MetLife Life & Annuity CO of Connecticut 10Q 2007 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, 2007

OR

o		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:33-58677

MetLife Life and Annuity Company of Connecticut

(Exact name of registrant as specified in its charter)


Connecticut (State or other jurisdiction of incorporation or organization)		06-0904249 (I.R.S. Employer Identification No.)

One Cityplace, Hartford, Connecticut (Address of principal executive offices)		06103-3415 (Zip Code)

(860) 308-1000

(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 o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” inRule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

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

At May 10, 2007, 30,000 shares of the registrant’s common stock, $100 par value per share, were outstanding, all of which are owned by MetLife Insurance Company of Connecticut, a subsidiary of MetLife, Inc.

REDUCED DISCLOSURE FORMAT

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

Table of Contents


	Page

Part I — Financial Information
Item 1. Financial Statements		4
Interim Condensed Consolidated Balance Sheets at March 31, 2007 (Unaudited) and December 31, 2006		4
Interim Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2007 and 2006 (Unaudited)		5
Interim Condensed Consolidated Statement of Stockholder’s Equity for the Three Months Ended March 31, 2007 (Unaudited)		6
Interim Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006 (Unaudited)		7
Notes to Interim Condensed Consolidated Financial Statements (Unaudited)		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 4. Controls and Procedures		26
Part II — Other Information
Item 1. Legal Proceedings		26
Item 6. Exhibits		28
Signatures		29
Exhibit Index		E-1
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32.1: CERTIFICATION
EX-32.2: CERTIFICATION

Note Regarding Forward-Looking Statements

This Quarterly Report onForm 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in the operations and financial results and the business and the products of MetLife Life and Annuity Company of Connecticut and its subsidiary, as well as other statements including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend” and other similar expressions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects on MetLife Life and Annuity Company of Connecticut and its subsidiary. Such forward-looking statements are not guarantees of future performance. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Part I — Financial Information


Item 1.	*Financial Statements*

MetLife Life and Annuity Company of Connecticut
(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

Interim Condensed Consolidated Balance Sheets

March 31, 2007 (Unaudited) and December 31, 2006

(In millions, except share and per share data)


	March 31,			December 31,
	2007			2006

Assets
Investments:
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $6,342 and $5,967, respectively)	$	6,279		$	5,889
Equity securitiesavailable-for-sale, at estimated fair value (cost: $67 and $56, respectively)		68			57
Mortgage loans on real estate		357			295
Policy loans		55			55
Real estate and real estate joint venturesheld-for-investment		3			2
Other limited partnership interests		82			68
Short-term investments		147			95
Other invested assets		300			341

Total investments		7,291			6,802
Cash and cash equivalents		263			230
Accrued investment income		69			68
Premiums and other receivables		303			289
Deferred policy acquisition costs and value of business acquired		1,654			1,712
Current income tax recoverable		—			19
Deferred income tax assets		10			8
Goodwill		239			239
Other assets		25			25
Separate account assets		12,004			12,246

Total assets	$	21,858		$	21,638


Liabilities and Stockholder’s Equity
Liabilities:
Future policy benefits	$	1,777		$	1,782
Policyholder account balances		5,218			5,377
Other policyholder funds		82			79
Current income tax payable		1			—
Payables for collateral under securities loaned and other transactions		652			102
Other liabilities		141			119
Separate account liabilities		12,004			12,246

Total liabilities		19,875			19,705

Contingencies, Commitments and Guarantees (Note 4)
Stockholder’s Equity:
Common stock, par value $100 per share; 100,000 shares authorized; 30,000 shares issued and outstanding at March 31, 2007 and December 31, 2006		3			3
Additional paid-in capital		1,730			1,730
Retained earnings		275			230
Accumulated other comprehensive loss		(25	)		(30	)

Total stockholder’s equity		1,983			1,933

Total liabilities and stockholder’s equity	$	21,858		$	21,638

See accompanying notes to interim condensed consolidated financial statements.

MetLife Life and Annuity Company of Connecticut
(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

Interim Condensed Consolidated Statements of Income

For the Three Months Ended March 31, 2007 and 2006 (Unaudited)

(In millions)


	Three Months Ended
	March 31,
	2007		2006

Revenues
Premiums	$	12	$	12
Universal life and investment-type product policy fees		112		121
Net investment income		91		86
Other revenues		6		7
Net investment gains (losses)		4		(32	)

Total revenues		225		194

Expenses
Policyholder benefits and claims		34		25
Interest credited to policyholder account balances		34		29
Other expenses		96		71

Total expenses		164		125

Income before provision for income tax		61		69
Provision for income tax		16		20

Net income	$	45	$	49

See accompanying notes to interim condensed consolidated financial statements.

MetLife Life and Annuity Company of Connecticut
(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

Interim Condensed Consolidated Statement of Stockholder’s Equity

For the Three Months Ended March 31, 2007 (Unaudited)

(In millions)


							Accumulated Other
							Comprehensive
							Income (Loss)
							Net
			Additional				Unrealized
	Common		Paid-in		Retained		Investment
	Stock		Capital		Earnings		Gains (Losses)			Total

Balance at January 1, 2007	$	3	$	1,730	$	230	$	(30	)	$	1,933
Comprehensive income (loss):
Net income						45					45
Other comprehensive income (loss):
Unrealized investment gains (losses), net of related offsets and income tax								5			5

Other comprehensive income (loss)											5

Comprehensive income (loss)											50

Balance at March 31, 2007	$	3	$	1,730	$	275	$	(25	)	$	1,983

See accompanying notes to interim condensed consolidated financial statements.

MetLife Life and Annuity Company of Connecticut
(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

Interim Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2007 and 2006 (Unaudited)

(In millions)


	Three Months Ended
	March 31,
	2007			2006

Net cash provided by (used in) operating activities	$	55		$	(89	)

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		742			1,436
Equity securities		3			—
Mortgage loans on real estate		4			2
Other limited partnership interests		25			12
Purchases of:
Fixed maturity securities		(1,082	)		(1,248	)
Equity securities		(11	)		—
Mortgage loans on real estate		(67	)		—
Other limited partnership interests		(36	)		(8	)
Net change in policy loans		—			(9	)
Net change in short-term investments		(52	)		(121	)
Net change in other invested assets		3			31

Net cash (used in) provided by investing activities		(471	)		95

Cash flows from financing activities
Policyholder account balances:
Deposits		97			194
Withdrawals		(210	)		(200	)
Net change in payables for collateral under securities loaned and other transactions		550			(9	)
Financing element on certain derivative instruments		12			(7	)

Net cash provided by (used in) financing activities		449			(22	)

Change in cash and cash equivalents		33			(16	)
Cash and cash equivalents, beginning of period		230			233

Cash and cash equivalents, end of period	$	263		$	217

Supplemental disclosures of cash flow information:
Net cash paid during the period for:
Income tax	$	—		$	—

See accompanying notes to interim condensed consolidated financial statements.

MetLife Life and Annuity Company of Connecticut
(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

Notes to Interim Condensed Consolidated Financial Statements (Unaudited)


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

Business

“MLAC” or the “Company” refers to MetLife Life and Annuity Company of Connecticut, a Connecticut corporation incorporated in 1973 (“MetLife Annuity”), and its subsidiary. MLAC is a wholly-owned subsidiary of MetLife Insurance Company of Connecticut (“MICC”). MICC is a subsidiary of MetLife, Inc. (“MetLife”). The Company’s core offerings include universal and variable life insurance, fixed and variable deferred annuities, structured settlements and payout annuities.

The Company currently operates as a single segment and, as such, financial results are prepared and reviewed by management as a single operating segment. The Company continually evaluates its operating activities and the method utilized by management to evaluate the performance of such activities and will report on a segment basis when appropriate to do so.

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.

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 unaudited interim condensed consolidated financial statements. The most critical estimates include those used in determining:

(i) the fair value of investments in the absence of quoted market values;

(ii) investment impairments;

(iii) the recognition of income on certain investments;

(iv) application of the consolidation rules to certain investments;

(v) the fair value of and accounting for derivatives;

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

(vii) the measurement of goodwill and related impairment, if any;

(viii) the liability for future policyholder benefits;

(ix) accounting for income taxes and the valuation of deferred income tax assets;

(x) accounting for reinsurance transactions; and

(xi) the liability for litigation and regulatory matters.

In applying these policies, management makes 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 the Company’s business and operations. Actual results could differ from these estimates.

The accompanying unaudited interim condensed consolidated financial statements include the accounts of (i) the Company and (ii) partnerships and joint ventures in which the Company has control. Intercompany accounts and transactions have been eliminated.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

The Company uses the equity method of accounting for investments in equity securities in which it has more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint ventures’ and partnerships’ operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint ventures’ and partnerships’ operations.

Certain amounts in the prior year period’s unaudited interim condensed consolidated financial statements have been reclassified to conform with the 2007 presentation.

The accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at March 31, 2007, its consolidated results of operations for the three months ended March 31, 2007 and 2006, its consolidated cash flows for the three months ended March 31, 2007 and 2006, and its consolidated statement of stockholder’s equity for the three months ended March 31, 2007, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2006 consolidated balance sheet data was derived from audited consolidated financial statements included in the Company’s 2006 Annual Report onForm 10-K (“2006 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), which includes all disclosures required by GAAP. Therefore, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2006 Annual Report.

Adoption of New Accounting Pronouncements

Income Taxes

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 48,Accounting for Uncertainty in Income Taxes — An Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company’s financial statements. FIN 48 requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. The adoption of FIN 48 did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

Insurance Contracts

Effective January 1, 2007, the Company adopted Statement of Position (“SOP”)05-1,Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts(“SOP 05-1”).SOP 05-1 provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in Statement of Financial Accounting Standards (“SFAS”) No. 97,Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments.SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature of coverage within a contract.SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the American Institute of Certified Public Accountants issued related Technical Practice Aids (“TPAs”) to provide further clarification ofSOP 05-1. The TPAs became effective concurrently with the adoption ofSOP 05-1.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

As a result of the adoption ofSOP 05-1 and the related TPAs, the Company assesses internal replacements to determine whether such modifications significantly change the contract terms based on the criteria noted in the guidance. If the modification substantially changes the contract, then the DAC is written off immediately through income and any new deferrable expenses associated with the new replacement are deferred. If the contract modifications do not substantially change the contract, the DAC amortization on the original policy will continue and any acquisition costs associated with the related modification are immediately expensed.

The adoption ofSOP 05-1 and the Company’s interpretation of related TPAs did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

Other

Effective January 1, 2007, the Company adopted SFAS No. 156,Accounting for Servicing of Financial Assets — an amendment of FASB Statement No. 140 (“SFAS 156”). Among other requirements, SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations. The adoption of SFAS 156 did not have an impact on the Company’s unaudited interim condensed consolidated financial statements.

Future Adoption of New Accounting Pronouncements

In May 2007, the FASB issued FSPNo. FIN 39-1,Amendment of FASB Interpretation No. 39(“FSP39-1”). FSP39-1 amends FIN No. 39,Offsetting of Amounts Related to Certain Contracts(“FIN 39”),to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. FSP39-1 also amends FIN 39 for certain terminology modifications. FSP39-1 applies to fiscal years beginning after November 15, 2007. FSP39-1 will be applied retrospectively, unless it is impracticable to do so. Upon adoption of FSP39-1, the Company is permitted to change its accounting policy to offset or not offset fair value amounts recognized for derivative instruments under master netting arrangements. The Company is currently evaluating the impact of FSP39-1 on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities(“SFAS 159”). SFAS 159 permits all entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to report related unrealized gains and losses in earnings. The fair value option will generally be applied on aninstrument-by-instrument basis and is generally an irrevocable election. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating which eligible financial instruments, if any, it will elect to account for at fair value under SFAS 159 and the related impact on the Company’s consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require additional fair value measurements. The pronouncement is effective for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with certain exceptions. The Company is currently evaluating the impact that adoption of SFAS 157 will have on the Company’s consolidated financial statements. Implementation of SFAS 157 will require additional disclosures regarding measurement of fair value in the Company’s consolidated financial statements.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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


2.	Investments

Fixed Maturity and Equity SecuritiesAvailable-for-Sale

The following tables present the cost or amortized cost, gross unrealized gain and loss, and estimated fair value of the Company’s fixed maturity and equity securities, the percentage that each sector represents by the total fixed maturity securities holdings and by the total equity securities holdings at:


	March 31, 2007
	Cost or		Gross Unrealized				Estimated		% of
	Amortized Cost		Gain		Loss		Fair Value		Total
	(In millions)

U.S. corporate securities	$	2,726	$	17	$	59	$	2,684		42.7	%
Foreign corporate securities		867		6		17		856		13.6
U.S. Treasury/agency securities		710		2		17		695		11.1
Commercial mortgage-backed securities		764		5		6		763		12.2
Residential mortgage-backed securities		959		11		4		966		15.4
Asset-backed securities		151		—		1		150		2.4
State and political subdivision securities		95		1		5		91		1.4
Foreign government securities		70		5		1		74		1.2

Total fixed maturity securities	$	6,342	$	47	$	110	$	6,279		100.0	%

Non-redeemable preferred stock	$	66	$	2	$	1	$	67		98.5	%
Common stock		1		—		—		1		1.5

Total equity securities	$	67	$	2	$	1	$	68		100.0	%


	December 31, 2006
	Cost or		Gross Unrealized				Estimated		% of
	Amortized Cost		Gain		Loss		Fair Value		Total
	(In millions)

U.S. corporate securities	$	2,542	$	18	$	62	$	2,498		42.4	%
Foreign corporate securities		892		5		21		876		14.9
U.S. Treasury/agency securities		801		2		20		783		13.3
Commercial mortgage-backed securities		736		4		6		734		12.5
Residential mortgage-backed securities		734		10		5		739		12.5
Asset-backed securities		102		—		2		100		1.7
State and political subdivision securities		91		1		6		86		1.5
Foreign government securities		69		5		1		73		1.2

Total fixed maturity securities	$	5,967	$	45	$	123	$	5,889		100.0	%

Non-redeemable preferred stock	$	55	$	2	$	1	$	56		98.2	%
Common stock		1		—		—		1		1.8

Total equity securities	$	56	$	2	$	1	$	57		100.0	%

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

Unrealized Loss for Fixed Maturity and Equity SecuritiesAvailable-for-Sale

The following tables present the estimated fair value and gross unrealized loss of the Company’s fixed maturity (aggregated by sector) and equity securities in an unrealized loss position, aggregated by length of time that the securities have been in a continuous unrealized loss position at:


	March 31, 2007
					Equal to or Greater than
	Less than 12 months				12 months				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
	(In millions, except number of securities)

U.S. corporate securities	$	1,382	$	39	$	501	$	20	$	1,883	$	59
Foreign corporate securities		372		9		219		8		591		17
U.S. Treasury/agency securities		307		9		150		8		457		17
Commercial mortgage-backed securities		251		2		105		4		356		6
Residential mortgage-backed securities		414		3		54		1		468		4
Asset-backed securities		34		—		22		1		56		1
State and political subdivision securities		25		2		56		3		81		5
Foreign government securities		17		—		12		1		29		1

Total fixed maturity securities	$	2,802	$	64	$	1,119	$	46	$	3,921	$	110

Equity securities	$	46	$	1	$	6	$	—	$	52	$	1

Total number of securities in an unrealized loss position		230				420				650


	December 31, 2006
					Equal to or Greater than
	Less than 12 months				12 months				Total
			Gross				Gross				Gross
	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
	(In millions, except number of securities)

U.S. corporate securities	$	1,330	$	40	$	500	$	22	$	1,830	$	62
Foreign corporate securities		462		13		174		8		636		21
U.S. Treasury/agency securities		474		17		51		3		525		20
Commercial mortgage-backed securities		304		2		109		4		413		6
Residential mortgage-backed securities		307		4		59		1		366		5
Asset-backed securities		45		—		22		2		67		2
State and political subdivision securities		21		3		54		3		75		6
Foreign government securities		13		1		12		—		25		1

Total fixed maturity securities	$	2,956	$	80	$	981	$	43	$	3,937	$	123

Equity securities	$	37	$	1	$	5	$	—	$	42	$	1

Total number of securities in an unrealized loss position		772				430				1,202

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

Aging of Gross Unrealized Loss for Fixed Maturity and Equity SecuritiesAvailable-for-Sale

The following tables present the cost or amortized cost, gross unrealized loss and number of securities for fixed maturity and equity securities, where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:


	March 31, 2007
	Cost or				Gross				Number of
	Amortized Cost				Unrealized Loss				Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Less than six months	$	2,900	$	3	$	63	$	2		208		4
Six months or greater but less than nine months		—		—		—		—		1		—
Nine months or greater but less than twelve months		10		—		—		—		17		—
Twelve months or greater		1,171		—		46		—		420		—

Total	$	4,081	$	3	$	109	$	2		646		4


	December 31, 2006
	Cost or				Gross				Number of
	Amortized Cost				Unrealized Loss				Securities
	Less than		20% or		Less than		20% or		Less than		20% or
	20%		more		20%		more		20%		more
	(In millions, except number of securities)

Less than six months	$	2,763	$	4	$	66	$	2		696		9
Six months or greater but less than nine months		16		—		—		—		24		—
Nine months or greater but less than twelve months		291		—		13		—		43		—
Twelve months or greater		1,029		—		43		—		430		—

Total	$	4,099	$	4	$	122	$	2		1,193		9

At March 31, 2007 and December 31, 2006, $109 million and $122 million, respectively, of unrealized losses related to securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 3% of the cost or amortized cost of such securities.

At March 31, 2007, $2 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 67% of the cost or amortized cost of such securities. Of such unrealized losses of $2 million, all related to securities that were in an unrealized loss position for a period of less than six months. At December 31, 2006, $2 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 50% of the cost or amortized cost of such securities. Of such unrealized losses of $2 million, all related to securities that were in an unrealized loss position for a period of less than six months.

The Company held no fixed maturity and equity securities with a gross unrealized loss at both March 31, 2007 and December 31, 2006 of greater than $10 million.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

At March 31, 2007 and December 31, 2006, the Company had $111 million and $124 million, respectively, of gross unrealized losses related to its fixed maturity and equity securities. These securities are concentrated, calculated as a percentage of gross unrealized loss, as follows:


	March 31,			December 31,
	2007			2006

Sector:
U.S. corporate securities		53	%		50	%
Foreign corporate securities		15			17
U.S. Treasury/agency securities		15			16
Commercial mortgage-backed securities		5			5
Residential mortgage-backed securities		4			4
State and political subdivision securities		5			5
Other		3			3

Total		100	%		100	%

Industry:
Industrial		16	%		26	%
Finance		17			20
Government		16			17
Utility		12			12
Mortgage-backed		9			9
Consumer		13			2
Other		17			14

Total		100	%		100	%

As disclosed in Note 1 of Notes to Consolidated Financial Statements included in the 2006 Annual Report, the Company performs a regular evaluation, on asecurity-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such securities areother-than-temporarily impaired. One of the criteria which the Company considers in itsother-than-temporary impairment analysis is its intent and ability to hold securities for a period of time sufficient to allow for the recovery of their value to an amount equal to or greater than cost or amortized cost. The Company’s intent and ability to hold securities considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security and that security is not expected to recover prior to the expected time of sale, the security will be deemedother-than-temporarily impaired in the period that the sale decision was made and another-than-temporary impairment loss will be recognized.

Based upon the Company’s current evaluation of the securities in accordance with its impairment policy, the cause of the decline being principally attributable to the general rise in interest rates during the holding period, and the Company’s current intent and ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover, the Company has concluded that the aforementioned securities are notother-than-temporarily impaired.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

Securities Lending

In the first quarter of 2007, the Company began participating in a securities lending program whereby blocks of securities, which are included in fixed maturity and equity securities, are loaned to third parties, primarily major brokerage firms. The Company requires a minimum of 102% of the fair value of the loaned securities to be separately maintained as collateral for the loans. Securities with a cost or amortized cost of $561 million and an estimated fair value of $547 million were on loan under the program at March 31, 2007. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $565 million at March 31, 2007. There was no security collateral on deposit from customers in connection with the securities lending transactions at March 31, 2007.

Net Investment Income

The components of net investment income are as follows:


	Three Months Ended
	March 31,
	2007		2006
	(In millions)

Fixed maturity securities	$	84	$	77
Equity securities		1		—
Mortgage loans on real estate		5		4
Policy loans		1		1
Other limited partnership interests		2		2
Cash, cash equivalents and short-term investments		4		3
Other invested assets		1		—

Total investment income		98		87
Less: Investment expenses		7		1

Net investment income	$	91	$	86

For the three months ended March 31, 2007 and 2006, affiliated investment income of $2 million and $1 million, respectively, related to short-term investments, is included in the table above.

Net Investment Gains (Losses)

The components of net investment gains (losses) are as follows:


	Three Months Ended
	March 31,
	2007			2006
	(In millions)

Fixed maturity securities	$	(8	)	$	(28	)
Mortgage loans on real estate		—			1
Other limited partnership interests		4			—
Derivatives		8			(5	)

Net investment gains (losses)	$	4		$	(32	)

For the three months ended March 31, 2007 and 2006, there were no affiliated investment gains (losses) included in the table above.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to declines in fair value occurring in the period of the disposition or are as a result of management’s decision to sell securities based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives.

There were no losses from fixed maturity and equity securities deemedother-than-temporarily impaired, included within net investment gains (losses), for the three months ended March 31, 2007 and 2006.


3.	Derivative Financial Instruments

Types of Derivative Financial Instruments

The following table presents the notional amount and current market or fair value of derivative financial instruments held at:


	March 31, 2007						December 31, 2006
			Current Market						Current Market
	Notional		or Fair Value				Notional		or Fair Value
	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Interest rate swaps	$	853	$	227	$	1	$	911	$	266	$	32
Financial futures		32		1		1		26		—		—
Foreign currency swaps		36		—		8		32		1		9
Foreign currency forwards		1		—		—		4		—		—
Options		—		51		5		—		53		5
Financial forwards		—		—		—		—		—		1
Credit default swaps		4		—		—		4		—		—

Total	$	926	$	279	$	15	$	977	$	320	$	47

The above table does not include notional amounts for equity futures, equity variance swaps and equity options. At March 31, 2007 and December 31, 2006, the Company owned 163 and 156 equity futures contracts, respectively. Fair values of equity futures are included in financial futures in the preceding table. At March 31, 2007 and December 31, 2006, the Company owned 6,000 and 18,000 equity variance swaps, respectively. Fair values of equity variance swaps are included in financial forwards in the preceding table. At March 31, 2007 and December 31, 2006, the Company owned 702,550 and 742,550 equity options, respectively. Fair values of equity options are included in options in the preceding table.

This information should be read in conjunction with Note 4 of Notes to Consolidated Financial Statements included in the 2006 Annual Report.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

Hedging

The following table presents the notional amount and fair value of derivatives by type of hedge designation at:


	March 31, 2007						December 31, 2006
	Notional		Fair Value				Notional		Fair Value
	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Fair value	$	6	$	—	$	—	$	—	$	—	$	—
Cash flow		4		—		—		—		—		—
Non-qualifying		916		279		15		977		320		47

Total	$	926	$	279	$	15	$	977	$	320	$	47

For both the three months ended March 31, 2007 and 2006, the Company had $2 million in settlement payments related to non-qualifying derivatives included within net investment gains (losses).

Fair Value Hedges

The Company designates and accounts for the following as fair value hedges when they have met the requirements of SFAS No. 133,Accounting for Derivative Instruments and Hedging(“SFAS 133”): (i) interest rate swaps to convert fixed rate investments to floating rate investments; and (ii) foreign currency swaps to hedge the foreign currency fair value exposure of foreign currency denominated investments and liabilities.

The Company recognized insignificant net investment gains (losses) representing the ineffective portion of all fair value hedges for the three months ended March 31, 2007. The Company did not have fair value hedges for the three months ended March 31, 2006.

All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge.

Cash Flow Hedges

The Company designates and accounts for the following as cash flow hedges when they have met the requirements of SFAS 133: (i) interest rate swaps to convert floating rate investments to fixed rate investments; and (ii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities.

For the three months ended March 31, 2007 and 2006, the Company recognized no net investment gains (losses) which represented the ineffective portion of all cash flow hedges. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date or in the additional time period permitted by SFAS 133. For the three months ended March 31, 2007 and 2006, there were no instances in which the Company discontinued cash flow hedges. There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments, for both the three months ended March 31, 2007 and 2006.

Non-qualifying Derivatives and Derivatives for Purposes Other Than Hedging

The Company enters into the following derivatives that do not qualify for hedge accounting under SFAS 133 or for purposes other than hedging: (i) interest rate swaps and interest rate futures to economically hedge its exposure to interest rate volatility; (ii) foreign currency forwards and swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to economically hedge exposure to adverse movements in

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

credit; (iv) equity futures, equity index options and equity variance swaps to economically hedge liabilities embedded in certain variable annuity products; (v) credit default swaps to synthetically create investments; and (vi) financial forwards to buy and sell securities.

For the three months ended March 31, 2007 and 2006, the Company recognized as net investment gains (losses), excluding embedded derivatives, changes in fair value of $1 million and ($33) million, respectively, related to derivatives that do not qualify for hedge accounting.

Embedded Derivatives

The Company has certain embedded derivatives which are required to be separated from their host contracts and accounted for as derivatives. These host contracts include guaranteed minimum withdrawal contracts and guaranteed minimum accumulation contracts. The fair value of the Company’s embedded derivative assets was $30 million and $25 million at March 31, 2007 and December 31, 2006, respectively. The fair value of the Company’s embedded derivative liabilities were $0 at both March 31, 2007 and December 31, 2006. The amounts recorded and included in net investment gains (losses) during the three months ended March 31, 2007 and 2006 were gains (losses) of $6 million and $25 million, respectively.

Credit Risk

The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company’s derivative contracts is limited to the fair value at the reporting date. The credit exposure of the Company’s derivative transactions is represented by the fair value of contracts with a net positive fair value at the reporting date.

The Company manages its credit risk related toover-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments.

The Company enters into various collateral arrangements, which require both the pledging and accepting of collateral in connection with its derivative instruments. As of March 31, 2007 and December 31, 2006, the Company was obligated to return cash collateral under its control of $87 million and $102 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets. As of March 31, 2007 and December 31, 2006, the Company had also accepted collateral consisting of various securities with a fair market value of $0 and $6 million, respectively, which are held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, but as of March 31, 2007 and December 31, 2006, none of the collateral had been sold or repledged.

In addition, the Company has exchange traded futures, which require the pledging of collateral. As of both March 31, 2007 and December 31, 2006, the Company pledged collateral of $14 million, which is included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral.


4.	Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, largeand/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the United

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

States 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, demonstrate to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value. Thus, unless stated below, the specific monetary relief sought is not noted.

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 inherently impossible to ascertain with any degree of certainty. Inherent uncertainties can include how fact finders will view individually and in their totality documentary evidence, the credibility and effectiveness of witnesses’ 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.

On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation and contingencies to be reflected in the Company’s consolidated financial statements. The review includes senior legal and financial personnel. Unless stated below, estimates of possible additional losses or ranges of loss for particular matters cannot in the ordinary course be made with a reasonable degree of certainty. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities have been established for a number of the matters noted below. It is possible that some of the matters could require the Company to pay damages or make other expenditures or establish accruals in amounts that could not be estimated as of March 31, 2007.

Macomber, et al. v. Travelers Property Casualty Corp., et al. (Conn. Super. Ct., Hartford, filed April 7, 1999). An amended putative class action complaint was filed against MetLife Annuity, Travelers Equity Sales, Inc. and certain former affiliates. The amended complaint alleged Travelers Property Casualty Corporation, a former MetLife Annuity affiliate, purchased structured settlement annuities from MetLife Annuity and spent less on the purchase of those structured settlement annuities than agreed with claimants, and that commissions paid to brokers for the structured settlement annuities, including an affiliate of MetLife Annuity, were paid in part to Travelers Property Casualty Corporation. On May 26, 2004, the Connecticut Superior Court certified a nationwide class action involving the following claims against MetLife Annuity: violation of the Connecticut Unfair Trade Practice Statute, unjust enrichment, and civil conspiracy. On June 15, 2004, the defendants appealed the class certification order. In March 2006, the Connecticut Supreme Court reversed the trial court’s certification of a class. The parties have been involved in settlement discussions.

Regulatory bodies have contacted the Company and have requested information relating to various regulatory issues regarding mutual funds and variable insurance products, including the marketing of such products. The Company believes that many of these inquiries are similar to those made to many financial services companies as part of industry-wide investigations by various regulatory agencies. The Company is fully cooperating with regard to these information requests and investigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may have a material adverse effect on the Company’s consolidated financial position.

In addition, the Company is a defendant or co-defendant in various other litigation matters in the normal course of business. These may include civil actions, arbitration proceedings and other matters arising in the normal course of business out of activities as an insurance company or otherwise. Further, state insurance regulatory authorities and other federal and state authorities may make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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

In the opinion of the Company’s management, the ultimate resolution of these legal and regulatory proceedings would not be likely to have a material adverse effect on the Company’s consolidated financial position or liquidity, but, if involving monetary liability, may be material to the Company’s operating results for any particular period.

Commitments

Commitments to Fund Partnership Investments

The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $117 million and $46 million at March 31, 2007 and December 31, 2006, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years.

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $10 million and $60 million at March 31, 2007 and December 31, 2006, respectively.

Commitments to Fund Bank Credit Facilities and Private Corporate Bond Investments

The Company commits to lend funds under bank credit facilities and private corporate bond investments. The amounts of these unfunded commitments were $20 million and $24 million at March 31, 2007 and December 31, 2006, respectively.

Guarantees

In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future.

In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future.

The Company’s recorded liability at March 31, 2007 and December 31, 2006 for indemnities, guarantees and commitments is insignificant.

MetLife Life and Annuity Company of Connecticut

(A Wholly-Owned Subsidiary of MetLife Insurance Company of Connecticut)

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


5.	Comprehensive Income (Loss)

The components of comprehensive income (loss) are as follows:


	Three Months Ended
	March 31,
	2007		2006
	(In millions)

Net income	$	45	$	49
Other comprehensive income (loss):
Unrealized investment gains (losses), net of related offsets and income tax		5		(54	)

Other comprehensive income (loss):		5		(54	)

Comprehensive income (loss)	$	50	$	(5	)


6.	Other Expenses

Information on other expenses is as follows:


	Three Months Ended
	March 31,
	2007			2006
	(In millions)

Compensation	$	5		$	18
Commissions		23			61
Amortization of DAC and VOBA		66			36
Capitalization of DAC		(14	)		(55	)
Rent, net of sublease income		—			1
Insurance tax		2			3
Other		14			7

Total other expenses	$	96		$	71


7.	Related Party Transactions

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. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $4 million and $10 million for the three months ended March 31, 2007 and 2006, respectively.

At March 31, 2007 and December 31, 2006, the Company had receivables from MICC of $28 million and $13 million, respectively. The Company had receivables from other affiliates of $4 million at both March 31, 2007 and December 31, 2006, excluding affiliated reinsurance balances discussed below.

The Company has reinsurance agreements with MetLife and certain of its subsidiaries, including Reinsurance Group of America, Incorporated, MetLife Reinsurance Company of South Carolina and Exeter Reassurance Company, Ltd. At March 31, 2007, the Company had reinsurance related assets and liabilities from these agreements totaling $103 million and $17 million, respectively. At December 31, 2006, comparable assets and liabilities were $108 million and $12 million, respectively. The Company had ceded premiums of $1 million for both the three months ended March 31, 2007 and 2006. The Company had ceded fees of $18 million and $12 million, and ceded benefits of $6 million and $9 million, for the three months ended March 31, 2007 and 2006, respectively.


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

For purposes of this discussion, “MLAC” or the “Company” refers to MetLife Life and Annuity Company of Connecticut, a Connecticut corporation incorporated in 1973 (“MetLife Annuity”), and its subsidiary. MLAC is a wholly-owned subsidiary of MetLife Insurance Company of Connecticut (“MICC”). Management’s narrative analysis of the results of operations of MLAC is presented pursuant to General Instruction H(2)(a) ofForm 10-Q. This narrative analysis should be read in conjunction with the Company’s 2006 Annual Report onForm 10-K (“2006 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), the forward-looking statement information included below and the Company’s unaudited interim condensed consolidated financial statements included elsewhere herein.

This narrative analysis contains statements which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to trends in the operations and financial results and the business and the products of the Company, as well as other statements including words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend” and other similar expressions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Such forward-looking statements are not guarantees of future performance.

Actual results may differ materially from those included in the forward-looking statements as a result of risks and uncertainties including, but not limited to, the following: (i) changes in general economic conditions, including the performance of financial markets and interest rates; (ii) heightened competition, including with respect to pricing, entry of new competitors, the development of new products by new and existing competitors and for personnel; (iii) investment losses and defaults; (iv) unanticipated changes in industry trends; (v) ineffectiveness of risk management policies and procedures; (vi) changes in accounting standards, practicesand/or policies; (vii) changes in assumptions related to deferred policy acquisition costs (“DAC”), value of business acquired (“VOBA”) or goodwill; (viii) discrepancies between actual claims experience and assumptions used in setting prices for the Company’s products and establishing the liabilities for the Company’s obligations for future policy benefits and claims; (ix) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (x) adverse results or other consequences from litigation, arbitration or regulatory investigations; (xi) downgrades in the Company’s and its affiliates’ claims paying ability or financial strength ratings; (xii) regulatory, legislative or tax changes that may affect the cost of, or demand for, the Company’s products or services; (xiii) the effects of business disruption or economic contraction due to terrorism or other hostilities; and (xiv) other risks and uncertainties described from time to time in the Company’s filings with the SEC.

The Company specifically disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Business

The Company’s core offerings include universal and variable life insurance, fixed and variable deferred annuities, structured settlements and payout annuities. The Company currently operates as a single segment and, as such, financial results are prepared and reviewed by management as a single operating segment.

Summary of Critical Accounting Estimates

(i) the fair value of investments in the absence of quoted market values;

(ii) investment impairments;

(iii) the recognition of income on certain investments;

(iv) application of the consolidation rules to certain investments;

(v) the fair value of and accounting for derivatives;

(vi) the capitalization and amortization of DAC and the establishment and amortization of VOBA;

(vii) the measurement of goodwill and related impairment, if any;

(viii) the liability for future policyholder benefits;

(ix) accounting for income taxes and the valuation of deferred income tax assets;

(x) accounting for reinsurance transactions; and

(xi) the liability for litigation and regulatory matters.

Results of Operations

Discussion of Results

The following table presents consolidated financial information for the Company for the periods indicated:


	Three Months Ended
	March 31,
	2007		2006
	(In millions)

Revenues
Premiums	$	12	$	12
Universal life and investment-type product policy fees		112		121
Net investment income		91		86
Other revenues		6		7
Net investment gains (losses)		4		(32	)

Total revenues		225		194

Expenses
Policyholder benefits and claims		34		25
Interest credited to policyholder account balances		34		29
Other expenses		96		71

Total expenses		164		125

Income before provision for income tax		61		69
Provision for income tax		16		20

Net income	$	45	$	49

Net Income

Net income decreased by $4 million, or 8%, to $45 million for the three months ended March 31, 2007 from $49 million in the comparable 2006 period.

The decrease in net income was primarily due to higher DAC amortization of $19 million, net of income tax, driven by higher net investment gains in the current year period.

There were unfavorable underwriting results of $6 million, net of income tax, primarily related to unfavorable reserve refinements in structured settlement products of $4 million in the prior year period, net of income tax, and unfavorable underwriting in life products of $2 million, net of income tax.

Net income was also impacted by lower universal life and investment-type product policy fees and other revenues of $6 million, net of income tax, due to higher ceded fees resulting from an increase in ceded reinsurance on certain universal life products.

Interest credited to policyholder account balances increased $3 million, net of income tax, resulting from lower amortization of the excess interest reserves on annuity and universal life blocks of business partially offset by a decrease in interest credited associated with lower policyholder account balances in annuity products.

Partially offsetting the decrease in net income were higher net investment gains of $23 million, net of income tax, primarily attributable to reduced losses on fixed maturity securities resulting from 2006 portfolio repositioning in a rising interest rate environment and increased gains onmark-to-market derivatives, as well as gains on other limited partnership interests in the current year period.

Also offsetting the decrease in net income were lower expenses of $3 million, net of income tax, primarily due to lower compensation expenses.

Net investment income increased $3 million, net of income tax, primarily due to an increase in yields across various invested asset classes.

Income tax expense for the three months ended March 31, 2007 was $16 million, or 26% of net income before provision for income tax, compared with $20 million, or 29% of such income, for the comparable 2006 period. The 2007 and 2006 effective tax rates differ from the corporate tax rate of 35% primarily due to the impact of tax exempt investment income.

Revenues

Total revenues, excluding net investment gains (losses), decreased by $5 million to $221 million for the three months ended March 31, 2007 from $226 million in the comparable 2006 period.

Universal life and investment-type product policy fees for universal life and variable annuity products combined with other revenues decreased by $10 million, or 8%. This decrease is due to higher ceded fees resulting from an increase in ceded reinsurance on certain universal life products.

Net investment income increased by $5 million, or 6%. Management attributes the increase to an increase in yields across various asset classes.

Expenses

Total expenses increased by $39 million, or 31%, to $164 million for the three months ended March 31, 2007 from $125 million in the comparable 2006 period.

Policyholder benefits and claims increased by $9 million, or 36%, primarily due to structured settlement reserve refinements of $6 million in the prior year period and unfavorable underwriting in life products of $3 million.

Interest credited to policyholder account balances increased by $5 million, or 17%, from lower amortization of the excess interest reserves on annuity and universal life blocks of business partially offset by lower interest credited resulting from lower policyholder account balances in annuity products.

Other expenses increased by $25 million, or 35%, primarily due to higher DAC amortization of $30 million driven by net investment gains in the current year period. Partially offsetting the increase were lower expenses of $5 million, primarily due to lower compensation expenses.

Insurance Regulations

Risk-based capital (“RBC”) requirements are used as minimum capital requirements by the National Association of Insurance Commissioners and the state insurance departments to identify companies that merit

further regulatory action on an annual basis. RBC is based on a formula calculated by applying factors to various asset, premium and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk and business risk and is calculated on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not exceed certain RBC levels. As of the date of the most recent statutory financial statements filed with insurance regulators, the total adjusted capital of MetLife Annuity was in excess of each of those RBC levels calculated at December 31, 2006.

MLAC had negative statutory unassigned surplus at December 31, 2006, and therefore cannot pay dividends to MICC without prior regulatory approval from the Connecticut Commissioner of Insurance.

Adoption of New Accounting Pronouncements

Income Taxes

Insurance Contracts

Effective January 1, 2007, the Company adopted Statement of Position (“SOP”)05-1,Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts(“SOP 05-1”).SOP 05-1 provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in Statement of Financial Accounting Standards (“SFAS”) No. 97,Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments.SOP 05-1 defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract.SOP 05-1 is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the American Institute of Certified Public Accountants issued related Technical Practice Aids (“TPAs”) to provide further clarification ofSOP 05-1. The TPAs became effective concurrently with the adoption ofSOP 05-1.

The adoption ofSOP 05-1 and the Company’s interpretation of related TPAs did not have a material impact on the Company’s unaudited interim condensed consolidated financial statements.

Other

Future Adoption of New Accounting Pronouncements


Item 4.	*Controls and Procedures*

Management, with the participation of the President and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Exchange ActRule 15d-15(e) as of the end of the period covered by this report. Based on that evaluation, the President 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 ActRule 13a-15(f) during the quarter ended March 31, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II — Other Information

Item 1. Legal Proceedings

The following should be read in conjunction with (i) Part I, Item 3 of MetLife Life and Annuity Company of Connecticut’s Annual Report onForm 10-K for the year ended December 31, 2006, and (ii) Note 4 to the unaudited interim condensed consolidated financial statements in Part I of this report.

Macomber, et al. v. Travelers Property Casualty Corp., et al. (Conn. Super. Ct., Hartford, filed April 7, 1999). An amended putative class action complaint was filed against MetLife Annuity, Travelers Equity Sales, Inc. and certain former affiliates. The amended complaint alleged Travelers Property Casualty Corporation, a former MetLife Annuity affiliate, purchased structured settlement annuities from MetLife Annuity and spent less on the purchase of those structured settlement annuities than agreed with claimants, and that commissions paid to brokers for the structured settlement annuities, including an affiliate of MetLife Annuity, were paid in part to Travelers Property Casualty Corporation. On May 26, 2004, the Connecticut Superior Court certified a nationwide class action involving the following claims against MetLife Annuity: violation of the Connecticut Unfair Trade Practice Statute, unjust enrichment, and civil conspiracy. On June 15, 2004, the defendants appealed the class certification order. In March 2006, the Connecticut Supreme Court reversed the trial court’s certification of a class. The parties have been involved in settlement discussions.

The Company is a defendant or co-defendant in various other litigation matters in the normal course of business. These may include civil actions, arbitration proceedings and other matters arising in the normal course of business out of activities as an insurance company or otherwise. Further, state insurance regulatory authorities and other federal and state authorities may make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.


Item 6.	*Exhibits*


31	.1	Certification of President 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 President 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

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 LIFE AND ANNUITY COMPANY OF CONNECTICUT


	By:	/s/ Joseph J. Prochaska, Jr.

Name: Joseph J. Prochaska, Jr.


	Title:	Executive Vice-President and Chief Accounting Officer

(Authorized Signatory and Chief Accounting Officer)

Date: May 11, 2007

Exhibit Index


Exhibit
Number			Exhibit Name

	31	.1	Certification of President 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 President 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

E-1

Positive
Negative
Uncertain
Constraining
Legalese
Litigious
Readability	H.S. freshman Bad

MetLife Life & Annuity CO of Connecticut Inactive 10-Q2007 Q1 Quarterly report

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