BRIGHTHOUSE LIFE INSURANCE 10-Q 2014 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2014

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: 33-03094

MetLife Insurance Company of Connecticut

(Exact name of registrant as specified in its charter)

Connecticut	06-0566090
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1300 Hall Boulevard, Bloomfield, Connecticut	06002
(Address of principal executive offices)	(Zip Code)

(860) 656-3000

(Registrant’s telephone number, including area code)

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 þ    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes þ    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer    þ  (Do not check if a smaller reporting company)	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨    No þ

At May 14, 2014, 34,595,317 shares of the registrant’s common stock, $2.50 par value per share, were outstanding, of which 30,000,000 shares were owned directly by MetLife, Inc. and the remaining 4,595,317 shares were owned by MetLife Investors Group, Inc., a wholly-owned subsidiary of MetLife, Inc.

REDUCED DISCLOSURE FORMAT

The registrant meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is, therefore, filing this Form 10-Q with the reduced disclosure format.

Table of Contents

		Page
Part I — Financial Information
Item 1.	Financial Statements (at March 31, 2014 (Unaudited) and December 31, 2013 and for the Three Months Ended March 31, 2014 and 2013 (Unaudited))	4
	Interim Condensed Consolidated Balance Sheets	4
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	5
	Interim Condensed Consolidated Statements of Stockholders’ Equity	6
	Interim Condensed Consolidated Statements of Cash Flows	7
	Notes to the Interim Condensed Consolidated Financial Statements:
	Note 1 — Business, Basis of Presentation and Summary of Significant Accounting Policies	8
	Note 2 — Segment Information	10
	Note 3 — Pending Disposition	14
	Note 4 — Insurance	14
	Note 5 — Investments	16
	Note 6 — Derivatives	28
	Note 7 — Fair Value	40
	Note 8 — Goodwill	59
	Note 9 — Equity	60
	Note 10 — Other Expenses	62
	Note 11 — Contingencies, Commitments and Guarantees	62
	Note 12 — Related Party Transactions	64
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	67
Item 4.	Controls and Procedures	79
Part II — Other Information
Item 1.	Legal Proceedings	80
Item 1A.	Risk Factors	80
Item 6.	Exhibits	81
Signatures		82
Exhibit Index		E-1

As used in this Form 10-Q, “MICC,” the “Company,” “we,” “our” and “us” refer to MetLife Insurance Company of Connecticut, a Connecticut corporation incorporated in 1863, and its subsidiaries, including MetLife Investors USA Insurance Company (“MLI-USA”). MetLife Insurance Company of Connecticut is a wholly-owned subsidiary of MetLife, Inc. (“MetLife”).

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 such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial 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.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of MetLife Insurance Company of Connecticut and its subsidiaries. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual 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 Insurance Company of Connecticut’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) increased volatility and disruption of the capital and credit markets, which may affect our ability to meet liquidity needs and access capital, generate fee income and market-related revenue and finance statutory reserve requirements and may require us to pledge collateral or make payments related to declines in value of specified assets, including assets supporting risks ceded to certain affiliated captive reinsurers or hedging arrangements associated with those risks; (3) exposure to financial and capital market risks, including as a result of the disruption in Europe; (4) impact on us of comprehensive financial services regulation reform, including regulation of MetLife as a potential non-bank systemically important financial institution, or otherwise; (5) numerous rulemaking initiatives required or permitted by the Dodd-Frank Wall Street Reform and Consumer Protection Act which may impact how we conduct our business, including those compelling the liquidation of certain financial institutions; (6) regulatory, legislative or tax changes relating to our insurance, international, or other operations that may affect the cost of, or demand for, our products or services, or increase the cost or administrative burdens of providing benefits to employees; (7) adverse results or other consequences from litigation, arbitration or regulatory investigations; (8) potential liquidity and other risks resulting from our participation in a securities lending program and other transactions; (9) investment losses and defaults, and changes to investment valuations; (10) changes in assumptions related to investment valuations, deferred policy acquisition costs, deferred sales inducements, value of business acquired or goodwill; (11) impairments of goodwill and realized losses or market value impairments to illiquid assets; (12) defaults on our mortgage loans; (13) the defaults or deteriorating credit of other financial institutions that could adversely affect us; (14) economic, political, legal, currency and other risks relating to our international operations, including with respect to fluctuations of exchange rates; (15) downgrades in our claims paying ability, financial strength ratings or those of MetLife’s other insurance subsidiaries, or MetLife’s credit ratings; (16) an inability of MetLife to access its credit facilities; (17) availability and effectiveness of reinsurance or indemnification arrangements, as well as any default or failure of counterparties to perform; (18) differences between actual claims experience and underwriting and reserving assumptions; (19) ineffectiveness of MetLife’s risk management policies and procedures; (20) catastrophe losses; (21) increasing cost and limited market capacity for statutory life insurance reserve financings; (22) heightened competition, 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; (23) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (24) our ability to address difficulties, unforeseen liabilities, asset impairments, or rating agency actions arising from business acquisitions, and integrating and managing the growth of such acquired businesses, or arising from dispositions of businesses or legal entity reorganizations; (25) changes in accounting standards, practices and/or policies; (26) increased expenses relating to pension and postretirement benefit plans for employees and retirees of MetLife and its subsidiaries, as well as health care and other employee benefits; (27) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (28) inability to attract and retain sales representatives; (29) the effects of business disruption or economic contraction due to disasters such as terrorist attacks, cyberattacks, other hostilities, or natural catastrophes, including any related impact on the value of our investment portfolio, MetLife’s disaster recovery systems, cyber- or other information security systems and management continuity planning; (30) the effectiveness of MetLife’s programs and practices in avoiding giving associates incentives to take excessive risks; and (31) other risks and uncertainties described from time to time in MetLife Insurance Company of Connecticut’s filings with the SEC.

MetLife Insurance Company of Connecticut does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife Insurance Company of Connecticut later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife Insurance Company of Connecticut makes on related subjects in reports to the SEC.

Note Regarding Reliance on Statements in Our Contracts

See “Exhibit Index — Note Regarding Reliance on Statements in Our Contracts” for information regarding agreements included as exhibits to this Quarterly Report on Form 10-Q.

2

Part I — Financial Information

Item 1.  Financial Statements

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

Interim Condensed Consolidated Balance Sheets

March 31, 2014 (Unaudited) and December 31, 2013

(In millions, except share and per share data)

	March 31, 2014		December 31, 2013
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $43,937 and $43,477, respectively)	$	46,787	$	45,252
Equity securities available-for-sale, at estimated fair value (cost: $397 and $397, respectively)	430		418
Mortgage loans (net of valuation allowances of $33 and $34, respectively; includes $1,140 and $1,598, respectively, at estimated fair value, relating to variable interest entities)	6,982		7,718
Policy loans	1,214		1,219
Real estate and real estate joint ventures	842		754
Other limited partnership interests	2,222		2,130
Short-term investments, principally at estimated fair value	1,810		2,107
Other invested assets, principally at estimated fair value	2,609		2,555
Total investments	62,896		62,153
Cash and cash equivalents, principally at estimated fair value	1,843		746
Accrued investment income (includes $7 and $9, respectively, relating to variable interest entities)	558		542
Premiums, reinsurance and other receivables	21,579		20,609
Deferred policy acquisition costs and value of business acquired	4,395		4,730
Current income tax recoverable	222		192
Goodwill	381		493
Other assets	785		794
Separate account assets	98,005		97,780
Total assets	$	190,664	$	188,039
Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits	$	28,455	$	27,991
Policyholder account balances	33,055		33,453
Other policy-related balances	3,194		3,164
Payables for collateral under securities loaned and other transactions	7,764		6,451
Long-term debt (includes $1,000 and $1,461, respectively, at estimated fair value, relating to variable interest entities)	1,790		2,251
Deferred income tax liability	1,688		1,385
Other liabilities (includes $6 and $7, respectively, relating to variable interest entities)	7,353		6,776
Separate account liabilities	98,005		97,780
Total liabilities	181,304		179,251
Contingencies, Commitments and Guarantees (Note 11)
Stockholders’ Equity
Common stock, par value $2.50 per share; 40,000,000 shares authorized; 34,595,317 shares issued and outstanding at March 31, 2014 and December 31, 2013	86		86
Additional paid-in capital	6,737		6,737
Retained earnings	982		1,076
Accumulated other comprehensive income (loss)	1,555		889
Total stockholders’ equity	9,360		8,788
Total liabilities and stockholders’ equity	$	190,664	$	188,039

See accompanying notes to the interim condensed consolidated financial statements.

4

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

For the Three Months Ended March 31, 2014 and 2013 (Unaudited)

(In millions)

	Three Months Ended March 31,
	2014			2013
Revenues
Premiums	$	165		$	151
Universal life and investment-type product policy fees	589			564
Net investment income	702			730
Other revenues	119			157
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities	(1		)	(2		)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)	—			(7		)
Other net investment gains (losses)	(518		)	75
Total net investment gains (losses)	(519		)	66
Net derivative gains (losses)	180			113
Total revenues	1,236			1,781
Expenses
Policyholder benefits and claims	420			414
Interest credited to policyholder account balances	239			264
Other expenses	720			408
Total expenses	1,379			1,086
Income (loss) before provision for income tax	(143		)	695
Provision for income tax expense (benefit)	(49		)	230
Net income (loss)	$	(94	)	$	465
Comprehensive income (loss)	$	572		$	51

See accompanying notes to the interim condensed consolidated financial statements.

5

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

Interim Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2014 and 2013 (Unaudited)

(In millions)

								Accumulated Other Comprehensive Income (Loss)
	Common Stock		Additional Paid-in Capital		Retained Earnings			Net Unrealized Investment Gains  (Losses)			Other-Than- Temporary Impairments			Foreign Currency Translation Adjustments			Total Stockholders’ Equity
Balance at December 31, 2013	$	86	$	6,737	$	1,076		$	938		$	(26	)	$	(23	)	$	8,788
Net income (loss)					(94		)										(94		)
Other comprehensive income (loss), net of income tax								658			2			6			666
Balance at March 31, 2014	$	86	$	6,737	$	982		$	1,596		$	(24	)	$	(17	)	$	9,360
								Accumulated Other Comprehensive Income (Loss)
	Common Stock		Additional Paid-in Capital		Retained Earnings			Net Unrealized Investment Gains  (Losses)			Other-Than- Temporary Impairments			Foreign Currency Translation Adjustments			Total Stockholders’ Equity
Balance at December 31, 2012	$	86	$	6,718	$	1,356		$	2,487		$	(38	)	$	(49	)	$	10,560
Net income (loss)					465												465
Other comprehensive income (loss), net of income tax								(367		)	9			(56		)	(414		)
Balance at March 31, 2013	$	86	$	6,718	$	1,821		$	2,120		$	(29	)	$	(105	)	$	10,611

See accompanying notes to the interim condensed consolidated financial statements.

6

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

Interim Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2014 and 2013 (Unaudited)

(In millions)

	Three Months Ended March 31,
	2014			2013
Net cash provided by (used in) operating activities	$	616		$	460
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	4,388			4,037
Equity securities	14			24
Mortgage loans	867			373
Real estate and real estate joint ventures	1			3
Other limited partnership interests	37			27
Purchases of:
Fixed maturity securities	(5,064		)	(5,275		)
Equity securities	(9		)	(63		)
Mortgage loans	(119		)	(132		)
Real estate and real estate joint ventures	(89		)	(32		)
Other limited partnership interests	(61		)	(131		)
Cash received in connection with freestanding derivatives	46			30
Cash paid in connection with freestanding derivatives	(45		)	(218		)
Net change in policy loans	5			4
Net change in short-term investments	294			215
Net change in other invested assets	(5		)	(21		)
Net cash provided by (used in) investing activities	260			(1,159		)
Cash flows from financing activities
Policyholder account balances:
Deposits	4,057			4,296
Withdrawals	(4,678		)	(3,638		)
Net change in payables for collateral under securities loaned and other transactions	1,313			701
Long-term debt repaid	(459		)	(246		)
Financing element on certain derivative instruments	(13		)	(17		)
Net cash provided by (used in) financing activities	220			1,096
Effect of change in foreign currency exchange rates on cash and cash equivalents balances	1			(16		)
Change in cash and cash equivalents	1,097			381
Cash and cash equivalents, beginning of period	746			895
Cash and cash equivalents, end of period	$	1,843		$	1,276
Supplemental disclosures of cash flow information:
Net cash paid (received) for:
Interest	$	21		$	37
Income tax	$	2		$	17

See accompanying notes to the interim condensed consolidated financial statements.

7

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)

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

Business

“MICC” or the “Company” refers to MetLife Insurance Company of Connecticut, a Connecticut corporation incorporated in 1863, and its subsidiaries, including MetLife Investors USA Insurance Company (“MLI-USA”). MetLife Insurance Company of Connecticut is a wholly-owned subsidiary of MetLife, Inc. (“MetLife”). The Company offers individual annuities, individual life insurance, and institutional protection and asset accumulation products.

The Company is organized into two segments: Retail and Corporate Benefit Funding.

In 2013, MetLife announced its plans to merge three U.S.-based life insurance companies and an offshore reinsurance subsidiary to create one larger U.S.-based and U.S.-regulated life insurance company (the “Mergers”). The companies to be merged are MetLife Insurance Company of Connecticut, MLI-USA and MetLife Investors Insurance Company (“MLIIC”), each a U.S. insurance company that issues variable annuity products in addition to other products, and Exeter Reassurance Company, Ltd. (“Exeter”), a reinsurance company that mainly reinsures guarantees associated with variable annuity products. MetLife Insurance Company of Connecticut, which is expected to be renamed and domiciled in Delaware, will be the surviving entity. Exeter, formerly a Cayman Islands company, was re-domesticated to Delaware in October 2013. Effective January 1, 2014, following receipt of New York State Department of Financial Services approval, MetLife Insurance Company of Connecticut withdrew its license to issue insurance policies and annuity contracts in New York. Also effective January 1, 2014, MetLife Insurance Company of Connecticut reinsured with Metropolitan Life Insurance Company (“MLIC”), an affiliate, all existing New York insurance policies and annuity contracts that include a separate account feature. See Note 12. On December 31, 2013, MetLife Insurance Company of Connecticut deposited investments with an estimated fair market value of $6.3 billion into a custodial account, which became restricted to secure MetLife Insurance Company of Connecticut’s remaining New York policyholder liabilities not covered by such reinsurance on January 1, 2014. The Mergers are expected to occur in the fourth quarter of 2014, subject to regulatory approvals.

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 in 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. 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 estimates.

The accompanying interim condensed consolidated financial statements include the accounts of MetLife Insurance Company of Connecticut 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 for investments in equity securities when it has significant influence or at least 20% interest and for investments in real estate joint ventures and other limited partnership interests (“investees”) when it has more than a minor ownership interest or more than a minor influence over the investee’s operations, but does not have a controlling financial interest. The Company generally recognizes its share of the investee’s earnings on a three-month lag in instances where the investee’s financial information is not sufficiently timely or when the investee’s reporting period differs from the Company’s reporting period. The Company uses the cost method of accounting for investments in which it has virtually no influence over the investee’s operations.

Certain amounts in the prior year periods’ interim condensed consolidated financial statements and related footnotes thereto have been reclassified to conform with the 2014 presentation as discussed throughout the Notes to the Interim Condensed Consolidated Financial Statements.

Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity.

8

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

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

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, 2013 consolidated balance sheet data was derived from audited consolidated financial statements included in MetLife Insurance Company of Connecticut’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Annual Report”), filed with the U.S. Securities and Exchange Commission (“SEC”), 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 2013 Annual Report.

Adoption of New Accounting Pronouncements

Effective January 1, 2014, the Company adopted new guidance regarding reporting of discontinued operations and disclosures of disposals of components of an entity. The guidance increases the threshold for a disposal to qualify as a discontinued operation, expands the disclosures for discontinued operations and requires new disclosures for certain disposals that do not meet the definition of a discontinued operation. Disposals must now represent a strategic shift that has or will have a major effect on the entity’s operations and financial results to qualify as discontinued operations. As discussed in Note 3, the Company has entered into a definitive agreement to sell its wholly-owned subsidiary, MetLife Assurance Limited (“MAL”). As a result of the adoption of this new guidance, the results of operations of MAL and the estimated loss on sale have been included in income from continuing operations.

Effective January 1, 2014, the Company adopted new guidance regarding the presentation of an unrecognized tax benefit. The new guidance requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. However, when the carryforwards are not available at the reporting date to settle any additional income taxes that would result from the disallowance of a tax position or the applicable tax law does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit will be presented in the financial statements as a liability and will not be combined with the related deferred tax asset. The adoption was prospectively applied and did not have a material impact on the Company’s consolidated financial statements.

Effective January 1, 2014, the Company adopted new guidance regarding foreign currency that requires an entity that ceases to have a controlling financial interest in a subsidiary or group of assets within a foreign entity to release any related cumulative translation adjustment into net income. Accordingly, the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. For an equity method investment that is a foreign entity, a pro rata portion of the cumulative translation adjustment should be released into net income upon a partial sale of such an equity method investment. The new guidance did not have a material impact on the financial statements upon adoption.

Effective January 1, 2014, the Company adopted new guidance regarding liabilities that requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. In addition, the amendments require an entity to disclose the nature and amount of the obligation, as well as other information about the obligation. The new guidance did not have a material impact on the financial statements upon adoption.

Future Adoption of New Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board issued new guidance regarding investments (Accounting Standards Update 2014-01, Investments — Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects). This guidance is applicable to investments in flow-through limited liability entities that manage or invest in affordable housing projects that qualify for the low-income housing tax credit. Under the guidance, an entity that meets certain conditions is permitted to make an accounting policy election to amortize the initial cost of its investment in proportion to the tax credits and other tax benefits received and recognize the net investment performance on the statement of operations as a component of income tax expense (benefit). The new guidance is effective for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014, and should be applied retrospectively to all periods presented. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

9

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

2. Segment Information

The Company is organized into two segments: Retail and Corporate Benefit Funding. In addition, the Company reports certain of its results of operations in Corporate & Other.

Retail

The Retail segment offers a broad range of protection products and a variety of annuities primarily to individuals, and is organized into two businesses: Annuities and Life & Other. Annuities includes a variety of variable, fixed and indexed annuities which provide for both asset accumulation and asset distribution needs. Life & Other insurance products and services include variable life, universal life, term life and whole life products, as well as individual disability income products. Additionally, through broker-dealer affiliates, the Company offers a full range of mutual funds and other securities products.

Corporate Benefit Funding

The Corporate Benefit Funding segment offers a broad range of annuity and investment products, including guaranteed interest products and other stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets. This segment also includes structured settlements and certain products to fund company-, bank- or trust-owned life insurance used to finance non-qualified benefit programs for executives.

Corporate & Other

Corporate & Other contains the excess capital not allocated to the segments, various business activities including start-up businesses, run-off businesses, the Company’s ancillary international operations, 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. Start-up businesses include direct and digital marketing products. Corporate & Other also includes the elimination of intersegment amounts.

Financial Measures and Segment Accounting Policies

Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is the Company’s measure of segment performance and is reported below. Operating earnings should not be viewed as a substitute for net income (loss). The Company believes the presentation of operating 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.

Operating earnings is defined as operating revenues less operating expenses, both net of income tax.

Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or exited by the Company (“Divested Businesses”). Operating revenues also excludes net investment gains (losses) and net derivative gains (losses). Operating expenses also excludes goodwill impairments.

The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating 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”); and

• Net investment income: (i) includes amounts for scheduled periodic settlement payments 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) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP.

10

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

2. Segment Information (continued)

The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses:

• Policyholder benefits and claims excludes: (i) amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (ii) benefits and hedging costs related to GMIBs (“GMIB Costs”), and (iii) market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”);

• Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of policyholder account balances (“PABs”) but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder-directed unit-linked investments;

• Amortization of deferred policy acquisition costs (“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;

• 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) implementation of new insurance regulatory requirements, and (ii) acquisition and integration costs.

In the first quarter of 2014, MetLife began reporting the operations of MAL as divested business. See Note 3. Consequently, the results for Corporate Benefit Funding and Corporate & Other have decreased by $5 million, net of $3 million of income tax, and $3 million, net of $2 million of income tax, respectively, for the three months ended March 31, 2013.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months ended March 31, 2014 and 2013. The segment accounting policies are the same as those used to prepare the Company’s consolidated financial statements, except for operating earnings adjustments as defined above. In addition, segment accounting policies include the method of capital allocation described below.

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

MetLife’s economic capital model 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 and applying an industry standard method for the inclusion of diversification benefits among risk types.

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, operating earnings or net income (loss).

Net investment income is based upon the actual results of each segment’s specifically identifiable investment portfolios adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.

11

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

2. Segment Information (continued)

	Operating Earnings
Three Months Ended March 31, 2014	Retail			Corporate Benefit Funding (1)			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	216		$	(65	)	$	14		$	165		$	—		$	165
Universal life and investment-type product policy fees	542			8			—			550			39			589
Net investment income	406			235			35			676			26			702
Other revenues	117			2			—			119			—			119
Net investment gains (losses)	—			—			—			—			(519		)	(519		)
Net derivative gains (losses)	—			—			—			—			180			180
Total revenues	1,281			180			49			1,510			(274		)	1,236
Expenses
Policyholder benefits and claims	320			26			(1		)	345			75			420
Interest credited to policyholder account balances	209			30			—			239			—			239
Capitalization of DAC	(58		)	—			(16		)	(74		)	—			(74		)
Amortization of DAC and VOBA	169			—			8			177			139			316
Interest expense on debt	—			—			17			17			18			35
Other expenses	414			7			18			439			4			443
Total expenses	1,054			63			26			1,143			236			1,379
Provision for income tax expense (benefit)	78			41			(13		)	106			(155		)	(49		)
Operating earnings	$	149		$	76		$	36		261
Adjustments to:
Total revenues										(274		)
Total expenses										(236		)
Provision for income tax (expense) benefit										155
Net income (loss)										$	(94	)				$	(94	)

____________

(1) Premiums and policyholder benefits and claims both include ($87) million of ceded reinsurance with MLIC, related to the Mergers. See Note 12.

12

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

2. Segment Information (continued)

	Operating Earnings
Three Months Ended March 31, 2013	Retail			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	74		$	20		$	9		$	103		$	48		$	151
Universal life and investment-type product policy fees	521			9			—			530			34			564
Net investment income	400			251			32			683			47			730
Other revenues	156			1			—			157			—			157
Net investment gains (losses)	—			—			—			—			66			66
Net derivative gains (losses)	—			—			—			—			113			113
Total revenues	1,151			281			41			1,473			308			1,781
Expenses
Policyholder benefits and claims	146			127			9			282			132			414
Interest credited to policyholder account balances	229			37			—			266			(2		)	264
Capitalization of DAC	(148		)	(2		)	(4		)	(154		)	—			(154		)
Amortization of DAC and VOBA	114			2			—			116			(90		)	26
Interest expense on debt	—			—			17			17			34			51
Other expenses	466			8			7			481			4			485
Total expenses	807			172			29			1,008			78			1,086
Provision for income tax expense (benefit)	120			38			(11		)	147			83			230
Operating earnings	$	224		$	71		$	23		318
Adjustments to:
Total revenues										308
Total expenses										(78		)
Provision for income tax (expense) benefit										(83		)
Net income (loss)										$	465					$	465

13

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of 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:

	March 31, 2014		December 31, 2013
	(In millions)
Retail	$	147,375	$	146,515
Corporate Benefit Funding	31,281		30,822
Corporate & Other	12,008		10,702
Total	$	190,664	$	188,039

3.  Pending Disposition

On February 14, 2014, the Company entered into a definitive agreement to sell its wholly-owned subsidiary, MAL, for an expected gross consideration of $705 million (£424 million) in cash. The transaction is expected to close in the second quarter of 2014, subject to satisfaction of customary closing conditions. As a result of this agreement, an expected loss of $547 million ($386 million, net of income tax), which includes a reduction to goodwill of $112 million, was recorded for the three months ended March 31, 2014, and is reflected within net investment gains (losses) on the consolidated statement of operations and comprehensive income (loss). MAL’s results of operations are included in continuing operations and were historically reported in the Corporate Benefit Funding segment. See Note 2.

The carrying amount of major classes of assets and liabilities related to the MAL disposition were as follows at:

	March 31, 2014
	(In millions)
Total investments	$	5,028
Total assets	$	5,347
Other liabilities (1)	$	741
Future policy benefits	$	3,645
Total liabilities	$	4,508

__________________

(1) Includes an estimate of $435 million ($292 million, net of income tax) related to the loss on sale.

4.  Insurance

Guarantees

As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report, the Company issues variable annuity products with guaranteed minimum benefits. The non-life contingent portion of guaranteed minimum withdrawal benefits (“GMWBs”) and the portion of certain GMIBs that does not require annuitization are accounted for as embedded derivatives in PABs and are further discussed in Note 6.

Based on the type of guarantee, the Company defines net amount at risk (“NAR”) as listed below.

Variable Annuity Guarantees

In the Event of Death

Defined as the death benefit less the total contract 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.

At Annuitization

Defined as the amount (if any) that would be required to be added to the total contract 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.

14

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

4. Insurance (continued)

Universal and Variable Life Contracts

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.

The amounts in the table below include direct business, but exclude offsets from hedging or reinsurance, if any. As discussed in Note 6 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report, the Company has reinsured 100% of the living and death benefit guarantees associated with variable annuities issued since 2006 to an affiliated reinsurer, and certain portions of living and death benefit guarantees associated with variable annuities issued prior to 2006 to affiliated and unaffiliated reinsurers. Therefore, the NARs presented below reflect the economic exposures of living and death benefit guarantees associated with variable annuities, but not necessarily their impact on the Company.

Information regarding the types of guarantees relating to annuity contracts and universal and variable life contracts was as follows at: 

	March 31, 2014				December 31, 2013
	In the Event of Death		At Annuitization		In the Event of Death		At Annuitization
	(In millions)
Annuity Contracts (1)
Variable Annuity Guarantees
Total contract account value	$	100,528	$	57,073	$	100,420	$	57,041
Separate account value	$	95,802	$	55,884	$	95,637	$	55,805
Net amount at risk	$	2,220	$	624	$	2,230	$	562
Average attained age of contractholders	64 years		65 years		64 years		64 years

	March 31, 2014		December 31, 2013
	Secondary Guarantees
	(In millions)
Universal and Variable Life Contracts (1)
Account value (general and separate account)	$	6,469	$	6,360
Net amount at risk	$	91,173	$	91,264
Average attained age of policyholders	58 years		58 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.

15

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5.  Investments

Fixed Maturity and Equity Securities Available-for-Sale

Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following table presents the fixed maturity and equity securities available-for-sale (“AFS”) by sector. Redeemable preferred stock is reported within U.S. corporate and foreign corporate fixed maturity securities and non-redeemable preferred stock is reported within equity securities. Included within fixed maturity securities are structured securities including residential mortgage-backed securities (“RMBS”), asset-backed securities (“ABS”) and commercial mortgage-backed securities (“CMBS”).

	March 31, 2014										December 31, 2013
	Cost or Amortized Cost		Gross Unrealized						Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized						Estimated Fair Value
			Gains		Temporary Losses		OTTI Losses						Gains		Temporary Losses		OTTI Losses
	(In millions)
Fixed maturity securities
U.S. corporate	$	15,624	$	1,397	$	128	$	—	$	16,893	$	15,779	$	1,130	$	207	$	—	$	16,702
Foreign corporate	7,961		565		46		—		8,480		8,111		485		79		—		8,517
U.S. Treasury and agency	8,944		637		101		—		9,480		8,188		334		228		—		8,294
RMBS	4,786		225		53		38		4,920		4,587		201		59		41		4,688
State and political subdivision	2,125		217		25		—		2,317		2,147		139		62		—		2,224
ABS	1,972		37		10		—		1,999		2,081		32		12		—		2,101
CMBS	1,490		54		3		—		1,541		1,546		62		4		—		1,604
Foreign government	1,035		134		12		—		1,157		1,038		103		19		—		1,122
Total fixed maturity securities	$	43,937	$	3,266	$	378	$	38	$	46,787	$	43,477	$	2,486	$	670	$	41	$	45,252
Equity securities
Non-redeemable preferred stock	$	236	$	11	$	21	$	—	$	226	$	236	$	9	$	28	$	—	$	217
Common stock	161		51		8		—		204		161		40		—		—		201
Total equity securities	$	397	$	62	$	29	$	—	$	430	$	397	$	49	$	28	$	—	$	418

The Company held non-income producing fixed maturity securities with an estimated fair value of $19 million and $30 million with unrealized gains (losses) of $5 million and $6 million at March 31, 2014 and December 31, 2013, respectively.

Maturities of Fixed Maturity Securities

The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date, were as follows at:

	March 31, 2014				December 31, 2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In millions)
Due in one year or less	$	3,233	$	3,262	$	2,934	$	2,966
Due after one year through five years	9,414		9,847		8,895		9,301
Due after five years through ten years	7,096		7,705		7,433		7,970
Due after ten years	15,946		17,513		16,001		16,622
Subtotal	35,689		38,327		35,263		36,859
Structured securities (RMBS, ABS and CMBS)	8,248		8,460		8,214		8,393
Total fixed maturity securities	$	43,937	$	46,787	$	43,477	$	45,252

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

16

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Continuous Gross Unrealized Losses for Fixed Maturity and Equity Securities AFS by Sector

The following table presents the estimated fair value and gross unrealized losses of fixed maturity and equity securities AFS in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position.

	March 31, 2014								December 31, 2013
	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
	(In millions, except number of securities)
Fixed maturity securities
U.S. corporate	$	1,551	$	60	$	575	$	68	$	2,526	$	141	$	470	$	66
Foreign corporate	1,015		34		173		12		1,520		70		135		9
U.S. Treasury and agency	2,220		101		—		—		3,825		228		—		—
RMBS	1,152		52		299		39		996		35		457		65
State and political subdivision	158		11		60		14		630		44		64		18
ABS	453		4		104		6		680		5		104		7
CMBS	173		3		7		—		143		4		7		—
Foreign government	104		6		61		6		264		19		1		—
Total fixed maturity securities	$	6,826	$	271	$	1,279	$	145	$	10,584	$	546	$	1,238	$	165
Equity securities
Non-redeemable preferred stock	$	120	$	15	$	22	$	6	$	105	$	21	$	33	$	7
Common stock	4		1		—		7		3		—		7		—
Total equity securities	$	124	$	16	$	22	$	13	$	108	$	21	$	40	$	7
Total number of securities in an unrealized loss position	844				261				1,081				297

Evaluation of AFS Securities for OTTI and Evaluating Temporarily Impaired AFS Securities

As described more fully in Notes 1 and 7 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report, the Company performs a regular evaluation of all investment classes for impairment, including fixed maturity securities, equity securities and perpetual hybrid securities, in accordance with its impairment policy, in order to evaluate whether such investments are other-than-temporarily impaired.

Current Period Evaluation

Based on the Company’s current evaluation of its AFS securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired at March 31, 2014. Future other-than-temporary impairment (“OTTI”) will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), and changes in credit ratings, collateral valuation, interest rates and credit spreads. If economic fundamentals deteriorate or if there are adverse changes in the above factors, OTTI may be incurred in upcoming periods.

Gross unrealized losses on fixed maturity securities decreased $295 million during the three months ended March 31, 2014 from $711 million to $416 million. The decrease in gross unrealized losses for the three months ended March 31, 2014, was primarily attributable to a decrease in interest rates, and to a lesser extent narrowing credit spreads.

At March 31, 2014, $45 million of the total $416 million of gross unrealized losses were from 16 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

Investment Grade Fixed Maturity Securities

Of the $45 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $33 million, or 73%, are related to gross unrealized losses on 13 investment grade fixed maturity securities. Unrealized losses on investment grade fixed maturity securities are principally related to widening credit spreads and, with respect to fixed-rate fixed maturity securities, rising interest rates since purchase.

17

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Below Investment Grade Fixed Maturity Securities

Of the $45 million of gross unrealized losses on fixed maturity securities with an unrealized loss of 20% or more of amortized cost for six months or greater, $12 million, or 27%, are related to gross unrealized losses on three below investment grade fixed maturity securities. Unrealized losses on below investment grade fixed maturity securities are principally related to non-agency RMBS (primarily alternative residential mortgage loans) and are the result of significantly wider credit spreads resulting from higher risk premiums since purchase, largely due to economic and market uncertainties including concerns over unemployment levels and valuations of residential real estate supporting non-agency RMBS. Management evaluates non-agency RMBS based on actual and projected cash flows after considering the quality of underlying collateral, expected prepayment speeds, current and forecasted loss severity, consideration of the payment terms of the underlying assets backing a particular security, and the payment priority within the tranche structure of the security.

Equity Securities

Gross unrealized losses on equity securities increased $1 million during the three months ended March 31, 2014 from $28 million to $29 million. Of the $29 million, $4 million were from two equity securities with gross unrealized losses of 20% or more of cost for 12 months or greater, all of which were financial services industry investment grade non-redeemable preferred stock, of which 39% were rated A or better.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	March 31, 2014					December 31, 2013
	Carrying Value			% of Total		Carrying Value			% of Total
	(In millions)					(In millions)
Mortgage loans:
Commercial	$	4,604		66.0	%	$	4,869		63.1	%
Agricultural	1,271			18.2		1,285			16.6
Subtotal	5,875			84.2		6,154			79.7
Valuation allowances	(33		)	(0.5	)	(34		)	(0.4	)
Subtotal mortgage loans, net	5,842			83.7		6,120			79.3
Commercial mortgage loans held by CSEs — fair value option (“FVO”)	1,140			16.3		1,598			20.7
Total mortgage loans, net	$	6,982		100.0	%	$	7,718		100.0	%

See “— Variable Interest Entities” for discussion of consolidated securitization entities (“CSEs”).

See “— Related Party Investment Transactions” for discussion of related party mortgage loans.

Mortgage Loans and Valuation Allowance by Portfolio Segment

The carrying value prior to valuation allowance (“recorded investment”) in mortgage loans, by portfolio segment, by method of evaluation of credit loss, and the related valuation allowances, by type of credit loss, were as follows at:

	March 31, 2014						December 31, 2013
	Commercial		Agricultural		Total		Commercial		Agricultural		Total
	(In millions)
Mortgage loans:
Evaluated individually for credit losses	$	73	$	3	$	76	$	72	$	4	$	76
Evaluated collectively for credit losses	4,531		1,268		5,799		4,797		1,281		6,078
Total mortgage loans	4,604		1,271		5,875		4,869		1,285		6,154
Valuation allowances:
Specific credit losses	8		—		8		7		—		7
Non-specifically identified credit losses	21		4		25		23		4		27
Total valuation allowances	29		4		33		30		4		34
Mortgage loans, net of valuation allowance	$	4,575	$	1,267	$	5,842	$	4,839	$	1,281	$	6,120

18

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Valuation Allowance Rollforward by Portfolio Segment

The changes in the valuation allowance, by portfolio segment, were as follows:

	Three Months Ended March 31,
	2014								2013
	Commercial			Agricultural		Total			Commercial		Agricultural		Total
	(In millions)
Balance, beginning of period	$	30		$	4	$	34		$	32	$	3	$	35
Provision (release)	(1		)	—		(1		)	—		—		—
Balance, end of period	$	29		$	4	$	33		$	32	$	3	$	35

Credit Quality of Commercial Mortgage Loans

The credit quality of commercial mortgage loans, were as follows at:

	Recorded Investment
	Debt Service Coverage Ratios								% of Total		Estimated Fair Value		% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(In millions)										(In millions)
March 31, 2014
Loan-to-value ratios:
Less than 65%	$	3,741	$	109	$	121	$	3,971	86.3	%	$	4,257	87.1	%
65% to 75%	452		—		27		479		10.4		484		9.9
76% to 80%	80		12		—		92		2.0		92		1.9
Greater than 80%	36		26		—		62		1.3		53		1.1
Total	$	4,309	$	147	$	148	$	4,604	100.0	%	$	4,886	100.0	%
December 31, 2013
Loan-to-value ratios:
Less than 65%	$	3,754	$	125	$	107	$	3,986	81.9	%	$	4,224	82.8	%
65% to 75%	700		—		27		727		14.9		736		14.4
76% to 80%	80		13		—		93		1.9		93		1.8
Greater than 80%	37		26		—		63		1.3		53		1.0
Total	$	4,571	$	164	$	134	$	4,869	100.0	%	$	5,106	100.0	%

Credit Quality of Agricultural Mortgage Loans

The credit quality of agricultural mortgage loans, were as follows at:

	March 31, 2014				December 31, 2013
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(In millions)				(In millions)
Loan-to-value ratios:
Less than 65%	$	1,196	94.1	%	$	1,215	94.6	%
65% to 75%	75		5.9		70		5.4
Total	$	1,271	100.0	%	$	1,285	100.0	%

The estimated fair value of agricultural mortgage loans was $1.3 billion at both March 31, 2014 and December 31, 2013.

19

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Past Due and Interest Accrual Status of Mortgage Loans

The Company has a high quality, well performing mortgage loan portfolio, with 99% of all mortgage loans classified as performing at both March 31, 2014 and December 31, 2013. The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial mortgage loans — 60 days and agricultural mortgage loans — 90 days. The Company had one commercial mortgage loan in non-accrual status with a recorded investment of $22 million at both March 31, 2014 and December 31, 2013. The Company had no agricultural mortgage loans past due or in non-accrual status at both March 31, 2014 and December 31, 2013.

Impaired Mortgage Loans

Impaired mortgage loans including those modified in a troubled debt restructuring, by portfolio segment, were as follows at:

	Loans with a Valuation Allowance								Loans without a  Valuation Allowance				All Impaired Loans
	Unpaid Principal Balance		Recorded Investment		Valuation Allowances		Carrying Value		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance		Carrying Value
	(In millions)
March 31, 2014
Commercial	$	22	$	22	$	8	$	14	$	52	$	51	$	74	$	65
Agricultural (1)	4		3		—		3		—		—		4		3
Total	$	26	$	25	$	8	$	17	$	52	$	51	$	78	$	68
December 31, 2013
Commercial	$	22	$	22	$	7	$	15	$	52	$	50	$	74	$	65
Agricultural (1)	4		4		—		4		—		—		4		4
Total	$	26	$	26	$	7	$	19	$	52	$	50	$	78	$	69

____________

(1) Valuation allowance on agricultural mortgage loans was less than $1 million at both March 31, 2014 and December 31, 2013.

Unpaid principal balance is generally prior to any charge-offs.

The average recorded investment in impaired mortgage loans, including those modified in a troubled debt restructuring, and the related interest income, which is primarily recognized on a cash basis, by portfolio segment, was:

	Impaired Mortgage Loans
	Three Months Ended March 31,
	2014				2013
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
	(In millions)
Commercial	$	72	$	—	$	74	$	1
Agricultural	4		—		—		—
Total	$	76	$	—	$	74	$	1

Mortgage Loans Modified in a Troubled Debt Restructuring

There were no mortgage loans modified in a troubled debt restructuring during the three months ended March 31, 2014 and 2013.

During the three months ended March 31, 2014 and 2013, the Company had no mortgage loans with subsequent payment defaults that were modified in a troubled debt restructuring during the previous 12 months. Payment default is determined in the same manner as delinquency status as described above.

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 $1.5 billion and $469 million at March 31, 2014 and December 31, 2013, respectively.

20

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Net Unrealized Investment Gains (Losses)

The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss) (“AOCI”), were as follows:

	March 31, 2014			December 31, 2013
	(In millions)
Fixed maturity securities	$	2,891		$	1,819
Fixed maturity securities with noncredit OTTI losses in AOCI	(38		)	(41		)
Total fixed maturity securities	2,853			1,778
Equity securities	32			15
Derivatives	103			39
Short-term investments	—			1
Other	(61		)	(71		)
Subtotal	2,927			1,762
Amounts allocated from:
Insurance liability loss recognition	(77		)	—
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(1		)	(1		)
DAC and VOBA	(366		)	(274		)
Subtotal	(444		)	(275		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	15			16
Deferred income tax benefit (expense)	(926		)	(591		)
Net unrealized investment gains (losses)	$	1,572		$	912

The changes in fixed maturity securities with noncredit OTTI losses included in AOCI were as follows:

	Three Months   Ended   March 31, 2014			Year   Ended   December 31, 2013
	(In millions)
Balance, beginning of period	$	(41	)	$	(64	)
Noncredit OTTI losses and subsequent changes recognized (1)	—			11
Securities sold with previous noncredit OTTI loss	2			21
Subsequent changes in estimated fair value	1			(9		)
Balance, end of period	$	(38	)	$	(41	)

____________

(1) Noncredit OTTI losses and subsequent changes recognized, net of DAC, were ($3) million and $7 million for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively.

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

	Three Months   Ended   March 31, 2014
	(In millions)
Balance, beginning of period	$	912
Fixed maturity securities on which noncredit OTTI losses have been recognized	3
Unrealized investment gains (losses) during the period	1,162
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition	(77		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	—
DAC and VOBA	(92		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(1		)
Deferred income tax benefit (expense)	(335		)
Balance, end of period	$	1,572
Change in net unrealized investment gains (losses)	$	660

21

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s stockholders’ equity, other than the U.S. government and its agencies, at both March 31, 2014 and December 31, 2013.

Securities Lending

Elements of the securities lending program are presented below at:

	March 31, 2014		December 31, 2013
	(In millions)
Securities on loan: (1)
Amortized cost	$	6,889	$	5,931
Estimated fair value	$	7,253	$	5,984
Cash collateral on deposit from counterparties (2)	$	7,363	$	6,140
Security collateral on deposit from counterparties (3)	$	63	$	—
Reinvestment portfolio — estimated fair value	$	7,397	$	6,145

____________

(1) Included within fixed maturity securities, short-term investments, cash and cash equivalents and equity securities.

(2) Included within payables for collateral under securities loaned and other transactions.

(3) Security collateral on deposit from counterparties may not be sold or repledged, unless the counterparty is in default, and is not reflected on the consolidated financial statements.

Invested Assets on Deposit and Pledged as Collateral

Invested assets on deposit and pledged as collateral are presented below at estimated fair value for cash and cash equivalents, short-term investments and fixed maturity securities and at carrying value for mortgage loans at:

	March 31, 2014		December 31, 2013
	(In millions)
Invested assets on deposit (regulatory deposits) (1)	$	6,644	$	56
Invested assets pledged as collateral (2)	1,934		1,901
Total invested assets on deposit and pledged as collateral	$	8,578	$	1,957

____________

(1) See Note 1 for information about invested assets that became restricted when MetLife Insurance Company of Connecticut withdrew its New York license on January 1, 2014.

(2) The Company has pledged invested assets in connection with various agreements and transactions, including funding agreements (see Note 4 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report) and derivative transactions (see Note 6).

See “— Securities Lending” for securities on loan.

22

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Variable Interest Entities

The Company has invested in certain structured transactions (including CSEs), 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. The Company generally uses a qualitative approach to determine whether it is the primary beneficiary. However, for VIEs that are investment companies or apply measurement principles consistent with those utilized by investment companies, the primary beneficiary is based on a risks and rewards model and is defined as the entity that will absorb a majority of a VIE’s expected losses, receive a majority of a VIE’s expected residual returns if no single entity absorbs a majority of expected losses, or both. The Company reassesses its involvement with VIEs on a quarterly basis. The use of different methodologies, assumptions and inputs in the determination of the primary beneficiary could have a material effect on the amounts presented within the consolidated financial statements.

Consolidated VIEs

The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated at March 31, 2014 and December 31, 2013. 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.

	March 31, 2014		December 31, 2013
	(In millions)
CSEs: (1)
Assets:
Mortgage loans (commercial mortgage loans)	$	1,140	$	1,598
Accrued investment income	7		9
Total assets	$	1,147	$	1,607
Liabilities:
Long-term debt	$	1,000	$	1,461
Other liabilities	6		7
Total liabilities	$	1,006	$	1,468

____________

(1) The Company consolidates entities that are structured as CMBS. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company liable for any principal or interest shortfalls should any arise. The Company’s exposure was limited to that of its remaining investment in these entities of $122 million and $120 million at estimated fair value at March 31, 2014 and December 31, 2013, respectively. The long-term debt bears interest primarily at fixed rates ranging from 2.25% to 5.57%, payable primarily on a monthly basis. Interest expense related to these obligations, included in other expenses, was $18 million and $34 million for the three months ended March 31, 2014 and 2013, respectively.

23

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. 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:

	March 31, 2014				December 31, 2013
	Carrying Amount		Maximum Exposure to Loss (1)		Carrying Amount		Maximum Exposure to Loss (1)
	(In millions)
Fixed maturity securities AFS:
Structured securities (RMBS, ABS and CMBS) (2)	$	8,460	$	8,460	$	8,393	$	8,393
U.S. and foreign corporate	599		599		468		468
Other limited partnership interests	1,707		2,169		1,651		2,077
Real estate joint ventures	41		45		41		45
Other invested assets	17		37		9		44
Total	$	10,824	$	11,310	$	10,562	$	11,027

____________

(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, real estate joint ventures and other invested assets is equal to the carrying amounts plus any unfunded commitments of the Company. 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 11, 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 during the three months endedMarch 31, 2014 and 2013.

24

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Net Investment Income

The components of net investment income were as follows:

	Three Months Ended March 31,
	2014			2013
	(In millions)
Investment income:
Fixed maturity securities	$	492		$	542
Equity securities	4			2
Mortgage loans	77			82
Policy loans	14			14
Real estate and real estate joint ventures	23			8
Other limited partnership interests	97			79
Cash, cash equivalents and short-term investments	1			2
International joint ventures	—			(8		)
Other	(4		)	—
Subtotal	704			721
Less: Investment expenses	24			28
Subtotal, net	680			693
FVO CSEs — interest income: Commercial mortgage loans	22			37
Net investment income	$	702		$	730

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of affiliated net investment income and investment expenses.

25

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. 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 March 31,
	2014			2013
	(In millions)
Total gains (losses) on fixed maturity securities:
Total OTTI losses recognized — by sector and industry:
U.S. and foreign corporate securities — by industry:
Finance	$	—		$	(3	)
Consumer	(1		)	—
Total U.S. and foreign corporate securities	(1		)	(3		)
RMBS	—			(6		)
OTTI losses on fixed maturity securities recognized in earnings	(1		)	(9		)
Fixed maturity securities — net gains (losses) on sales and disposals	17			73
Total gains (losses) on fixed maturity securities	16			64
Total gains (losses) on equity securities:
Total OTTI losses recognized — by sector:
Non-redeemable preferred stock	—			(3		)
OTTI losses on equity securities recognized in earnings	—			(3		)
Equity securities — net gains (losses) on sales and disposals	4			3
Total gains (losses) on equity securities	4			—
Mortgage loans	8			(1		)
Real estate and real estate joint ventures	(2		)	(1		)
Other limited partnership interests	(2		)	—
Other investment portfolio gains (losses)	1			2
Subtotal — investment portfolio gains (losses)	25			64
FVO CSEs — changes in estimated fair value subsequent to consolidation:
Commercial mortgage loans	1			(13		)
Long-term debt — related to commercial mortgage loans	1			22
Non-investment portfolio gains (losses) (1)	(546		)	(7		)
Subtotal FVO CSEs and non-investment portfolio gains (losses)	(544		)	2
Total net investment gains (losses)	$	(519	)	$	66

____________

(1) Non-investment portfolio gain (losses) for the three months ended March 31, 2014 includes a loss of $547 million related to the disposition of MAL. See Note 3.

See “— Variable Interest Entities” for discussion of CSEs.

See “— Related Party Investment Transactions” for discussion of affiliated net investment gains (losses) related to transfers of invested assets to affiliates.

Gains (losses) from foreign currency transactions included within net investment gains (losses) were $2 million and ($6) million for the three months ended March 31, 2014 and 2013, respectively.

26

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

Sales or Disposals and Impairments of Fixed Maturity and Equity Securities

Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) are as shown in the table below. Investment gains and losses on sales of securities are determined on a specific identification basis. 

	Three Months Ended March 31,
	2014			2013			2014		2013			2014			2013
	Fixed Maturity Securities						Equity Securities					Total
	(In millions)
Proceeds	$	3,507		$	2,580		$	11	$	25		$	3,518		$	2,605
Gross investment gains	$	38		$	89		$	4	$	4		$	42		$	93
Gross investment losses	(21		)	(16		)	—		(1		)	(21		)	(17		)
Total OTTI losses:
Credit-related	(1		)	(6		)	—		—			(1		)	(6		)
Other (1)	—			(3		)	—		(3		)	—			(6		)
Total OTTI losses	(1		)	(9		)	—		(3		)	(1		)	(12		)
Net investment gains (losses)	$	16		$	64		$	4	$	—		$	20		$	64

____________

(1) Other OTTI losses recognized in earnings include impairments on (i) equity securities, (ii) perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and (iii) fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value.

Credit Loss Rollforward

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held for which a portion of the OTTI loss was recognized in other comprehensive income (loss) (“OCI”): 

	Three Months Ended March 31,
	2014			2013
	(In millions)
Balance, beginning of period	$	57		$	59
Additions:
Additional impairments — credit loss OTTI recognized on securities previously impaired	—			7
Reductions:
Sales (maturities, pay downs or prepayments) during the period of securities previously impaired as credit loss OTTI	(2		)	(6		)
Balance, end of period	$	55		$	60

Related Party Investment Transactions

The Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Invested assets transferred to and from affiliates were as follows:

	Three Months Ended March 31,
	2014		2013
	(In millions)
Estimated fair value of invested assets transferred to affiliates	$	354	$	13
Amortized cost of invested assets transferred to affiliates	$	333	$	12
Net investment gains (losses) recognized on transfers	$	21	$	1
Estimated fair value of invested assets transferred from affiliates	$	35	$	6

27

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

5. Investments (continued)

The Company receives investment administrative services from an affiliate. The related investment administrative service charges were $14 million and $17 million for the three months endedMarch 31, 2014 and 2013, respectively. The Company also had additional affiliated net investment income (loss) of less than $1 million for both the three months ended March 31, 2014 and 2013.

Below is a summary of certain affiliated loans, which are more fully described in Note 7 of the Notes of the Consolidated Financial Statements included in the 2013 Annual Report.

The Company has affiliated loans outstanding to wholly-owned real estate subsidiaries of an affiliate, MLIC, which are included in mortgage loans, with a carrying value of $363 million and $364 million at March 31, 2014 and December 31, 2013, respectively. These affiliated loans are secured by interests in the real estate subsidiaries, which own operating real estate with a fair value in excess of the loans. Net investment income from these loans was $5 million and $4 million for the three months ended March 31, 2014 and 2013, respectively.

The Company has affiliated loans outstanding to MetLife, which are included in other invested assets, totaling $430 million at both March 31, 2014 and December 31, 2013. Net investment income from these loans was $6 million for both the three months ended March 31, 2014 and 2013, respectively.

The Company committed to lend up to $1.8 billion to Exeter, an affiliate, pursuant to a note purchase agreement. Pursuant to the agreement, MetLife Insurance Company of Connecticut committed to purchase up to $1.3 billion of notes and MLI-USA committed to purchase up to $438 million of notes through December 31, 2014. The notes will be due not later than three years after issuance. The repayment of any notes issued pursuant to this agreement is guaranteed by MetLife. Pursuant to this agreement, the Company issued loans to Exeter which are included in other invested assets, totaling $500 million at both March 31, 2014 and December 31, 2013. The loans of $375 million, issued by MetLife Insurance Company of Connecticut and $125 million, issued by MLI-USA, are both due October 15, 2015, and bear interest, payable semi-annually, at 2.47%.  Net investment income from these loans was $3 million for the three months ended March 31, 2014. There was no investment income from these loans for the three months ended March 31, 2013.  The remaining total commitment to lend is $1.2 billion with $925 million committed by MetLife Insurance Company of Connecticut and $313 million committed by MLI-USA at March 31, 2014.

6.  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 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 derivatives 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

28

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

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 net derivative gains (losses), consistent with the change in fair value of the hedged item attributable to the designated risk being hedged.

• 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) - effectiveness in OCI (deferred gains or losses on the derivative are reclassified into the statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item); ineffectiveness in net derivative gains (losses).

The changes in estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported on the statement of operations within interest income or interest expense to match the location of the hedged item.

In its hedge documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method that will be used to measure ineffectiveness. 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 and measurements of ineffectiveness 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 occurrence, 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 are recognized immediately in net derivative 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).

29

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Embedded Derivatives

The Company sells 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 fair value with changes in 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.

See Note 7 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 whose values are 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 to synthetically replicate investment risks and returns which are not readily available in the cash market.

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, caps, floors, 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 non-qualifying hedging relationships.

The Company purchases interest rate caps and floors 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, as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. 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 non-qualifying hedging relationships.

30

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

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, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. 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 and to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance. The Company utilizes exchange-traded interest rate futures in non-qualifying hedging relationships.

Inflation swaps are used as an economic hedge to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are included in interest rate swaps. The Company utilizes inflation swaps in non-qualifying hedging relationships.

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 hedging relationships.

Foreign Currency Exchange Rate Derivatives

The Company uses foreign currency swaps to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount. The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow and non-qualifying hedging relationships.

To a lesser extent, the Company uses foreign currency forwards in non-qualifying hedging relationships.

Credit Derivatives

The Company enters into purchased credit default swaps to hedge against credit-related changes in the value of its investments. In a credit default swap transaction, the Company agrees with another party to pay, at specified intervals, a premium to hedge credit risk. If a credit event occurs, as defined by the contract, the contract may be cash settled or it may be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional 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, repudiation, moratorium, or involuntary restructuring. 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 non-qualifying 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. Treasury securities, agency securities or other fixed maturity securities. These credit default swaps are not designated as hedging instruments.

To a lesser extent, the Company uses credit forwards to lock in the price to be paid for forward purchases of certain securities. 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, variance swaps and exchange-traded equity futures.

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the 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. 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 non-qualifying hedging relationships.

31

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered 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 non-qualifying 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, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. 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 liabilities embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships.

To a lesser extent, the Company also uses total rate of return swaps (“TRRs”) to hedge its equity market guarantees in certain of its insurance products. The Company utilizes TRRs in non-qualifying hedging relationships.

Primary Risks Managed by Derivatives

The following table presents the gross notional amount, estimated fair value and primary underlying risk exposure of the Company’s derivatives, excluding embedded derivatives, held at:

		March 31, 2014						December 31, 2013
	Primary Underlying Risk Exposure	Notional Amount		Estimated Fair Value				Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments
Fair value hedges:
Interest rate swaps	Interest rate	$	431	$	9	$	4	$	436	$	5	$	10
Foreign currency swaps	Foreign currency exchange rate	122		—		12		122		—		13
Subtotal		553		9		16		558		5		23
Cash flow hedges:
Interest rate swaps	Interest rate	527		26		10		537		6		32
Interest rate forwards	Interest rate	230		20		—		245		3		4
Foreign currency swaps	Foreign currency exchange rate	548		25		33		544		25		35
Subtotal		1,305		71		43		1,326		34		71
Total qualifying hedges		1,858		80		59		1,884		39		94
Derivatives Not Designated or Not Qualifying as Hedging Instruments
Interest rate swaps	Interest rate	21,420		924		397		22,262		881		441
Interest rate floors	Interest rate	17,604		100		94		17,604		103		99
Interest rate caps	Interest rate	7,901		23		—		9,651		36		—
Interest rate futures	Interest rate	1,988		—		1		1,443		—		3
Foreign currency swaps	Foreign currency exchange rate	787		49		33		882		52		41
Foreign currency forwards	Foreign currency exchange rate	59		—		1		56		—		1
Credit default swaps — purchased	Credit	172		—		1		157		—		1
Credit default swaps — written	Credit	2,253		34		—		2,243		38		—
Equity futures	Equity market	849		—		8		778		—		3
Equity options	Equity market	3,773		284		53		3,597		305		42
Variance swaps	Equity market	2,510		7		103		2,270		6		94
TRRs	Equity market	476		—		13		462		—		22
Total non-designated or non-qualifying derivatives		59,792		1,421		704		61,405		1,421		747
Total		$	61,650	$	1,501	$	763	$	63,289	$	1,460	$	841

32

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Based on 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, 2014 and December 31, 2013. 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 that are used to synthetically create credit investments and that do not qualify for hedge accounting because they do not involve a hedging relationship. For these non-qualified 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.

Net Derivative Gains (Losses)

The components of net derivative gains (losses) were as follows:

	Three Months Ended March 31,
	2014		2013
	(In millions)
Derivatives and hedging gains (losses) (1)	$	66	$	(140	)
Embedded derivatives	114		253
Total net derivative gains (losses)	$	180	$	113

____________

(1) Includes foreign currency transaction gains (losses) on hedged items in cash flow and non-qualifying hedging relationships, which are not presented elsewhere in this note.

The following table presents earned income on derivatives:

	Three Months Ended March 31,
	2014		2013
	(In millions)
Qualifying hedges:
Net investment income	$	—	$	1
Interest credited to policyholder account balances	—		1
Non-qualifying hedges:
Net derivative gains (losses)	33		16
Policyholder benefits and claims	1		(7		)
Total	$	34	$	11

33

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Non-Qualifying Derivatives and Derivatives for Purposes Other Than Hedging

The following table presents the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments:

	Net Derivative Gains (Losses)			Net Investment Income (1)			Policyholder Benefits and Claims (2)
	(In millions)
Three Months Ended March 31, 2014
Interest rate derivatives	$	81		$	—		$	12
Foreign currency exchange rate derivatives	6			—			—
Credit derivatives — written	(2		)	—			—
Equity derivatives	(57		)	(3		)	(5		)
Total	$	28		$	(3	)	$	7
Three Months Ended March 31, 2013
Interest rate derivatives	$	22		$	—		$	2
Foreign currency exchange rate derivatives	15			—			—
Credit derivatives — written	7			—			—
Equity derivatives	(201		)	(2		)	(34		)
Total	$	(157	)	$	(2	)	$	(32	)

____________

(1) Changes in estimated fair value related to economic hedges of equity method investments in joint ventures.

(2) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.

Fair Value Hedges

The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities; and (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated liabilities.

The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net derivative gains (losses). The following table presents the amount of such net derivative gains (losses):

Derivatives in Fair Value Hedging Relationships	Hedged Items in Fair Value Hedging Relationships	Net Derivative Gains (Losses) Recognized for Derivatives			Net Derivative Gains (Losses) Recognized for Hedged Items			Ineffectiveness Recognized in Net Derivative Gains (Losses)
		(In millions)
Three Months Ended March 31, 2014
Interest rate swaps:	Fixed maturity securities	$	—		$	—		$	—
	Policyholder liabilities (1)	9			(9		)	—
Foreign currency swaps:	Foreign-denominated PABs (2)	1			(1		)	—
Total		$	10		$	(10	)	$	—
Three Months Ended March 31, 2013
Interest rate swaps:	Fixed maturity securities	$	1		$	(1	)	$	—
	Policyholder liabilities (1)	(7		)	6			(1		)
Foreign currency swaps:	Foreign-denominated PABs (2)	(7		)	7			—
Total		$	(13	)	$	12		$	(1	)

____________ 

(1) Fixed rate liabilities reported in PABs or future policy benefits.

(2) Fixed rate or floating rate liabilities.

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

34

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Cash Flow Hedges

The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging: (i) interest rate swaps to convert floating rate assets and liabilities to fixed rate assets and liabilities; (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated assets and liabilities; (iii) interest rate forwards and credit forwards to lock in the price to be paid for forward purchases of investments; and (iv) interest rate swaps and interest rate forwards to hedge the forecasted purchases of fixed-rate investments.

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions were not probable of occurring within two months of the anticipated date, the Company reclassified certain amounts from AOCI into net derivative gains (losses). For both of the three months ended March 31, 2014 and 2013, there were no amounts reclassified into net derivative gain (losses) related to such discontinued cash flow hedges.

At both March 31, 2014 and December 31, 2013, 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 six years.

At March 31, 2014 and December 31, 2013, the balance in AOCI associated with cash flow hedges was $103 million and $39 million, respectively. 

The following table presents the effects of derivatives in cash flow hedging relationships on the consolidated statements of operations and comprehensive income (loss) and the consolidated statements of stockholders’ equity:

Derivatives in Cash Flow Hedging Relationships	Amount of Gains (Losses) Deferred in AOCI on Derivatives			Amount and Location of Gains (Losses) Reclassified from AOCI into Income (Loss)					Amount and Location of Gains (Losses) Recognized in Income (Loss) on Derivatives
	(Effective Portion)			(Effective Portion)					(Ineffective Portion)
				Net Derivative Gains (Losses)			Net Investment Income		Net Derivative Gains (Losses)
				(In millions)
Three Months Ended March 31, 2014
Interest rate swaps	$	42		$	—		$	—	$	1
Interest rate forwards	20			—			—		1
Foreign currency swaps	2			—			—		—
Total	$	64		$	—		$	—	$	2
Three Months Ended March 31, 2013
Interest rate swaps	$	(23	)	$	(1	)	$	—	$	—
Interest rate forwards	(15		)	3			1		—
Foreign currency swaps	24			(1		)	—		1
Total	$	(14	)	$	1		$	1	$	1

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

At March 31, 2014, the amount of deferred net gains (losses) on derivatives in AOCI that was expected to be reclassified to earnings within the next 12 months was not significant.

35

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

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 non-qualifying 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 $2.3 billion and $2.2 billion at March 31, 2014 and December 31, 2013, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current fair value of the credit default swaps. At March 31, 2014 and December 31, 2013, the Company would have received $34 million and $38 million, respectively, to terminate all of these contracts.

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, 2014					December 31, 2013
Rating Agency Designation of Referenced Credit Obligations (1)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps (2)		Weighted Average Years to Maturity (3)	Estimated Fair Value of Credit Default Swaps		Maximum Amount of Future Payments under Credit Default Swaps (2)		Weighted Average Years to Maturity (3)
	(In millions)					(In millions)
Aaa/Aa/A
Single name credit default swaps (corporate)	$	2	$	115	2.3	$	3	$	115	2.7
Credit default swaps referencing indices	4		650		0.8	6		650		1.1
Subtotal	6		765		1.1	9		765		1.3
Baa
Single name credit default swaps (corporate)	8		446		2.8	8		446		3.0
Credit default swaps referencing indices	17		1,006		4.9	18		996		4.9
Subtotal	25		1,452		4.2	26		1,442		4.3
B
Single name credit default swaps (corporate)	—		—		—	—		—		—
Credit default swaps referencing indices	3		36		5.3	3		36		5.0
Subtotal	3		36		5.3	3		36		5.0
Total	$	34	$	2,253	3.2	$	38	$	2,243	3.3

____________

(1) The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings. If no rating is available from a rating agency, then an internally developed rating is used.

(2) Assumes the value of the referenced credit obligations is zero.

(3) The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts.

36

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Credit Risk on Freestanding Derivatives

The Company may be exposed to credit-related losses in the event of nonperformance by 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 generally 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 all of the Company’s ISDA Master Agreements also include Credit Support Annex provisions which require both the pledging and accepting of collateral in connection with its OTC-bilateral derivatives.

The Company’s OTC-cleared derivatives are effected through central clearing counterparties and its exchange-traded derivatives are effected through regulated exchanges. Such positions are marked to market and margined on a daily basis, and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.

See Note 7 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, 2014						December 31, 2013
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)	$	1,495		$	752		$	1,450		$	851
OTC-cleared (1)	48			20			50			9
Exchange-traded	—			9			—			6
Total gross estimated fair value of derivatives (1)	1,543			781			1,500			866
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1)	1,543			781			1,500			866
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(600		)	(600		)	(670		)	(670		)
OTC-cleared	(17		)	(17		)	(8		)	(8		)
Exchange-traded	—			—			—			—
Cash collateral: (3)
OTC-bilateral	(324		)	—			(216		)	—
OTC-cleared	(29		)	—			(40		)	(1		)
Exchange-traded	—			(3		)	—			(5		)
Securities collateral: (4)
OTC-bilateral	(491		)	(143		)	(554		)	(160		)
OTC-cleared	—			(3		)	—			—
Exchange-traded	—			(6		)	—			(1		)
Net amount after application of master netting agreements and collateral	$	82		$	9		$	12		$	21

____________

(1) At March 31, 2014 and December 31, 2013, derivative assets include income or expense accruals reported in accrued investment income or in other liabilities of $42 million and $40 million, respectively, and derivative liabilities include income or expense accruals reported in accrued investment income or in other liabilities of $18 million and $25 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.

37

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

(3) Cash collateral received is included in cash and cash equivalents, short-term investments or in fixed maturity securities, and the obligation to return it is included in payables for collateral under securities loaned and other transactions on the balance sheet. 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, 2014 and December 31, 2013, the Company received excess cash collateral of $14 million and $21 million, respectively, and provided excess cash collateral of $33 million and $19 million, respectively, which is not included in the table above due to the foregoing limitation.

(4) 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 repledge this collateral, but at March 31, 2014none of the collateral had been sold or repledged. Securities collateral pledged by the Company is reported in fixed maturity securities on the balance sheet. Subject to certain constraints, the counterparties are permitted by contract to sell or repledge 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, 2014 and December 31, 2013, the Company received excess securities collateral with an estimated fair value of $94 million and $34 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At March 31, 2014 and December 31, 2013, the Company provided excess securities collateral with an estimated fair value of $1 million and $1 million, respectively, for its OTC-bilateral derivatives and $26 million and $29 million, respectively, for its OTC-cleared derivatives, and $35 million and $46 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 fair value of that counterparty’s derivatives reaches a pre-determined threshold. Certain of these arrangements also include financial strength-contingent provisions that provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the financial strength ratings of the Company and/or the credit ratings of the counterparty. In addition, certain of the Company’s netting agreements for derivatives contain provisions that require both the Company and the counterparty to maintain a specific investment grade financial strength or credit rating from each of Moody’s and S&P. If a party’s financial strength or credit ratings were to fall below that specific investment grade financial strength or credit rating, that party would be in violation of these provisions, and the other party to the derivatives could terminate the transactions and demand immediate settlement and payment based on such party’s reasonable valuation of the derivatives.

The following table presents the estimated fair value of the Company’s OTC-bilateral derivatives that are 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. The table also presents the incremental collateral that the Company would be required to provide if there was a one notch downgrade in the Company’s financial strength rating at the reporting date or if the Company’s financial strength rating sustained a downgrade to a level that triggered full overnight collateralization or termination of the derivative position at the reporting date. OTC-bilateral derivatives that are not subject to collateral agreements are excluded from this table. 

			Estimated Fair Value of Collateral Provided:		Fair Value of Incremental  Collateral Provided Upon:
	Estimated Fair Value of Derivatives in Net Liability Position (1)		Fixed Maturity Securities		One Notch Downgrade in the Company’s Financial Strength Rating		Downgrade in the Company’s Financial Strength Rating to a Level that Triggers Full Overnight Collateralization or Termination of the Derivative Position
	(In millions)
March 31, 2014	$	152	$	144	$	—	$	1
December 31, 2013	$	181	$	161	$	—	$	2

____________

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

38

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

6. Derivatives (continued)

Embedded Derivatives

The Company issues certain products or purchases certain investments that contain embedded derivatives that are required to be separated from their host contracts and accounted for as freestanding derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including GMWBs, guaranteed minimum accumulation benefits (“GMABs”) and certain GMIBs; affiliated ceded reinsurance of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; affiliated assumed reinsurance of guaranteed minimum benefits related to GMWBs and certain GMIBs; funds withheld on ceded reinsurance; fixed annuities with equity-indexed returns; and certain debt and equity securities.

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, 2014			December 31, 2013
		(In millions)
Net embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	1,253		$	912
Options embedded in debt or equity securities	Investments	(35		)	(30		)
Net embedded derivatives within asset host contracts		$	1,218		$	882
Net embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	PABs	$	(1,142	)	$	(1,232	)
Assumed guaranteed minimum benefits	PABs	(12		)	(13		)
Funds withheld on ceded reinsurance	Other liabilities	161			34
Other	PABs	9			—
Net embedded derivatives within liability host contracts		$	(984	)	$	(1,211	)

The following table presents changes in estimated fair value related to embedded derivatives:

	Three Months Ended March 31,
	2014		2013
	(In millions)
Net derivative gains (losses) (1), (2)	$	114	$	253

____________

(1) The valuation of direct and assumed guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses), in connection with this adjustment, were $5 million and ($89) million for the three months ended March 31, 2014 and 2013, respectively. In addition, the valuation of ceded guaranteed minimum benefits includes a nonperformance risk adjustment. The amounts included in net derivative gains (losses), in connection with this adjustment, were ($19) million and $118 million for the three months ended March 31, 2014 and 2013, respectively.

(2) See Note 12 for discussion of affiliated net derivative gains (losses) included in the table above.

39

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7.  Fair Value

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

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.

	March 31, 2014
	Fair Value Hierarchy								Total Estimated Fair Value
	Level 1			Level 2		Level 3
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—		$	15,493	$	1,400		$	16,893
Foreign corporate	—			7,757		723			8,480
U.S. Treasury and agency	3,651			5,829		—			9,480
RMBS	—			4,385		535			4,920
State and political subdivision	—			2,317		—			2,317
ABS	—			1,814		185			1,999
CMBS	—			1,439		102			1,541
Foreign government	—			1,157		—			1,157
Total fixed maturity securities	3,651			40,191		2,945			46,787
Equity securities:
Non-redeemable preferred stock	—			137		89			226
Common stock	87		��	84		33			204
Total equity securities	87			221		122			430
Short-term investments (1)	405			1,243		91			1,739
Mortgage loans held by CSEs — FVO	—			1,140		—			1,140
Other invested assets:
FVO securities	—			10		—			10
Derivative assets: (2)
Interest rate	—			1,056		46			1,102
Foreign currency exchange rate	—			74		—			74
Credit	—			30		4			34
Equity market	—			283		8			291
Total derivative assets	—			1,443		58			1,501
Total other invested assets	—			1,453		58			1,511
Net embedded derivatives within asset host contracts (3)	—			—		1,253			1,253
Separate account assets (4)	286			97,559		160			98,005
Total assets	$	4,429		$	141,807	$	4,629		$	150,865
Liabilities
Derivative liabilities: (2)
Interest rate	$	1		$	497	$	8		$	506
Foreign currency exchange rate	—			79		—			79
Credit	—			1		—			1
Equity market	8			66		103			177
Total derivative liabilities	9			643		111			763
Net embedded derivatives within liability host contracts (3)	—			—		(984		)	(984		)
Long-term debt of CSEs — FVO	—			1,000		—			1,000
Total liabilities	$	9		$	1,643	$	(873	)	$	779

40

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

	December 31, 2013
	Fair Value Hierarchy							Total Estimated Fair Value
	Level 1		Level 2		Level 3
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	15,454	$	1,248		$	16,702
Foreign corporate	—		7,783		734			8,517
U.S. Treasury and agency	4,365		3,929		—			8,294
RMBS	—		4,266		422			4,688
State and political subdivision	—		2,224		—			2,224
ABS	—		1,682		419			2,101
CMBS	—		1,532		72			1,604
Foreign government	—		1,122		—			1,122
Total fixed maturity securities	4,365		37,992		2,895			45,252
Equity securities:
Non-redeemable preferred stock	—		136		81			217
Common stock	86		84		31			201
Total equity securities	86		220		112			418
Short-term investments (1)	391		1,671		—			2,062
Mortgage loans held by CSEs — FVO	—		1,598		—			1,598
Other invested assets:
FVO securities	—		9		—			9
Derivative assets: (2)
Interest rate	—		1,011		23			1,034
Foreign currency exchange rate	—		77		—			77
Credit	—		32		6			38
Equity market	—		305		6			311
Total derivative assets	—		1,425		35			1,460
Total other invested assets	—		1,434		35			1,469
Net embedded derivatives within asset host contracts (3)	—		—		912			912
Separate account assets (4)	259		97,368		153			97,780
Total assets	$	5,101	$	140,283	$	4,107		$	149,491
Liabilities
Derivative liabilities: (2)
Interest rate	$	3	$	574	$	12		$	589
Foreign currency exchange rate	—		90		—			90
Credit	—		1		—			1
Equity market	3		64		94			161
Total derivative liabilities	6		729		106			841
Net embedded derivatives within liability host contracts (3)	—		—		(1,211		)	(1,211		)
Long-term debt of CSEs — FVO	—		1,461		—			1,461
Total liabilities	$	6	$	2,190	$	(1,105	)	$	1,091

____________

41

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

(1) 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.

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

(3) Net embedded derivatives within asset host contracts are presented primarily within premiums, reinsurance and other receivables on the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented primarily within PABs and other liabilities on the consolidated balance sheets. At March 31, 2014 and December 31, 2013, equity securities also included embedded derivatives of ($35) million and ($30) million, respectively.

(4) 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.

The following describes the valuation methodologies used to measure assets and liabilities at fair value. The description includes the valuation techniques and key inputs for each category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy.

Investments

Valuation Controls and Procedures

On behalf of the Company and MetLife, Inc.’s Chief Investment Officer and Chief Financial Officer, a pricing and valuation committee that is independent of the trading and investing functions and comprised of senior management provides oversight of control systems and valuation policies for securities, mortgage loans and derivatives. On a quarterly basis, this committee reviews and approves new transaction types and markets, ensures that observable market prices and market-based parameters are used for valuation, wherever possible, and determines that judgmental valuation adjustments, when applied, are based upon established policies and are applied consistently over time. This committee also provides oversight of the selection of independent third party pricing providers and the controls and procedures to evaluate third party pricing. Periodically, the Chief Accounting Officer reports to MetLife Insurance Company of Connecticut’s Audit Committee regarding compliance with fair value accounting standards.

The Company reviews its valuation methodologies on an ongoing basis and revises those methodologies when necessary based on changing market conditions. Assurance is gained on the overall reasonableness and consistent application of input assumptions, valuation methodologies and compliance with fair value accounting standards through controls designed to ensure valuations represent an exit price. Several controls are utilized, including certain monthly controls, which include, but are not limited to, analysis of portfolio returns to corresponding benchmark returns, comparing a sample of executed prices of securities sold to the fair value estimates, comparing fair value estimates to management’s knowledge of the current market, reviewing the bid/ask spreads to assess activity, comparing prices from multiple independent pricing services and ongoing due diligence to confirm that independent pricing services use market-based parameters. The process includes a determination of the observability of inputs used in estimated fair values received from independent pricing services or brokers by assessing whether these inputs can be corroborated by observable market data. The Company ensures that prices received from independent brokers, also referred to herein as “consensus pricing,” represent a reasonable estimate of fair value by considering such pricing relative to the Company’s knowledge of the current market dynamics and current pricing for similar financial instruments. While independent non-binding broker quotations are utilized, they are not used for a significant portion of the portfolio. For example, fixed maturity securities priced using independent non-binding broker quotations represent less than 1% of the total estimated fair value of fixed maturity securities and 15% of the total estimated fair value of Level 3 fixed maturity securities.

42

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

The Company also applies a formal process to challenge any prices received from independent pricing services that are not considered representative of estimated fair value. If prices received from independent pricing services are not considered reflective of market activity or representative of estimated fair value, independent non-binding broker quotations are obtained, or an internally developed valuation is prepared. Internally developed valuations of current estimated fair value, which reflect internal estimates of liquidity and nonperformance risks, compared with pricing received from the independent pricing services, did not produce material differences in the estimated fair values for the majority of the portfolio; accordingly, overrides were not material. This is, in part, because internal estimates of liquidity and nonperformance risks are generally based on available market evidence and estimates used by other market participants. In the absence of such market-based evidence, management’s best estimate is used.

Securities, Short-term Investments and Long-term Debt of CSEs

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 long-term debt of CSEs is determined on a basis consistent with the methodologies described herein for securities.

Level 2 Valuation Techniques and Key Inputs:

This level includes securities priced principally by independent pricing services using observable inputs. FVO securities and short-term investments within this level are of a similar nature and class to the Level 2 fixed maturity securities and equity securities.

U.S. corporate and foreign corporate securities

These securities are principally valued using the market and income approaches. Valuations are based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques that use standard market observable inputs such as benchmark yields, spreads off benchmark yields, new issuances, issuer rating, duration, and trades of identical or comparable securities. Privately-placed securities are valued using matrix pricing methodologies using standard market observable inputs, and inputs derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer, and in certain cases, delta spread adjustments to reflect specific credit-related issues.

U.S. Treasury and agency securities

These securities are principally valued using the market approach. Valuations are based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques using standard market observable inputs such as a benchmark U.S. Treasury yield curve, the spread off the U.S. Treasury yield curve for the identical security and comparable securities that are actively traded.

43

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Structured securities comprised of RMBS, ABS and CMBS

These securities are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing, discounted cash flow methodologies or other similar techniques using standard market inputs, including spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information, including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans.

State and political subdivision and foreign government securities

These securities are principally valued using the market approach. Valuations are based primarily on matrix pricing or other similar techniques using standard market observable inputs including a benchmark U.S. Treasury yield or other yields, issuer ratings, broker-dealer quotes, issuer spreads and reported trades of similar securities, including those within the same sub-sector or with a similar maturity or credit rating.

Non-redeemable preferred and common stock

These securities are principally valued using the market approach. Valuations are based principally on observable inputs, including quoted prices in markets that are not considered active.

Level 3 Valuation Techniques and Key Inputs:

In general, securities classified within Level 3 use many of the same valuation techniques and inputs as described previously for Level 2. However, if key inputs are unobservable, or if the investments are less liquid and there is very limited trading activity, the investments are generally classified as Level 3. The use of independent non-binding broker quotations to value investments generally indicates there is a lack of liquidity or a lack of transparency in the process to develop the valuation estimates, generally causing these investments to be classified in Level 3.

Short-term investments within this level are of a similar nature and class to the Level 3 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below.

U.S. corporate and foreign corporate securities

These securities, including financial services industry hybrid securities classified within fixed maturity securities, are principally valued using the market approach. Valuations are based primarily on matrix pricing or other similar techniques that utilize unobservable inputs or inputs that cannot be derived principally from, or corroborated by, observable market data, including illiquidity premium, delta spread adjustments to reflect specific credit-related issues, credit spreads; and inputs including 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. Certain valuations are based on independent non-binding broker quotations.

Structured securities comprised of RMBS, ABS and CMBS

These securities are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing, discounted cash flow methodologies or other similar techniques that utilize inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data, including credit spreads. Below investment grade securities and sub-prime RMBS included in this level are valued based on inputs including 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. Certain of these valuations are based on independent non-binding broker quotations.

44

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

State and political subdivision and foreign government securities

These securities are principally valued using the market approach. Valuations are based primarily on independent non-binding broker quotations and inputs including 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. Certain valuations are based on matrix pricing that utilize inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data, including credit spreads.

Non-redeemable preferred and common stock

These securities, including privately-held securities and financial services industry hybrid securities classified within equity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing, discounted cash flow methodologies or other similar techniques using inputs such as comparable credit rating and issuance structure. Certain of these securities are valued based on inputs including 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 and independent non-binding broker quotations.

Mortgage Loans Held by CSEs — FVO

The Company consolidates certain securitization entities that hold mortgage loans.

Level 2 Valuation Techniques and Key Inputs:

These investments are principally valued using the market approach. The principal market for these investments is the securitization market. The Company uses the quoted securitization market price of the obligations of the CSEs to determine the estimated fair value of these commercial loan portfolios. These market prices are determined principally by independent pricing services using observable inputs.

Separate Account Assets

Separate account assets are carried at estimated fair value and reported as a summarized total on the consolidated balance sheets. The estimated fair value of separate account assets is based on the estimated fair value of the underlying assets. Separate account assets include: mutual funds, fixed maturity securities, equity securities, derivatives, other limited partnership interests, short-term investments and cash and cash equivalents.

Level 2 Valuation Techniques and Key Inputs:

These assets are comprised of investments that are similar in nature to the instruments described under “— Securities, Short-term Investments and Long-term Debt of CSEs.” Also included are certain mutual funds without readily determinable fair values, as prices are not published publicly. Valuation of the mutual funds is based upon quoted prices or reported net asset value (“NAV”) provided by the fund managers.

Level 3 Valuation Techniques and Key Inputs:

These assets are comprised of investments that are similar in nature to the instruments described under “— Securities, Short-term Investments and Long-term Debt of CSEs.” Also included are other limited partnership interests, which are valued giving consideration to the value of the underlying holdings of the partnerships and by applying a premium or discount, if appropriate, for factors such as liquidity, bid/ask spreads, the performance record of the fund manager or other relevant variables that may impact the exit value of the particular partnership interest.

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 valuation controls and procedures for derivatives are described in “— Investments.”

45

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

The significant inputs to the pricing models for most OTC-bilateral and OTC-cleared derivatives are inputs that are observable in the market or can be derived principally from, or corroborated by, observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves and volatility. However, 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. Significant inputs that are unobservable generally include references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. 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 Techniques 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. These derivatives are principally valued using the income approach.

Interest rate

Non-option-based. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and basis curves.

Option-based. Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, basis curves and interest rate volatility.

Foreign currency exchange rate

Non-option-based. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, basis curves, currency spot rates and cross currency basis curves.

Credit

Non-option-based. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, credit curves and recovery rates.

46

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Equity market

Non-option-based. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, spot equity index levels and dividend yield curves.

Option-based. Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, spot equity index levels, dividend yield curves and equity volatility.

Level 3 Valuation Techniques and Key Inputs:

These 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. These valuation methodologies generally use the same inputs as described in the corresponding sections above 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.

Interest rate

Non-option-based. Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve and basis curves.

Credit

Non-option-based. Significant unobservable inputs may include credit spreads, repurchase rates and the extrapolation beyond observable limits of the swap yield curve and credit curves. Certain of these derivatives are valued based on independent non-binding broker quotations.

Equity market

Non-option-based. Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves and equity volatility.

Embedded Derivatives

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees and embedded derivatives related to funds withheld on ceded reinsurance. 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 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 PABs on the consolidated balance sheets.

The fair value of these embedded derivatives, 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, is calculated by the Company’s actuarial department. The calculation is based on in-force business, and is performed using standard actuarial valuation software which projects 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.

47

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

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’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 compared to MetLife.

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 assumed, from an affiliated insurance company, the risk associated with certain GMIBs. These embedded derivatives are included in other policy-related balances on the consolidated balance sheets with changes in estimated fair value reported in net derivative gains (losses). The value of the embedded derivatives on these assumed risks is determined using a methodology consistent with that described previously for the guarantees directly written by the Company.

The Company ceded, to an affiliated reinsurance company, the risk associated with certain of the GMIBs, GMABs and GMWBs described above that are also accounted for as embedded derivatives. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also cedes, to the same affiliated reinsurance company, certain directly written GMIBs that are accounted for as insurance (i.e., not as embedded derivatives), but where the reinsurance agreement contains an embedded derivative. These embedded derivatives 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). 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 previously described in “— Investments — Securities, Short-term Investments and Long-term Debt of CSEs.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities on the consolidated balance sheets with changes in estimated fair value recorded in net derivative gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.

Embedded Derivatives Within Asset and Liability Host Contracts

Level 3 Valuation Techniques 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 curve, 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 curve 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.

48

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Reinsurance ceded on certain guaranteed minimum benefits

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

Transfers between Levels

Overall, transfers between levels occur when there are changes in the observability of inputs and market activity. Transfers into or out of any level are assumed to occur at the beginning of the period.

Transfers between Levels 1 and 2:

For assets and liabilities measured at estimated fair value and still held at both March 31, 2014 and December 31, 2013, transfers between Levels 1 and 2 were not significant.

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.

Transfers into Level 3 for fixed maturity securities were due primarily to a lack of trading activity, decreased liquidity and credit ratings downgrades (e.g., from investment grade to below investment grade) which have resulted in decreased transparency of valuations and an increased use of independent non-binding broker quotations and unobservable inputs, such as illiquidity premiums, delta spread adjustments, or credit spreads.

Transfers out of Level 3 for fixed maturity securities resulted primarily from increased transparency of both new issuances that, subsequent to issuance and establishment of trading activity, became priced by independent pricing services and existing issuances that, over time, the Company was able to obtain pricing from, or corroborate pricing received from, independent pricing services with observable inputs (such as observable spreads used in pricing securities) or increases in market activity and upgraded credit ratings.

49

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. 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:

					March 31, 2014				December 31, 2013				Impact of Increase in Input on Estimated Fair Value (2)
	Valuation Techniques		Significant Unobservable Inputs		Range			Weighted Average (1)	Range			Weighted Average (1)
Fixed maturity securities (3)
U.S. corporate and foreign corporate	Ÿ	Matrix pricing	Ÿ	Delta spread adjustments (4)	(5)	-	250	60	(10)	-	240	51	Decrease
			Ÿ	Illiquidity premium (4)	30	-	30	30	30	-	30	30	Decrease
			Ÿ	Credit spreads (4)	(118)	-	787	191	(112)	-	538	208	Decrease
			Ÿ	Offered quotes (5)	99	-	101	100	99	-	100	100	Increase
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	—	-	118	94					Increase
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	64	-	1,250	465	33	-	103	87	Increase
RMBS	Ÿ	Matrix pricing and discounted cash flow	Ÿ	Credit spreads (4)	(141)	-	1,234	251	(96)	-	2,406	295	Decrease (6)
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	38	-	107	97	10	-	100	95	Increase (6)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	2	-	78	71	78	-	100	95	Increase (6)
CMBS	Ÿ	Matrix pricing and discounted cash flow	Ÿ	Credit spreads (4)					341	-	1,879	746	Decrease (6)
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	1	-	112	101	97	-	104	101	Increase (6)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	13	-	100	100	101	-	101	101	Increase (6)
ABS	Ÿ	Matrix pricing and discounted cash flow	Ÿ	Credit spreads (4)	131	-	875	311	30	-	875	319	Decrease (6)
	Ÿ	Market pricing	Ÿ	Quoted prices (5)	—	-	100	100	—	-	104	101	Increase (6)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (5)	60	-	106	98	58	-	106	98	Increase (6)
Derivatives
Interest rate	Ÿ	Present value techniques	Ÿ	Swap yield (7)	242	-	401		248	-	450		Increase (11)
Credit	Ÿ	Present value techniques	Ÿ	Credit spreads (8)	99	-	100		98	-	100		Decrease (8)
	Ÿ	Consensus pricing	Ÿ	Offered quotes (9)
Equity market	Ÿ	Present value techniques	Ÿ	Volatility (10)	15%	-	23%		17%	-	28%		Increase (11)
Embedded derivatives
Direct and ceded guaranteed minimum benefits	Ÿ	Option pricing techniques	Ÿ	Mortality rates:
				Ages 0 - 40	0%	-	0.10%		0%	-	0.10%		Decrease (12)
				Ages 41 - 60	0.04%	-	0.65%		0.04%	-	0.65%		Decrease (12)
				Ages 61 - 115	0.26%	-	100%		0.26%	-	100%		Decrease (12)
			Ÿ	Lapse rates:
				Durations 1 - 10	0.50%	-	100%		0.50%	-	100%		Decrease (13)
				Durations 11 - 20	3%	-	100%		3%	-	100%		Decrease (13)
				Durations 21 - 116	3%	-	100%		3%	-	100%		Decrease (13)
			Ÿ	Utilization rates	20%	-	50%		20%	-	50%		Increase (14)
			Ÿ	Withdrawal rates	0.07%	-	10%		0.07%	-	10%		(15)
			Ÿ	Long-term equity volatilities	17.40%	-	25%		17.40%	-	25%		Increase (16)
			Ÿ	Nonperformance risk spread	0.03%	-	1.35%		0.03%	-	0.44%		Decrease (17)

____________

50

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

(1) The weighted average for fixed maturity securities is determined based on the estimated fair value of the securities.

(2) The impact of a decrease in input would have the opposite impact on the estimated fair value. For embedded derivatives, changes to direct guaranteed minimum benefits are based on liability positions and changes to ceded guaranteed minimum benefits are based on asset positions.

(3) Significant increases (decreases) in expected default rates in isolation would result in substantially lower (higher) valuations.

(4) Range and weighted average are presented in basis points.

(5) Range and weighted average are presented in accordance with the market convention for fixed maturity securities of dollars per hundred dollars of par.

(6) Changes in the assumptions used for the probability of default is 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.

(7) Ranges represent the rates across different yield curves and are presented in basis points. The swap yield curve is 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.

(8) 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.

(9) At both March 31, 2014 and December 31, 2013, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value.

(10) 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.

(11) Changes are based on long U.S. dollar net asset positions and will be inversely impacted for short U.S. dollar net asset positions.

(12) 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.

(13) 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.

(14) The utilization rate assumption estimates the percentage of contract holders 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.

(15) 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.

(16) 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.

51

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

(17) 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.

The following is a summary of the valuation techniques and significant unobservable inputs used in the fair value measurement 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 and embedded derivatives within funds withheld related to certain ceded reinsurance, 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 sensitivity of the estimated fair value to changes in the significant unobservable inputs for these other assets and liabilities is similar in nature to that described in the preceding table. The valuation techniques and significant unobservable inputs used in the fair value measurement for the more significant assets measured at estimated fair value on a nonrecurring basis and determined using significant unobservable inputs (Level 3) are summarized in “— Nonrecurring Fair Value Measurements.”

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
	U.S. Corporate			Foreign Corporate			RMBS			State and Political Subdivision		ABS			CMBS			Foreign Government
	(In millions)
Three Months Ended March 31, 2014
Balance, beginning of period	$	1,248		$	734		$	422		$	—	$	419		$	72		$	—
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	1			—			1			—		—			—			—
Net investment gains (losses)	(1		)	—			2			—		—			—			—
Net derivative gains (losses)	—			—			—			—		—			—			—
OCI	28			16			2			—		4			—			—
Purchases (3)	23			3			146			—		58			34			—
Sales (3)	(34		)	—			(35		)	—		(6		)	(10		)	—
Issuances (3)	—			—			—			—		—			—			—
Settlements (3)	—			—			—			—		—			—			—
Transfers into Level 3 (4)	186			—			15			—		—			6			—
Transfers out of Level 3 (4)	(51		)	(30		)	(18		)	—		(290		)	—			—
Balance, end of period	$	1,400		$	723		$	535		$	—	$	185		$	102		$	—
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	1		$	—		$	1		$	—	$	—		$	—		$	—
Net investment gains (losses)	$	(1	)	$	—		$	—		$	—	$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—	$	—		$	—		$	—

52

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities							Net Derivatives (6)
	Non - redeemable Preferred Stock		Common Stock			Short-term Investments		Interest Rate			Credit			Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)
	(In millions)
Three Months Ended March 31, 2014
Balance, beginning of period	$	81	$	31		$	—	$	11		$	6		$	(88	)	$	2,123		$	153
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	—		—			—		—			—			—			—			—
Net investment gains (losses)	—		4			—		—			—			—			—			5
Net derivative gains (losses)	—		—			—		7			(2		)	(7		)	119			—
OCI	—		(1		)	—		21			—			—			—			—
Purchases (3)	—		—			91		—			—			—			—			4
Sales (3)	—		(6		)	—		—			—			—			—			(2		)
Issuances (3)	—		—			—		—			—			—			—			—
Settlements (3)	—		—			—		(1		)	—			—			(5		)	—
Transfers into Level 3 (4)	8		5			—		—			—			—			—			—
Transfers out of Level 3 (4)	—		—			—		—			—			—			—			—
Balance, end of period	$	89	$	33		$	91	$	38		$	4		$	(95	)	$	2,237		$	160
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	—	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—	$	—		$	—	$	6		$	(2	)	$	(7	)	$	126		$	—

53

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Fixed Maturity Securities
	U.S. Corporate			Foreign Corporate			RMBS			State and Political Subdivision		ABS			CMBS			Foreign Government
	(In millions)
Three Months Ended March 31, 2013
Balance, beginning of period	$	1,434		$	868		$	278		$	25	$	343		$	125		$	3
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	3			—			—			—		—			—			—
Net investment gains (losses)	—			(3		)	—			—		—			—			—
Net derivative gains (losses)	—			—			—			—		—			—			—
OCI	28			6			8			—		—			2			(1		)
Purchases (3)	47			40			35			—		116			14			—
Sales (3)	(45		)	(42		)	(10		)	—		(11		)	(30		)	—
Issuances (3)	—			—			—			—		—			—			—
Settlements (3)	—			—			—			—		—			—			—
Transfers into Level 3 (4)	95			9			8			—		—			14			—
Transfers out of Level 3 (4)	(295		)	(92		)	(5		)	—		(28		)	(19		)	—
Balance, end of period	$	1,267		$	786		$	314		$	25	$	420		$	106		$	2
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	3		$	—		$	—		$	—	$	—		$	—		$	—
Net investment gains (losses)	$	—		$	(3	)	$	—		$	—	$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—	$	—		$	—		$	—

54

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Equity Securities								Net Derivatives (6)
	Non- redeemable Preferred Stock			Common Stock		Short-term Investments			Interest Rate			Credit			Equity Market			Net Embedded Derivatives (7)		Separate Account Assets (8)
	(In millions)
Three Months Ended March 31, 2013
Balance, beginning of period	$	93		$	26	$	13		$	119		$	10		$	(51	)	$	2,290	$	141
Total realized/unrealized gains (losses)
included in:
Net income (loss): (1), (2)
Net investment income	—			—		—			—			—			—			—		—
Net investment gains (losses)	—			—		—			—			—			—			—		(2		)
Net derivative gains (losses)	—			—		—			5			(2		)	(28		)	254		—
OCI	4			—		—			(15		)	—			—			—		—
Purchases (3)	—			—		393			—			—			—			—		—
Sales (3)	(18		)	—		(10		)	—			—			—			—		—
Issuances (3)	—			—		—			—			—			—			—		—
Settlements (3)	—			—		—			(3		)	—			(7		)	6		—
Transfers into Level 3 (4)	—			—		—			—			—			—			—		—
Transfers out of Level 3 (4)	—			—		—			—			—			—			—		—
Balance, end of period	$	79		$	26	$	396		$	106		$	8		$	(86	)	$	2,550	$	139
Changes in unrealized gains (losses)
included in net income (loss): (5)
Net investment income	$	—		$	—	$	—		$	—		$	—		$	—		$	—	$	—
Net investment gains (losses)	$	(2	)	$	—	$	—		$	—		$	—		$	—		$	—	$	—
Net derivative gains (losses)	$	—		$	—	$	—		$	5		$	(2	)	$	(27	)	$	260	$	—

____________

(1) 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). Lapses associated with net embedded derivatives are included in net derivative gains (losses).

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

(3) Items purchased/issued and then sold/settled in the same period are excluded from the rollforward. Fees attributed to embedded derivatives are included in settlements.

(4) Gains and losses, in net income (loss) and OCI, are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and then out of Level 3 in the same period are excluded from the rollforward.

(5) Changes in unrealized gains (losses) included in net income (loss) relate to assets and liabilities still held at the end of the respective periods.

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

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

(8) 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. For the purpose of this disclosure, these changes are presented within net investment gains (losses).

55

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Fair Value Option

The following table presents information for certain assets and liabilities of CSEs, which are accounted for under the FVO. These assets and liabilities were initially measured at fair value.

	March 31, 2014		December 31, 2013
	(In millions)
Assets (1)
Unpaid principal balance	$	1,068	$	1,528
Difference between estimated fair value and unpaid principal balance	72		70
Carrying value at estimated fair value	$	1,140	$	1,598
Liabilities (1)
Contractual principal balance	$	977	$	1,436
Difference between estimated fair value and contractual principal balance	23		25
Carrying value at estimated fair value	$	1,000	$	1,461

____________

(1) These assets and liabilities are comprised of commercial mortgage loans and long-term debt. Changes in estimated fair value on these assets and liabilities and gains or losses on sales of these assets are recognized in net investment gains (losses). Interest income on commercial mortgage loans held by CSEs — FVO is recognized in net investment income. Interest expense from long-term debt of CSEs — FVO is recognized in other expenses.

Nonrecurring Fair Value Measurements

The following table presents information for assets measured at estimated fair value on a nonrecurring basis during the periods and still held at the reporting dates; that is, they are not measured at fair value on a recurring basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). The estimated fair values for these assets were determined using significant unobservable inputs (Level 3).

	At March 31,				Three Months  Ended  March 31,
	2014		2013		2014			2013
	Carrying Value After Measurement				Gains (Losses)
	(In millions)
Mortgage loans, net (1)	$	17	$	17	$	—		$	—
Other limited partnership interests (2)	$	4	$	1	$	(2	)	$	—
Real estate joint ventures (3)	$	—	$	1	$	—		$	(1	)

____________

(1) Estimated fair values for impaired mortgage loans are based on independent broker quotations or valuation models using unobservable inputs or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, are based on the estimated fair value of the underlying collateral or the present value of the expected future cash flows.

(2) For these cost method investments, estimated fair value is determined from information provided in the financial statements of the underlying entities including NAV data. These investments include private equity and debt funds that typically invest primarily in various strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; and below investment grade debt and mezzanine debt funds. Distributions will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next two to 10 years. Unfunded commitments for these investments at both March 31, 2014 and 2013 were not significant.

(3) For these cost method investments, estimated fair value is determined from information provided in the financial statements of the underlying entities including NAV data. These investments include several real estate funds that typically invest primarily in commercial real estate. Distributions will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next one to 10 years. Unfunded commitments for these investments at both March 31, 2014 and 2013 were not significant.

56

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Fair Value of Financial Instruments Carried at Other Than Fair Value

The following tables provide fair value information for financial instruments that are carried on the balance sheet at amounts other than fair value. These tables exclude the following financial instruments: cash and cash equivalents, accrued investment income, payables for collateral under securities loaned and other transactions and those short-term investments that are not securities, such as time deposits, and therefore are not included in the three level hierarchy table disclosed in the “— Recurring Fair Value Measurements” section. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2 and, to a lesser extent, in Level 1, approximates carrying value as they are short-term in nature such that the Company believes there is minimal risk of material changes in interest rates or credit quality. All remaining balance sheet amounts excluded from the table below are not considered financial instruments subject to this disclosure.

The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows at:

	March 31, 2014
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	5,842	$	—	$	—	$	6,195	$	6,195
Policy loans	$	1,214	$	—	$	869	$	411	$	1,280
Real estate joint ventures	$	54	$	—	$	—	$	107	$	107
Other limited partnership interests	$	75	$	—	$	—	$	99	$	99
Other invested assets	$	931	$	—	$	1,007	$	—	$	1,007
Premiums, reinsurance and other receivables	$	6,478	$	—	$	37	$	7,034	$	7,071
Liabilities
PABs	$	20,301	$	—	$	—	$	21,472	$	21,472
Long-term debt	$	790	$	—	$	1,031	$	—	$	1,031
Other liabilities	$	334	$	—	$	170	$	164	$	334
Separate account liabilities	$	1,452	$	—	$	1,452	$	—	$	1,452

	December 31, 2013
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	6,120	$	—	$	—	$	6,427	$	6,427
Policy loans	$	1,219	$	—	$	872	$	407	$	1,279
Real estate joint ventures	$	55	$	—	$	—	$	98	$	98
Other limited partnership interests	$	78	$	—	$	—	$	89	$	89
Other invested assets	$	931	$	—	$	995	$	—	$	995
Premiums, reinsurance and other receivables	$	5,928	$	—	$	24	$	6,282	$	6,306
Liabilities
PABs	$	20,875	$	—	$	—	$	21,987	$	21,987
Long-term debt	$	790	$	—	$	1,009	$	—	$	1,009
Other liabilities	$	258	$	—	$	96	$	162	$	258
Separate account liabilities	$	1,448	$	—	$	1,448	$	—	$	1,448

The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of financial instruments are summarized as follows:

Mortgage Loans

The estimated fair value of mortgage loans is primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar mortgage loans with similar credit risk, or is determined from pricing for similar loans.

57

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Policy Loans

Policy loans with fixed interest rates are classified within Level 3. The estimated fair values for these loans are determined using a discounted cash flow model applied to groups of similar policy loans determined by the nature of the underlying insurance liabilities. Cash flow estimates are developed by applying a weighted-average interest rate to the outstanding principal balance of the respective group of policy loans and an estimated average maturity determined through experience studies of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance policy. Policy loans with variable interest rates are classified within Level 2 and the estimated fair value approximates carrying value due to the absence of borrower credit risk and the short time period between interest rate resets, which presents minimal risk of a material change in estimated fair value due to changes in market interest rates.

Real Estate Joint Ventures and Other Limited Partnership Interests

The estimated fair values of these cost method investments are generally based on the Company’s share of the NAV as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments.

Other Invested Assets

These other invested assets are principally comprised of loans to affiliates. The estimated fair value of loans to affiliates is determined by discounting the expected future cash flows using market interest rates currently available for instruments with similar terms and remaining maturities.

Premiums, Reinsurance and Other Receivables

Premiums, reinsurance and other receivables are principally comprised of certain amounts recoverable under reinsurance agreements, amounts on deposit with financial institutions to facilitate daily settlements related to certain derivatives and amounts receivable for securities sold but not yet settled.

Amounts recoverable under ceded reinsurance agreements, which the Company has determined do not transfer significant risk such that they are accounted for using the deposit method of accounting, have been classified as Level 3. The valuation is based on discounted cash flow methodologies using significant unobservable inputs. The estimated fair value is determined using interest rates determined to reflect the appropriate credit standing of the assuming counterparty.

The amounts on deposit for derivative settlements, classified within Level 2, essentially represent the equivalent of demand deposit balances and amounts due for securities sold are generally received over short periods such that the estimated fair value approximates carrying value.

PABs

These PABs include investment contracts. Embedded derivatives on investment contracts and certain variable annuity guarantees accounted for as embedded derivatives are excluded from this caption in the preceding tables as they are separately presented in “— Recurring Fair Value Measurements.”

The investment contracts primarily include certain funding agreements, fixed deferred annuities, modified guaranteed annuities, fixed term payout annuities and total control accounts. The valuation of these investment contracts is based on discounted cash flow methodologies using significant unobservable inputs. The estimated fair value is determined using current market risk-free interest rates adding a spread to reflect the nonperformance risk in the liability.

Long-term Debt

The estimated fair value of long-term debt is principally determined using market standard valuation methodologies. Valuations are based primarily on quoted prices in markets that are not active or using matrix pricing that use standard market observable inputs such as quoted prices in markets that are not active and observable yields and spreads in the market. Instruments valued using discounted cash flow methodologies use standard market observable inputs including market yield curve, duration, observable prices and spreads for similar publicly traded or privately traded issues.

58

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

7. Fair Value (continued)

Other Liabilities

Other liabilities consist primarily of interest payable, amounts due for securities purchased but not yet settled and funds withheld amounts payable, which are contractually withheld by the Company in accordance with the terms of the reinsurance agreements. The Company evaluates the specific terms, facts and circumstances of each instrument to determine the appropriate estimated fair values, which are not materially different from the carrying values.

Separate Account Liabilities

Separate account liabilities represent those balances due to policyholders under contracts that are classified as investment contracts.

Separate account liabilities classified as investment contracts primarily represent variable annuities with no significant mortality risk to the Company such that the death benefit is equal to the account balance and certain contracts that provide for benefit funding.

Since separate account liabilities are fully funded by cash flows from the separate account assets which are recognized at estimated fair value as described in the section “— Recurring Fair Value Measurements,” the value of those assets approximates the estimated fair value of the related separate account liabilities. The valuation techniques and inputs for separate account liabilities are similar to those described for separate account assets.

8.  Goodwill

During the three months ended March 31, 2014, in connection with the anticipated sale of MAL, goodwill in the Corporate Benefit Funding segment was reduced by $112 million. See Note 3. This goodwill was allocated to MAL based on the relative fair value of MAL to the estimated fair value of the Corporate Benefit Funding segment in total. The Company tested the remaining goodwill in the Corporate Benefit Funding segment for impairment and concluded that the fair value was in excess of the carrying value and therefore, it was not impaired.

59

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

9.  Equity

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI, net of income tax, was as follows:

	Three Months   Ended   March 31, 2014
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Total
	(In millions)
Balance, beginning of period	$	885		$	27		$	(23	)	$	889
OCI before reclassifications	960			64			7			1,031
Income tax expense (benefit)	(323		)	(22		)	(1		)	(346		)
OCI before reclassifications, net of income tax	1,522			69			(17		)	1,574
Amounts reclassified from AOCI	(28		)	—			—			(28		)
Income tax expense (benefit)	9			—			—			9
Amounts reclassified from AOCI, net of income tax	(19		)	—			—			(19		)
Balance, end of period	$	1,503		$	69		$	(17	)	$	1,555

	Three Months   Ended   March 31, 2013
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Total
	(In millions)
Balance, beginning of period	$	2,291		$	158		$	(49	)	$	2,400
OCI before reclassifications	(516		)	(14		)	(55		)	(585		)
Income tax expense (benefit)	209			5			(1		)	213
OCI before reclassifications, net of income tax	1,984			149			(105		)	2,028
Amounts reclassified from AOCI	(67		)	(2		)	—			(69		)
Income tax expense (benefit)	27			—			—			27
Amounts reclassified from AOCI, net of income tax	(40		)	(2		)	—			(42		)
Balance, end of period	$	1,944		$	147		$	(105	)	$	1,986

____________

(1) See Note 5 for information on offsets to investments related to insurance liabilities and DAC and VOBA.

60

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

9. Equity (continued)

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

AOCI Components	Amounts Reclassified from AOCI						Statement of Operations and Comprehensive Income (Loss) Location
	Three Months   Ended   March 31, 2014			Three Months   Ended   March 31, 2013
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	20		$	71		Net investment gains (losses)
Net unrealized investment gains (losses)	6			3			Net investment income
Net unrealized investment gains (losses)	2			—			Net derivative gains (losses)
OTTI	—			(7		)	Net investment gains (losses)
Net unrealized investment gains (losses), before income tax	28			67
Income tax (expense) benefit	(9		)	(27		)
Net unrealized investment gains (losses), net of income tax	$	19		$	40
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	$	—		$	(1	)	Net derivative gains (losses)
Interest rate forwards	—			3			Net derivative gains (losses)
Interest rate forwards	—			1			Net investment income
Foreign currency swaps	—			(1		)	Net derivative gains (losses)
Gains (losses) on cash flow hedges, before income tax	—			2
Income tax (expense) benefit	—			—
Gains (losses) on cash flow hedges, net of income tax	$	—		$	2
Total reclassifications, net of income tax	$	19		$	42

61

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

10. Other Expenses

Information on other expenses was as follows:

	Three Months Ended March 31,
	2014			2013
	(In millions)
Compensation	$	79		$	89
Commissions	130			193
Volume-related costs	38			18
Affiliated interest costs on ceded reinsurance	66			58
Capitalization of DAC	(74		)	(154		)
Amortization of DAC and VOBA	316			26
Interest expense on debt	35			51
Premium taxes, licenses and fees	13			13
Professional services	9			5
Rent and related expenses	8			8
Other	100			101
Total other expenses	$	720		$	408

Affiliated Expenses

Commissions, capitalization of DAC and amortization of DAC and VOBA include the impact of affiliated reinsurance transactions. See Note 12 for discussion of affiliated expenses included in the table above.

11. Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, 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.

Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may normally be difficult to ascertain. Uncertainties can include how fact finders will evaluate documentary evidence and the credibility and effectiveness of witness testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

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 some of the matters 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 estimated at March 31, 2014.

Matters as to Which an Estimate Can Be Made

For some of the matters discussed below, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. As of March 31, 2014, the aggregate range of reasonably possible losses in excess of amounts accrued for these matters was not material for the Company.

62

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

11. Contingencies, Commitments and Guarantees (continued)

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.

Unclaimed Property Inquiries

On December 28, 2012, the West Virginia Treasurer filed an action (West Virginia ex rel. John D. Perdue v. MetLife Insurance Company of Connecticut, Circuit Court of Putnam County), alleging that MetLife Insurance Company of Connecticut violated the West Virginia Uniform Unclaimed Property Act, seeking to compel compliance with the Act, and seeking payment of unclaimed property, interest, and penalties. On November 14, 2012, the Treasurer filed a substantially identical suit against MLI-USA. On December 30, 2013, the court granted defendants’ motions to dismiss all of the West Virginia Treasurer’s actions. The Treasurer has filed a notice to appeal the dismissal order. At least one other jurisdiction is pursuing a similar market conduct examination concerning compliance with unclaimed property statutes.

Sales Practices Claims

Over the past several years, the Company has faced claims and regulatory inquiries and investigations, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. The Company continues to vigorously defend against the claims in these matters. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for sales practices matters.

Summary

Various litigation, claims and assessments against the Company, in addition to those discussed previously 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, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, 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.

Commitments

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $131 million and $147 million at March 31, 2014 and December 31, 2013, respectively.

Commitments to Fund Partnerships Investments, Bank Credit Facilities and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under bank credit facilities and private corporate bond investments. The amounts of these unfunded commitments were $929 million and $1.0 billion at March 31, 2014 and December 31, 2013, respectively.

63

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

11. Contingencies, Commitments and Guarantees (continued)

Other Commitments

The Company has entered into collateral arrangements with affiliates, which require the transfer of collateral in connection with secured demand notes. At both March 31, 2014 and December 31, 2013, the Company had agreed to fund up to $61 million of cash upon the request by these affiliates and had transferred collateral consisting of various securities with a fair market value of $81 million and $74 million at March 31, 2014 and December 31, 2013, respectively, to custody accounts to secure the demand notes. Each of these affiliates is permitted by contract to sell or repledge this collateral. In April 2014, $29 million of this commitment matured.

See Note 5 “— Related Party Investment Transactions” for additional other commitments.

12.  Related Party Transactions

Service Agreements

The Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided under these agreements include management, policy administrative functions, personnel, investment advice and distribution services. For certain agreements, charges are based on various performance measures or activity-based costing. The bases for such charges are modified and adjusted by management when necessary or appropriate to reflect fairly and equitably the actual incidence of cost incurred by the Company and/or affiliate. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $346 million and $444 million for the three months ended March 31, 2014 and 2013, respectively. Revenues received from affiliates related to these agreements, recorded in universal life and investment-type product policy fees, were $57 million and $50 million for the three months ended March 31, 2014 and 2013, respectively. Revenues received from affiliates related to these agreements, recorded in other revenues, were $47 million and $46 million for the three months ended March 31, 2014 and 2013, respectively.

The Company had net payables to affiliates, related to the items discussed above, of $193 million and $210 million at March 31, 2014 and December 31, 2013, respectively.

See Note 5 for additional information on related party transactions.

Related Party Reinsurance Transactions

The Company has reinsurance agreements with certain MetLife subsidiaries, including MLIC, MetLife Reinsurance Company of South Carolina, Exeter, General American Life Insurance Company, MLIIC, MetLife Reinsurance Company of Vermont and MetLife Reinsurance Company of Delaware (“MRD”), all of which are related parties.

64

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

12. Related Party Transactions (continued)

Information regarding the significant effects of affiliated reinsurance included on the consolidated statements of operations and comprehensive income (loss) was as follows:

	Three Months Ended March 31,
	2014			2013
	(In millions)
Premiums
Reinsurance assumed	$	6		$	4
Reinsurance ceded	(263		)	(147		)
Net premiums	$	(257	)	$	(143	)
Universal life and investment-type product policy fees
Reinsurance assumed	$	24		$	21
Reinsurance ceded	(157		)	(134		)
Net universal life and investment-type product policy fees	$	(133	)	$	(113	)
Other revenues
Reinsurance assumed	$	—		$	—
Reinsurance ceded	57			92
Net other revenues	$	57		$	92
Policyholder benefits and claims
Reinsurance assumed	$	5		$	3
Reinsurance ceded	(350		)	(193		)
Net policyholder benefits and claims	$	(345	)	$	(190	)
Interest credited to policyholder account balances
Reinsurance assumed	$	19		$	18
Reinsurance ceded	(33		)	(29		)
Net interest credited to policyholder account balances	$	(14	)	$	(11	)
Other expenses
Reinsurance assumed	$	12		$	9
Reinsurance ceded	24			21
Net other expenses	$	36		$	30

Information regarding the significant effects of affiliated reinsurance included on the consolidated balance sheets was as follows at:

	March 31, 2014					December 31, 2013
	Assumed		Ceded			Assumed		Ceded
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	32	$	13,528		$	28	$	12,710
Deferred policy acquisition costs and value of business acquired	135		(606		)	122		(579		)
Total assets	$	167	$	12,922		$	150	$	12,131
Liabilities
Other policy-related balances	$	1,656	$	799		$	1,640	$	811
Other liabilities	14		5,361			9		5,260
Total liabilities	$	1,670	$	6,160		$	1,649	$	6,071

65

MetLife Insurance Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife, Inc.)

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

12. Related Party Transactions (continued)

In October 2012, MLI-USA entered into a reinsurance agreement to cede two blocks of business to MRD, on a 90% coinsurance with funds withheld basis. This agreement covers certain term and certain universal life policies issued in 2012 by MLI-USA and was amended in 2013 to include certain term and universal life policies issued by MLI-USA through December 31, 2013. This agreement transfers risk to MRD and, therefore, is accounted for as reinsurance. As a result of the agreement, affiliated reinsurance recoverables, included in premiums, reinsurance and other receivables, were $543 million and $917 million at March 31, 2014 and December 31, 2013, respectively. MLI-USA also recorded a funds withheld liability and other reinsurance payables, included in other liabilities, which were $433 million and $798 million at March 31, 2014 and December 31, 2013, respectively. Certain contractual features of this agreement qualify as embedded derivatives, which are separately accounted for at fair value on the Company’s consolidated balance sheets. The embedded derivative related to this cession is included within other liabilities and was $11 million and ($14) million at March 31, 2014 and December 31, 2013, respectively. For the three months ended March 31, 2014 and 2013, the Company’s consolidated statements of operations and comprehensive income (loss) reflects a loss for this agreement of $51 million and $15 million, respectively, which included net derivative gains (losses) of ($25) million and $1 million for the three months endedMarch 31, 2014 and 2013, respectively, related to the embedded derivative.

The Company ceded risks to affiliates related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their fair value are included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were assets of $1.3 billion and $912 million at March 31, 2014 and December 31, 2013, respectively. Net derivative gains (losses) associated with the embedded derivatives were $248 million and ($748) million for the three months endedMarch 31, 2014 and 2013, respectively.

MLI-USA ceded two blocks of business to an affiliate on a 90% coinsurance with funds withheld basis. Certain contractual features of this agreement qualify as embedded derivatives, which are separately accounted for at estimated fair value on the Company’s consolidated balance sheets. The embedded derivative related to the funds withheld associated with this reinsurance agreement is included within other liabilities and increased the funds withheld balance by $150 million and $48 million at March 31, 2014 and December 31, 2013, respectively. Net derivative gains (losses) associated with the embedded derivatives were ($102) million and $289 million for the three months endedMarch 31, 2014 and 2013, respectively.

Effective January 1, 2014, MetLife Insurance Company of Connecticut reinsured with MLIC all existing New York insurance policies and annuity contracts that include a separate account feature. As a result of the reinsurance agreements, MetLife Insurance Company of Connecticut recorded reinsurance receivables, included in premiums, reinsurance and other receivables, of $700 million, a funds withheld liability, included in other liabilities, of $192 million, and other reinsurance payables of $14 million included in other liabilities, and transferred cash and investments of $494 million to MLIC. See Note 1.

66

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	68
Business	68
Summary of Critical Accounting Estimates	71
Economic Capital	71
Dispositions	72
Results of Operations	73
Adoption of New Accounting Pronouncements	78
Future Adoption of New Accounting Pronouncements	78
Non-GAAP and Other Financial Disclosures	79

67

Forward-Looking Statements and Other Financial Information

For purposes of this discussion, “MICC,” the “Company,” “we,” “our” and “us” refer to MetLife Insurance Company of Connecticut, a Connecticut corporation incorporated in 1863, and its subsidiaries, including MetLife Investors USA Insurance Company (“MLI-USA”). MetLife Insurance Company of Connecticut is a wholly-owned subsidiary of MetLife, Inc. (“MetLife”). Management’s narrative analysis of the results of operations is presented pursuant to General Instruction H(2)(a) of Form 10-Q. This narrative analysis should be read in conjunction with MetLife Insurance Company of Connecticut’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Annual Report”), the forward-looking statement information included below, the “Risk Factors” set forth in Part II, Item 1A, and the additional risk factors referred to therein, and the Company’s interim condensed consolidated financial statements included elsewhere herein.

This narrative analysis 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 such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial 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. Any or all forward-looking statements may turn out to be wrong. Actual results could differ materially from those expressed or implied in the forward-looking statements. See “Note Regarding Forward-Looking Statements.”

This narrative analysis includes references to our performance measure, operating earnings, that is not based on accounting principles generally accepted in the United States of America (“GAAP”). Operating earnings is the measure of segment profit or loss we use to evaluate segment performance and allocate resources. Consistent with GAAP guidance for segment reporting, operating earnings is our measure of segment performance. See “— Non-GAAP and Other Financial Disclosures” for definitions of such measures.

Business

Overview

MICC is organized into two segments: Retail and Corporate Benefit Funding. In addition, the Company reports certain of its results of operations in 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 Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements for further information on the Company’s segments and Corporate & Other.

During the third quarter of 2013, MetLife Insurance Company of Connecticut sold its broker-dealer subsidiary, Tower Square Securities, Inc., to a third party.

On February 14, 2014, the Company entered into a definitive agreement to sell its wholly-owned subsidiary, MetLife Assurance Limited (“MAL”). As a result, in the first quarter of 2014, MetLife began reporting the operations of MAL as divested business. See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements. Consequently, the results for Corporate Benefit Funding and Corporate & Other have decreased by $5 million, net of $3 million of income tax, and $3 million, net of $2 million of income tax, respectively, for the three months ended March 31, 2013.

68

In 2013, MetLife announced its plans to merge three U.S.-based life insurance companies and an offshore reinsurance subsidiary to create one larger U.S.-based and U.S.-regulated life insurance company (the “Mergers”). The companies to be merged are MetLife Insurance Company of Connecticut, MLI-USA and MetLife Investors Insurance Company, each a U.S. insurance company that issues variable annuity products in addition to other products, and Exeter Reassurance Company, Ltd. (“Exeter”), a reinsurance company that mainly reinsures guarantees associated with variable annuity products. MetLife Insurance Company of Connecticut, which is expected to be renamed and domiciled in Delaware, will be the surviving entity. Exeter, formerly a Cayman Islands company, was re-domesticated to Delaware in October 2013. Effective January 1, 2014, following receipt of New York State Department of Financial Services (the “Department of Financial Services”) approval, MetLife Insurance Company of Connecticut withdrew its license to issue insurance policies and annuity contracts in New York. Also effective January 1, 2014, MetLife Insurance Company of Connecticut reinsured with Metropolitan Life Insurance Company (“MLIC”), an affiliate, all existing New York insurance policies and annuity contracts that include a separate account feature. As a result of the reinsurance agreements, MetLife Insurance Company of Connecticut recorded reinsurance receivables, included in premiums, reinsurance and other receivables, of $700 million and a funds withheld liability, included in other liabilities, of $192 million, and other reinsurance payables of $14 million, included in other liabilities, and transferred cash and investments of $494 million to MLIC. On December 31, 2013, MetLife Insurance Company of Connecticut deposited investments with an estimated fair market value of $6.3 billion into a custodial account, which became restricted to secure MetLife Insurance Company of Connecticut’s remaining New York policyholder liabilities not covered by such reinsurance on January 1, 2014. Also, in connection with the Mergers and subject to certain regulatory approvals, MetLife Insurance Company of Connecticut will likely enter into transactions to transfer to one or more affiliates certain business that is currently reinsured by Exeter. The Mergers are expected to occur in the fourth quarter of 2014, subject to regulatory approvals.

The Mergers (i) may mitigate to some degree the impact of any restrictions on the use of captive reinsurers that could be adopted by insurance regulators in Connecticut or Delaware by reducing our exposure to and use of captive reinsurers; (ii) will alleviate the need to use MetLife cash to fund derivative collateral requirements; (iii) will increase transparency relative to our capital allocation and variable annuity risk management; and (iv) may impact the aggregate amount of dividends permitted to be paid without insurance regulatory approval. See “— Regulatory Developments — Insurance Regulatory Examinations,” and Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements for further information on the impact of the Mergers and see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital — Affiliated Captive Reinsurance Transactions” included in the 2013 Annual Report for information on our use of captive reinsurers. See also “Risk Factors — Acquisition-Related Risks — We Could Face Difficulties, Unforeseen Liabilities, Asset Impairments or Rating Actions Arising from Business Acquisitions or Integrating and Managing Growth of Such Businesses, Dispositions of Businesses, or Legal Entity Reorganizations” included in the 2013 Annual Report for information regarding the potential impact on our operations if the Mergers or related regulatory approvals are prevented or delayed.

Regulatory Developments

The U.S. life insurance industry is regulated primarily at the state level, with some products and services also subject to federal regulation. As life insurers introduce new and often more complex products, regulators refine capital requirements and introduce new reserving standards for the life insurance industry. Regulations recently adopted or currently under review can potentially impact the statutory reserve and capital requirements of the industry. In addition, regulators have undertaken market and sales practices reviews of several markets or products, including equity-indexed annuities, variable annuities and group products, as well as reviews of the utilization of affiliated captive reinsurers or off-shore entities to reinsure insurance risks.

The regulation of the global financial services industry has received renewed scrutiny as a result of the disruptions in the financial markets. Significant regulatory reforms have been recently adopted and additional reforms proposed, and these or other reforms could be implemented. See “Business — Regulation,” “Risk Factors — Regulatory and Legal Risks — Our Insurance Businesses Are Highly Regulated, and Changes in Regulation and in Supervisory and Enforcement Policies May Reduce Our Profitability and Limit Our Growth,” “Risk Factors — Risks Related to Our Business — Our Statutory Life Insurance Reserve Financings May Be Subject to Cost Increases and New Financings May Be Subject to Limited Market Capacity,” and “Risk Factors — Regulatory and Legal Risks — Changes in U.S. Federal and State Securities Laws and Regulations, and State Insurance Regulations Regarding Suitability of Annuity Product Sales, May Affect Our Operations and Our Profitability” included in the 2013 Annual Report. For example, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which was signed by President Obama in July 2010, effected the most far-reaching overhaul of financial regulation in the U.S. in decades. The full impact of Dodd-Frank on us will depend on the numerous rulemaking initiatives required or permitted by Dodd-Frank which are in various stages of implementation, many of which are not likely to be completed for some time.

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Insurance Regulatory Examinations

As part of their regulatory oversight process, state insurance departments conduct periodic detailed examinations of the books, records, accounts, and business practices of insurers domiciled in their states. State insurance departments also have the authority to conduct examinations of non-domiciliary insurers that are licensed in their states. Except as otherwise disclosed in Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements included elsewhere herein, and in Note 15 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report, during the three months ended March 31, 2014 and the years ended December 31, 2013, 2012 and 2011, we have not received any material adverse findings resulting from state insurance department examinations of our insurance subsidiaries.

Regulatory authorities in a small number of states, Financial Industry Regulatory Authority and, occasionally, the U.S. Securities and Exchange Commission, have had investigations or inquiries relating to our sales of individual life insurance policies or annuities or other products. These investigations often focus on the conduct of particular financial services representatives and the sale of unregistered or unsuitable products or the misuse of client assets. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary payments and certain other relief, including restitution payments. We may continue to resolve investigations in a similar manner.

In addition, claims payment practices by insurance companies have received increased scrutiny from regulators. See Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements included elsewhere herein and in Note 15 of the Notes to the Consolidated Financial Statements included in the 2013 Annual Report for further information regarding unclaimed property inquiries and related litigation.

State insurance regulators and the National Association of Insurance Commissioners (“NAIC”) are also investigating the use of affiliated captive reinsurers or off-shore entities to reinsure insurance risks. In June 2013, the Department of Financial Services issued a highly critical report setting forth its findings to date relating to its inquiry into the life insurance industry’s use of captive insurance companies. The Financial Condition Committee of the NAIC has charged its Financial Analysis Working Group with the task of performing a peer review of captive insurer reserve financings in order to gather more information regarding their nature and how extensively they are used. The NAIC contracted with Rector & Associates to study captives and recommend additional regulation, and its report (the “Rector Report”) was released for comment in late February 2014. The Rector Report recommends, among other things, limitations on the types of assets that may be used to support reserve financing transactions, a presumption that ceding insurance companies be subject to corrective regulatory action if they do not follow the requirements proposed in the Rector Report, and an aggressive timeline for implementing its recommendations. The Rector Report further suggested that modifications to reserve requirements that would adequately provide for coverage of policyholder claims, but be less conservative than current reserve requirements, would eliminate incentives to engage in reserve financing transactions and eliminate the need for captive reinsurers. Any final version of the Rector Report that is adopted by the NAIC will not be a regulation but may lead to additional regulation of captives. In late March 2014, the NAIC released for comment a proposed redefinition of “multi-state insurers” to prospectively include U.S. captive reinsurers, which would entail that certain standards, such as solvency standards, that apply to multi-state insurers would apply to U.S. captive reinsurers. Any states that did not apply multi-state insurer requirements would be at risk of losing their NAIC accreditation. It is premature to project the impact of the Rector Report, in the form it may be adopted, or the proposed redefinition of “multi-state insurers,” if it is adopted, on captive usage by MetLife. Like many life insurance companies, we utilize captive reinsurers to satisfy statutory reserve requirements related to universal life and term life insurance policies. We also cede variable annuity risks to a captive reinsurer, which allows us to consolidate hedging and other risk management programs. If the insurance regulators in Connecticut or Delaware restrict the use of such captive reinsurers or if we otherwise are unable to continue to use captive reinsurers in the future, our ability to write certain products or to hedge the associated risks efficiently, and/or our risk-based capital ratios and ability to deploy excess capital, could be adversely affected or we may need to increase prices on those products, which could adversely impact our competitive position and our results of operations. We will continue to evaluate product modifications, pricing structure and alternative means of managing risks, capital and statutory reserves and we expect the discontinued use of captive reinsurance on new reserve financing transactions would not have a material impact on our future consolidated financial results. In 2013, MetLife announced its plans for the Mergers. See “— Overview” for further information on the Mergers. The Mergers may mitigate to some degree the impact of any restrictions on the use of captive reinsurers that could be adopted by insurance regulators in Connecticut or Delaware. For more information on our use of captive reinsurers see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital — Affiliated Captive Reinsurance Transactions” included in the 2013 Annual Report.

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The NAIC has been reviewing life insurers’ use of non-variable separate accounts that are insulated from general account claims. The review with respect to institutional products is substantially complete. The result was formal ratification of the principle that, when the general account was appropriately compensated, general account guarantees for such separate account contracts were also appropriate. Thus, with respect to institutional products, the NAIC’s work reduced the potential risk that our institutional products business could be affected by an adverse regulatory determination regarding the status of guarantees of such non-variable separate accounts. The NAIC and certain state regulators continue to look at the use of non-insulated book value separate accounts for index-linked variable annuities in retail sales, and for this business the risk of unfavorable regulatory developments remains and our ability to do business in these markets could be adversely affected.

The International Association of Insurance Supervisors has encouraged U.S. insurance supervisors to establish Supervisory Colleges for U.S.-based insurance groups with international operations, including MetLife, to facilitate cooperation and coordination among the insurance groups’ supervisors and to enhance the member regulators’ understanding of an insurance group’s risk profile. MetLife has been the subject of Supervisory College meetings chaired by the Department of Financial Services and attended by MetLife’s key U.S. and international insurance regulators in January 2013 and March 2014. MetLife has not received any report or recommendations from the Supervisory College meetings, and we do not expect any outcome of the meetings to have a material adverse effect 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 in the Interim Condensed Consolidated Financial Statements. The most critical estimates include those used in determining:

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

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

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

(iv) investment 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 income taxes and the valuation of deferred tax assets; and

(viii) liabilities for litigation and regulatory matters.

In applying our accounting policies, we make subjective and complex judgments that frequently require estimates 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 2013 Annual Report.

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 MetLife’s and the Company’s business.

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MetLife’s economic capital model 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 and 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 management is responsible for the on-going 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, operating earnings or net income (loss).

Dispositions

See Note 3 of the Notes to the Interim Condensed Consolidated Financial Statements for further information regarding the Company’s pending disposition.

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Results of Operations

Consolidated Results

Changes to our guarantee features over the last couple of years along with continued management of sales in the current period by focusing on pricing discipline and risk management drove a $1.1 billion, before income tax, or 58%, decrease in variable annuity sales. Variable and universal life sales were also lower by 64%, mainly driven by the discontinuance of all but one of our secondary guarantees on universal life products. These decreases were partially offset by higher fixed income annuity sales of $135 million, before income tax.

	Three Months Ended March 31,
	2014			2013
	(In millions)
Revenues
Premiums	$	165		$	151
Universal life and investment-type product policy fees	589			564
Net investment income	702			730
Other revenues	119			157
Net investment gains (losses)	(519		)	66
Net derivative gains (losses)	180			113
Total revenues	1,236			1,781
Expenses
Policyholder benefits and claims	420			414
Interest credited to policyholder account balances	239			264
Capitalization of DAC	(74		)	(154		)
Amortization of DAC and VOBA	316			26
Interest expense on debt	35			51
Other expenses	443			485
Total expenses	1,379			1,086
Income (loss) before provision for income tax	(143		)	695
Provision for income tax expense (benefit)	(49		)	230
Net income (loss)	$	(94	)	$	465

Three Months Ended March 31, 2014 Compared with the Three Months Ended March 31, 2013

During the three months ended March 31, 2014, income (loss) before provision for income tax, decreased $838 million ($559 million, net of income tax) from the prior period primarily driven by unfavorable changes in net investment gains (losses) and operating earnings, partially offset by a favorable change in net derivative gains (losses).

We manage our investment portfolio using disciplined asset/liability management 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 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. Other invested asset classes including, but not limited to, equity securities, other limited partnership interests and real estate and real estate joint ventures, provide additional diversification and opportunity for long-term yield enhancement in addition to supporting the cash flow and duration objectives of our investment portfolio. We also use derivatives as an integral part of our management of the investment portfolio to hedge certain risks, including changes in interest rates, foreign currency exchange rates, credit spreads and equity market levels. Additional considerations for our investment portfolio include current and expected market conditions and expectations for changes within our specific mix of products and business segments.

The composition of the investment portfolio of each business segment is tailored to the specific characteristics of its insurance liabilities, causing certain portfolios to be shorter in duration and others to be longer in duration. Accordingly, certain portfolios are more heavily weighted in longer duration, higher yielding fixed maturity securities, or certain sub-sectors of fixed maturity securities, than other portfolios.

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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 both impairments and realized gains and losses on investments sold.

We use freestanding interest rate, equity, credit and currency derivatives to hedge certain invested assets and insurance liabilities. Certain 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.

Certain direct or assumed variable annuity products with minimum benefit guarantees 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 hedge the market and other risks inherent in these variable annuity guarantees through a combination of reinsurance and freestanding derivatives. Ceded reinsurance of direct or assumed variable annuity products with minimum benefit guarantees generally 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). 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.

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

	Three Months Ended March 31,
	2014			2013
	(In millions)
Non-VA program derivatives
Interest rate	$	48		$	64
Foreign currency exchange rate	11			15
Credit	3			13
Non-VA embedded derivatives	(136		)	287
Total non-VA program derivatives	(74		)	379
VA program derivatives
Embedded derivatives-direct/assumed guarantees:
Market risks	41			764
Nonperformance risk	5			(89		)
Other risks	(45		)	38
Total	1			713
Embedded derivatives-ceded reinsurance:
Market and other risks	268			(865		)
Nonperformance risk	(19		)	118
Total	249			(747		)
Freestanding derivatives hedging direct/assumed embedded derivatives	4			(232		)
Total VA program derivatives	254			(266		)
Net derivative gains (losses)	$	180		$	113

Within VA program derivatives, we reclassified the prior period amounts to conform to the current period presentation and separately present each component of market risks and other risks within direct/assumed embedded derivatives.

The unfavorable change in net derivative gains (losses) on non-VA program derivatives was $453 million ($294 million, net of income tax). This was primarily due to non-VA program embedded derivatives in affiliated ceded reinsurance written on a coinsurance with funds withheld basis, which were unfavorably impacted by changes in value of the underlying assets, as well as by a prior period refinement to the method in which the changes in fair value of the underlying assets in the reference portfolio are allocated to the embedded derivative.

The favorable change in net derivative gains (losses) on VA program derivatives was $520 million ($338 million, net of income tax). This was due to a favorable change of $563 million ($366 million, net of income tax) related to market and other

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risks on direct and assumed variable annuity embedded derivatives, net of the impact of market and other risks on the ceded reinsurance embedded derivatives and net of freestanding derivatives hedging those risks, partially offset by unfavorable change of $43 million ($28 million, net of income tax) related to the nonperformance risk adjustment on the direct and assumed variable annuity embedded derivatives, net of the impact of nonperformance risk adjustment on the ceded variable annuity embedded derivatives.

The nonperformance risk adjustment on ceded variable annuity embedded derivatives unfavorable change of $137 million ($89 million, net of income tax) was due to an unfavorable change of $113 million, before income tax, due to the impact of changes in capital market inputs, such as long-term risk free interest rates and key equity index levels, as well as an unfavorable change of $24 million, before income tax, due to changes in the reinsurer’s credit spread. The nonperformance risk adjustment on direct and assumed variable annuity embedded derivatives favorable change of $94 million ($61 million, net of income tax) was due to a favorable change of $86 million, before income tax, due to the impact of changes in capital market inputs, such as long-term risk free interest rates and key equity index levels, as well as a favorable change of $8 million, before income tax, due to changes in our own credit spread. We calculate the nonperformance risk adjustment on the direct, assumed, and ceded variable annuity embedded derivatives as the change in the embedded derivative discounted at the risk adjusted rate (which includes our own credit spread to the extent that the embedded derivative is in-the-money) less the change in the embedded derivative discounted at the risk free rate.

When equity index levels decrease in isolation, the direct and assumed 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 on the direct and assumed variable annuity embedded derivatives. The opposite impact occurs with respect to the nonperformance risk adjustment on the ceded variable annuity guarantees.

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 rate, thus creating a gain from including an adjustment for nonperformance risk on the direct and assumed variable annuity embedded derivatives. The opposite impact occurs with respect to the nonperformance risk adjustment on the ceded variable annuity guarantees.

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 on the direct and assumed variable annuity embedded derivatives. The opposite impact occurs with respect to the nonperformance risk adjustment on the ceded variable annuity guarantees when the reinsurer's credit spread increases in isolation. For each of these primary market drivers, the opposite effect occurs when they move in the opposite direction.

Generally, a higher portion of the ceded reinsurance for guaranteed minimum income benefits (“GMIBs”) is accounted for as an embedded derivative as compared to the direct guarantees since the settlement provisions of the reinsurance contracts generally meet the accounting criteria of “net settlement.” This mismatch in accounting can lead to significant volatility in earnings, even though the risks inherent in these direct guarantees are fully covered by the ceded reinsurance.

The foregoing favorable change of $563 million ($366 million, net of income tax) is comprised of a $1.4 billion ($890 million, net of income tax) favorable change in market and other risks on ceded variable annuity embedded derivatives and freestanding derivatives which, together, hedge the market and other risks on direct and assumed variable annuity embedded derivatives, and an $806 million ($524 million, net of income tax) unfavorable change in market and other risks on direct and assumed variable annuity embedded derivatives. As discussed in the preceding paragraph, changes in market and other risks lead to volatility in earnings due to the mismatch in accounting on GMIBs.

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The primary changes in market factors are summarized as follows:

• Long-term interest rates decreased in the current period and increased in the prior period, contributing to a favorable change in our ceded reinsurance assets and our freestanding derivatives and an unfavorable change in our direct and assumed embedded derivatives.

• Key equity index levels increased less in the current period than in the prior period contributing to a favorable change in our ceded reinsurance assets and our freestanding derivatives and an unfavorable change in direct and assumed embedded derivatives.

• Key equity volatility measures decreased less in the current period than in the prior period, contributing to a favorable change in our ceded reinsurance assets and our freestanding derivatives and an unfavorable change in our direct and assumed embedded derivatives.

The unfavorable change in net investment gains (losses) of $585 million ($380 million, net of income tax) primarily reflects a loss related to the disposition of MAL and lower net gains on sales of fixed maturity securities in the current period.

Our income tax benefit for the three months ended March 31, 2014 was $49 million, or 34% of income (loss) before provision for income tax, compared with income tax expense of $230 million, or 33% of income (loss) before provision for income tax for the prior period. The Company’s first quarter 2014 effective tax rate differs from the U.S. statutory rate of 35% primarily due to non-taxable investment income and the tax effects of the MAL divestiture. The Company’s first quarter 2013 effective tax rate was different from the U.S. statutory rate of 35% primarily due to non-taxable investment income.

As more fully described in “— Non-GAAP and Other Financial Disclosures,” we use operating 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 operating 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. Operating earnings should not be viewed as a substitute for net income (loss). Operating earnings decreased $57 million, net of income tax, to $261 million, net of income tax, for the three months ended March 31. 2014 from $318 million, net of income tax, for the three months ended March 31, 2013.

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Reconciliation of net income (loss) to operating earnings

	Three Months Ended March 31,
	2014			2013
	(In millions)
Net income (loss)	$	(94	)	$	465
Less: Net investment gains (losses)	(519		)	66
Less: Net derivative gains (losses)	180			113
Less: Other adjustments to net income (1)	(171		)	51
Less: Provision for income tax (expense) benefit	155			(83		)
Operating earnings	$	261		$	318

____________

(1) See definitions of operating revenues and operating expenses under “— Non-GAAP and Other Financial Disclosures” for the components of such adjustments.

Reconciliation of GAAP revenues to operating revenues and GAAP expenses to operating expenses

	Three Months Ended March 31,
	2014			2013
	(In millions)
Total revenues	$	1,236		$	1,781
Less: Net investment gains (losses)	(519		)	66
Less: Net derivative gains (losses)	180			113
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	—			(1		)
Less: Other adjustments to revenues (1)	65			130
Total operating revenues	$	1,510		$	1,473
Total expenses	$	1,379		$	1,086
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	133			(81		)
Less: Other adjustments to expenses (1)	103			159
Total operating expenses	$	1,143		$	1,008

____________

(1) See definitions of operating revenues and operating expenses under “— Non-GAAP and Other Financial Disclosures” for the components of such adjustments.

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Consolidated Results – Operating

	Three Months Ended March 31,
	2014			2013
	(In millions)
OPERATING REVENUES
Premiums	$	165		$	103
Universal life and investment-type product policy fees	550			530
Net investment income	676			683
Other revenues	119			157
Total operating revenues	1,510			1,473
OPERATING EXPENSES
Policyholder benefits and claims	345			282
Interest credited to policyholder account balances	239			266
Capitalization of DAC	(74		)	(154		)
Amortization of DAC and VOBA	177			116
Interest expense on debt	17			17
Other expenses	439			481
Total operating expenses	1,143			1,008
Provision for income tax expense (benefit)	106			147
Operating earnings	$	261		$	318

Three Months Ended March 31, 2014 Compared with the Three Months Ended March 31, 2013

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

The primary drivers of the decrease in operating earnings were higher DAC amortization, less favorable claims experience and lower net investment income primarily due to a decrease in invested assets, partially offset by higher asset-based fee revenues from improved equity market performance and a decrease in interest credited expense.

In our deferred annuity business, surrenders and withdrawals exceeded sales for the period, resulting in negative net flows. This caused a decrease in average separate account balances and thus asset-based fees and contributed to a reduction in interest credited expenses in the general account. A decrease in funding agreement issuances and the aforementioned negative net flows in our deferred annuity business were partially offset by positive net flows in our universal life business, which caused a decrease in invested assets, resulting in lower net investment income. Operating earnings also decreased in the current period as a result of the sale of our former broker-dealer subsidiary, Tower Square Securities, Inc., in 2013. The changes in business growth discussed above resulted in a $27 million decrease in operating earnings.

In the annuity business, stronger 2013 equity market performance increased our average separate account balances, driving an increase in asset-based fee income. This increase was partially offset by higher asset-based commissions that are also, in part, determined by separate account balances. Operating earnings increased due to lower interest credited expense as we reduced interest credited rates on contracts with discretionary rate reset provisions. Operating earnings increased as a result of higher investment yields from improved returns on our alternative investments, real estate joint ventures and other limited partnership interests, partially offset by lower prepayment fees and the impact of the low interest rate environment on our fixed maturity securities. The changes in market factors, including equity markers and interest rates, discussed above resulted in an $11 million increase in operating earnings.

Less favorable claims experience in our variable and universal life business, primarily driven by two large, unreinsured claims, partially offset by our traditional life and structured settlement businesses reduced operating earnings by $7 million. DAC amortization increased due to the significant prior period equity market increase and less favorable growth in the business, resulting in a $26 million decrease in operating earnings. Refinements to DAC and certain insurance-related liabilities in both the current and prior periods resulted in a $14 million decrease in operating earnings.

The Company’s effective tax rate differs from the U.S. statutory rate of 35% primarily due to non-taxable investment income and tax credits. In the current period, the Company realized additional tax benefits of $7 million compared to the prior period, primarily from the higher utilization of tax preferenced investments.

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.

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Non-GAAP and Other Financial Disclosures

Operating earnings is defined as operating revenues less operating expenses, both net of income tax.

Operating revenues and operating expenses exclude results of discontinued operations and other businesses that have been or will be sold or exited by the Company (“Divested Businesses”). Operating revenues also excludes net investment gains (losses) and net derivative gains (losses). Operating expenses also excludes goodwill impairments.

The following additional adjustments are made to GAAP revenues, in the line items indicated, in calculating operating revenues: 

• Universal life and investment-type product policy fees excludes the amortization of unearned revenue related to net investment gains (losses) and net derivative gains (losses) and certain variable annuity GMIB fees (“GMIB Fees”); and

• Net investment income: (i) includes amounts for scheduled periodic settlement payments 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) includes income from discontinued real estate operations, (iii) excludes post-tax operating earnings adjustments relating to insurance joint ventures accounted for under the equity method, (iv) excludes certain amounts related to contractholder-directed unit-linked investments, and (v) excludes certain amounts related to securitization entities that are variable interest entities (“VIEs”) consolidated under GAAP.

The following additional adjustments are made to GAAP expenses, in the line items indicated, in calculating operating expenses: 

• Policyholder benefits and claims excludes: (i) amounts associated with periodic crediting rate adjustments based on the total return of a contractually referenced pool of assets, (ii) benefits and hedging costs related to GMIBs (“GMIB Costs”), and (iii) market value adjustments associated with surrenders or terminations of contracts (“Market Value Adjustments”);

• Interest credited to policyholder account balances includes adjustments for scheduled periodic settlement payments and amortization of premium on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment and excludes amounts related to net investment income earned on contractholder-directed unit-linked investments;

• Amortization of DAC and VOBA excludes amounts related to: (i) net investment gains (losses) and net derivative gains (losses), (ii) GMIB Fees and GMIB Costs, and (iii) Market Value Adjustments;

• Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and

• Other expenses excludes costs related to: (i) implementation of new insurance regulatory requirements, and (ii) acquisition and integration costs.

We believe the presentation of operating 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 our business. Operating revenues, operating expenses and operating earnings should not be viewed as substitutes for the following financial measures calculated in accordance with GAAP: GAAP revenues, GAAP expenses, and net income (loss), respectively. Reconciliations of these measures to the most directly comparable GAAP measures are included in “— Results of Operations.”

In this discussion, 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.

Item 4. Controls and Procedures

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer 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 15d-15(f) during the quarter ended March 31, 2014 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

The following should be read in conjunction with (i) Part I, Item 3, of MetLife Insurance Company of Connecticut’s Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Annual Report”), filed with the U.S. Securities and Exchange Commission (“SEC”); and (ii) Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements in Part I of this report.

Various litigation, claims and assessments against the Company, in addition to those discussed previously 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, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although, in light of these considerations it is possible that an adverse outcome in certain cases could have a material effect upon the Company’s financial position, based on information currently known by the Company’s management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, 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.

Item 1A.Risk Factors

The following should be read in conjunction with, and supplements and amends, the factors that may affect the Company's business or operations described under “Risk Factors” in Part I, Item 1A, of the 2013 Annual Report, which are incorporated herein by reference.

Regulatory and Legal Risks

The Dodd-Frank Provisions Compelling the Liquidation of Certain Types of Financial Institutions Could Materially and Adversely Affect MetLife as Such a Financial Institution and as an Investor in Other Such Financial Institutions, as well as Our Investors

Under provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), if MetLife or another financial institution were to become insolvent or were in danger of defaulting on its obligations, it could be compelled to undergo liquidation with the Federal Deposit Insurance Corporation (“FDIC”) as receiver. For this new regime to be applicable, a number of determinations would have to be made, including that a default by the affected company would have serious adverse effects on financial stability in the United States. If the FDIC were appointed as the receiver for such a company, liquidation of that company would occur under the provisions of the new liquidation authority, and not under the Bankruptcy Code, which ordinarily governs liquidations. Even if the Orderly Liquidation Authority provisions were invoked, our U.S. insurance companies would be resolved under state insurance law. In an FDIC-managed liquidation, holders of a company’s debt could be treated differently than under the Bankruptcy Code and similarly-situated creditors could be treated differently. In particular, unsecured creditors and shareholders are intended to bear the losses of the company being liquidated. These provisions could also apply to financial institutions whose debt securities we hold in our investment portfolio and could adversely affect our position as a creditor and the value of our holdings.

Dodd-Frank also provides for the assessment of charges against certain financial institutions, including non-bank systemically important financial institutions (“non-bank SIFIs”) and bank holding companies and other financial companies with assets of $50 billion or more, to cover the costs of liquidating any financial company subject to the new liquidation authority. The liquidation authority could increase the funding costs of large bank holding companies or financial companies that might be viewed as systemically significant, such as MetLife. See “Business — Regulation — Potential Regulation of MetLife as a Non-Bank SIFI — Orderly Liquidation Authority” included in the 2013 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 Insurance Company of Connecticut and its subsidiaries, 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 Insurance Company of Connecticut and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife Insurance Company of Connecticut’s other public filings, which are available without charge through the SEC’s website at www.sec.gov.)

Exhibit No.	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

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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 INSURANCE COMPANY OF CONNECTICUT
By:	/s/	Peter M. Carlson
	Name:	Peter M. Carlson
	Title:	Executive Vice President
		and Chief Accounting Officer
		(Authorized Signatory and Principal Accounting Officer)

Date: May 14, 2014

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Exhibit Index

(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 Insurance Company of Connecticut and its subsidiaries, 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 Insurance Company of Connecticut and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife Insurance Company of Connecticut’s other public filings, which are available without charge through the SEC’s website at www.sec.gov.)

Exhibit No.	Description
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

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