators, executive branch officials, legislators, courts, employee representatives, arbitrators, mediators and other persons exercising governmental, political, or related authority or influence (collectively, “Authorities”) and other organizations may not effectively respond to the spread and severity of the COVID-19 Pandemic, and their actions and the resulting impacts are unpredictable. The ultimate spread, duration, and severity of the COVID-19 Pandemic, and of Authorities’ actions to address it, are uncertain, and may persist. Adverse conditions may worsen over time. Actions to respond to the COVID-19 Pandemic have reduced and altered economic activity and financial markets. New information about the severity and duration of the COVID-19 Pandemic or other public health issues, and Authorities’, businesses’, and societal reactions to that information, may increase the severity or duration of the COVID-19 Pandemic and its effects.
The COVID-19 Pandemic, and its effect on financial markets, have adversely affected our investment portfolio (and, specifically, increased the risk of defaults, downgrades and volatility in the value of the investments we hold, and lowered variable investment income and returns) and may continue to do so. Market volatility may slow or prevent us from reacting to market events as effectively as we otherwise could. When we sell our investment holdings, we may not receive the prices we seek, and may sell at a price lower than our carrying value, due to reduced liquidity during periods of market volatility or disruption, or other reasons. This may affect privately-placed fixed income securities, certain derivative instruments, mortgage or other loans, direct financing and leveraged leases, other limited partnership interests, tax credit and renewable energy partnerships and real estate equity, including real estate joint ventures and funds. Borrowers may delay or fail to pay principal and interest when due, and Authorities may delay or place a moratorium on foreclosures or otherwise impair enforcement actions, affecting the value of our mortgage investments, mortgage-backed securities, and other investments, and the cash flows they produce. Market volatility has also significantly increased credit spreads and may continue to do so, which may increase our borrowing costs and decrease product fee income.
Low, zero or negative interest rates, yields, returns, reduced liquidity and a continued slowdown in U.S. or global economic conditions, and COVID-19 Pandemic-related actions, have adversely affected the values and cash flows of assets in our investment portfolio and may continue to do so, especially if prolonged. Such conditions, whether due to the COVID-19 Pandemic or efforts to counter it or its impact, may make any of the effects we have described for low interest rates, yields, and returns more severe. Authorities’ actions, including activity by the U.S. Federal Reserve and other central banks, in response to the COVID-19 Pandemic could cause inflation to be higher than we expected, which could require us to strengthen our reserves.
We have built, and may continue to build, our cash and other liquid assets beyond the range we anticipated before the COVID-19 Pandemic. As a result, we may have less capital to devote to other uses, such as innovation, acquisitions, development, return of capital to shareholders, or other uses. In addition, Authorities may limit the dividends that our operating companies may distribute to holding companies, limiting the capital available for a variety of purposes at the holding companies.
Market dislocations, decreases in observable market activity, or unavailability of information, may restrict our access to key inputs used to derive certain estimates and assumptions made in connection with financial reporting or otherwise. As a result, the variability of our financial statement balances, estimates and assumptions we use to run our business may increase, and their reliability decrease.

The COVID-19 Pandemic has increased, and may continue to increase, claims under many of our policies (for example, life, disability, long-term care, and supplemental health products) and our resulting costs. Beginning in the second quarter of 2020, the impact on claims in each quarter may be far greater than in prior quarters. In addition, an increased number of policyholders and contractholders may have lower income or assets, and so may have difficulty paying premiums and fees. Authorities may require (or suggest) “no lapse” in policy coverage for uncertain or prolonged periods of time, regardless of whether we receive premiums or are able to assess fees against policyholder account balances. Legal and regulatory responses to the COVID-19 Pandemic and related public health issues may also include the extension of insurance coverage beyond our policy or contract language, and/or changes to insurance policy conditions such as premium grace periods, suspension of cancellations, and extensions of proof of loss deadlines. Authorities may also purport to change policy coverage, including retroactively, exposing us to risks and costs we were unable to foresee or underwrite. We may also voluntarily (or in response to requirements, guidance, or pressure) adopt customer accommodations, such as waiving exclusions, forgoing rate increases or implementing lower rate increases than we would otherwise, relaxation of claim documentation requirements, premium credit, or accommodations for customers experiencing economic or other distress as a result of the COVID-19 Pandemic. Our New York regulator's annual letters on Special Considerations that affect year-end asset adequacy testing may impose unforeseen assumptions or requirements that require us to increase or release reserves, which could affect our statutory capital and surplus.
Our cost of reinsurance for policies could increase, and we may find reinsurance unavailable. Reinsurers may dispute, or seek to reduce or eliminate, coverage on policies as a result of any changes to policies or practices we make as a result of the COVID-19 Pandemic.
Policyholders may change their behavior in unexpected ways. For example, policyholders and contractholders seeking sources of liquidity due to COVID-19 Pandemic-related economic uncertainty and increased unemployment may withdraw or surrender at greater rates than we expected. They may also change their premium payment practices, exercise product options, or take other actions as a result of the COVID-19 Pandemic and Authorities’ efforts to respond to it.
We have incurred, and may continue to incur, increased administrative expenses as a result of the COVID-19 Pandemic and Authorities’ efforts to respond to it. These conditions may affect our employees, agents, brokers and distribution partners, as well as the workforces of our vendors, service providers and counterparties. We may have difficulties conducting our business, including in selling our products, such as those traditionally sold in person. We may find it difficult or impossible to obtain required or appropriate signatures from our representatives, customers, or others for a variety of purposes, including property title-related or other filings with Authorities, increasing the uncertainties and risks from various transactions, such as product sales, regulatory matters, or real estate-related transactions. We may face increased workplace safety costs and risks, lose access to critical employees, and face increased employment-related claims and employee-relations challenges, each of which may increase when our employees begin to return to our workplaces. Any of the third parties to whom we outsource certain critical business activities may fail to perform as a result of the COVID-19 Pandemic or claim that it cannot perform due to a force majeure.
Our risk factorsmanagement, contingency, and business continuity plans may not adequately protect our operations. Extended periods of remote work arrangements and other unusual business conditions and circumstances as a result of the COVID-19 Pandemic could strain our business continuity plans, introduce operational risk, increase our cybersecurity risks, and impair our ability to manage our business. The frequency and sophistication of attempts at unauthorized access to our technology systems and fraud may increase, and COVID-19 Pandemic conditions may impair our cybersecurity efforts and risk management. Our efforts to prevent money-laundering or other fraud, whether due to limited abilities to "know our customers," strains on our programs to avoid and deter foreign corrupt practices, or otherwise, may increase our compliance costs and risk of violations.
The COVID-19 Pandemic could affect our internal controls over financial reporting. We have developed, and may continue to develop, new and less-seasoned processes, procedures, and controls to respond to changes in our business environment. If any employees who are key to our controls become ill from the risk factors previously disclosedCOVID-19 Pandemic and are unable to work, this may affect our ability to operate our internal controls.
Authorities may delay, or consider delaying, implementing legal or regulatory changes, increasing uncertainty and creating the potential for later, rapid changes. Authorities may also not be able to act on other policy or regulatory priorities as a result of the COVID-19 Pandemic. The U.K. and the European Union may extend their trade negotiations. This could prolong the U.K.’s post-exit transition period beyond 2020, thereby extending its prior relationship with the European Union.
Our efforts to return excess capital to our shareholders may be challenged. For example, Authorities, investors, or media may exert pressure on us not to repurchase shares of our common stock or other securities, or prohibit us from doing so. Our use of other means to return excess capital to shareholders may be less tax-efficient than repurchases.

Any uncertainty as a result of any of these events, including but not limited to investment portfolio impact, mortality or morbidity rate changes, an increase in expenses, or policyholder behavior changes, may require us to change our estimates, assumptions, models or reserves. Authorities may not accurately report population and impact data, such as death rates, infections, morbidity, hospitalizations, or illness that we use in our estimates, assumptions, models or reserves.
Any of the 2018direct or indirect effects of the COVID-19 Pandemic may cause litigation or regulatory, investor, media, or public inquiries. Our costs to manage and effectively respond to these matters, and to address them in settlement or other ways, may increase.
Any of the events described above have adversely affected, may continue to adversely affect, or may yet adversely affect the global economy, global financial markets, our business, our results of operations, or our financial condition. These events could also cause, contribute to, or exacerbate the risks and uncertainties we described in our 2019 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
Purchases of MetLife, Inc. common stock made by or on behalf of MetLife, Inc. or its affiliates during the quarter ended June 30, 2019March 31, 2020 are set forth below:
Period Total Number
of Shares Purchased (1)		 Average Price Paid per Share Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs		 Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
Be Purchased Under the
Plans or Programs (2)
April 1 — April 30, 2019 —
 $—
 —
 $770,341,529
May 1 — May 31, 2019 10,038,637
 $47.46
 10,026,913
 $294,439,277
June 1 — June 30, 2019 5,729,388
 $47.84
 5,729,388
 $20,341,538
Total 15,768,025
   15,756,301
 

Period Total Number
of Shares Purchased (1)		 Average Price Paid per Share Total Number
of Shares
Purchased as Part
of Publicly
Announced Plans
or Programs		 Maximum Number
(or Approximate
Dollar Value) of
Shares that May Yet
Be Purchased Under the
Plans or Programs (2)
January 1 — January 31, 2020 —
 $—
 —
 $985,343,812
February 1 — February 29, 2020 5,240,532
 $50.43
 5,240,532
 $721,080,757
March 1 — March 31, 2020 5,424,076
 $43.46
 5,424,076
 $485,343,836
Total 10,664,608
   10,664,608
 

__________________
(1)Except for the foregoing, there were no shares of MetLife, Inc. common stock repurchased by MetLife, Inc. During the periods AprilJanuary 1 through April 30, 2019, MayJanuary 31, 2020, February 1 through May 31, 2019February 29, 2020 and JuneMarch 1 through June 30, 2019,March 31, 2020, separate account index funds purchased 0 shares, 11,7240 shares and 0 shares, respectively, of MetLife, Inc. common stock on the open market in non-discretionary transactions.
(2)In November 2018,July 2019, MetLife, Inc. announced that its Board of Directors authorized $2.0 billion of common stock repurchases. At June 30, 2019,March 31, 2020, MetLife, Inc. had $20$485 million of common stock repurchases remaining under thisthe authorization. On July 31, 2019, MetLife, Inc. announced that its Board of Directors authorized an additional $2.0 billion of common stock repurchases. For more information on common stock repurchases, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Common Stock Repurchases.” See also “Risk Factors — Capital Risks — Legal and Regulatory Restrictions May Prevent Us from Paying Dividends and Repurchasing Our Stock at the Level We Wish”Stock” and Note 1516 of the Notes to the Consolidated Financial Statements included in the 20182019 Annual Report.

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Item 6. Exhibits
(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife, Inc., its subsidiaries or affiliates, or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about MetLife, Inc., its subsidiaries and affiliates may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife, Inc.’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission website at www.sec.gov.)
    Incorporated by Reference  
Exhibit No. Description Form File Number Exhibit Filing Date Filed or Furnished Herewith
             
10.1 
Separation Agreement and General Release, effective June 16, 2019, between MetLife, Inc. and MetLife Group, Inc. and Martin Lippert.*

 8-K 001-15787 10.1 June 18, 2019  
             
10.2 
Description of Agreement between Kishore Ponnavolu and MetLife, Inc. dated April 23, 2019.*

         X
             
31.1 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
         X
             
31.2 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
         X
             
32.1 
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
         X
             
32.2 
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
         X
             
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.         X
             
101.SCH Inline XBRL Taxonomy Extension Schema Document.         X
             
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.         X
             
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.         X
             
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.         X
             
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.         X
             
104 
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

         X
Incorporated by Reference
Exhibit No.DescriptionFormFile NumberExhibitFiling DateFiled or Furnished Herewith
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document.X
101.SCHInline XBRL Taxonomy Extension Schema Document.X
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.X
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.X
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.X
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.X
104
Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101).

X
__________________

*Indicates management contracts or compensatory plans or arrangements.


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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
METLIFE, INC.
   
By: 
/s/ Tamara L. Schock

  
Name:  Tamara L. Schock
Title:    Executive Vice President
             and Chief Accounting Officer
             (Authorized Signatory and Principal
              Accounting Officer)
Date: August 5, 2019May 8, 2020

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