Metropolitan Life Insurance 10-Q 2015 Q2 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 JUNE 30, 2015

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: 000-55029

________________________________________

Metropolitan Life Insurance Company

(Exact name of registrant as specified in its charter)

New York	13-5581829
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Park Avenue, New York, N.Y.	10166-0188
(Address of principal executive offices)	(Zip Code)

(212) 578-9500

(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 August 12, 2015, 494,466,664 shares of the registrant’s common stock, $0.01 par value per share, were outstanding, all of which were owned directly by 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 June 30, 2015 (Unaudited) and December 31, 2014 and for the Three Months and Six Months Ended June 30, 2015 and 2014 (Unaudited))	4
	Interim Condensed Consolidated Balance Sheets	4
	Interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	5
	Interim Condensed Consolidated Statements of 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 — Insurance	15
	Note 4 — Closed Block	17
	Note 5 — Investments	19
	Note 6 — Derivatives	34
	Note 7 — Fair Value	46
	Note 8 — Equity	74
	Note 9 — Other Expenses	77
	Note 10 — Employee Benefit Plans	77
	Note 11 — Contingencies, Commitments and Guarantees	78
	Note 12 — Related Party Transactions	84
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	87
Item 4.	Controls and Procedures	110
Part II — Other Information
Item 1.	Legal Proceedings	111
Item 1A.	Risk Factors	112
Item 6.	Exhibits	113
Signatures		114
Exhibit Index		E - 1

As used in this Form 10-Q, “MLIC,” the “Company,” “we,” “our” and “us” refer to Metropolitan Life Insurance Company, a New York corporation incorporated in 1868, and its subsidiaries. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together with its subsidiaries and affiliates, “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 MLIC. 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 Metropolitan Life Insurance Company's filings with the U.S. Securities and Exchange Commission. 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 and possible withdrawal of one or more countries from the Euro zone; (4) impact on us of comprehensive financial services regulation reform, including regulation of MetLife, Inc. as a 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 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) fluctuations in foreign currency exchange rates; (15) downgrades in our claims paying ability, financial strength ratings or those of MetLife, Inc.’s other insurance subsidiaries, or MetLife, Inc.’s credit ratings; (16) an inability of MetLife, Inc. or MLIC 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) deterioration in the experience of the closed block established in connection with the reorganization of MLIC; (22) increasing cost and limited market capacity for statutory life insurance reserve financings; (23) 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; (24) 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; (25) 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; (26) changes in accounting standards, practices and/or policies; (27) increased expenses relating to pension and postretirement benefit plans for employees and retirees of MetLife, Inc. and its subsidiaries, as well as health care and other employee benefits; (28) inability to protect our intellectual property rights or claims of infringement of the intellectual property rights of others; (29) inability to attract and retain sales representatives; (30) 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;

2

(31) the effectiveness of MetLife's programs and practices in avoiding giving associates incentives to take excessive risks; and (32) other risks and uncertainties described from time to time in Metropolitan Life Insurance Company's filings with the U.S. Securities and Exchange Commission. Metropolitan Life Insurance Company does not undertake any obligation to publicly correct or update any forward-looking statement if Metropolitan Life Insurance Company later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures Metropolitan Life Insurance Company makes on related subjects in reports to the U.S. Securities and Exchange Commission.

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.

3

Part I — Financial Information

Item 1. Financial Statements

Metropolitan Life Insurance Company

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

Interim Condensed Consolidated Balance Sheets

June 30, 2015 (Unaudited) and December 31, 2014

(In millions, except share and per share data)

	June 30, 2015		December 31, 2014
Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $166,520 and $173,604, respectively; includes $159 and $160, respectively, relating to variable interest entities)	$	176,632	$	188,911
Equity securities available-for-sale, at estimated fair value (cost: $2,028 and $1,926, respectively)	2,152		2,065
Trading and fair value option securities, at estimated fair value (includes $654 and $654, respectively, of actively traded securities; and $14 and $15, respectively, relating to variable interest entities)	683		705
Mortgage loans (net of valuation allowances of $270 and $258, respectively; includes $345 and $308, respectively, under the fair value option)	51,713		49,059
Policy loans	8,526		8,491
Real estate and real estate joint ventures (includes $0 and $8, respectively, relating to variable interest entities; includes $823 and $78, respectively, of real estate held-for-sale)	7,786		7,874
Other limited partnership interests (includes $27 and $34, respectively, relating to variable interest entities)	4,849		4,926
Short-term investments, principally at estimated fair value	8,512		4,474
Other invested assets (includes $55 and $56, respectively, relating to variable interest entities)	15,337		14,209
Total investments	276,190		280,714
Cash and cash equivalents, principally at estimated fair value (includes $6 and $2, respectively, relating to variable interest entities)	1,369		1,993
Accrued investment income (includes $2 and $3, respectively, relating to variable interest entities)	2,218		2,293
Premiums, reinsurance and other receivables (includes $1 and $2, respectively, relating to variable interest entities)	24,909		23,439
Deferred policy acquisition costs and value of business acquired	6,152		5,975
Current income tax recoverable	365		—
Other assets (includes $4 and $4, respectively, relating to variable interest entities)	4,677		4,469
Separate account assets	143,241		139,335
Total assets	$	459,121	$	458,218
Liabilities and Equity
Liabilities
Future policy benefits	$	116,950	$	117,402
Policyholder account balances	95,454		95,902
Other policy-related balances	7,330		5,840
Policyholder dividends payable	624		615
Policyholder dividend obligation	2,328		3,155
Payables for collateral under securities loaned and other transactions	21,959		24,167
Short-term debt	100		100
Long-term debt (includes $90 and $91, respectively, at estimated fair value, relating to variable interest entities)	2,011		2,027
Current income tax payable	—		44
Deferred income tax liability	3,150		3,835
Other liabilities (includes $2 and $17, respectively, relating to variable interest entities)	34,244		33,447
Separate account liabilities	143,241		139,335
Total liabilities	427,391		425,869
Contingencies, Commitments and Guarantees (Note 11)
Equity
Metropolitan Life Insurance Company stockholder’s equity:
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 494,466,664 shares issued and outstanding	5		5
Additional paid-in capital	14,452		14,448
Retained earnings	13,721		12,470
Accumulated other comprehensive income (loss)	3,148		5,034
Total Metropolitan Life Insurance Company stockholder’s equity	31,326		31,957
Noncontrolling interests	404		392
Total equity	31,730		32,349
Total liabilities and equity	$	459,121	$	458,218

See accompanying notes to the interim condensed consolidated financial statements.

4

Metropolitan Life Insurance Company

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

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

For the Three Months and Six Months Ended June 30, 2015 and 2014 (Unaudited)

(In millions)

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
Revenues
Premiums	$	5,065		$	5,344		$	10,203		$	10,328
Universal life and investment-type product policy fees	647			590			1,283			1,183
Net investment income	3,059			2,994			6,025			5,941
Other revenues	386			437			783			863
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities	—			(1		)	(6		)	(12		)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)	(2		)	(4		)	(11		)	(1		)
Other net investment gains (losses)	(91		)	(52		)	149			(76		)
Total net investment gains (losses)	(93		)	(57		)	132			(89		)
Net derivative gains (losses)	(231		)	(56		)	269			63
Total revenues	8,833			9,252			18,695			18,289
Expenses
Policyholder benefits and claims	5,659			5,902			11,498			11,618
Interest credited to policyholder account balances	544			545			1,081			1,074
Policyholder dividends	304			303			608			599
Other expenses	1,438			1,460			2,928			2,808
Total expenses	7,945			8,210			16,115			16,099
Income (loss) from continuing operations before provision for income tax	888			1,042			2,580			2,190
Provision for income tax expense (benefit)	220			293			722			613
Income (loss) from continuing operations, net of income tax	668			749			1,858			1,577
Income (loss) from discontinued operations, net of income tax	—			—			—			(3		)
Net income (loss)	668			749			1,858			1,574
Less: Net income (loss) attributable to noncontrolling interests	6			—			7			1
Net income (loss) attributable to Metropolitan Life Insurance Company	$	662		$	749		$	1,851		$	1,573
Comprehensive income (loss)	$	(1,790	)	$	2,110		$	(28	)	$	4,884
Less: Comprehensive income (loss) attributable to noncontrolling interests, net of income tax	6			—			7			1
Comprehensive income (loss) attributable to Metropolitan Life Insurance Company	$	(1,796	)	$	2,110		$	(35	)	$	4,883

See accompanying notes to the interim condensed consolidated financial statements.

5

Metropolitan Life Insurance Company

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

Interim Condensed Consolidated Statements of Equity

For the Six Months Ended June 30, 2015 and 2014 (Unaudited)

(In millions)

	Common Stock		Additional Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Metropolitan Life Insurance Company Stockholder’s Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2014	$	5	$	14,448	$	12,470		$	5,034		$	31,957		$	392	$	32,349
Capital contributions from MetLife, Inc.			2								2					2
Returns of capital			—								—					—
Excess tax benefits related to stock-based compensation			2								2					2
Dividend paid to MetLife, Inc.					(600		)				(600		)			(600		)
Change in equity of noncontrolling interests											—			5		5
Net income (loss)					1,851						1,851			7		1,858
Other comprehensive income (loss), net of income tax								(1,886		)	(1,886		)			(1,886		)
Balance at June 30, 2015	$	5	$	14,452	$	13,721		$	3,148		$	31,326		$	404	$	31,730

	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Total Metropolitan Life Insurance Company Stockholder’s Equity			Noncontrolling Interests		Total Equity
Balance at December 31, 2013	$	5	$	14,515		$	9,352		$	2,158	$	26,030		$	250	$	26,280
Capital contributions from MetLife, Inc.			1								1					1
Returns of capital			(40		)						(40		)			(40		)
Excess tax benefits related to stock-based compensation			4								4					4
Dividend paid to MetLife, Inc.						(558		)			(558		)			(558		)
Change in equity of noncontrolling interests											—			119		119
Net income (loss)						1,573					1,573			1		1,574
Other comprehensive income (loss), net of income tax									3,310		3,310					3,310
Balance at June 30, 2014	$	5	$	14,480		$	10,367		$	5,468	$	30,320		$	370	$	30,690

See accompanying notes to the interim condensed consolidated financial statements.

6

Metropolitan Life Insurance Company

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

Interim Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2015 and 2014 (Unaudited)

(In millions)

	Six Months   Ended  June 30,
	2015			2014
Net cash provided by (used in) operating activities	$	1,812		$	2,953
Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities	44,645			29,944
Equity securities	52			81
Mortgage loans	5,867			4,867
Real estate and real estate joint ventures	310			408
Other limited partnership interests	324			250
Purchases of:
Fixed maturity securities	(36,929		)	(34,640		)
Equity securities	(150		)	(89		)
Mortgage loans	(8,532		)	(5,149		)
Real estate and real estate joint ventures	(244		)	(767		)
Other limited partnership interests	(308		)	(332		)
Cash received in connection with freestanding derivatives	631			340
Cash paid in connection with freestanding derivatives	(471		)	(580		)
Net change in policy loans	(35		)	(22		)
Net change in short-term investments	(4,044		)	918
Net change in other invested assets	(234		)	(118		)
Net change in property, equipment and leasehold improvements	(122		)	(66		)
Other, net	—			(13		)
Net cash provided by (used in) investing activities	760			(4,968		)
Cash flows from financing activities
Policyholder account balances:
Deposits	29,483			30,788
Withdrawals	(29,655		)	(30,011		)
Net change in payables for collateral under securities loaned and other transactions	(2,208		)	2,190
Net change in short-term debt	—			(320		)
Long-term debt repaid	(16		)	(21		)
Dividends paid to MetLife, Inc.	(600		)	(558		)
Other, net	(200		)	(165		)
Net cash provided by (used in) financing activities	(3,196		)	1,903
Change in cash and cash equivalents	(624		)	(112		)
Cash and cash equivalents, beginning of period	1,993			1,098
Cash and cash equivalents, end of period	$	1,369		$	986
Supplemental disclosures of cash flow information
Net cash paid (received) for:
Interest	$	64		$	76
Income tax	$	830		$	428
Non-cash transactions:
Capital contributions from MetLife, Inc.	$	2		$	1
Deconsolidation of MetLife Core Property Fund:
Reduction of redeemable noncontrolling interests	$	—		$	774
Reduction of long-term debt	$	—		$	413
Reduction of real estate and real estate joint ventures	$	—		$	1,132
Issuance of short-term debt	$	—		$	245
Returns of capital	$	—		$	40

See accompanying notes to the interim condensed consolidated financial statements.

7

Metropolitan Life Insurance Company

(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

Metropolitan Life Insurance Company and its subsidiaries (collectively, “MLIC” or the “Company”) is a provider of life insurance, annuities, employee benefits and asset management and is organized into three segments: Retail; Group, Voluntary & Worksite Benefits; and Corporate Benefit Funding. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together with its subsidiaries and affiliates, “MetLife”).

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 Metropolitan Life Insurance Company 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 equity securities when it has significant influence or at least 20% interest and for 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 2015 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.

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, 2014 consolidated balance sheet data was derived from audited consolidated financial statements included in Metropolitan Life Insurance Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Annual Report”), which include all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2014 Annual Report.

Adoption of New Accounting Pronouncements

Effective January 1, 2015, the Company adopted guidance requiring repurchase-to-maturity transactions and repurchase financing arrangements to be accounted for as secured borrowings and providing for enhanced disclosures, including the nature of collateral pledged and the time to maturity. Certain interim period disclosures for securities lending transactions were not required until the second quarter of 2015. The Company has provided these enhanced disclosures in Note 5. The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements.

8

Metropolitan Life Insurance Company

(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)

Future Adoption of New Accounting Pronouncements

In May 2015, the Financial Accounting Standards Board (“FASB”) issued new guidance on short-duration insurance contracts (Accounting Standards Update (“ASU”) 2015-09,Financial Services - Insurance (Topic 944): Disclosures about Short-Duration Contracts). The amendments in this new guidance are effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. The new guidance should be applied retrospectively by providing comparative disclosures for each period presented, except for those requirements that apply only to the current period. The new guidance requires insurance entities to provide users of financial statements with more transparent information about initial claim estimates and subsequent adjustments to these estimates, including reconciling from the claim development table to the balance sheet liability; methodologies and judgments in estimating claims; and the timing, and frequency of claims. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In May 2015, the FASB issued new guidance on fair value measurement (ASU 2015‑07,Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)),effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and which should be applied retrospectively to all periods presented. Earlier application is permitted. The new amendments in this ASU remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value (“NAV”) per share practical expedient. In addition, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued new guidance on accounting for fees paid in a cloud computing arrangement (ASU 2015-05,Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the new guidance is permitted and an entity can elect to adopt the guidance either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The new guidance provides that all software licenses included in cloud computing arrangements be accounted for consistent with other licenses of intangible assets. However, if a cloud computing arrangement does not include a software license, the arrangement should be accounted for as a service contract, the accounting for which did not change. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2015, the FASB issued new guidance on the presentation of debt issuance costs (ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs), effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years and should be applied retrospectively to all periods presented. Early adoption of the new guidance is permitted for financial statements that have not been previously issued. The new guidance will require that debt issuance costs be presented in the balance sheet as a direct deduction from the related debt liability, consistent with debt discounts, rather than as an asset. However, the current recognition and measurement guidance for debt issuance costs are not affected by the new guidance. The adoption of this new guidance will not have a material impact on the Company’s consolidated financial statements.

In February 2015, the FASB issued new guidance to improve consolidation guidance for legal entities (ASU 2015-02,Consolidation (Topic 810): Amendments to the Consolidation Analysis), effective for fiscal years beginning after December 15, 2015 and interim periods within those years and early adoption is permitted. The new standard is intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures. The amendments in this ASU affect the consolidation evaluation for reporting organizations. In addition, the amendments in this ASU simplify and improve current GAAP by reducing the number of consolidation models. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In May 2014, the FASB issued a comprehensive new revenue recognition standard (ASU 2014-09,Revenue from Contracts with Customers (Topic 606)), effective for fiscal years beginning after December 15, 2017 and interim periods within those years and should be applied retrospectively to all periods presented. Early adoption of this standard is not permitted. The new guidance will supersede nearly all existing revenue recognition guidance under GAAP; however, it will not impact the accounting for insurance contracts, leases, financial instruments and guarantees. For those contracts that are impacted by the new guidance, the guidance will require an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

9

Metropolitan Life Insurance Company

(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 three segments: Retail; Group, Voluntary & Worksite Benefits; and Corporate Benefit Funding. In addition, the Company reports certain of its results of operations in Corporate & Other.

In the first quarter of 2015, the Company implemented certain segment reporting changes related to the measurement of segment operating earnings, which included revising the Company’s capital allocation methodology. These changes were applied retrospectively and did not have an impact on total consolidated operating earnings or net income.

Retail

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

Group, Voluntary & Worksite Benefits

The Group, Voluntary & Worksite Benefits segment offers a broad range of protection products and services to individuals and corporations, as well as other institutions and their respective employees. Group Voluntary & Worksite Benefits insurance products and services include life, dental, group short- and long-term disability and accidental death and dismemberment coverages. In addition, the Group, Voluntary & Worksite Benefits segment offers long-term care, critical illness and accident & health coverages, as well as prepaid legal plans.

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 postretirement benefits and company-, bank- or trust-owned life insurance used to finance non-qualified benefit programs for executives.

Corporate & Other

Corporate & Other contains the excess capital, as well as enterprise-wide strategic initiative restructuring charges, not allocated to the segments, various start-up businesses (including the investment management business through which the Company offers fee-based investment management services to institutional clients), certain run-off businesses, the Company’s ancillary international operations and interest expense related to the majority of the Company’s outstanding debt, as well as expenses associated with certain legal proceedings and income tax audit issues. In addition, Corporate & Other includes ancillary U.S. direct business, comprised of group and individual products sold through sponsoring organizations, affinity groups and direct to consumer. Additionally, Corporate & Other includes the elimination of intersegment amounts, which generally relate to intersegment loans, which bear interest rates commensurate with related borrowings.

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 income (loss) from continuing operations, net of income tax. 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 excludes net investment gains (losses) and net derivative gains (losses).

10

Metropolitan Life Insurance Company

(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 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, and (iv) excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP.

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

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

• Interest credited to policyholder account balances includes adjustments for 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;

• 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 noncontrolling interests and goodwill impairments.

In the first quarter of 2015, the Company implemented certain segment reporting changes related to the measurement of segment operating earnings, which included revising the Company’s capital allocation methodology. Consequently, prior period results for the three months and six months ended June 30, 2014 were impacted as follows:

• Retail’s operating earnings increased (decreased) by $30 million and $63 million, net of ($4) million and ($8) million of income tax expense (benefit), respectively;

• Group, Voluntary & Worksite Benefits’ operating earnings increased (decreased) by ($4) million and ($9) million, net of ($1) million and ($4) million of income tax expense (benefit), respectively;

• Corporate Benefit Funding’s operating earnings increased (decreased) by ($14) million and ($29) million, net of ($13) million and ($22) million of income tax expense (benefit), respectively; and

• Corporate & Other’s operating earnings increased (decreased) by ($12) million and ($25) million, net of $18 million and $34 million of income tax expense (benefit), respectively.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the three months and six months ended June 30, 2015 and 2014. 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.

11

Metropolitan Life Insurance Company

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

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

2. Segment Information (continued)

MetLife’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. MetLife’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.

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 income (loss) from continuing operations, net of income tax.

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.

	Operating Results
Three Months Ended June 30, 2015	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	1,027		$	3,696		$	315		$	27		$	5,065		$	—		$	5,065
Universal life and investment-type product policy fees	388			183			51			—			622			25			647
Net investment income	1,346			462			1,305			51			3,164			(105		)	3,059
Other revenues	42			111			78			155			386			—			386
Net investment gains (losses)	—			—			—			—			—			(93		)	(93		)
Net derivative gains (losses)	—			—			—			—			—			(231		)	(231		)
Total revenues	2,803			4,452			1,749			233			9,237			(404		)	8,833
Expenses
Policyholder benefits and claims and policyholder dividends	1,558			3,519			847			25			5,949			14			5,963
Interest credited to policyholder account balances	239			38			266			—			543			1			544
Capitalization of DAC	(109		)	(3		)	(4		)	(1		)	(117		)	—			(117		)
Amortization of DAC and VOBA	151			7			6			—			164			(80		)	84
Interest expense on debt	1			—			2			29			32			1			33
Other expenses	504			569			125			248			1,446			(8		)	1,438
Total expenses	2,344			4,130			1,242			301			8,017			(72		)	7,945
Provision for income tax expense (benefit)	143			119			177			(102		)	337			(117		)	220
Operating earnings	$	316		$	203		$	330		$	34		883
Adjustments to:
Total revenues													(404		)
Total expenses													72
Provision for income tax (expense) benefit													117
Income (loss) from continuing operations, net of income tax													$	668					$	668

12

Metropolitan Life Insurance Company

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

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

2. Segment Information (continued)

	Operating Results
Three Months Ended June 30, 2014	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	999		$	3,643		$	671		$	31		$	5,344		$	—		$	5,344
Universal life and investment-type product policy fees	355			180			46			—			581			9			590
Net investment income	1,363			447			1,197			97			3,104			(110		)	2,994
Other revenues	91			105			78			163			437			—			437
Net investment gains (losses)	—			—			—			—			—			(57		)	(57		)
Net derivative gains (losses)	—			—			—			—			—			(56		)	(56		)
Total revenues	2,808			4,375			1,992			291			9,466			(214		)	9,252
Expenses
Policyholder benefits and claims and policyholder dividends	1,498			3,512			1,161			16			6,187			18			6,205
Interest credited to policyholder account balances	244			39			259			—			542			3			545
Capitalization of DAC	(85		)	(4		)	(18		)	—			(107		)	—			(107		)
Amortization of DAC and VOBA	139			5			5			—			149			3			152
Interest expense on debt	1			—			2			33			36			1			37
Other expenses	429			537			128			283			1,377			1			1,378
Total expenses	2,226			4,089			1,537			332			8,184			26			8,210
Provision for income tax expense (benefit)	190			106			156			(76		)	376			(83		)	293
Operating earnings	$	392		$	180		$	299		$	35		906
Adjustments to:
Total revenues													(214		)
Total expenses													(26		)
Provision for income tax (expense) benefit													83
Income (loss) from continuing operations, net of income tax													$	749					$	749

13

Metropolitan Life Insurance Company

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

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

2. Segment Information (continued)

	Operating Results
Six Months Ended June 30, 2015	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	2,010		$	7,407		$	730		$	56		$	10,203		$	—		$	10,203
Universal life and investment-type product policy fees	767			371			95			—			1,233			50			1,283
Net investment income	2,690			921			2,530			116			6,257			(232		)	6,025
Other revenues	85			222			149			327			783			—			783
Net investment gains (losses)	—			—			—			—			—			132			132
Net derivative gains (losses)	—			—			—			—			—			269			269
Total revenues	5,552			8,921			3,504			499			18,476			219			18,695
Expenses
Policyholder benefits and claims and policyholder dividends	3,214			7,054			1,764			44			12,076			30			12,106
Interest credited to policyholder account balances	474			75			530			—			1,079			2			1,081
Capitalization of DAC	(211		)	(7		)	(10		)	(1		)	(229		)	—			(229		)
Amortization of DAC and VOBA	272			16			11			—			299			(7		)	292
Interest expense on debt	2			—			3			59			64			1			65
Other expenses	947			1,126			243			492			2,808			(8		)	2,800
Total expenses	4,698			8,264			2,541			594			16,097			18			16,115
Provision for income tax expense (benefit)	264			243			335			(190		)	652			70			722
Operating earnings	$	590		$	414		$	628		$	95		1,727
Adjustments to:
Total revenues													219
Total expenses													(18		)
Provision for income tax (expense) benefit													(70		)
Income (loss) from continuing operations, net of income tax													$	1,858					$	1,858

14

Metropolitan Life Insurance Company

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

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

2. Segment Information (continued)

	Operating Results
Six Months Ended June 30, 2014	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total			Adjustments			Total Consolidated
	(In millions)
Revenues
Premiums	$	1,968		$	7,257		$	1,037		$	66		$	10,328		$	—		$	10,328
Universal life and investment-type product policy fees	715			358			94			—			1,167			16			1,183
Net investment income	2,741			886			2,340			203			6,170			(229		)	5,941
Other revenues	176			209			145			333			863			—			863
Net investment gains (losses)	—			—			—			—			—			(89		)	(89		)
Net derivative gains (losses)	—			—			—			—			—			63			63
Total revenues	5,600			8,710			3,616			602			18,528			(239		)	18,289
Expenses
Policyholder benefits and claims and policyholder dividends	3,088			7,028			2,036			38			12,190			27			12,217
Interest credited to policyholder account balances	484			79			505			—			1,068			6			1,074
Capitalization of DAC	(180		)	(8		)	(19		)	—			(207		)	—			(207		)
Amortization of DAC and VOBA	344			11			9			—			364			30			394
Interest expense on debt	2			—			5			68			75			1			76
Other expenses	652			1,067			236			590			2,545			—			2,545
Total expenses	4,390			8,177			2,772			696			16,035			64			16,099
Provision for income tax expense (benefit)	396			197			291			(166		)	718			(105		)	613
Operating earnings	$	814		$	336		$	553		$	72		1,775
Adjustments to:
Total revenues													(239		)
Total expenses													(64		)
Provision for income tax (expense) benefit													105
Income (loss) from continuing operations, net of income tax													$	1,577					$	1,577

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

	June 30, 2015		December 31, 2014
	(In millions)
Retail	$	181,119	$	181,207
Group, Voluntary & Worksite Benefits	43,651		43,718
Corporate Benefit Funding	207,512		203,281
Corporate & Other	26,839		30,012
Total	$	459,121	$	458,218

3. Insurance

Guarantees

As discussed in Notes 1 and 4 of the Notes to the Consolidated Financial Statements included in the 2014 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 policyholder account balances and are further discussed in Note 6.

The Company also issues two tier annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash (the “lower tier”) and a higher rate if the contractholder elects to annuitize (the “upper tier”). These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed annuitization benefits that may be above what would be provided by the current account value of the contract. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit.

15

Metropolitan Life Insurance Company

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

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

3. Insurance (continued)

Based on the type of guarantee, the Company defines net amount at risk as listed below. These amounts include direct business, but exclude offsets from hedging or reinsurance, if any.

Variable Annuities

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.

Two Tier and Other Annuities

Two tier annuities are defined as the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date. Other annuities are 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.

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.

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

	June 30, 2015				December 31, 2014
	In the Event of Death		At Annuitization		In the Event of Death		At Annuitization
	(In millions)
Annuity Contracts(1)
Variable Annuities
Total contract account value	$	62,527	$	29,311	$	62,810	$	29,474
Separate account value	$	50,895	$	28,198	$	51,077	$	28,347
Net amount at risk	$	880	$	239	$	702	$	244
Average attained age of contractholders	65 years		63 years		65 years		63 years
Two Tier and Other Annuities
Account value	N/A		$	404	N/A		$	456
Net amount at risk	N/A		$	144	N/A		$	153
Average attained age of contractholders	N/A		55 years		N/A		55 years

16

Metropolitan Life Insurance Company

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

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

3. Insurance (continued)

	June 30, 2015				December 31, 2014
	Secondary Guarantees		Paid-Up Guarantees		Secondary Guarantees		Paid-Up Guarantees
	(In millions)
Universal and Variable Life Contracts(1)
Account value (general and separate account)	$	8,336	$	1,071	$	8,213	$	1,091
Net amount at risk	$	77,236	$	7,902	$	78,758	$	8,164
Average attained age of policyholders	55 years		61 years		54 years		60 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.

4. Closed Block

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

Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the closed block.

Closed block assets, liabilities, revenues and expenses are combined on a line-by-line basis with the assets, liabilities, revenues and expenses outside the closed block based on the nature of the particular item.

17

Metropolitan Life Insurance Company

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

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

4. Closed Block (continued)

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

	June 30, 2015			December 31, 2014
	(In millions)
Closed Block Liabilities
Future policy benefits	$	41,367		$	41,667
Other policy-related balances	283			265
Policyholder dividends payable	485			461
Policyholder dividend obligation	2,328			3,155
Current income tax payable	4			1
Other liabilities	570			646
Total closed block liabilities	45,037			46,195
Assets Designated to the Closed Block
Investments:
Fixed maturity securities available-for-sale, at estimated fair value	27,799			29,199
Equity securities available-for-sale, at estimated fair value	120			91
Mortgage loans	6,202			6,076
Policy loans	4,645			4,646
Real estate and real estate joint ventures	649			666
Other invested assets	1,061			1,065
Total investments	40,476			41,743
Cash and cash equivalents	395			227
Accrued investment income	464			477
Premiums, reinsurance and other receivables	93			67
Deferred income tax assets	269			289
Total assets designated to the closed block	41,697			42,803
Excess of closed block liabilities over assets designated to the closed block	3,340			3,392
Amounts included in accumulated other comprehensive income (loss) (“AOCI”)
Unrealized investment gains (losses), net of income tax	1,720			2,291
Unrealized gains (losses) on derivatives, net of income tax	45			28
Allocated to policyholder dividend obligation, net of income tax	(1,513		)	(2,051		)
Total amounts included in AOCI	252			268
Maximum future earnings to be recognized from closed block assets and liabilities	$	3,592		$	3,660

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

	Six Months   Ended   June 30, 2015			Year   Ended   December 31, 2014
	(In millions)
Balance, beginning of period	$	3,155		$	1,771
Change in unrealized investment and derivative gains (losses)	(827		)	1,384
Balance, end of period	$	2,328		$	3,155

18

Metropolitan Life Insurance Company

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

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

4. Closed Block (continued)

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

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015		2014
	(In millions)
Revenues
Premiums	$	457		$	473		$	887	$	919
Net investment income	498			522			1,013		1,052
Net investment gains (losses)	2			8			1		8
Net derivative gains (losses)	(13		)	(3		)	12		(4		)
Total revenues	944			1,000			1,913		1,975
Expenses
Policyholder benefits and claims	643			645			1,251		1,269
Policyholder dividends	244			243			484		476
Other expenses	36			38			73		79
Total expenses	923			926			1,808		1,824
Revenues, net of expenses before provision for income tax expense (benefit)	21			74			105		151
Provision for income tax expense (benefit)	8			26			37		53
Revenues, net of expenses and provision for income tax expense (benefit)	$	13		$	48		$	68	$	98

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

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”).

19

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

	June 30, 2015										December 31, 2014
	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	$	57,834	$	4,608	$	770	$	—	$	61,672	$	59,532	$	6,246	$	421	$	—	$	65,357
U.S. Treasury and agency	34,817		3,362		236		—		37,943		34,391		4,698		19		—		39,070
Foreign corporate	27,196		1,423		854		—		27,765		28,395		1,934		511		—		29,818
RMBS	25,442		1,249		203		22		26,466		26,893		1,493		157		66		28,163
ABS	6,662		68		78		—		6,652		8,206		102		82		—		8,226
CMBS	6,108		155		61		—		6,202		7,705		241		33		—		7,913
State and political subdivision	5,618		888		41		—		6,465		5,329		1,197		6		—		6,520
Foreign government	2,843		667		43		—		3,467		3,153		761		70		—		3,844
Total fixed maturity securities	$	166,520	$	12,420	$	2,286	$	22	$	176,632	$	173,604	$	16,672	$	1,299	$	66	$	188,911
Equity securities
Common stock	$	1,317	$	124	$	24	$	—	$	1,417	$	1,236	$	142	$	26	$	—	$	1,352
Non-redeemable preferred stock	711		59		35		—		735		690		53		30		—		713
Total equity securities	$	2,028	$	183	$	59	$	—	$	2,152	$	1,926	$	195	$	56	$	—	$	2,065

The Company held non-income producing fixed maturity securities with an estimated fair value of $5 million and $6 million with unrealized gains (losses) of $4 million and $5 million at June 30, 2015 and December 31, 2014, 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 June 30, 2015:

	Due in One Year or Less		Due After One Year Through Five Years		Due After Five Years Through Ten Years		Due After Ten Years		Structured Securities		Total Fixed Maturity Securities
	(In millions)
Amortized cost	$	6,476	$	35,785	$	34,982	$	51,065	$	38,212	$	166,520
Estimated fair value	$	6,478	$	37,283	$	36,521	$	57,030	$	39,320	$	176,632

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. Structured securities (RMBS, ABS and CMBS) are shown separately, as they are not due at a single maturity.

20

Metropolitan Life Insurance Company

(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.

	June 30, 2015								December 31, 2014
	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	$	12,178	$	616	$	1,487	$	154	$	8,950	$	260	$	2,251	$	161
U.S. Treasury and agency	5,820		233		252		3		3,933		6		982		13
Foreign corporate	9,063		712		969		142		7,052		397		1,165		114
RMBS	6,282		107		1,177		118		3,141		63		1,900		160
ABS	2,896		54		805		24		3,147		45		732		37
CMBS	1,320		42		314		19		772		20		461		13
State and political subdivision	624		37		18		4		26		—		76		6
Foreign government	517		31		57		12		327		32		265		38
Total fixed maturity securities	$	38,700	$	1,832	$	5,079	$	476	$	27,348	$	823	$	7,832	$	542
Equity securities
Common stock	$	167	$	24	$	2	$	—	$	98	$	26	$	1	$	—
Non-redeemable preferred stock	45		1		135		34		32		—		139		30
Total equity securities	$	212	$	25	$	137	$	34	$	130	$	26	$	140	$	30
Total number of securities in an unrealized loss position	3,343				444				1,997				642

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

As described more fully in Notes 1 and 8 of the Notes to the Consolidated Financial Statements included in the 2014 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 concluded that these securities were not other-than-temporarily impaired at June 30, 2015. 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), 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 increased $943 million during the six months ended June 30, 2015 to $2.3 billion. The increase in gross unrealized losses for the six months ended June 30, 2015 was primarily attributable to an increase in interest rates, and to a lesser extent, widening credit spreads.

At June 30, 2015, $158 million of the total $2.3 billion of gross unrealized losses were from 34 fixed maturity securities with an unrealized loss position of 20% or more of amortized cost for six months or greater.

21

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

Investment Grade Fixed Maturity Securities

Of the $158 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, $134 million, or 85%, were related to gross unrealized losses on 20 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.

Below Investment Grade Fixed Maturity Securities

Of the $158 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, $24 million, or 15%, were related to gross unrealized losses on 14 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 U.S. corporate securities (primarily industrial industry securities) 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 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; and evaluates U.S. corporate securities based on factors such as expected cash flows and the financial condition and near-term and long-term prospects of the issuers.

Equity Securities

Gross unrealized losses on equity securities increased $3 million during the six months ended June 30, 2015 to $59 million. Of the $59 million, $25 million were from six securities with gross unrealized losses of 20% or more of cost for 12 months or greater. Of the $25 million, 64% were from securities rated A or better, and all were from financial services industry investment grade non-redeemable preferred stock securities.

Mortgage Loans

Mortgage Loans by Portfolio Segment

Mortgage loans are summarized as follows at:

	June 30, 2015					December 31, 2014
	Carrying Value			% of Total		Carrying Value			% of Total
	(In millions)					(In millions)
Mortgage loans:
Commercial	$	33,201		64.2	%	$	32,482		66.2	%
Agricultural	11,075			21.4		11,033			22.5
Residential	7,362			14.2		5,494			11.2
Subtotal (1)	51,638			99.8		49,009			99.9
Valuation allowances	(270		)	(0.5	)	(258		)	(0.5	)
Subtotal mortgage loans, net	51,368			99.3		48,751			99.4
Residential — fair value option (“FVO”)	345			0.7		308			0.6
Total mortgage loans, net	$	51,713		100.0	%	$	49,059		100.0	%

__________________

(1) Purchases of mortgage loans were $745 million and $2.2 billion for the three months and six months ended June 30, 2015, respectively. Purchases of mortgage loans were $812 million and $1.4 billion for the three months and six months ended June 30, 2014, respectively.

Information on commercial, agricultural and residential mortgage loans is presented in the tables below. Information on residential - FVO is presented in Note 7. The Company elects the FVO for certain residential mortgage loans that are managed on a total return basis.

22

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

Mortgage Loans, Valuation Allowance and Impaired Loans by Portfolio Segment

Mortgage loans by portfolio segment, by method of evaluation of credit loss, impaired mortgage loans including those modified in a troubled debt restructuring, and the related valuation allowances, were as follows at:

	Evaluated Individually for Credit Losses										Evaluated Collectively for Credit Losses				Impaired Loans
	Impaired Loans with a Valuation Allowance						Impaired Loans without a Valuation Allowance
	Unpaid Principal Balance		Recorded Investment		Valuation Allowances		Unpaid Principal Balance		Recorded Investment		Recorded Investment		Valuation Allowances		Carrying Value
	(In millions)
June 30, 2015
Commercial	$	70	$	70	$	18	$	83	$	83	$	33,048	$	162	$	135
Agricultural	47		44		3		16		16		11,015		33		57
Residential	—		—		—		91		83		7,279		54		83
Total	$	117	$	114	$	21	$	190	$	182	$	51,342	$	249	$	275
December 31, 2014
Commercial	$	75	$	75	$	24	$	84	$	84	$	32,323	$	158	$	135
Agricultural	47		45		2		14		13		10,975		33		56
Residential	—		—		—		40		37		5,457		41		37
Total	$	122	$	120	$	26	$	138	$	134	$	48,755	$	232	$	228

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $152 million, $60 million and $70 million, respectively, for the three months ended June 30, 2015; and $154 million, $60 million and $59 million, respectively, for thesix months endedJune 30, 2015.

The average recorded investment for impaired commercial, agricultural and residential mortgage loans was $372 million, $85 million and $9 million, respectively, for the three months ended June 30, 2014; and $387 million, $88 million and $8 million, respectively, for the six months ended June 30, 2014.

Valuation Allowance Rollforward by Portfolio Segment

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

	Six Months   Ended  June 30,
	2015											2014
	Commercial			Agricultural		Residential			Total			Commercial			Agricultural			Residential			Total
	(In millions)
Balance, beginning of period	$	182		$	35	$	41		$	258		$	213		$	40		$	19		$	272
Provision (release)	(2		)	1		22			21			(7		)	(3		)	4			(6		)
Charge-offs, net of recoveries	—			—		(9		)	(9		)	(24		)	—			(1		)	(25		)
Balance, end of period	$	180		$	36	$	54		$	270		$	182		$	37		$	22		$	241

23

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

Credit Quality of Commercial Mortgage Loans

The credit quality of commercial mortgage loans was as follows at:

	Recorded Investment										Estimated Fair Value		% of Total
	Debt Service Coverage Ratios								% of Total
	> 1.20x		1.00x - 1.20x		< 1.00x		Total
	(In millions)										(In millions)
June 30, 2015
Loan-to-value ratios
Less than 65%	$	27,357	$	898	$	478	$	28,733	86.5	%	$	29,877	87.1	%
65% to 75%	3,261		335		53		3,649		11.0		3,664		10.7
76% to 80%	108		—		8		116		0.4		119		0.3
Greater than 80%	378		235		90		703		2.1		658		1.9
Total	$	31,104	$	1,468	$	629	$	33,201	100.0	%	$	34,318	100.0	%
December 31, 2014
Loan-to-value ratios
Less than 65%	$	26,810	$	746	$	761	$	28,317	87.2	%	$	29,860	87.7	%
65% to 75%	2,783		391		86		3,260		10.0		3,322		9.8
76% to 80%	109		—		8		117		0.4		121		0.3
Greater than 80%	384		256		148		788		2.4		736		2.2
Total	$	30,086	$	1,393	$	1,003	$	32,482	100.0	%	$	34,039	100.0	%

Credit Quality of Agricultural Mortgage Loans

The credit quality of agricultural mortgage loans was as follows at:

	June 30, 2015				December 31, 2014
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(In millions)				(In millions)
Loan-to-value ratios
Less than 65%	$	10,412	94.0	%	$	10,462	94.8	%
65% to 75%	523		4.8		469		4.2
76% to 80%	70		0.6		17		0.2
Greater than 80%	70		0.6		85		0.8
Total	$	11,075	100.0	%	$	11,033	100.0	%

The estimated fair value of agricultural mortgage loans was $11.4 billion at both June 30, 2015 and December 31, 2014.

Credit Quality of Residential Mortgage Loans

The credit quality of residential mortgage loans was as follows at:

	June 30, 2015				December 31, 2014
	Recorded Investment		% of Total		Recorded Investment		% of Total
	(In millions)				(In millions)
Performance indicators
Performing	$	6,862	93.2	%	$	5,345	97.3	%
Nonperforming	500		6.8		149		2.7
Total	$	7,362	100.0	%	$	5,494	100.0	%

24

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

The estimated fair value of residential mortgage loans was $7.6 billion and $5.6 billion at June 30, 2015 and December 31, 2014, respectively.

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 June 30, 2015 and December 31, 2014. The Company defines delinquency consistent with industry practice, when mortgage loans are past due as follows: commercial and residential mortgage loans — 60 days and agricultural mortgage loans — 90 days. The past due and accrual status of mortgage loans at recorded investment, prior to valuation allowances, by portfolio segment, were as follows at:

	Past Due				Nonaccrual Status
	June 30, 2015		December 31, 2014		June 30, 2015		December 31, 2014
	(In millions)
Commercial	$	—	$	—	$	70	$	75
Agricultural	33		1		46		41
Residential	500		149		500		149
Total	$	533	$	150	$	616	$	265

Mortgage Loans Modified in a Troubled Debt Restructuring

For a small portion of the mortgage loan portfolio, classified as troubled debt restructurings, concessions are granted related to borrowers experiencing financial difficulties. Generally, the types of concessions include: reduction of the contractual interest rate, extension of the maturity date at an interest rate lower than current market interest rates, and/or a reduction of accrued interest. The amount, timing and extent of the concession granted is considered in determining any impairment or changes in the specific valuation allowance. During both the three months and six months ended June 30, 2015 and 2014, the Company did not have a significant amount of mortgage loans modified in a troubled debt restructuring.

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 $543 million and $1.0 billion at June 30, 2015 and December 31, 2014, respectively.

Net Unrealized Investment Gains (Losses)

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

25

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

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

	June 30, 2015			December 31, 2014
	(In millions)
Fixed maturity securities	$	10,101		$	15,374
Fixed maturity securities with noncredit OTTI losses in AOCI	(22		)	(66		)
Total fixed maturity securities	10,079			15,308
Equity securities	170			173
Derivatives	1,749			1,649
Other	81			87
Subtotal	12,079			17,217
Amounts allocated from:
Future policy benefits	(829		)	(1,964		)
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	(1		)	(3		)
DAC, VOBA and DSI	(667		)	(918		)
Policyholder dividend obligation	(2,328		)	(3,155		)
Subtotal	(3,825		)	(6,040		)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	9			25
Deferred income tax benefit (expense)	(2,886		)	(3,928		)
Net unrealized investment gains (losses)	5,377			7,274
Net unrealized investment gains (losses) attributable to noncontrolling interests	(1		)	(1		)
Net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company	$	5,376		$	7,273

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

	Six Months   Ended   June 30, 2015			Year   Ended   December 31, 2014
	(In millions)
Balance, beginning of period	$	(66	)	$	(149	)
Noncredit OTTI losses and subsequent changes recognized	11			10
Securities sold with previous noncredit OTTI loss	78			41
Subsequent changes in estimated fair value	(45		)	32
Balance, end of period	$	(22	)	$	(66	)

26

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

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

	Six Months   Ended   June 30, 2015
	(In millions)
Balance, beginning of period	$	7,273
Fixed maturity securities on which noncredit OTTI losses have been recognized	44
Unrealized investment gains (losses) during the period	(5,182		)
Unrealized investment gains (losses) relating to:
Future policy benefits	1,135
DAC and VOBA related to noncredit OTTI losses recognized in AOCI	2
DAC, VOBA and DSI	251
Policyholder dividend obligation	827
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in AOCI	(16		)
Deferred income tax benefit (expense)	1,042
Net unrealized investment gains (losses)	5,376
Net unrealized investment gains (losses) attributable to noncontrolling interests	—
Balance, end of period	$	5,376
Change in net unrealized investment gains (losses)	$	(1,897	)
Change in net unrealized investment gains (losses) attributable to noncontrolling interests	—
Change in net unrealized investment gains (losses) attributable to Metropolitan Life Insurance Company	$	(1,897	)

Concentrations of Credit Risk

There were no investments in any counterparty that were greater than 10% of the Company’s equity, other than the U.S. government and its agencies, at both June 30, 2015 and December 31, 2014.

Securities Lending

The Company participates in a securities lending program whereby securities are loaned to third parties, primarily brokerage firms and commercial banks. The Company obtains collateral, usually cash, in an amount generally equal to 102% of the estimated fair value of the securities loaned at inception of the loan. The Company monitors the estimated fair value of the securities loaned on a daily basis with additional collateral obtained as necessary throughout the duration of the loan.

Elements of the securities lending program are presented below at:

	June 30, 2015		December 31, 2014
	(In millions)
Securities on loan: (1)
Amortized cost	$	17,536	$	19,099
Estimated fair value	$	18,592	$	21,185
Cash collateral on deposit from counterparties (2)	$	19,039	$	21,635
Security collateral on deposit from counterparties (3)	$	37	$	19
Reinvestment portfolio — estimated fair value	$	19,281	$	22,046

__________________

(1) Included within fixed maturity securities and short-term investments.

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

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

27

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

The cash collateral liability by loaned security type and remaining tenor of the agreements were as follows at:

	June 30, 2015
	Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		6 Months to 1 Year		Total		% of Total
	(In millions)
Cash collateral liability by loaned security type
U.S. Treasury and agency	$	7,403	$	5,571	$	5,323	$	696	$	18,993	99.8	%
Agency RMBS	—		—		7		—		7		—
U.S. corporate	—		28		—		—		28		0.1
Foreign corporate	—		11		—		—		11		0.1
Foreign government	—		—		—		—		—		—
Total	$	7,403	$	5,610	$	5,330	$	696	$	19,039	100.0	%

	December 31, 2014
	Remaining Tenor of Securities Lending Agreements
	Open (1)		1 Month or Less		1 to 6 Months		6 Months to 1 Year		Total		% of Total
	(In millions)
Cash collateral liability by loaned security type
U.S. Treasury and agency	$	7,346	$	7,401	$	3,912	$	—	$	18,659	86.2	%
Agency RMBS	—		387		2,015		—		2,402		11.1
U.S. corporate	109		148		—		—		257		1.2
Foreign corporate	152		89		—		—		241		1.1
Foreign government	22		54		—		—		76		0.4
Total	$	7,629	$	8,079	$	5,927	$	—	$	21,635	100.0	%

_________________

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

If the Company is required to return significant amounts of cash collateral on short notice and is forced to sell securities to meet the return obligation, it may have difficulty selling such collateral that is invested in securities in a timely manner, be forced to sell securities in a volatile or illiquid market for less than what otherwise would have been realized under normal market conditions, or both. The estimated fair value of the securities on loan related to the cash collateral on open at June 30, 2015 was $7.2 billion, all of which were U.S. Treasury and agency securities which, if put back to the Company, could be immediately sold to satisfy the cash requirement.

The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including agency RMBS, U.S. Treasury and agency, ABS, U.S. corporate and foreign corporate securities) with over 60% invested in agency RMBS, U.S. Treasury and agency securities, short-term investments, or held in cash and cash equivalents. If the securities on loan or the reinvestment portfolio become less liquid, the Company has the liquidity resources of most of its general account available to meet any potential cash demands when securities on loan are put back to the Company.

28

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

Invested Assets on Deposit and Pledged as Collateral

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

	June 30, 2015		December 31, 2014
	(In millions)
Invested assets on deposit (regulatory deposits)	$	1,299	$	1,421
Invested assets pledged as collateral (1)	20,465		20,712
Total invested assets on deposit and pledged as collateral	$	21,764	$	22,133

__________________

(1) 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 2014 Annual Report) and derivative transactions (see Note 6).

See “— Securities Lending” for information regarding securities on loan and Note 4 for information regarding investments designated to the closed block.

Variable Interest Entities

The Company has invested in certain structured transactions (including consolidated securitization entities (“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 June 30, 2015 and December 31, 2014. 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.

	June 30, 2015				December 31, 2014
	Total Assets		Total Liabilities		Total Assets		Total Liabilities
	(In millions)
Fixed maturity securities (1)	$	162	$	78	$	163	$	78
Other invested assets	58		—		59		—
Other limited partnership interests	34		—		37		—
CSEs (assets (primarily loans) and liabilities (primarily debt)) (2)	14		14		16		15
Real estate joint ventures	—		—		9		15
Total	$	268	$	92	$	284	$	108

__________________

(1) The Company consolidates certain fixed maturity securities purchased in an investment vehicle which was partially funded with affiliated long-term debt. The long-term debt bears interest primarily at variable rates, payable on a bi-annual basis. Interest expense related to these obligations, included in other expenses, was less than $1 million and $1 million for both the three months and six months ended June 30, 2015 and 2014, respectively.

29

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

(2) The Company consolidates entities that are structured as collateralized debt obligations. 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 less than $1 million at estimated fair value at both June 30, 2015 and December 31, 2014. The long-term debt bears interest primarily at variable rates, payable on a bi-annual basis. Interest expense related to these obligations, included in other expenses, was less than $1 million and $1 million for the three months and six months ended June 30, 2015 and 2014, respectively.

Unconsolidated VIEs

The carrying amount and maximum exposure to loss relating to VIEs in which the Company holds a significant variable interest but is not the primary beneficiary and which have not been consolidated were as follows at:

	June 30, 2015				December 31, 2014
	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)	$	39,320	$	39,320	$	44,302	$	44,302
U.S. and foreign corporate	1,700		1,700		1,919		1,919
Other limited partnership interests	3,589		4,317		3,722		4,833
Other invested assets	1,553		1,972		1,683		2,003
Real estate joint ventures	41		62		52		74
Total	$	46,203	$	47,371	$	51,678	$	53,131

__________________

(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 and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments. For certain of its investments in other invested assets, the Company’s return is in the form of income tax credits which are guaranteed by creditworthy third parties. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by income tax credits guaranteed by third parties of $197 million and $212 million at June 30, 2015 and December 31, 2014, respectively. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2) For these variable interests, the Company’s involvement is limited to that of a passive investor in mortgage-backed or asset-backed securities issued by trusts that do not have substantial equity.

As described in Note 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 both the six months ended June 30, 2015 and 2014.

30

Metropolitan Life Insurance Company

(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  June 30,					Six Months   Ended  June 30,
	2015		2014			2015		2014
	(In millions)
Investment income:
Fixed maturity securities	$	2,051	$	2,101		$	4,074	$	4,120
Equity securities	23		25			43		45
Trading and FVO securities — Actively Traded and FVO general account securities (1)	—		18			18		35
Mortgage loans	648		571			1,248		1,151
Policy loans	108		111			219		224
Real estate and real estate joint ventures	253		211			409		369
Other limited partnership interests	176		164			316		381
Cash, cash equivalents and short-term investments	6		6			12		12
Operating joint venture	4		(1		)	6		(1		)
Other	20		3			129		15
Subtotal	3,289		3,209			6,474		6,351
Less: Investment expenses	231		216			450		411
Subtotal, net	3,058		2,993			6,024		5,940
FVO CSEs — interest income:
Securities	1		1			1		1
Subtotal	1		1			1		1
Net investment income	$	3,059	$	2,994		$	6,025	$	5,941

__________________

(1) Changes in estimated fair value subsequent to purchase for securities still held as of the end of the respective periods included in net investment income were ($39) million and ($43) million for the three months and six months ended June 30, 2015, respectively, and $8 million and $16 million for the three months and six months ended June 30, 2014, respectively.

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

Trading and fair value option securities (“FVO securities”) are primarily comprised of securities for which the FVO has been elected. The Company has a trading securities portfolio, principally invested in fixed maturity securities, to support investment strategies that involve the active and frequent purchase and sale of actively traded securities and the execution of short sale agreements. FVO securities include certain fixed maturity and equity securities held-for-investment by the general account to support asset/liability management strategies for certain insurance products and investments in certain separate accounts. FVO securities also include securities held by CSEs.

31

Metropolitan Life Insurance Company

(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  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(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:
Consumer	$	—		$	—		$	(3	)	$	(6	)
Total U.S. and foreign corporate securities	—			—			(3		)	(6		)
RMBS	(2		)	(5		)	(14		)	(7		)
OTTI losses on fixed maturity securities recognized in earnings	(2		)	(5		)	(17		)	(13		)
Fixed maturity securities — net gains (losses) on sales and disposals	48			(16		)	115			(97		)
Total gains (losses) on fixed maturity securities	46			(21		)	98			(110		)
Total gains (losses) on equity securities:
Total OTTI losses recognized — by sector:
Non-redeemable preferred stock	—			(15		)	—			(15		)
Common stock	(8		)	(3		)	(8		)	(4		)
OTTI losses on equity securities recognized in earnings	(8		)	(18		)	(8		)	(19		)
Equity securities — net gains (losses) on sales and disposals	—			33			(2		)	36
Total gains (losses) on equity securities	(8		)	15			(10		)	17
Mortgage loans	(7		)	17			(44		)	8
Other limited partnership interests	(9		)	(34		)	8			(34		)
Real estate and real estate joint ventures	19			9			23			73
Other investment portfolio gains (losses)	(23		)	5			(12		)	3
Subtotal — investment portfolio gains (losses)	18			(9		)	63			(43		)
FVO CSEs:
Long-term debt — related to securities	—			(1		)	—			(1		)
Non-investment portfolio gains (losses)	(111		)	(47		)	69			(45		)
Subtotal FVO CSEs and non-investment portfolio gains (losses)	(111		)	(48		)	69			(46		)
Total net investment gains (losses)	$	(93	)	$	(57	)	$	132		$	(89	)

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 ($140) million and $17 million for the three months and six months ended June 30, 2015, respectively, and ($37) million and ($88) million for the three months and six months ended June 30, 2014, respectively.

32

Metropolitan Life Insurance Company

(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) were as shown in the tables below. Investment gains and losses on sales of securities are determined on a specific identification basis.

	Three Months   Ended  June 30,
	2015			2014			2015			2014
	Fixed Maturity Securities						Equity Securities
	(In millions)
Proceeds	$	16,054		$	11,352		$	13		$	64
Gross investment gains	$	200		$	51		$	2		$	34
Gross investment losses	(152		)	(67		)	(2		)	(1		)
OTTI losses	(2		)	(5		)	(8		)	(18		)
Net investment gains (losses)	$	46		$	(21	)	$	(8	)	$	15

	Six Months   Ended  June 30,
	2015			2014			2015			2014
	Fixed Maturity Securities						Equity Securities
	(In millions)
Proceeds	$	32,079		$	20,803		$	28		$	69
Gross investment gains	$	400		$	105		$	6		$	37
Gross investment losses	(285		)	(202		)	(8		)	(1		)
OTTI losses	(17		)	(13		)	(8		)	(19		)
Net investment gains (losses)	$	98		$	(110	)	$	(10	)	$	17

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  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Balance, beginning of period	$	264		$	271		$	263		$	277
Additions:
Initial impairments — credit loss OTTI on securities not previously impaired	—			—			1			—
Additional impairments — credit loss OTTI on securities previously impaired	1			4			11			5
Reductions:
Sales (maturities, pay downs or prepayments) of securities previously impaired as credit loss OTTI	(70		)	(7		)	(80		)	(14		)
Increase in cash flows — accretion of previous credit loss OTTI	(1		)	—			(1		)	—
Balance, end of period	$	194		$	268		$	194		$	268

33

Metropolitan Life Insurance Company

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

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

5. Investments (continued)

Related Party Investment Transactions

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

	Three Months   Ended  June 30,				Six Months   Ended  June 30,
	2015		2014		2015		2014
	(In millions)				(In millions)
Estimated fair value of invested assets transferred to affiliates	$	—	$	—	$	600	$	—
Amortized cost of invested assets transferred to affiliates	$	—	$	—	$	567	$	—
Net investment gains (losses) recognized on transfers	$	—	$	—	$	33	$	—
Estimated fair value of invested assets transferred from affiliates	$	101	$	91	$	101	$	445

Below is a summary of certain affiliated loans, which are more fully described in Note 8 of the Notes of the Consolidated Financial Statements included in the 2014 Annual Report.

The Company has affiliated loans outstanding to MetLife, Inc., which are included in other invested assets, totaling $2.0 billion at both June 30, 2015 and December 31, 2014. Net investment income from affiliated loans was $25 million and $48 million for the three months and six months ended June 30, 2015, respectively, and $22 million and $45 million for the three months and six months ended June 30, 2014, respectively.

The Company holds a surplus note from American Life Insurance Company, an affiliate, which is included in other invested assets, totaling $100 million at both June 30, 2015 and December 31, 2014. The note was issued in December 2014, bears interest at a fixed rate of 3.17%, payable semiannually, and is due on June 30, 2020. Net investment income from this surplus note was $1 million and $2 million for the three months and six months ended June 30, 2015, respectively.

The Company provides investment administrative services to certain affiliates. The related investment administrative service charges to these affiliates were $39 million and $79 million for the three months and six months ended June 30, 2015, respectively, and $39 million and $83 million for the three months and six months ended June 30, 2014, respectively. The Company also earned additional affiliated net investment income of $1 million and $2 million for the three months and six months ended June 30, 2015, respectively, and $1 million and $2 million for the three months and six months ended June 30, 2014, respectively.

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 estimated fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

Accruals on derivatives are generally recorded in accrued investment income or within other liabilities. However, accruals that are not scheduled to settle within one year are included with the 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
	•	All derivatives held in relation to trading portfolios

34

Metropolitan Life Insurance Company

(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 estimated 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).

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 estimated fair value with changes in estimated fair value recorded in earnings;

• the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract; and

• a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument.

35

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

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 with values derived from interest rates, foreign currency exchange rates, credit spreads and/or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit default swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available in the cash 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, swaptions, futures and forwards.

Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional amount. The Company utilizes interest rate swaps in fair value, cash flow and non-qualifying hedging relationships.

The Company uses structured interest rate swaps to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. Treasury, agency, or other fixed maturity security. Structured interest rate swaps are included in interest rate swaps and are not designated as hedging instruments.

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.

Swaptions are used by the Company to hedge interest rate risk associated with the Company’s long-term liabilities and invested assets. A swaption is an option to enter into a swap with a forward starting effective date. In certain instances, the Company locks in the economic impact of existing purchased swaptions by entering into offsetting written swaptions. The Company pays a premium for purchased swaptions and receives a premium for written swaptions. The Company utilizes swaptions in non-qualifying hedging relationships. Swaptions are included in interest rate options.

The Company enters into interest rate forwards to buy and sell securities. The price is agreed upon at the time of the contract and payment for such a contract is made at a specified future date. The Company utilizes interest rate forwards in cash flow hedging relationships.

To a lesser extent, the Company uses exchange-traded interest rate futures in non-qualifying hedging relationships.

36

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

Foreign Currency Exchange Rate Derivatives

The Company uses foreign currency exchange rate derivatives including foreign currency swaps and foreign currency forwards 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.

In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made at the specified future date. The Company utilizes foreign currency forwards in 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 amount in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit events vary by type of issuer but typically include bankruptcy, failure to pay debt obligations, repudiation, moratorium, involuntary restructuring or governmental intervention. 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.

The Company also enters into certain purchased and written credit default swaps held in relation to trading portfolios for the purpose of generating profits on short-term differences in price. These credit default swaps are not designated as hedging instruments.

The Company enters into forwards to lock in the price to be paid for forward purchases of certain securities. The price is agreed upon at the time of the contract and payment for the contract is made at a specified future date. When the primary purpose of entering into these transactions is to hedge against the risk of changes in purchase price due to changes in credit spreads, the Company designates these transactions as credit forwards. The Company utilizes credit forwards in cash flow hedging relationships.

Equity Derivatives

The Company uses a variety of equity derivatives to reduce its exposure to equity market risk, including equity index options, equity variance swaps, exchange-traded equity futures and total rate of return swaps (“TRRs”).

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. Certain of these contracts may also contain settlement provisions linked to interest rates. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. The Company utilizes equity index options in non-qualifying hedging relationships.

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.

37

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

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 minimum guarantees embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships.

TRRs are swaps whereby the Company agrees with another party to exchange, at specified intervals, the difference between the economic risk and reward of an asset or a market index and the London Interbank Offered Rate (also, LIBOR), calculated by reference to an agreed notional amount. No cash is exchanged at the outset of the contract. Cash is paid and received over the life of the contract based on the terms of the swap. The Company uses TRRs to hedge its equity market guarantees in certain of its insurance products. TRRs can be used as hedges or to synthetically create investments. 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:

		June 30, 2015						December 31, 2014
	Primary Underlying Risk Exposure	Gross Notional Amount		Estimated Fair Value				Gross Notional Amount		Estimated Fair Value
				Assets		Liabilities				Assets		Liabilities
		(In millions)
Derivatives Designated as Hedging Instruments
Fair value hedges:
Interest rate swaps	Interest rate	$	5,522	$	1,941	$	16	$	5,632	$	2,031	$	18
Foreign currency swaps	Foreign currency exchange rate	3,078		125		225		2,709		65		101
Subtotal		8,600		2,066		241		8,341		2,096		119
Cash flow hedges:
Interest rate swaps	Interest rate	2,500		325		13		2,191		447		—
Interest rate forwards	Interest rate	70		13		—		70		18		—
Foreign currency swaps	Foreign currency exchange rate	16,686		789		993		14,895		501		614
Subtotal		19,256		1,127		1,006		17,156		966		614
Total qualifying hedges		27,856		3,193		1,247		25,497		3,062		733
Derivatives Not Designated or Not Qualifying as Hedging Instruments
Interest rate swaps	Interest rate	55,304		1,919		1,004		56,394		2,213		1,072
Interest rate floors	Interest rate	17,551		252		50		36,141		319		108
Interest rate caps	Interest rate	44,862		79		1		41,227		134		1
Interest rate futures	Interest rate	50		—		—		70		—		—
Interest rate options	Interest rate	7,099		364		27		6,399		379		15
Synthetic GICs	Interest rate	4,211		—		—		4,298		—		—
Foreign currency swaps	Foreign currency exchange rate	8,642		339		213		8,774		359		176
Foreign currency forwards	Foreign currency exchange rate	3,559		69		37		3,985		92		80
Credit default swaps — purchased	Credit	881		12		9		857		8		11
Credit default swaps — written	Credit	6,966		112		4		7,419		130		5
Equity futures	Equity market	1,039		—		2		954		10		—
Equity index options	Equity market	7,281		320		365		7,698		328		352
Equity variance swaps	Equity market	5,764		84		158		5,678		60		146
TRRs	Equity market	948		23		—		911		10		33
Total non-designated or non-qualifying derivatives		164,157		3,573		1,870		180,805		4,042		1,999
Total		$	192,013	$	6,766	$	3,117	$	206,302	$	7,104	$	2,732

38

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

Based on gross notional amounts, a substantial portion of the Company’s derivatives was not designated or did not qualify as part of a hedging relationship at both June 30, 2015 and December 31, 2014. 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  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Derivatives and hedging gains (losses) (1)	$	(736	)	$	122		$	(134	)	$	338
Embedded derivatives gains (losses)	505			(178		)	403			(275		)
Total net derivative gains (losses)	$	(231	)	$	(56	)	$	269		$	63

__________________

(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  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Qualifying hedges:
Net investment income	$	48		$	34		$	107		$	68
Interest credited to policyholder account balances	14			33			17			65
Non-qualifying hedges:
Net investment income	(1		)	(1		)	(2		)	(2		)
Net derivative gains (losses)	123			114			266			236
Policyholder benefits and claims	—			—			1			—
Total	$	184		$	180		$	389		$	367

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 June 30, 2015
Interest rate derivatives	$	(657	)	$	—		$	—
Foreign currency exchange rate derivatives	(292		)	—			—
Credit derivatives — purchased	—			1			—
Credit derivatives — written	(27		)	—			—
Equity derivatives	(14		)	(2		)	(5		)
Total	$	(990	)	$	(1	)	$	(5	)
Three Months Ended June 30, 2014
Interest rate derivatives	$	7		$	—		$	—
Foreign currency exchange rate derivatives	(120		)	—			—
Credit derivatives — purchased	(6		)	(1		)	—
Credit derivatives — written	18			—			—
Equity derivatives	—			(3		)	—
Total	$	(101	)	$	(4	)	$	—
Six Months Ended June 30, 2015
Interest rate derivatives	$	(419	)	$	—		$	—
Foreign currency exchange rate derivatives	230			—			—
Credit derivatives — purchased	4			—			—
Credit derivatives — written	(23		)	1			—
Equity derivatives	(84		)	(6		)	(31		)
Total	$	(292	)	$	(5	)	$	(31	)
Six Months Ended June 30, 2014
Interest rate derivatives	$	51		$	—		$	—
Foreign currency exchange rate derivatives	(109		)	—			—
Credit derivatives — purchased	(9		)	—			—
Credit derivatives — written	12			—			—
Equity derivatives	—			(6		)	—
Total	$	(55	)	$	(6	)	$	—

__________________

(1) Changes in estimated fair value related to economic hedges of equity method investments in joint ventures and derivatives held in relation to trading portfolios.

(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 assets and liabilities.

39

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

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 June 30, 2015
Interest rate swaps:	Fixed maturity securities	$	4		$	(2	)	$	2
	Policyholder liabilities (1)	(350		)	347			(3		)
Foreign currency swaps:	Foreign-denominated fixed maturity securities	(3		)	5			2
	Foreign-denominated policyholder account balances (2)	110			(112		)	(2		)
Total		$	(239	)	$	238		$	(1	)
Three Months Ended June 30, 2014
Interest rate swaps:	Fixed maturity securities	$	(1	)	$	2		$	1
	Policyholder liabilities (1)	131			(125		)	6
Foreign currency swaps:	Foreign-denominated fixed maturity securities	(3		)	3			—
	Foreign-denominated policyholder account balances (2)	2			(4		)	(2		)
Total		$	129		$	(124	)	$	5
Six Months Ended June 30, 2015
Interest rate swaps:	Fixed maturity securities	$	—		$	3		$	3
	Policyholder liabilities (1)	(162		)	158			(4		)
Foreign currency swaps:	Foreign-denominated fixed maturity securities	7			(3		)	4
	Foreign-denominated policyholder account balances (2)	(139		)	133			(6		)
Total		$	(294	)	$	291		$	(3	)
Six Months Ended June 30, 2014
Interest rate swaps:	Fixed maturity securities	$	(1	)	$	3		$	2
	Policyholder liabilities (1)	331			(320		)	11
Foreign currency swaps:	Foreign-denominated fixed maturity securities	(7		)	7			—
	Foreign-denominated policyholder account balances (2)	(26		)	29			3
Total		$	297		$	(281	)	$	16

__________________

(1) Fixed rate liabilities reported in policyholder account balances 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.

Cash Flow Hedges

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

40

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

In certain instances, the Company discontinued cash flow hedge accounting because the forecasted transactions were no longer probable of occurring. Because certain of the forecasted transactions also were not probable of occurring within two months of the anticipated date, the Company reclassified amounts from AOCI into net derivative gains (losses). These amounts were $0 and $4 million for the three months and six months ended June 30, 2015, respectively, and ($2) million and ($4) million for the three months and six months ended June 30, 2014, respectively.

At both June 30, 2015 and December 31, 2014, 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 June 30, 2015 and December 31, 2014, the balance in AOCI associated with cash flow hedges was $1.7 billion and $1.6 billion, 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 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 June 30, 2015
Interest rate swaps	$	(228	)	$	7		$	4		$	(1	)
Interest rate forwards	(9		)	1			—			—
Foreign currency swaps	(57		)	255			(1		)	(2		)
Credit forwards	—			—			—			—
Total	$	(294	)	$	263		$	3		$	(3	)
Three Months Ended June 30, 2014
Interest rate swaps	$	106		$	11		$	2		$	(5	)
Interest rate forwards	1			1			—			—
Foreign currency swaps	2			47			—			—
Credit forwards	—			—			—			—
Total	$	109		$	59		$	2		$	(5	)
Six Months Ended June 30, 2015
Interest rate swaps	$	(83	)	$	12		$	6		$	1
Interest rate forwards	(5		)	3			1			—
Foreign currency swaps	(67		)	(277		)	(1		)	1
Credit forwards	—			1			—			—
Total	$	(155	)	$	(261	)	$	6		$	2
Six Months Ended June 30, 2014
Interest rate swaps	$	288		$	27		$	4		$	—
Interest rate forwards	22			1			1			—
Foreign currency swaps	48			77			(1		)	(1		)
Credit forwards	—			—			—			—
Total	$	358		$	105		$	4		$	(1	)

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

At June 30, 2015, $43 million of deferred net gains (losses) on derivatives in AOCI was expected to be reclassified to earnings within the next 12 months.

41

Metropolitan Life Insurance Company

(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 and credit default swaps held in relation to the trading portfolio, 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 $7.0 billion and $7.4 billion at June 30, 2015 and December 31, 2014, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current estimated fair value of the credit default swaps. At June 30, 2015 and December 31, 2014, the Company would have received $108 million and $125 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:

	June 30, 2015					December 31, 2014
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)	$	3	$	330	2.2	$	5		$	415	2.2
Credit default swaps referencing indices	4		1,416		2.9	10			1,566		2.7
Subtotal	7		1,746		2.7	15			1,981		2.6
Baa
Single name credit default swaps (corporate)	12		847		2.7	15			1,002		2.8
Credit default swaps referencing indices	48		3,550		4.6	59			3,687		4.5
Subtotal	60		4,397		4.3	74			4,689		4.1
Ba
Single name credit default swaps (corporate)	1		65		2.6	—			60		3.0
Credit default swaps referencing indices	—		100		1.5	(1		)	100		2.0
Subtotal	1		165		1.9	(1		)	160		2.4
B
Single name credit default swaps (corporate)	—		—		—	—			—		—
Credit default swaps referencing indices	40		658		4.9	37			589		4.9
Subtotal	40		658		4.9	37			589		4.9
Total	$	108	$	6,966	3.9	$	125		$	7,419	3.8

__________________

(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 gross notional amounts.

42

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

The Company has also entered into credit default swaps to purchase credit protection on certain of the referenced credit obligations in the table above. As a result, the maximum amounts of potential future recoveries available to offset the $7.0 billion and $7.4 billion from the table above were $180 million and $60 million at June 30, 2015 and December 31, 2014, respectively.

Written credit default swaps held in relation to the trading portfolio amounted to $104 million and $15 million in gross notional amount and $4 million and $1 million in estimated fair value at June 30, 2015 and December 31, 2014, respectively.

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 (both initial margin and variation margin), and the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivatives.

See Note 7 for a description of the impact of credit risk on the valuation of derivatives.

43

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

The estimated fair values of the Company’s net derivative assets and net derivative liabilities after the application of master netting agreements and collateral were as follows at:

	June 30, 2015						December 31, 2014
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)	$	6,241		$	2,485		$	6,497		$	2,092
OTC-cleared (1)	650			672			740			682
Exchange-traded	—			2			10			—
Total gross estimated fair value of derivatives (1)	6,891			3,159			7,247			2,774
Amounts offset on the consolidated balance sheets	—			—			—			—
Estimated fair value of derivatives presented on the consolidated balance sheets (1)	6,891			3,159			7,247			2,774
Gross amounts not offset on the consolidated balance sheets:
Gross estimated fair value of derivatives: (2)
OTC-bilateral	(2,077		)	(2,077		)	(1,742		)	(1,742		)
OTC-cleared	(566		)	(566		)	(638		)	(638		)
Exchange-traded	—			—			—			—
Cash collateral: (3), (4)
OTC-bilateral	(2,728		)	(3		)	(2,470		)	(2		)
OTC-cleared	(80		)	(106		)	(97		)	(40		)
Exchange-traded	—			(1		)	—			—
Securities collateral: (5)
OTC-bilateral	(1,206		)	(397		)	(2,161		)	(333		)
OTC-cleared	—			—			—			(3		)
Exchange-traded	—			(1		)	—			—
Net amount after application of master netting agreements and collateral	$	234		$	8		$	139		$	16

__________________

(1) At June 30, 2015 and December 31, 2014, derivative assets included income or expense accruals reported in accrued investment income or in other liabilities of $125 million and $143 million, respectively. At both June 30, 2015 and December 31, 2014, derivative liabilities included income or expense accruals reported in accrued investment income or in other liabilities of$42 million.

(2) Estimated fair value of derivatives is limited to the amount that is subject to set-off and includes income or expense accruals.

(3) Cash collateral received by the Company for OTC-bilateral and OTC-cleared derivatives 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. In certain instances, cash collateral pledged to the Company as initial margin for OTC-bilateral derivatives is held in separate custodial accounts and is not recorded on the Company’s balance sheet because the account title is in the name of the counterparty (but segregated for the benefit of the Company). The amount of this off-balance sheet collateral was $0 and $138 million at June 30, 2015 and December 31, 2014, respectively.

(4) The receivable for the return of cash collateral provided by the Company is inclusive of initial margin on exchange-traded and OTC-cleared derivatives and is included in premiums, reinsurance and other receivables on the balance sheet. The amount of cash collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements. At June 30, 2015 and December 31, 2014, the Company received excess cash collateral of $9 million and $0, respectively, and provided excess cash collateral of $28 million and $31 million, respectively, which is not included in the table above due to the foregoing limitation.

44

Metropolitan Life Insurance Company

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

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

6. Derivatives (continued)

(5) Securities collateral received by the Company is held in separate custodial accounts and is not recorded on the balance sheet. Subject to certain constraints, the Company is permitted by contract to sell or re-pledge this collateral, but at June 30, 2015 none of the collateral had been sold or re-pledged. 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 re-pledge this collateral. The amount of securities collateral offset in the table above is limited to the net estimated fair value of derivatives after application of netting agreements and cash collateral. At June 30, 2015 and December 31, 2014, the Company received excess securities collateral with an estimated fair value of $15 million and $243 million, respectively, for its OTC-bilateral derivatives, which are not included in the table above due to the foregoing limitation. At June 30, 2015 and December 31, 2014, the Company provided excess securities collateral with an estimated fair value of $62 million and $57 million, respectively, for its OTC-bilateral derivatives, and $194 million and $155 million, respectively, for its OTC-cleared derivatives, and $13 million and $17 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 estimated 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		Cash		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)
June 30, 2015
Derivatives subject to financial strength-contingent provisions	$	399	$	457	$	—	$	—	$	2
Derivatives not subject to financial strength-contingent provisions	4		—		3		—		—
Total	$	403	$	457	$	3	$	—	$	2
December 31, 2014
Derivatives subject to financial strength-contingent provisions	$	334	$	390	$	—	$	—	$	—
Derivatives not subject to financial strength-contingent provisions	4		—		2		—		—
Total	$	338	$	390	$	2	$	—	$	—

__________________

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

45

Metropolitan Life Insurance Company

(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, GMABs and certain GMIBs; funds withheld on ceded reinsurance and affiliated funds withheld on ceded reinsurance; funding agreements with equity or bond indexed crediting rates; 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	June 30, 2015			December 31, 2014
		(In millions)
Net embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	Premiums, reinsurance and other receivables	$	603		$	657
Options embedded in debt or equity securities	Investments	(123		)	(150		)
Net embedded derivatives within asset host contracts		$	480		$	507
Net embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	Policyholder account balances	$	(600	)	$	(548	)
Assumed guaranteed minimum benefits	Policyholder account balances	59			72
Funds withheld on ceded reinsurance	Other liabilities	891			1,200
Other	Policyholder account balances	4			7
Net embedded derivatives within liability host contracts		$	354		$	731

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

	Three Months   Ended  June 30,					Six Months   Ended  June 30,
	2015		2014			2015		2014
	(In millions)
Net derivative gains (losses) (1), (2)	$	505	$	(178	)	$	403	$	(275	)

__________________

(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 ($20) million and ($4) million for the three months and six months ended June 30, 2015, respectively, and were not significant for both the three months and six months ended June 30, 2014. 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 $6 million and $3 million for the three months and six months ended June 30, 2015, respectively, and $1 million and ($1) million for the three months and six months ended June 30, 2014, respectively.

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

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.

46

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

	June 30, 2015
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	56,633	$	5,039	$	61,672
U.S. Treasury and agency	20,612		17,301		30		37,943
Foreign corporate	—		24,257		3,508		27,765
RMBS	1,206		22,188		3,072		26,466
ABS	—		5,691		961		6,652
CMBS	—		5,876		326		6,202
State and political subdivision	—		6,417		48		6,465
Foreign government	—		3,302		165		3,467
Total fixed maturity securities	21,818		141,665		13,149		176,632
Equity securities:
Common stock	587		736		94		1,417
Non-redeemable preferred stock	—		484		251		735
Total equity securities	587		1,220		345		2,152
Trading and FVO securities:
Actively Traded securities	—		641		13		654
FVO general account securities	—		—		15		15
FVO securities held by CSEs	—		4		10		14
Total trading and FVO securities	—		645		38		683
Short-term investments (1)	1,414		5,587		933		7,934
Residential mortgage loans — FVO	—		—		345		345
Derivative assets: (2)
Interest rate	—		4,880		13		4,893
Foreign currency exchange rate	—		1,312		10		1,322
Credit	—		115		9		124
Equity market	—		289		138		427
Total derivative assets	—		6,596		170		6,766
Net embedded derivatives within asset host contracts (3)	—		—		603		603
Separate account assets (4)	27,097		114,581		1,563		143,241
Total assets	$	50,916	$	270,294	$	17,146	$	338,356
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	1,110	$	1	$	1,111
Foreign currency exchange rate	—		1,466		2		1,468
Credit	—		12		1		13
Equity market	2		362		161		525
Total derivative liabilities	2		2,950		165		3,117
Net embedded derivatives within liability host contracts (3)	—		4		350		354
Long-term debt	—		78		25		103
Long-term debt of CSEs — FVO	—		—		12		12
Trading liabilities (5)	207		20		4		231
Total liabilities	$	209	$	3,052	$	556	$	3,817

47

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

	December 31, 2014
	Fair Value Hierarchy
	Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate	$	—	$	60,420	$	4,937	$	65,357
U.S. Treasury and agency	21,625		17,445		—		39,070
Foreign corporate	—		26,227		3,591		29,818
RMBS	—		24,534		3,629		28,163
ABS	—		6,734		1,492		8,226
CMBS	—		7,464		449		7,913
State and political subdivision	—		6,520		—		6,520
Foreign government	—		3,642		202		3,844
Total fixed maturity securities	21,625		152,986		14,300		188,911
Equity securities:
Common stock	584		716		52		1,352
Non-redeemable preferred stock	—		550		163		713
Total equity securities	584		1,266		215		2,065
Trading and FVO securities:
Actively Traded securities	22		627		5		654
FVO general account securities	—		22		14		36
FVO securities held by CSEs	—		3		12		15
Total trading and FVO securities	22		652		31		705
Short-term investments (1)	860		3,091		230		4,181
Residential mortgage loans — FVO	—		—		308		308
Derivative assets: (2)
Interest rate	—		5,524		17		5,541
Foreign currency exchange rate	—		1,010		7		1,017
Credit	—		125		13		138
Equity market	10		279		119		408
Total derivative assets	10		6,938		156		7,104
Net embedded derivatives within asset host contracts (3)	—		—		657		657
Separate account assets (4)	26,119		111,601		1,615		139,335
Total assets	$	49,220	$	276,534	$	17,512	$	343,266
Liabilities
Derivative liabilities: (2)
Interest rate	$	—	$	1,214	$	—	$	1,214
Foreign currency exchange rate	—		971		—		971
Credit	—		15		1		16
Equity market	—		382		149		531
Total derivative liabilities	—		2,582		150		2,732
Net embedded derivatives within liability host contracts (3)	—		7		724		731
Long-term debt	—		82		35		117
Long-term debt of CSEs — FVO	—		—		13		13
Trading liabilities (5)	215		24		—		239
Total liabilities	$	215	$	2,695	$	922	$	3,832

__________________

(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.

48

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

(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 within policyholder account balances and other liabilities on the consolidated balance sheets. At June 30, 2015 and December 31, 2014, equity securities also included embedded derivatives of ($123) million and ($150) 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.

(5) Trading liabilities are presented within other liabilities on the consolidated balance sheets.

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 the Audit Committees of Metropolitan Life Insurance Company’s and MetLife, Inc.’s Boards of Directors 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 6% of the total estimated fair value of Level 3 fixed maturity securities at June 30, 2015.

49

Metropolitan Life Insurance Company

(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, Long-term Debt, Long-term Debt of CSEs — FVO and Trading Liabilities

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 FVO securities held by CSEs, long-term debt, long-term debt of CSEs — FVO and trading liabilities is determined on a basis consistent with the methodologies described herein for securities.

The valuation of most instruments listed below is determined using independent pricing sources, matrix pricing, discounted cash flow methodologies or other similar techniques that use either observable market inputs or unobservable inputs.

50

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

Instrument		Level 2 Observable Inputs		Level 3 Unobservable Inputs
Fixed Maturity Securities
U.S. corporate and Foreign corporate securities
	Valuation Techniques: Principally the market and income approaches.			Valuation Techniques: Principally the market approach.
	Key Inputs:			Key Inputs:
	•	quoted prices in markets that are not active		•	illiquidity premium
	•	benchmark yields		•	delta spread adjustments to reflect specific credit-related issues
	•	spreads off benchmark yields		•	credit spreads
	•	new issuances		•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
	•	issuer rating
	•	duration		•	independent non-binding broker quotations
	•	trades of identical or comparable securities
	•	Privately-placed securities are valued using the additional key inputs:
		•	market yield curve
		•	call provisions
		•	observable prices and spreads for similar publicly traded or privately traded securities that incorporate the credit quality and industry sector of the issuer
		•	delta spread adjustments to reflect specific credit-related issues
U.S. Treasury and agency, State and political subdivision and Foreign government securities
	Valuation Techniques: Principally the market approach.			Valuation Techniques: Principally the market approach.
	Key Inputs:			Key Inputs:
	•	quoted prices in markets that are not active		•	independent non-binding broker quotations
	•	benchmark U.S. Treasury yield or other yields		•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
	•	the spread off the U.S. Treasury yield curve for the identical security
	•	issuer ratings and issuer spreads		•	credit spreads
	•	broker-dealer quotes
	•	comparable securities that are actively traded
	•	reported trades of similar securities, including those that are actively traded, and those within the same sub-sector or with a similar maturity or credit rating
Structured securities comprised of RMBS, ABS and CMBS
	Valuation Techniques: Principally the market and income approaches.			Valuation Techniques: Principally the market and income approaches.
	Key Inputs:			Key Inputs:
	•	quoted prices in markets that are not active		•	credit spreads
	•	spreads for actively traded securities		•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
	•	spreads off benchmark yields
	•	expected prepayment speeds and volumes		•	independent non-binding broker quotations
	•	current and forecasted loss severity
	•	ratings
	•	weighted average coupon and weighted average maturity
	•	average delinquency rates
	•	geographic region
	•	debt-service coverage ratios
	•	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
		•	vintage of loans

51

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

Instrument	Level 2 Observable Inputs		Level 3 Unobservable Inputs
Equity Securities
Common and Non-redeemable preferred stock
	Valuation Techniques: Principally the market approach.		Valuation Techniques: Principally the market and income approaches.
	Key Input:		Key Inputs:
	•	quoted prices in markets that are not considered active	•	credit ratings
			•	issuance structures
			•	quoted prices in markets that are not active for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2
			•	independent non-binding broker quotations
Trading and FVO securities and Short-term investments
	•	Trading and FVO securities and short-term investments are of a similar nature and class to the fixed maturity and equity securities described above; accordingly, the valuation techniques and observable inputs used in their valuation are also similar to those described above.	•	Trading and FVO securities and short-term investments are of a similar nature and class to the fixed maturity and equity securities described above; accordingly, the valuation techniques and unobservable inputs used in their valuation are also similar to those described above.
Mortgage Loans — FVO
Residential mortgage loans — FVO
	•	N/A	Valuation Techniques: Principally the market approach, including matrix pricing or other similar techniques.
			Key Inputs: Inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data
Separate Account Assets (1)
Mutual funds and hedge funds without readily determinable fair values as prices are not published publicly
	Key Input:
	•	quoted prices or reported NAV provided by the fund managers	•	N/A
Other limited partnership interests
	•	N/A	Valuation Techniques: Valued giving consideration to the underlying holdings of the partnerships and by applying a premium or discount, if appropriate.
			Key Inputs:
			•	liquidity
			•	bid/ask spreads
			•	the performance record of the fund manager
			•	other relevant variables that may impact the exit value of the particular partnership interest

______________

(1) Estimated fair value equals carrying value, based on the value of the underlying assets, including: mutual fund interests, fixed maturity securities, equity securities, derivatives, hedge funds, other limited partnership interests, short-term investments and cash and cash equivalents. Fixed maturity securities, equity securities, derivatives, short-term investments and cash and cash equivalents are similar in nature to the instruments described under “— Securities, Short-term Investments, Other Investments, Long-term Debt of CSEs — FVO and Trading Liabilities” and “— Derivatives — Freestanding Derivatives Valuation Techniques and Key Inputs.”

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.”

52

Metropolitan Life Insurance Company

(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. Certain OTC-bilateral and OTC-cleared derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and management believes they are consistent with what other market participants would use when pricing such instruments.

Most inputs for OTC-bilateral and OTC-cleared derivatives are mid-market inputs but, in certain cases, liquidity adjustments are made when they are deemed more representative of exit value. Market liquidity, as well as the use of different methodologies, assumptions and inputs, may have a material effect on the estimated fair values of the Company’s derivatives and could materially affect net income.

The credit risk of both the counterparty and the Company are considered in determining the estimated fair value for all OTC-bilateral and OTC-cleared derivatives, and any potential credit adjustment is based on the net exposure by counterparty after taking into account the effects of netting agreements and collateral arrangements. The Company values its OTC-bilateral and OTC-cleared derivatives using standard swap curves which may include a spread to the risk-free rate, depending upon specific collateral arrangements. This credit spread is appropriate for those parties that execute trades at pricing levels consistent with similar collateral arrangements. As the Company and its significant derivative counterparties generally execute trades at such pricing levels and hold sufficient collateral, additional credit risk adjustments are not currently required in the valuation process. The Company’s ability to consistently execute at such pricing levels is in part due to the netting agreements and collateral arrangements that are in place with all of its significant derivative counterparties. An evaluation of the requirement to make additional credit risk adjustments is performed by the Company each reporting period.

Freestanding Derivatives Valuation Techniques and Key Inputs

Level 2

This level includes all types of derivatives utilized by the Company with the exception of exchange-traded derivatives included within Level 1 and those derivatives with unobservable inputs as described in Level 3.

Level 3

These valuation methodologies generally use the same inputs as described in the corresponding sections for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data.

Freestanding derivatives are principally valued using the income approach. Valuations of non-option-based derivatives utilize present value techniques, whereas valuations of option-based derivatives utilize option pricing models. Key inputs are as follows:

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

______________

(1) Option-based only.

53

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

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

Embedded Derivatives

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, certain affiliated ceded reinsurance agreements related to such variable annuity guarantees, equity or bond indexed crediting rates within certain funding agreements and those 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 certain GMIBs contain embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivative gains (losses). These embedded derivatives are classified within policyholder account balances on the consolidated balance sheets.

The Company’s actuarial department calculates the fair value of these embedded derivatives, which are estimated as the present value of projected future benefits minus the present value of projected future fees using actuarial and capital market assumptions including expectations concerning policyholder behavior. The calculation is based on in-force business, 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.

The valuation of these guarantee liabilities includes nonperformance risk adjustments and adjustments for a risk margin related to non-capital market inputs. The nonperformance adjustment is determined by taking into consideration publicly available information relating to spreads in the secondary market for MetLife, Inc.’s debt, including related credit default swaps. These observable spreads are then adjusted, as necessary, to reflect the priority of these liabilities and the claims paying ability of the issuing insurance subsidiaries compared to MetLife, Inc.

Risk margins are established to capture the non-capital market risks of the instrument which represent the additional compensation a market participant would require to assume the risks related to the uncertainties of such actuarial assumptions as annuitization, premium persistency, partial withdrawal and surrenders. The establishment of risk margins requires the use of significant management judgment, including assumptions of the amount and cost of capital needed to cover the guarantees. These guarantees may be more costly than expected in volatile or declining equity markets. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates; changes in nonperformance risk; and variations in actuarial assumptions regarding policyholder behavior, mortality and risk margins related to non-capital market inputs, may result in significant fluctuations in the estimated fair value of the guarantees that could materially affect net income.

The Company ceded the risk associated with certain of the GMIBs, GMABs and GMWBs previously described. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also ceded 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, Long-term Debt of CSEs — FVO and Trading Liabilities.” 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.

54

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

The estimated fair value of the embedded equity and bond indexed derivatives contained in certain funding agreements is determined using market standard swap valuation models and observable market inputs, including a nonperformance risk adjustment. The estimated fair value of these embedded derivatives are included, along with their funding agreements host, within policyholder account balances with changes in estimated fair value recorded in net derivative gains (losses). Changes in equity and bond indices, interest rates and the Company’s credit standing 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.

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.

Embedded derivatives within funds withheld related to certain ceded reinsurance

These embedded derivatives are principally valued using the income approach. The valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and the fair value of assets within the reference portfolio. 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 fair value of certain assets within the reference portfolio which are not observable in the market and cannot be derived principally from, or corroborated by, observable market data.

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 June 30, 2015, transfers between Levels 1 and 2 were not significant. For assets and liabilities measured at estimated fair value and still held at December 31, 2014, there were no transfers between Levels 1 and 2.

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.

55

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

Transfers out of Level 3 for fixed maturity securities, equity securities, short-term investments, and separate account assets 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.

Assets and Liabilities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)

The following table presents certain quantitative information about the significant unobservable inputs used in the fair value measurement, and the sensitivity of the estimated fair value to changes in those inputs, for the more significant asset and liability classes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at:

					June 30, 2015				December 31, 2014				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	•	Matrix pricing	•	Delta spread adjustments (4)	(40)	-	240	39	(40)	-	240	39	Decrease
			•	Offered quotes (5)	64	-	100	95	64	-	130	96	Increase
	•	Market pricing	•	Quoted prices (5)	6	-	462	123	—	-	590	126	Increase
	•	Consensus pricing	•	Offered quotes (5)	95	-	119	101	98	-	126	101	Increase
RMBS	•	Market pricing	•	Quoted prices (5)	12	-	120	93	22	-	120	97	Increase (6)
	•	Consensus pricing	•	Offered quotes (5)	33	-	113	94	1	-	118	93	Increase (6)
ABS	•	Market pricing	•	Quoted prices (5)	15	-	110	101	15	-	110	100	Increase (6)
	•	Consensus pricing	•	Offered quotes (5)	97	-	106	100	56	-	106	98	Increase (6)
Derivatives
Interest rate	•	Present value techniques	•	Swap yield (7)	322	-	322		290	-	290		Increase (11)
Foreign currency exchange rate	•	Present value techniques	•	Swap yield (7)	—	-	—		—	-	—		Increase (11)
			•	Correlation (8)	39%	-	57%		40%	-	55%
Credit	•	Present value techniques	•	Credit spreads (9)	99	-	100		98	-	100		Decrease (9)
	•	Consensus pricing	•	Offered quotes (10)
Equity market	•	Present value techniques or option pricing models	•	Volatility (12)	18%	-	35%		15%	-	27%		Increase (11)
			•	Correlation (8)	70%	-	70%		70%	-	70%
Embedded derivatives
Direct and ceded guaranteed minimum benefits	•	Option pricing techniques	•	Mortality rates:
				Ages 0 - 40	0%	-	0.09%		0%	-	0.10%		Decrease (13)
				Ages 41 - 60	0.04%	-	0.65%		0.04%	-	0.65%		Decrease (13)
				Ages 61 - 115	0.26%	-	100%		0.26%	-	100%		Decrease (13)
			•	Lapse rates:
				Durations 1 - 10	0.50%	-	100%		0.50%	-	100%		Decrease (14)
				Durations 11 - 20	3%	-	100%		3%	-	100%		Decrease (14)
				Durations 21 - 116	3%	-	100%		3%	-	100%		Decrease (14)
			•	Utilization rates	0%	-	30%		20%	-	50%		Increase (15)
			•	Withdrawal rates	0.08%	-	10%		0.07%	-	10%		(16)
			•	Long-term equity volatilities	17.40%	-	25%		17.40%	-	25%		Increase (17)
			•	Nonperformance risk spread	0.04%	-	0.45%		0.03%	-	0.46%		Decrease (18)

__________________

(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.

56

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

(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) Ranges represent the different correlation factors utilized as components within the valuation methodology. Presenting a range of correlation factors is more representative of the unobservable input used in the valuation. Increases (decreases) in correlation in isolation will increase (decrease) the significance of the change in valuations.

(9) Represents the risk quoted in basis points of a credit default event on the underlying instrument. Credit derivatives with significant unobservable inputs are primarily comprised of written credit default swaps.

(10) At both June 30, 2015 and December 31, 2014, independent non-binding broker quotations were used in the determination of less than 1% of the total net derivative estimated fair value.

(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) 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.

(13) Mortality rates vary by age and by demographic characteristics such as gender. Mortality rate assumptions are based on company experience. A mortality improvement assumption is also applied. For any given contract, mortality rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(14) Base lapse rates are adjusted at the contract level based on a comparison of the actuarially calculated guaranteed values and the current policyholder account value, as well as other factors, such as the applicability of any surrender charges. A dynamic lapse function reduces the base lapse rate when the guaranteed amount is greater than the account value, as in the money contracts are less likely to lapse. Lapse rates are also generally assumed to be lower in periods when a surrender charge applies. For any given contract, lapse rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

(15) The utilization rate assumption estimates the percentage of 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.

(16) The withdrawal rate represents the percentage of account balance that any given policyholder will elect to withdraw from the contract each year. The withdrawal rate assumption varies by age and duration of the contract, and also by other factors such as benefit type. For any given contract, withdrawal rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative. For GMWBs, any increase (decrease) in withdrawal rates results in an increase (decrease) in the estimated fair value of the guarantees. For GMABs and GMIBs, any increase (decrease) in withdrawal rates results in a decrease (increase) in the estimated fair value.

(17) Long-term equity volatilities represent equity volatility beyond the period for which observable equity volatilities are available. For any given contract, long-term equity volatility rates vary throughout the period over which cash flows are projected for purposes of valuing the embedded derivative.

57

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

(18) Nonperformance risk spread varies by duration and by currency. For any given contract, multiple nonperformance risk spreads will apply, depending on the duration of the cash flow being discounted for purposes of valuing the embedded derivative.

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 residential mortgage loans — FVO, long-term debt and long-term debt of CSEs—FVO are valued using independent non-binding broker quotations and internal models including matrix pricing and discounted cash flow methodologies using current interest rates. 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.”

58

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

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			U.S. Treasury and Agency		Foreign Corporate			RMBS			ABS			CMBS			State and Political Subdivision		Foreign Government
	(In millions)
Three Months Ended June 30, 2015
Balance, beginning of period	$	5,189		$	—	$	3,507		$	3,557		$	1,325		$	313		$	—	$	167
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	3			—		1			24			1			—			—		—
Net investment gains (losses)	17			—		(1		)	10			—			—			—		—
Net derivative gains (losses)	—			—		—			—			—			—			—		—
OCI	(222		)	—		(39		)	15			4			5			—		(1		)
Purchases (3)	251			30		65			219			109			3			48		—
Sales (3)	(240		)	—		(85		)	(265		)	(46		)	(48		)	—		(1		)
Issuances (3)	—			—		—			—			—			—			—		—
Settlements (3)	—			—		—			—			—			—			—		—
Transfers into Level 3 (4)	108			—		65			6			9			58			—		—
Transfers out of Level 3 (4)	(67		)	—		(5		)	(494		)	(441		)	(5		)	—		—
Balance, end of period	$	5,039		$	30	$	3,508		$	3,072		$	961		$	326		$	48	$	165
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	2		$	—	$	—		$	24		$	1		$	—		$	—	$	—
Net investment gains (losses)	$	—		$	—	$	—		$	(1	)	$	—		$	—		$	—	$	—
Net derivative gains (losses)	$	—		$	—	$	—		$	—		$	—		$	—		$	—	$	—

59

Metropolitan Life Insurance Company

(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						Trading and FVO Securities
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities			FVO General Account Securities		FVO Securities Held by CSEs		Short-term Investments			Residential Mortgage Loans - FVO
	(In millions)
Three Months Ended June 30, 2015
Balance, beginning of period	$	59		$	166		$	10		$	14	$	10	$	880		$	329
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			1		—		—			(2		)
Net investment gains (losses)	1			—			—			—		—		—			—
Net derivative gains (losses)	—			—			—			—		—		—			—
OCI	(3		)	(1		)	—			—		—		—			—
Purchases (3)	40			2			8			—		—		871			45
Sales (3)	(3		)	—			(4		)	—		—		(645		)	(23		)
Issuances (3)	—			—			—			—		—		—			—
Settlements (3)	—			—			—			—		—		—			(4		)
Transfers into Level 3 (4)	—			85			—			—		—		—			—
Transfers out of Level 3 (4)	—			(1		)	(1		)	—		—		(173		)	—
Balance, end of period	$	94		$	251		$	13		$	15	$	10	$	933		$	345
Changes in unrealized gains (losses) included in net income (loss):(5)
Net investment income	$	—		$	—		$	—		$	—	$	—	$	—		$	(2	)
Net investment gains (losses)	$	—		$	—		$	—		$	—	$	—	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—	$	—	$	—		$	—

60

Metropolitan Life Insurance Company

(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)
	Net Derivatives (6)
	Interest Rate			Foreign Currency Exchange Rate			Credit			Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt			Long-term Debt of CSEs — FVO			Trading Liabilities
	(In millions)
Three Months Ended June 30, 2015
Balance, beginning of period	$	21		$	9		$	11		$	(39	)	$	(184	)	$	1,725		$	(30	)	$	(12	)	$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			—			—			—			—			—			—
Net investment gains (losses)	—			—			—			—			—			(26		)	—			—			—
Net derivative gains (losses)	—			(1		)	(3		)	16			481			—			—			—			—
OCI	(10		)	—			—			—			—			—			—			—			—
Purchases (3)	—			—			—			—			—			108			—			—			(4		)
Sales (3)	—			—			—			—			—			(77		)	—			—			—
Issuances (3)	(1		)	—			—			—			—			—			—			—			—
Settlements (3)	2			—			—			—			(44		)	(1		)	5			—			—
Transfers into Level 3 (4)	—			—			—			—			—			—			—			—			—
Transfers out of Level 3 (4)	—			—			—			—			—			(166		)	—			—			—
Balance, end of period	$	12		$	8		$	8		$	(23	)	$	253		$	1,563		$	(25	)	$	(12	)	$	(4	)
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	(1	)	$	(1	)	$	16		$	486		$	—		$	—		$	—		$	—

61

Metropolitan Life Insurance Company

(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			U.S. Treasury and Agency			Foreign Corporate			RMBS			ABS			CMBS			State and Political Subdivision		Foreign Government
	(In millions)
Three Months Ended June 30, 2014
Balance, beginning of period	$	5,290		$	20		$	3,194		$	2,784		$	1,445		$	316		$	—	$	205
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	2			—			1			24			—			—			—		—
Net investment gains (losses)	7			—			—			—			2			—			—		—
Net derivative gains (losses)	—			—			—			—			—			—			—		—
OCI	89			—			79			71			(17		)	1			—		1
Purchases (3)	295			301			284			739			1,245			13			—		21
Sales (3)	(410		)	(1		)	(67		)	(194		)	(159		)	(6		)	—		(6		)
Issuances (3)	—			—			—			—			—			—			—		—
Settlements (3)	—			—			—			—			—			—			—		—
Transfers into Level 3 (4)	158			—			—			—			43			—			2		1
Transfers out of Level 3 (4)	(178		)	—			(155		)	(77		)	(257		)	(10		)	—		(68		)
Balance, end of period	$	5,253		$	320		$	3,336		$	3,347		$	2,302		$	314		$	2	$	154
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	12		$	1		$	—		$	—	$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—

62

Metropolitan Life Insurance Company

(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						Trading and FVO Securities
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities			FVO General Account Securities		FVO Securities Held by CSEs		Short-term Investments			Residential Mortgage Loans - FVO
	(In millions)
Three Months Ended June 30, 2014
Balance, beginning of period	$	57		$	316		$	11		$	14	$	11	$	686		$	352
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			—		—		—			8
Net investment gains (losses)	(1		)	(3		)	—			—		—		—			—
Net derivative gains (losses)	—			—			—			—		—		—			—
OCI	31			9			—			—		—		—			—
Purchases (3)	13			—			19			—		—		200			24
Sales (3)	(3		)	—			(2		)	—		—		(298		)	(3		)
Issuances (3)	—			—			—			—		—		—			—
Settlements (3)	—			—			—			—		—		—			(14		)
Transfers into Level 3 (4)	—			—			—			—		—		—			—
Transfers out of Level 3 (4)	—			(156		)	(8		)	—		—		(366		)	—
Balance, end of period	$	97		$	166		$	20		$	14	$	11	$	222		$	367
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—	$	—	$	—		$	8
Net investment gains (losses)	$	(1	)	$	(3	)	$	—		$	—	$	—	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—	$	—	$	—		$	—

63

Metropolitan Life Insurance Company

(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)
	Net Derivatives (6)
	Interest Rate			Foreign Currency Exchange Rate		Credit			Equity Market		Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt			Long-term Debt of CSEs — FVO			Trading Liabilities
	(In millions)
Three Months Ended June 30, 2014
Balance, beginning of period	$	18		$	14	$	16		$	—	$	(28	)	$	1,464		$	(24	)	$	(15	)	$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—		—			—		—			—			—			—			—
Net investment gains (losses)	—			—		—			—		—			21			—			—			—
Net derivative gains (losses)	—			1		(1		)	—		(158		)	—			—			—			—
OCI	—			—		—			—		—			—			—			—			—
Purchases (3)	—			—		—			—		—			120			—			—			—
Sales (3)	—			—		—			—		—			(76		)	—			—			—
Issuances (3)	—			—		—			—		—			57			—			—			—
Settlements (3)	(5		)	—		—			—		18			(27		)	1			—			—
Transfers into Level 3 (4)	—			—		—			—		—			4			—			—			—
Transfers out of Level 3 (4)	—			—		—			—		—			(122		)	—			—			—
Balance, end of period	$	13		$	15	$	15		$	—	$	(168	)	$	1,441		$	(23	)	$	(15	)	$	—
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—	$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—	$	(1	)	$	—	$	(155	)	$	—		$	—		$	—		$	—

64

Metropolitan Life Insurance Company

(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			U.S. Treasury and Agency		Foreign Corporate			RMBS			ABS			CMBS			State and Political Subdivision		Foreign Government
	(In millions)
Six Months Ended June 30, 2015
Balance, beginning of period	$	4,937		$	—	$	3,591		$	3,629		$	1,492		$	449		$	—	$	202
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	3			—		2			48			(5		)	—			—		—
Net investment gains (losses)	17			—		(1		)	12			(3		)	—			—		—
Net derivative gains (losses)	—			—		—			—			—			—			—		—
OCI	(173		)	—		(113		)	(3		)	(11		)	(5		)	—		9
Purchases (3)	472			30		66			402			260			3			48		—
Sales (3)	(337		)	—		(119		)	(435		)	(208		)	(148		)	—		—
Issuances (3)	—			—		—			—			—			—			—		—
Settlements (3)	—			—		—			—			—			—			—		—
Transfers into Level 3 (4)	156			—		91			6			25			65			—		—
Transfers out of Level 3 (4)	(36		)	—		(9		)	(587		)	(589		)	(38		)	—		(46		)
Balance, end of period	$	5,039		$	30	$	3,508		$	3,072		$	961		$	326		$	48	$	165
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	2		$	—	$	—		$	48		$	(6	)	$	—		$	—	$	—
Net investment gains (losses)	$	—		$	—	$	—		$	(1	)	$	—		$	—		$	—	$	—
Net derivative gains (losses)	$	—		$	—	$	—		$	—		$	—		$	—		$	—	$	—

65

Metropolitan Life Insurance Company

(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						Trading and FVO Securities
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities		FVO General Account Securities		FVO Securities Held by CSEs			Short-term Investments			Residential Mortgage Loans - FVO
	(In millions)
Six Months Ended June 30, 2015
Balance, beginning of period	$	52		$	163		$	5	$	14	$	12		$	230		$	308
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—		1		—			—			20
Net investment gains (losses)	—			—			—		—		—			—			—
Net derivative gains (losses)	—			—			—		—		—			—			—
OCI	—			(4		)	—		—		—			—			—
Purchases (3)	43			5			8		—		—			934			104
Sales (3)	(2		)	—			—		—		(1		)	(3		)	(71		)
Issuances (3)	—			—			—		—		—			—			—
Settlements (3)	—			—			—		—		—			—			(16		)
Transfers into Level 3 (4)	1			87			—		—		—			—			—
Transfers out of Level 3 (4)	—			—			—		—		(1		)	(228		)	—
Balance, end of period	$	94		$	251		$	13	$	15	$	10		$	933		$	345
Changes in unrealized gains (losses) included in net income (loss):(5)
Net investment income	$	—		$	—		$	—	$	—	$	—		$	—		$	20
Net investment gains (losses)	$	—		$	—		$	—	$	—	$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—	$	—	$	—		$	—		$	—

66

Metropolitan Life Insurance Company

(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)
	Net Derivatives (6)
	Interest Rate			Foreign Currency Exchange Rate			Credit			Equity Market			Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt			Long-term Debt of CSEs — FVO			Trading Liabilities
	(In millions)
Six Months Ended June 30, 2015
Balance, beginning of period	$	17		$	7		$	12		$	(30	)	$	(67	)	$	1,615		$	(35	)	$	(13	)	$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			—			—			—			—			—			—
Net investment gains (losses)	—			—			—			—			—			6			—			—			—
Net derivative gains (losses)	—			2			(4		)	7			412			—			—			—			—
OCI	(5		)	—			—			—			—			—			—			—			—
Purchases (3)	—			—			—			—			—			224			—			—			(4		)
Sales (3)	—			—			—			—			—			(174		)	—			—			—
Issuances (3)	—			—			—			—			—			1			—			—			—
Settlements (3)	—			(1		)	—			—			(92		)	(2		)	10			1			—
Transfers into Level 3 (4)	—			—			—			—			—			—			—			—			—
Transfers out of Level 3 (4)	—			—			—			—			—			(107		)	—			—			—
Balance, end of period	$	12		$	8		$	8		$	(23	)	$	253		$	1,563		$	(25	)	$	(12	)	$	(4	)
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	1		$	(2	)	$	6		$	419		$	—		$	—		$	—		$	—

67

Metropolitan Life Insurance Company

(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			U.S. Treasury and Agency			Foreign Corporate			RMBS			ABS			CMBS			State and Political Subdivision		Foreign Government
	(In millions)
Six Months Ended June 30, 2014
Balance, beginning of period	$	5,269		$	62		$	3,198		$	2,513		$	2,526		$	430		$	—	$	274
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	1			—			1			33			5			—			—		—
Net investment gains (losses)	1			—			2			5			(40		)	—			—		—
Net derivative gains (losses)	—			—			—			—			—			—			—		—
OCI	213			—			166			56			49			4			—		1
Purchases (3)	540			301			384			1,007			1,485			18			—		21
Sales (3)	(486		)	(1		)	(104		)	(331		)	(345		)	(16		)	—		—
Issuances (3)	—			—			—			—			—			—			—		—
Settlements (3)	—			—			—			—			—			—			—		—
Transfers into Level 3 (4)	188			—			77			132			100			10			2		1
Transfers out of Level 3 (4)	(473		)	(42		)	(388		)	(68		)	(1,478		)	(132		)	—		(143		)
Balance, end of period	$	5,253		$	320		$	3,336		$	3,347		$	2,302		$	314		$	2	$	154
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	(1	)	$	—		$	1		$	21		$	—		$	—		$	—	$	—
Net investment gains (losses)	$	(6	)	$	—		$	—		$	—		$	—		$	—		$	—	$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—

68

Metropolitan Life Insurance Company

(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						Trading and FVO Securities
	Common Stock			Non- redeemable Preferred Stock			Actively Traded Securities			FVO General Account Securities		FVO Securities Held by CSEs			Short-term Investments			Residential Mortgage Loans - FVO
	(In millions)
Six Months Ended June 30, 2014
Balance, beginning of period	$	50		$	278		$	12		$	14	$	—		$	175		$	338
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			—		—			—			11
Net investment gains (losses)	1			(3		)	—			—		—			—			—
Net derivative gains (losses)	—			—			—			—		—			—			—
OCI	38			9			—			—		—			—			—
Purchases (3)	16			—			20			—		—			200			51
Sales (3)	(8		)	—			(5		)	—		(1		)	(39		)	(8		)
Issuances (3)	—			—			—			—		—			—			—
Settlements (3)	—			—			—			—		—			—			(25		)
Transfers into Level 3 (4)	—			—			—			—		12			—			—
Transfers out of Level 3 (4)	—			(118		)	(7		)	—		—			(114		)	—
Balance, end of period	$	97		$	166		$	20		$	14	$	11		$	222		$	367
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—	$	—		$	—		$	11
Net investment gains (losses)	$	(2	)	$	(3	)	$	—		$	—	$	(1	)	$	—		$	—
Net derivative gains (losses)	$	—		$	—		$	—		$	—	$	—		$	—		$	—

69

Metropolitan Life Insurance Company

(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)
	Net Derivatives (6)
	Interest Rate			Foreign Currency Exchange Rate			Credit			Equity Market		Net Embedded Derivatives (7)			Separate Account Assets (8)			Long-term Debt			Long-term Debt of CSEs — FVO			Trading Liabilities
	(In millions)
Six Months Ended June 30, 2014
Balance, beginning of period	$	(1	)	$	14		$	23		$	—	$	48		$	1,209		$	(43	)	$	(28	)	$	—
Total realized/unrealized gains (losses) included in:
Net income (loss): (1), (2)
Net investment income	—			—			—			—		—			—			—			—			—
Net investment gains (losses)	—			—			—			—		—			55			—			—			—
Net derivative gains (losses)	—			2			(5		)	—		(249		)	—			—			—			—
OCI	19			—			—			—		—			—			—			—			—
Purchases (3)	—			—			—			—		—			298			—			—			—
Sales (3)	—			—			—			—		—			(125		)	—			—			—
Issuances (3)	—			—			(3		)	—		—			80			—			—			—
Settlements (3)	(5		)	(1		)	—			—		33			(28		)	2			13			—
Transfers into Level 3 (4)	—			—			—			—		—			2			—			—			—
Transfers out of Level 3 (4)	—			—			—			—		—			(50		)	18			—			—
Balance, end of period	$	13		$	15		$	15		$	—	$	(168	)	$	1,441		$	(23	)	$	(15	)	$	—
Changes in unrealized gains (losses) included in net income (loss): (5)
Net investment income	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net investment gains (losses)	$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—
Net derivative gains (losses)	$	—		$	1		$	(4	)	$	—	$	(243	)	$	—		$	—		$	—		$	—

__________________

(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), while changes in estimated fair value of residential mortgage loans - FVO are included in net investment income. Lapses associated with net embedded derivatives are included in net derivative gains (losses).

(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).

70

Metropolitan Life Insurance Company

(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 residential mortgage loans, which are accounted for under the FVO, and were initially measured at fair value.

	June 30, 2015			December 31, 2014
	(In millions)
Unpaid principal balance	$	482		$	436
Difference between estimated fair value and unpaid principal balance	(137		)	(128		)
Carrying value at estimated fair value	$	345		$	308
Loans in non-accrual status	$	141		$	125

The following table presents information for long-term debt, which is accounted for under the FVO, and was initially measured at fair value.

	Long-term Debt				Long-term Debt of CSEs
	June 30, 2015		December 31, 2014		June 30, 2015			December 31, 2014
	(In millions)
Contractual principal balance	$	101	$	115	$	25		$	26
Difference between estimated fair value and contractual principal balance	2		2		(13		)	(13		)
Carrying value at estimated fair value (1)	$	103	$	117	$	12		$	13

__________________

(1) Changes in estimated fair value are recognized in net investment gains (losses). Interest expense 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 (for example, when there is evidence of impairment). The estimated fair values for these assets were determined using significant unobservable inputs (Level 3).

	At June 30,				Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015		2014		2015			2014			2015			2014
	Carrying Value After Measurement				Gains (Losses)
	(In millions)
Mortgage loans (1)	$	93	$	112	$	1		$	—		$	4		$	(1	)
Other limited partnership interests (2)	$	36	$	63	$	(9	)	$	(33	)	$	(19	)	$	(33	)

__________________

(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 June 30, 2015 and 2014 were not significant.

71

Metropolitan Life Insurance Company

(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, short-term debt and those short-term investments that are not securities, such as time deposits, and therefore are not included in the three level hierarchy table disclosed in the “— Recurring Fair Value Measurements” section. The estimated fair value of the excluded financial instruments, which are primarily classified in Level 2, 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:

	June 30, 2015
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	51,368	$	—	$	—	$	53,325	$	53,325
Policy loans	$	8,526	$	—	$	800	$	9,513	$	10,313
Real estate joint ventures	$	18	$	—	$	—	$	47	$	47
Other limited partnership interests	$	543	$	—	$	—	$	689	$	689
Other invested assets	$	2,374	$	—	$	2,214	$	210	$	2,424
Premiums, reinsurance and other receivables	$	14,818	$	—	$	1,087	$	14,553	$	15,640
Other assets	$	89	$	—	$	89	$	—	$	89
Liabilities
Policyholder account balances	$	72,809	$	—	$	—	$	74,570	$	74,570
Long-term debt	$	1,896	$	—	$	1,989	$	264	$	2,253
Other liabilities	$	21,434	$	—	$	2,029	$	20,021	$	22,050
Separate account liabilities	$	63,144	$	—	$	63,144	$	—	$	63,144

	December 31, 2014
			Fair Value Hierarchy
	Carrying Value		Level 1		Level 2		Level 3		Total Estimated Fair Value
	(In millions)
Assets
Mortgage loans	$	48,751	$	—	$	—	$	50,992	$	50,992
Policy loans	$	8,491	$	—	$	796	$	9,614	$	10,410
Real estate joint ventures	$	30	$	—	$	—	$	54	$	54
Other limited partnership interests	$	635	$	—	$	—	$	819	$	819
Other invested assets	$	2,385	$	—	$	2,270	$	220	$	2,490
Premiums, reinsurance and other receivables	$	13,845	$	—	$	94	$	14,607	$	14,701
Other assets	$	—	$	—	$	—	$	—	$	—
Liabilities
Policyholder account balances	$	73,225	$	—	$	—	$	75,481	$	75,481
Long-term debt	$	1,897	$	—	$	2,029	$	268	$	2,297
Other liabilities	$	20,139	$	—	$	609	$	20,133	$	20,742
Separate account liabilities	$	60,840	$	—	$	60,840	$	—	$	60,840

72

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

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.

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. 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.”

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.

Other Assets

Other assets in the preceding tables are primarily composed of a receivable or funds due but not yet settled and are short-term in nature; therefore, carrying value approximates fair value.

Policyholder Account Balances

These policyholder account balances 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.”

73

Metropolitan Life Insurance Company

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

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

7. Fair Value (continued)

The investment contracts primarily include certain funding agreements, fixed deferred annuities, modified guaranteed annuities, fixed term payout annuities and total control accounts (“TCA”). 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 of instruments classified as Level 2 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.

Valuations of instruments classified as Level 3 are based primarily on discounted cash flow methodologies that utilize unobservable discount rates that can vary significantly based upon the specific terms of each individual arrangement.

Other Liabilities

Other liabilities consist primarily of interest payable, amounts due for securities purchased but not yet settled, funds withheld amounts payable, which are contractually withheld by the Company in accordance with the terms of the reinsurance agreements, and amounts payable under certain assumed reinsurance agreements, which are recorded using the deposit method of accounting. 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, with the exception of certain deposit type reinsurance payables. For such payables, the estimated fair value is determined as the present value of expected future cash flows, which are discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty.

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, funding agreements related to group life contracts 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. Equity

Accumulated Other Comprehensive Income (Loss)

Information regarding changes in the balances of each component of AOCI attributable to Metropolitan Life Insurance Company was as follows:

	Three Months   Ended   June 30, 2015
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, beginning of period	$	6,331		$	1,502		$	(27	)	$	(2,200	)	$	5,606
OCI before reclassifications	(3,263		)	(294		)	(63		)	—			(3,620		)
Deferred income tax benefit (expense)	1,144			103			24			—			1,271
AOCI before reclassifications, net of income tax	4,212			1,311			(66		)	(2,200		)	3,257
Amounts reclassified from AOCI	40			(266		)	—			58			(168		)
Deferred income tax benefit (expense)	(14		)	93			—			(20		)	59
Amounts reclassified from AOCI, net of income tax	26			(173		)	—			38			(109		)
Balance, end of period	$	4,238		$	1,138		$	(66	)	$	(2,162	)	$	3,148

	Three Months   Ended   June 30, 2014
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, beginning of period	$	5,254		$	367		$	34		$	(1,548	)	$	4,107
OCI before reclassifications	2,101			109			6			(52		)	2,164
Deferred income tax benefit (expense)	(727		)	(39		)	(3		)	9			(760		)
AOCI before reclassifications, net of income tax	6,628			437			37			(1,591		)	5,511
Amounts reclassified from AOCI	(50		)	(61		)	—			44			(67		)
Deferred income tax benefit (expense)	18			21			—			(15		)	24
Amounts reclassified from AOCI, net of income tax	(32		)	(40		)	—			29			(43		)
Balance, end of period	$	6,596		$	397		$	37		$	(1,562	)	$	5,468

74

Metropolitan Life Insurance Company

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

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

8. Equity (continued)

	Six Months   Ended   June 30, 2015
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, beginning of period	$	6,200		$	1,073		$	(3	)	$	(2,236	)	$	5,034
OCI before reclassifications	(3,098		)	(155		)	(96		)	—			(3,349		)
Deferred income tax benefit (expense)	1,087			54			33			—			1,174
AOCI before reclassifications, net of income tax	4,189			972			(66		)	(2,236		)	2,859
Amounts reclassified from AOCI	75			255			—			114			444
Deferred income tax benefit (expense)	(26		)	(89		)	—			(40		)	(155		)
Amounts reclassified from AOCI, net of income tax	49			166			—			74			289
Balance, end of period	$	4,238		$	1,138		$	(66	)	$	(2,162	)	$	3,148

	Six Months   Ended   June 30, 2014
	Unrealized Investment Gains (Losses), Net of Related Offsets (1)			Unrealized Gains (Losses) on Derivatives			Foreign Currency Translation Adjustments			Defined Benefit Plans Adjustment			Total
	(In millions)
Balance, beginning of period	$	3,468		$	236		$	31		$	(1,577	)	$	2,158
OCI before reclassifications	4,809			358			13			(51		)	5,129
Deferred income tax benefit (expense)	(1,673		)	(126		)	(7		)	9			(1,797		)
AOCI before reclassifications, net of income tax	6,604			468			37			(1,619		)	5,490
Amounts reclassified from AOCI	(13		)	(109		)	—			88			(34		)
Deferred income tax benefit (expense)	5			38			—			(31		)	12
Amounts reclassified from AOCI, net of income tax	(8		)	(71		)	—			57			(22		)
Balance, end of period	$	6,596		$	397		$	37		$	(1,562	)	$	5,468

__________________

(1) See Note 5 for information on offsets to investments related to future policy benefits, DAC, VOBA and DSI, and the policyholder dividend obligation.

75

Metropolitan Life Insurance Company

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

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

8. Equity (continued)

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

AOCI Components	Amounts Reclassified from AOCI												Consolidated Statement of Operations and Comprehensive Income (Loss) Locations
	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Net unrealized investment gains (losses):
Net unrealized investment gains (losses)	$	24		$	(6	)	$	74		$	(93	)	Net investment gains (losses)
Net unrealized investment gains (losses)	15			39			40			56			Net investment income
Net unrealized investment gains (losses)	(79		)	17			(189		)	50			Net derivative gains (losses)
Net unrealized investment gains (losses), before income tax	(40		)	50			(75		)	13
Income tax (expense) benefit	14			(18		)	26			(5		)
Net unrealized investment gains (losses), net of income tax	$	(26	)	$	32		$	(49	)	$	8
Unrealized gains (losses) on derivatives - cash flow hedges:
Interest rate swaps	$	7		$	11		$	12		$	27		Net derivative gains (losses)
Interest rate swaps	4			2			6			4			Net investment income
Interest rate forwards	1			1			3			1			Net derivative gains (losses)
Interest rate forwards	—			—			1			1			Net investment income
Foreign currency swaps	255			47			(277		)	77			Net derivative gains (losses)
Foreign currency swaps	(1		)	—			(1		)	(1		)	Net investment income
Credit forwards	—			—			1			—			Net derivative gains (losses)
Gains (losses) on cash flow hedges, before income tax	266			61			(255		)	109
Income tax (expense) benefit	(93		)	(21		)	89			(38		)
Gains (losses) on cash flow hedges, net of income tax	$	173		$	40		$	(166	)	$	71
Defined benefit plans adjustment: (1)
Amortization of net actuarial gains (losses)	$	(59	)	$	(43	)	$	(116	)	$	(87	)
Amortization of prior service (costs) credit	1			(1		)	2			(1		)
Amortization of defined benefit plan items, before income tax	(58		)	(44		)	(114		)	(88		)
Income tax (expense) benefit	20			15			40			31
Amortization of defined benefit plan items, net of income tax	$	(38	)	$	(29	)	$	(74	)	$	(57	)
Total reclassifications, net of income tax	$	109		$	43		$	(289	)	$	22

__________________

(1) These AOCI components are included in the computation of net periodic benefit costs. See Note 10.

76

Metropolitan Life Insurance Company

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

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

9. Other Expenses

Information on other expenses was as follows:

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Compensation	$	542		$	565		$	1,090		$	1,048
Pension, postretirement and postemployment benefit costs	62			69			116			156
Commissions	171			209			322			391
Volume-related costs	65			53			104			(35		)
Affiliated interest costs on ceded and assumed reinsurance	196			242			415			482
Capitalization of DAC	(117		)	(107		)	(229		)	(207		)
Amortization of DAC and VOBA	84			152			292			394
Interest expense on debt	33			37			65			76
Premium taxes, licenses and fees	99			86			187			163
Professional services	289			251			528			475
Rent and related expenses, net of sublease income	21			38			40			70
Other	(7		)	(135		)	(2		)	(205		)
Total other expenses	$	1,438		$	1,460		$	2,928		$	2,808

Affiliated Expenses

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

10. Employee Benefit Plans

Pension and Other Postretirement Benefit Plans

The Company sponsors and administers various U.S. qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans covering employees and sales representatives who meet specified eligibility requirements. Participating affiliates are allocated a proportionate share of net expense related to the plans, as well as contributions made to the plans.

The Company also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees. Participating affiliates are allocated a proportionate share of net expense and contributions related to the postemployment and other postretirement plans.

The components of net periodic benefit costs were as follows:

	Three Months   Ended  June 30,
	2015						2014
	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
	(In millions)
Service costs	$	54		$	4		$	45		$	3
Interest costs	101			22			103			22
Expected return on plan assets	(135		)	(20		)	(111		)	(18		)
Amortization of net actuarial (gains) losses	48			11			41			2
Amortization of prior service costs (credit)	—			(1		)	1			—
Allocated to affiliates	(15		)	(4		)	(17		)	(2		)
Net periodic benefit costs (credit)	$	53		$	12		$	62		$	7

77

Metropolitan Life Insurance Company

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

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

10. Employee Benefit Plans (continued)

	Six Months   Ended  June 30,
	2015						2014
	Pension Benefits			Other Postretirement Benefits			Pension Benefits			Other Postretirement Benefits
	(In millions)
Service costs	$	108		$	8		$	91		$	6
Interest costs	202			44			206			43
Expected return on plan assets	(269		)	(40		)	(222		)	(37		)
Amortization of net actuarial (gains) losses	95			21			82			5
Amortization of prior service costs (credit)	—			(2		)	1			—
Allocated to affiliates	(30		)	(8		)	(19		)	(2		)
Net periodic benefit costs (credit)	$	106		$	23		$	139		$	15

11. Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a large number of litigation matters. In some of the matters, very large and/or indeterminate amounts, including punitive and treble damages, are sought. Modern pleading practice in the U.S. permits considerable variation in the assertion of monetary damages or other relief. Jurisdictions may permit claimants not to specify the monetary damages sought or may permit claimants to state only that the amount sought is sufficient to invoke the jurisdiction of the trial court. In addition, jurisdictions may permit plaintiffs to allege monetary damages in amounts well exceeding reasonably possible verdicts in the jurisdiction for similar matters. This variability in pleadings, together with the actual experience of the Company in litigating or resolving through settlement numerous claims over an extended period of time, demonstrates to management that the monetary relief which may be specified in a lawsuit or claim bears little relevance to its merits or disposition value.

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 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 at June 30, 2015. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known to management, management does not believe any such charges are likely to have a material effect on the Company’s financial position.

Matters as to Which an Estimate Can Be Made

For some of the matters disclosed below, the Company is able to estimate a reasonably possible range of loss. For such matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made. As of June 30, 2015, the Company estimates the aggregate range of reasonably possible losses in excess of amounts accrued for these matters to be $0 to $410 million.

78

Metropolitan Life Insurance Company

(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.

Asbestos-Related Claims

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

Claims asserted against Metropolitan Life Insurance Company have included negligence, intentional tort and conspiracy concerning the health risks associated with asbestos. Metropolitan Life Insurance Company’s defenses (beyond denial of certain factual allegations) include that: (i) Metropolitan Life Insurance Company owed no duty to the plaintiffs — it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs did not rely on any actions of Metropolitan Life Insurance Company; (iii) Metropolitan Life Insurance Company’s conduct was not the cause of the plaintiffs’ injuries; (iv) plaintiffs’ exposure occurred after the dangers of asbestos were known; and (v) the applicable time with respect to filing suit has expired. During the course of the litigation, certain trial courts have granted motions dismissing claims against Metropolitan Life Insurance Company, while other trial courts have denied Metropolitan Life Insurance Company’s motions. There can be no assurance that Metropolitan Life Insurance Company will receive favorable decisions on motions in the future. While most cases brought to date have settled, Metropolitan Life Insurance Company intends to continue to defend aggressively against claims based on asbestos exposure, including defending claims at trials.

As reported in the 2014 Annual Report, Metropolitan Life Insurance Company received approximately 4,636 asbestos-related claims in 2014. During the six months ended June 30, 2015 and 2014, Metropolitan Life Insurance Company received approximately 2,022 and 2,569 new asbestos-related claims, respectively. See Note 17 of the Notes to the Consolidated Financial Statements included in the 2014 Annual Report for historical information concerning asbestos claims and Metropolitan Life Insurance Company’s increase in its recorded liability at December 31, 2014. The number of asbestos cases that may be brought, the aggregate amount of any liability that Metropolitan Life Insurance Company may incur, and the total amount paid in settlements in any given year are uncertain and may vary significantly from year to year.

The ability of Metropolitan Life Insurance Company to estimate its ultimate asbestos exposure is subject to considerable uncertainty, and the conditions impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow plaintiffs to pursue claims against Metropolitan Life Insurance Company when exposure to asbestos took place after the dangers of asbestos exposure were well known, and the impact of any possible future adverse verdicts and their amounts.

79

Metropolitan Life Insurance Company

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

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

11. Contingencies, Commitments and Guarantees (continued)

The ability to make estimates regarding ultimate asbestos exposure declines significantly as the estimates relate to years further in the future. In the Company’s judgment, there is a future point after which losses cease to be probable and reasonably estimable. It is reasonably possible that the Company’s total exposure to asbestos claims may be materially greater than the asbestos liability currently accrued and that future charges to income may be necessary. While the potential future charges could be material in the particular quarterly or annual periods in which they are recorded, based on information currently known by management, management does not believe any such charges are likely to have a material effect on the Company’s financial position.

The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for asbestos-related claims. Metropolitan Life Insurance Company’s recorded asbestos liability is based on its estimation of the following elements, as informed by the facts presently known to it, its understanding of current law and its past experiences: (i) the probable and reasonably estimable liability for asbestos claims already asserted against Metropolitan Life Insurance Company, including claims settled but not yet paid; (ii) the probable and reasonably estimable liability for asbestos claims not yet asserted against Metropolitan Life Insurance Company, but which Metropolitan Life Insurance Company believes are reasonably probable of assertion; and (iii) the legal defense costs associated with the foregoing claims. Significant assumptions underlying Metropolitan Life Insurance Company’s analysis of the adequacy of its recorded liability with respect to asbestos litigation include: (i) the number of future claims; (ii) the cost to resolve claims; and (iii) the cost to defend claims.

Metropolitan Life Insurance Company reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims filed against it and other defendants and the jurisdictions in which claims are pending. Based upon its reevaluation of its exposure from asbestos litigation, Metropolitan Life Insurance Company has updated its liability analysis for asbestos-related claims through June 30, 2015.

Regulatory Matters

The Company receives and responds to subpoenas or other inquiries from state regulators, including state insurance commissioners; state attorneys general or other state governmental authorities; federal regulators, including the U.S. Securities and Exchange Commission (the “SEC”); federal governmental authorities, including congressional committees; and the Financial Industry Regulatory Authority (“FINRA”) seeking a broad range of information. The issues involved in information requests and regulatory matters vary widely. The Company cooperates in these inquiries.

In the Matter of Chemform, Inc. Site, Pompano Beach, Broward County, Florida

In July 2010, the Environmental Protection Agency (“EPA”) advised Metropolitan Life Insurance Company that it believed payments were due under two settlement agreements, known as “Administrative Orders on Consent,” that New England Mutual Life Insurance Company (“New England Mutual”) signed in 1989 and 1992 with respect to the cleanup of a Superfund site in Florida (the “Chemform Site”). The EPA originally contacted Metropolitan Life Insurance Company (as successor to New England Mutual) and a third party in 2001, and advised that they owed additional clean-up costs for the Chemform Site. The matter was not resolved at that time. The EPA is requesting payment of an amount under $1 million from Metropolitan Life Insurance Company and such third party for past costs and an additional amount for future environmental testing costs at the Chemform Site. In September 2012, the EPA, Metropolitan Life Insurance Company and the third party executed an Administrative Order on Consent under which Metropolitan Life Insurance Company and the third party have agreed to be responsible for certain environmental testing at the Chemform site. The Company estimates that its costs for the environmental testing will not exceed $100,000. The September 2012 Administrative Order on Consent does not resolve the EPA’s claim for past clean-up costs. The EPA may seek additional costs if the environmental testing identifies issues. The Company estimates that the aggregate cost to resolve this matter will not exceed $1 million.

80

Metropolitan Life Insurance Company

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

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

11. Contingencies, Commitments and Guarantees (continued)

Sales Practices Regulatory Matters

Regulatory authorities in a small number of states and FINRA, and occasionally the SEC, have had investigations or inquiries relating to sales of individual life insurance policies or annuities or other products by Metropolitan Life Insurance Company, New England Life Insurance Company (“NELICO”) and General American Life Insurance Company (“GALIC”). 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. The Company may continue to resolve investigations in a similar manner. The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for these sales practices-related investigations or inquiries.

Unclaimed Property Litigation

West Virginia Lawsuits

On September 20, 2012, the West Virginia Treasurer filed an action against Metropolitan Life Insurance Company in West Virginia state court (West Virginia ex rel. John D. Perdue v. Metropolitan Life Insurance Company, Circuit Court of Putnam County, Civil Action No. 12-C-295)alleging that Metropolitan Life Insurance Company 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 21, 2012 and January 9, 2013, the Treasurer filed substantially identical suits against NELICO and GALIC, respectively. On June 16, 2015, the West Virginia Supreme Court of Appeals reversed the Circuit Court’s order that had granted defendants’ motions to dismiss the actions and remanded them to the Circuit Court for further proceedings. The defendants intend to defend these actions vigorously.

Total Control Accounts Litigation

Metropolitan Life Insurance Company is a defendant in lawsuits related to its use of retained asset accounts, known as TCA, as a settlement option for death benefits.

Keife, et al. v. Metropolitan Life Insurance Company (D. Nev., filed in state court on July 30, 2010 and removed to federal court on September 7, 2010); and Simon v. Metropolitan Life Insurance Company (D. Nev., filed November 3, 2011)

These putative class action lawsuits, which have been consolidated, raise breach of contract claims arising from Metropolitan Life Insurance Company’s use of the TCA to pay life insurance benefits under the Federal Employees’ Group Life Insurance program. On March 8, 2013, the court granted Metropolitan Life Insurance Company’s motion for summary judgment. On June 12, 2015, the United States Court of Appeals for the Ninth Circuit affirmed the order granting summary judgment to Metropolitan Life Insurance Company.

Owens v. Metropolitan Life Insurance Company (N.D. Ga., filed April 17, 2014)

This putative class action lawsuit alleges that Metropolitan Life Insurance Company’s use of the TCA as the settlement option for life insurance benefits under some group life insurance policies violates Metropolitan Life Insurance Company’s fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”). As damages, plaintiff seeks disgorgement of profits that Metropolitan Life Insurance Company realized on accounts owned by members of the putative class. The court denied Metropolitan Life Insurance Company’s motion to dismiss the complaint. The Company intends to defend this action vigorously.

Reinsurance Litigation

Robainas, et al. v. Metropolitan Life Ins. Co. (S.D.N.Y., December 16, 2014)

Plaintiffs filed this putative class action lawsuit on behalf of themselves and all persons and entities who, directly or indirectly, purchased, renewed or paid premiums on life insurance policies issued by Metropolitan Life Insurance Company from 2009 through 2014 (the “Policies”). Two similar actions were subsequently filed,Yale v. Metropolitan Life Ins. Co. (S.D.N.Y., January 12, 2015) and International Association of Machinists and Aerospace Workers District Lodge 15 v. Metropolitan Life Ins. Co. (E.D.N.Y., February 2, 2015). Both of these actions have been consolidated with the Robainas action. The consolidated complaint alleges that Metropolitan Life Insurance Company inadequately disclosed in its statutory annual statements that certain reinsurance transactions with affiliated reinsurance companies were collateralized using “contractual parental guarantees,” and thereby allegedly misrepresented its financial condition and the adequacy of its reserves. The lawsuit seeks recovery under Section 4226 of the New York Insurance Law of a statutory penalty in the amount of the premiums paid for the Policies. MetLife intends to defend this action vigorously.

81

Metropolitan Life Insurance Company

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

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

11. Contingencies, Commitments and Guarantees (continued)

Intoccia v. Metropolitan Life Ins. Co. (S.D.N.Y., April 20, 2015); and Weilert v. Metropolitan Life Ins. Co. (S.D.N.Y., April 30, 2015)

Plaintiffs filed these putative class actions on behalf of themselves and all persons and entities who, directly or indirectly, purchased, renewed or paid premiums for Guaranteed Benefits Insurance Riders attached to variable annuity contracts with Metropolitan Life Insurance Company from 2009 through 2015 (the “Annuities”). The complaints allege that Metropolitan Life Insurance Company inadequately disclosed in its statutory annual statements that certain reinsurance transactions with affiliated reinsurance companies were collateralized using “contractual parental guarantees,” and thereby allegedly misrepresented its financial condition and the adequacy of its reserves. The lawsuits seek recovery under Section 4226 of the New York Insurance Law of a statutory penalty in the amount of the premiums paid for Guaranteed Benefits Insurance Riders attached to the Annuities. MetLife intends to defend these actions vigorously.

Other Litigation

McGuire v. Metropolitan Life Insurance Company (E.D. Mich., filed February 22, 2012)

This lawsuit was filed by the fiduciary for the Union Carbide Employees’ Pension Plan and alleges that Metropolitan Life Insurance Company, which issued annuity contracts to fund some of the benefits the Plan provides, engaged in transactions that ERISA prohibits and violated duties under ERISA and federal common law by determining that no dividends were payable with respect to the contracts from and after 1999. On August 8, 2014, the court denied the parties’ motions for summary judgment. The court has not yet set a new trial date.

Sun Life Assurance Company of Canada Indemnity Claim

In 2006, Sun Life Assurance Company of Canada (“Sun Life”), as successor to the purchaser of Metropolitan Life Insurance Company’s Canadian operations, filed a lawsuit in Toronto, seeking a declaration that Metropolitan Life Insurance Company remains liable for “market conduct claims” related to certain individual life insurance policies sold by Metropolitan Life Insurance Company and that were transferred to Sun Life. Sun Life had asked that the court require Metropolitan Life Insurance Company to indemnify Sun Life for these claims pursuant to indemnity provisions in the sale agreement for the sale of Metropolitan Life Insurance Company’s Canadian operations entered into in June of 1998. In January 2010, the court found that Sun Life had given timely notice of its claim for indemnification but, because it found that Sun Life had not yet incurred an indemnifiable loss, granted Metropolitan Life Insurance Company’s motion for summary judgment. Both parties appealed but subsequently agreed to withdraw the appeal and consider the indemnity claim through arbitration. In September 2010, Sun Life notified Metropolitan Life Insurance Company that a purported class action lawsuit was filed against Sun Life in Toronto,Fehr v. Sun Life Assurance Co. (Super. Ct., Ontario, September 2010), alleging sales practices claims regarding the same individual policies sold by Metropolitan Life Insurance Company and transferred to Sun Life. An amended class action complaint in that case was served on Sun Life in May 2013, again without naming Metropolitan Life Insurance Company as a party. On August 30, 2011, Sun Life notified Metropolitan Life Insurance Company that a purported class action lawsuit was filed against Sun Life in Vancouver, Alamwala v. Sun Life Assurance Co. (Sup. Ct., British Columbia, August 2011), alleging sales practices claims regarding certain of the same policies sold by Metropolitan Life Insurance Company and transferred to Sun Life. Sun Life contends that Metropolitan Life Insurance Company is obligated to indemnify Sun Life for some or all of the claims in these lawsuits. These sales practices cases against Sun Life are ongoing, and the Company is unable to estimate the reasonably possible loss or range of loss arising from this litigation.

C-Mart, Inc. v. Metropolitan Life Ins. Co., et al. (S.D. Fla., January 10, 2013); Cadenasso v. Metropolitan Life Insurance Co., et al. (N.D. Cal., November 26, 2013, subsequently transferred to S.D. Fla.); and Fauley v. Metropolitan Life Insurance Co., et al. (Circuit Court of the 19th Judicial Circuit, Lake County, Ill., July 3, 2014)

Plaintiffs filed these lawsuits against defendants, including Metropolitan Life Insurance Company and a former MetLife financial services representative, alleging that the defendants sent unsolicited fax advertisements to plaintiff and others in violation of the Telephone Consumer Protection Act, as amended by the Junk Fax Prevention Act, 47 U.S.C. § 227. The C-Mart and Cadenasso cases were voluntarily dismissed. In the Fauley case, the court in Illinois issued a final order certifying a nationwide settlement class and approving a settlement under which Metropolitan Life Insurance Company agreed to pay up to $23 million to resolve claims as to fax ads sent between August 23, 2008 and August 7, 2014. An objector to the settlement has filed a notice to appeal the approval order.

82

Metropolitan Life Insurance Company

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

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

11. Contingencies, Commitments and Guarantees (continued)

Voshall v. Metropolitan Life Ins. Co. (Superior Court of the State of California, County of Los Angeles, April 8, 2015)

Plaintiff filed this putative class action lawsuit on behalf of himself and all persons covered under a long-term group disability income insurance policy issued by Metropolitan Life Insurance Company to public entities in California between April 8, 2011 and April 8, 2015. Plaintiff alleges that Metropolitan Life Insurance Company improperly reduced benefits by including cost of living adjustments and employee paid contributions in the employer retirement benefits and other income that reduces the benefit payable under such policies. Plaintiff asserts causes of action for declaratory relief, violation of the California Business & Professions Code, breach of contract and breach of the implied covenant of good faith and fair dealing. The Company intends to defend this action vigorously.

Sales Practices Claims

Over the past several years, the Company has faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. Some of the current cases seek substantial damages, including punitive and treble damages and attorneys’ fees. The Company continues to defend vigorously 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

Putative or certified class action litigation and other litigation and 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 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, very 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 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 $4.4 billion and $3.9 billion at June 30, 2015 and December 31, 2014, respectively.

Commitments to Fund Partnership Investments, Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments

The Company commits to fund partnership investments and to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of these unfunded commitments were $4.0 billion and $3.6 billion at June 30, 2015 and December 31, 2014, respectively.

83

Metropolitan Life Insurance Company

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

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

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 personnel, policy administrative functions 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 $527 million and $1.1 billion for the three months and six months ended June 30, 2015, respectively, and $560 million and $1.1 billion for the three months and six months ended June 30, 2014, respectively. Revenues received from affiliates related to these agreements, recorded in universal life and investment-type product policy fees, were $35 million and $69 million for the three months and six months endedJune 30, 2015, respectively, and $31 million and $61 million for the three months and six months ended June 30, 2014, respectively. Revenues received from affiliates related to these agreements, recorded in other revenues, were $36 million and $76 million for the three months and six months ended June 30, 2015, respectively, and $44 million and $79 million for the three months and six months ended June 30, 2014, respectively.

The Company also entered into agreements with affiliates to provide additional services necessary to conduct the affiliates’ activities. Typical services provided under these agreements include management, policy administrative functions, investment advice and distribution services. Expenses incurred by the Company related to these agreements, included in other expenses, were $372 million and $742 million for the three months and six months ended June 30, 2015, respectively, and $703 million and $1.0 billion for the three months and six months ended June 30, 2014, respectively, and were reimbursed to the Company by these affiliates.

The Company had net payables to affiliates related to the items discussed above of $168 million and $169 million at June 30, 2015 and December 31, 2014, respectively.

See Notes 5 and 10 for additional information on related party transactions.

Related Party Reinsurance Transactions

The Company has reinsurance agreements with certain of MetLife, Inc.’s subsidiaries, including MetLife Insurance Company USA (“MetLife USA”), First MetLife Investors Insurance Company (“First MetLife”), MetLife Reinsurance Company of Charleston (“MRC”), MetLife Reinsurance Company of Vermont and Metropolitan Tower Life Insurance Company, all of which are related parties.

84

Metropolitan Life Insurance Company

(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  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Premiums
Reinsurance assumed	$	183		$	148		$	344		$	369
Reinsurance ceded	(4		)	(9		)	(19		)	(22		)
Net premiums	$	179		$	139		$	325		$	347
Universal life and investment-type product policy fees
Reinsurance assumed	$	14		$	8		$	26		$	20
Reinsurance ceded	(38		)	(70		)	(74		)	(137		)
Net universal life and investment-type product policy fees	$	(24	)	$	(62	)	$	(48	)	$	(117	)
Other revenues
Reinsurance assumed	$	(1	)	$	6		$	—		$	3
Reinsurance ceded	150			164			312			322
Net other revenues	$	149		$	170		$	312		$	325
Policyholder benefits and claims
Reinsurance assumed	$	148		$	125		$	320		$	355
Reinsurance ceded	(23		)	(38		)	(51		)	(75		)
Net policyholder benefits and claims	$	125		$	87		$	269		$	280
Interest credited to policyholder account balances
Reinsurance assumed	$	7		$	9		$	16		$	17
Reinsurance ceded	(22		)	(26		)	(44		)	(52		)
Net interest credited to policyholder account balances	$	(15	)	$	(17	)	$	(28	)	$	(35	)
Other expenses
Reinsurance assumed	$	50		$	79		$	116		$	167
Reinsurance ceded	145			159			295			307
Net other expenses	$	195		$	238		$	411		$	474

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

	June 30, 2015					December 31, 2014
	Assumed		Ceded			Assumed		Ceded
	(In millions)
Assets
Premiums, reinsurance and other receivables	$	340	$	15,359		$	257	$	15,453
Deferred policy acquisition costs and value of business acquired	407		(198		)	370		(231		)
Total assets	$	747	$	15,161		$	627	$	15,222
Liabilities
Future policy benefits	$	1,286	$	(5	)	$	1,146	$	—
Policyholder account balances	269		—			288		—
Other policy-related balances	196		37			264		32
Other liabilities	6,489		13,198			6,610		13,545
Total liabilities	$	8,240	$	13,230		$	8,308	$	13,577

85

Metropolitan Life Insurance Company

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

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

12. Related Party Transactions (continued)

The Company ceded two blocks of business to two affiliates on a 75% coinsurance with funds withheld basis. Certain contractual features of these agreements qualify as embedded derivatives, which are separately accounted for at estimated fair value on the Company’s consolidated balance sheets. The embedded derivatives related to the funds withheld associated with these reinsurance agreements are included within other liabilities and increased the funds withheld balance by $11 million and $20 million at June 30, 2015 and December 31, 2014, respectively. Net derivative gains (losses) associated with these embedded derivatives were $10 million and $9 million for the three months andsix months endedJune 30, 2015, respectively, and($16) million and ($36) million for thethree monthsandsix months endedJune 30, 2014, respectively.

The Company ceded risks to an affiliate related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their estimated fair value are also included within net derivative gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were $603 million and $657 million at June 30, 2015 and December 31, 2014, respectively. Net derivative gains (losses) associated with the embedded derivatives were ($110) million and ($57) million for thethree monthsand six months endedJune 30, 2015, respectively, and$2 million and $142 million for thethree monthsandsix months endedJune 30, 2014, respectively.

Certain contractual features of the closed block agreement with MRC create an embedded derivative, which is 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 was included within other liabilities and increased the funds withheld balance by $838 million and $1.1 billion at June 30, 2015 and December 31, 2014, respectively. Net derivative gains (losses) associated with the embedded derivative were $347 million and $260 million for thethree months and six months endedJune 30, 2015, respectively, and($152) millionand ($355) million for thethree months and six months endedJune 30, 2014, respectively.

In January 2014, the Company entered into an agreement with MetLife USA which reinsured all existing New York insurance policies and annuity contracts that include a separate account feature. 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 this agreement is included within policyholder account balances and was $4 million at both June 30, 2015 and December 31, 2014. Net derivative gains (losses) associated with the embedded derivative were less than $1 million for boththethree months and six months endedJune 30, 2015 and less than $1 million and ($2) million for the three months and six months endedJune 30, 2014, respectively.

In November 2014, the Company entered into an agreement to assume 100% of certain variable annuities including guaranteed minimum benefit guarantees on a modified coinsurance basis from First MetLife. As a result of this reinsurance agreement, the significant effects to the Company were decreases in other liabilities of $259 million and $269 million at June 30, 2015 and December 31, 2014, respectively. 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 this agreement is included within policyholder account balances and was $55 million and $68 million at June 30, 2015 and December 31, 2014, respectively. Net derivative gains (losses) associated with the embedded derivative were $36 million and $12 million for the three months and six months endedJune 30, 2015, respectively. The Company made a one-time payment of cash and cash equivalents to First MetLife of $218 million at December 31, 2014.

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

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

	Page
Forward-Looking Statements and Other Financial Information	88
Business	88
Summary of Critical Accounting Estimates	90
Economic Capital	90
Results of Operations	91
Adoption of New Accounting Pronouncements	110
Future Adoption of New Accounting Pronouncements	110
Non-GAAP and Other Financial Disclosures	110

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Forward-Looking Statements and Other Financial Information

For purposes of this discussion, “MLIC,” the “Company,” “we,” “our” and “us” refer to Metropolitan Life Insurance Company, a New York corporation incorporated in 1868, and its subsidiaries. Metropolitan Life Insurance Company is a wholly-owned subsidiary of MetLife, Inc. (MetLife, Inc., together with its subsidiaries and affiliates, “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 Metropolitan Life Insurance Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Annual Report”), the cautionary language regarding forward-looking statements included below, the “Risk Factors” set forth in Part II, Item 1A, and the additional risk factors referred to therein, 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 this and other measures.

Business

Overview

The Company is a provider of life insurance, annuities, employee benefits and asset management and is organized into three segments: Retail; Group, Voluntary & Worksite Benefits; and Corporate Benefit Funding. In addition, the Company reports certain of its results of operations in Corporate & Other.

In the first quarter of 2015, the Company implemented certain segment reporting changes related to the measurement of segment operating earnings, which included revising the Company’s capital allocation methodology. These changes were applied retrospectively and did not have an impact on total consolidated operating earnings or net income. Consequently, prior period results for the three months and six months ended June 30, 2014 were impacted as follows:

• Retail’s operating earnings increased (decreased) by $30 million and $63 million, net of ($4) million and ($8) million of income tax expense (benefit), respectively;

• Group, Voluntary & Worksite Benefits’ operating earnings increased (decreased) by ($4) million and ($9) million, net of ($1) million and ($4) million of income tax expense (benefit), respectively;

• Corporate Benefit Funding’s operating earnings increased (decreased) by ($14) million and ($29) million, net of ($13) million and ($22) million of income tax expense (benefit), respectively; and

• Corporate & Other’s operating earnings increased (decreased) by ($12) million and ($25) million, net of $18 million and $34 million of income tax expense (benefit), respectively.

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.

In December 2014, Metropolitan Life Insurance Company distributed to MetLife, Inc., as a dividend, all of the issued and outstanding shares of common stock of its wholly-owned, broker-dealer subsidiary, New England Securities Corporation (“NES”). See Note 3 of the Notes to the Consolidated Financial Statements in the 2014 Annual Report for further information.

88

Regulatory Developments

The U.S. insurance industry is regulated primarily at the state level, with some products and services also subject to federal regulation. In addition, we are subject to regulation under the insurance holding company laws of the states of domicile of our U.S. insurance companies. As a subsidiary of MetLife, Inc., a non-bank systemically important financial institution (“non-bank SIFI”), we are affected by MetLife, Inc.’s regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the Federal Reserve Bank of New York (together with the Federal Reserve Board, the “Federal Reserve”) and the Federal Deposit Insurance Corporation. We may also be affected by any additional capital requirements to which MetLife, Inc. may become subject as a global systemically important insurer (“G-SII”). Furthermore, some of our operations, products and services are subject to consumer protection laws, securities regulation, environmental and unclaimed property laws and regulations, and to the Employee Retirement Income Security Act of 1974 (“ERISA”). See “— ERISA Considerations” and “— Designation Process and Policy Measures that May Apply to Global Systemically Important Insurers” below, as well as “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 2014 Annual Report, as may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business — Regulatory Developments” and similarly named sections under the caption “Risk Factors.”

ERISA Considerations

We provide products and services to certain employee benefit plans that are subject to ERISA or the Internal Revenue Code of 1986, as amended (the “Code”). As such, our activities are subject to the restrictions imposed by ERISA and the Code, including the requirement under ERISA that fiduciaries must perform their duties solely in the interests of ERISA plan participants and beneficiaries, and that fiduciaries may not cause a covered plan to engage in certain prohibited transactions. The prohibited transaction rules of ERISA and the Code generally restrict the provision of investment advice to ERISA plans and participants and Individual Retirement Accounts (“IRAs”) if the investment recommendation results in fees paid to the individual advisor, his or her firm or their affiliates that vary according to the investment recommendation chosen.

The Department of Labor (“DOL”) proposed new regulations in April 2015 that would substantially expand the definition of “investment advice” and thereby broaden the circumstances under which MetLife, in providing investment advice with respect to ERISA plans, plan participants or IRAs, could be deemed a fiduciary under ERISA or the Code. Pursuant to the proposal, any communications with plans, plan participants and IRA holders, including the marketing of products, and marketing of investment management or advisory services, could be deemed fiduciary investment advice, thus, causing increased exposure to fiduciary liability. The DOL also proposed amendments to its prohibited transaction exemptions, and proposed a new exemption, that would apply more onerous disclosure and contract requirements to, and increase fiduciary requirements and fiduciary liability exposure in respect of, transactions involving ERISA plans, plan participants and IRAs. 

If the new DOL proposals become final, MetLife may find it necessary to change sales representative and/or broker compensation and may limit the assistance or advice they can provide. Sales to middle income investors would be unlikely to generate fees sufficient to offset the increased cost of providing advice under the rules, if adopted as proposed. Under the rules as proposed, MetLife could reduce its risk of exposure to fiduciary liability by electing not to engage in the concurrent manufacturing and distribution of certain products, including individual annuity products. Further, if the proposed rules apply to welfare benefit plans, they will disrupt settled practices in the marketing and sales of welfare benefit plan insurance products.

Designation Process and Policy Measures that May Apply to Global Systemically Important Insurers

The International Association of Insurance Supervisors (“IAIS”), an association of insurance supervisors and regulators and a member of the Financial Stability Board (“FSB”), an international entity established to coordinate, develop and promote regulatory, supervisory and other financial sector policies in the interest of financial stability, is participating in the FSB’s initiative to identify and manage global systemically important financial institutions and has devised and published a methodology to assess the systemic relevance of global insurers and a framework of policy measures to be applied to G-SIIs. In July 2013 and November 2014, the FSB published its lists of G-SIIs, based on the IAIS’ assessment methodology, each of which included MetLife, Inc. The FSB will continue to update the list annually.

89

For G-SIIs which engage in activities deemed to be systemically risky, the framework of policy measures calls for imposition of additional capital (higher loss absorbency (“HLA”)) requirements on those activities. Given the absence of a common global base on which to calculate an HLA for insurers, the FSB directed the IAIS to develop basic capital requirements (“BCR”). G-SIIs will initially report BCR and HLA results to their group-wide supervisors on a confidential basis to allow for refinement of the BCR until fully adopted and implemented in 2019. On June 25, 2015, the IAIS published a proposed draft of HLA requirements and has requested comments by August 21, 2015. HLA requirements must be finalized by the end of 2015 and are to be applied in 2019 to companies designated as G-SIIs in 2017.

In addition, on December 17, 2014, the IAIS released a first exposure draft of a risk-based global insurance capital standard (“ICS”) which will apply to all internationally active insurance groups, including G-SIIs. The IAIS expects to publish an interim version of the ICS by the end of 2019 for implementation by individual jurisdictions with the further goal of reaching an ultimate ICS at some later date.

The FSB and IAIS propose that national authorities ensure that any insurers identified as G-SIIs be subject to additional requirements consistent with the framework of policy measures, which include preparation of a systemic risk management plan, preparation of a recovery and resolution plan, enhanced liquidity planning and management, more intensive supervision, closer coordination among regulators through global supervisory colleges led by a regulator with group-wide supervisory authority, and a policy bias in favor of separation of non-traditional insurance and non-insurance activities from traditional insurance activities. The IAIS policy measures would need to be implemented by legislation or regulation in each applicable jurisdiction, and the impact on MetLife, Inc. and other designated G-SIIs is uncertain.

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 policy benefits and the accounting for reinsurance;

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

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

(iv) investment impairments;

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

(vi) measurement of employee benefit plan liabilities;

(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 2014 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.

MetLife’s economic capital model, coupled with considerations of local capital requirements, aligns segment allocated equity with emerging standards and consistent risk principles. The model applies statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating required economic capital shock factors to a specific confidence level and time horizon while applying an industry standard method for the inclusion of diversification benefits among risk types. Economic capital-based risk estimation is an evolving science and industry best practices have emerged and continue to evolve. Areas of evolving industry best practices include stochastic liability valuation techniques, alternative methodologies for the calculation of diversification benefits, and the quantification of appropriate shock levels. MetLife’s management is responsible for the ongoing production and enhancement of the economic capital model and reviews its approach periodically to ensure that it remains consistent with emerging industry practice standards.

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 income (loss) from continuing operations, net of income tax.

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.

90

Results of Operations

Consolidated Results

Business Overview. Sales experience was positive in the majority of our businesses for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014. The introduction of new variable annuity products and enhancements made in late 2014 and early 2015, as well as focused marketing and increased engagement across our distribution channels, all contributed to higher sales in our Retail segment. With the decrease in the U.S. unemployment rate and gradual growth in the U.S. economy, our group term life, dental, and voluntary benefits businesses generated premium growth through sales and persistency, with the dental business also benefiting from the positive impact of pricing actions on existing business. While premiums have increased, sales are lower as a result of an increase in competition, particularly in the dental business. We experienced a decrease in sales of pension closeouts as a result of the decline in funding ratios for defined benefit pension plans of Standard & Poor’s Ratings Services (“S&P”) 500 companies. More competitive pricing in the market drove a decrease in structured settlement sales.

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Revenues
Premiums	$	5,065		$	5,344		$	10,203		$	10,328
Universal life and investment-type product policy fees	647			590			1,283			1,183
Net investment income	3,059			2,994			6,025			5,941
Other revenues	386			437			783			863
Net investment gains (losses)	(93		)	(57		)	132			(89		)
Net derivative gains (losses)	(231		)	(56		)	269			63
Total revenues	8,833			9,252			18,695			18,289
Expenses
Policyholder benefits and claims and policyholder dividends	5,963			6,205			12,106			12,217
Interest credited to policyholder account balances	544			545			1,081			1,074
Capitalization of DAC	(117		)	(107		)	(229		)	(207		)
Amortization of DAC and VOBA	84			152			292			394
Interest expense on debt	33			37			65			76
Other expenses	1,438			1,378			2,800			2,545
Total expenses	7,945			8,210			16,115			16,099
Income (loss) from continuing operations before provision for income tax	888			1,042			2,580			2,190
Provision for income tax expense (benefit)	220			293			722			613
Income (loss) from continuing operations, net of income tax	668			749			1,858			1,577
Income (loss) from discontinued operations, net of income tax	—			—			—			(3		)
Net income (loss)	668			749			1,858			1,574
Less: Net income (loss) attributable to noncontrolling interests	6			—			7			1
Net income (loss) attributable to Metropolitan Life Insurance Company	$	662		$	749		$	1,851		$	1,573

Three Months Ended June 30, 2015 Compared with the Three Months Ended June 30, 2014

During the three months ended June 30, 2015, income (loss) from continuing operations, before provision for income tax, decreased $154 million ($81 million, net of income tax) from the prior period primarily driven by unfavorable changes in net derivative gains (losses).

91

Management of Investment Portfolio and Hedging Market Risks with Derivatives.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. 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.

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 foreign 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 guaranteed minimum benefits contain embedded derivatives that are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value recorded in net derivative gains (losses). We use reinsurance and derivatives to hedge the market and other risks inherent in these variable annuity guarantees. Ceded reinsurance of direct variable annuity products with guaranteed minimum benefits 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.

92

Net Derivative Gains (Losses). Direct, assumed and ceded variable annuity embedded derivatives are referred to as “VA program derivatives” in the following table. All other embedded derivatives and all freestanding 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  June 30,
	2015			2014
	(In millions)
Non-VA program derivatives
Interest rate	$	(400	)	$	130
Foreign currency exchange rate	(169		)	(37		)
Credit	(12		)	29
Non-VA embedded derivatives	411			(229		)
Total non-VA program derivatives	(170		)	(107		)
VA program derivatives
Embedded derivatives-direct and assumed guarantees:
Market risks	247			80
Nonperformance risk adjustment	(20		)	—
Other risks	(22		)	(30		)
Total	205			50
Embedded derivatives-ceded reinsurance:
Market and other risks	(117		)	—
Nonperformance risk adjustment	6			1
Total	(111		)	1
Freestanding derivatives hedging direct and assumed embedded derivatives	(155		)	—
Total VA program derivatives	(61		)	51
Net derivative gains (losses)	$	(231	)	$	(56	)

The unfavorable change in net derivative gains (losses) on non-VA program derivatives was $63 million ($41 million, net of income tax). This was primarily due to long-term interest rates increasing in the current period and decreasing in the prior period, unfavorably impacting receive-fixed interest rate swaps and receiver swaptions primarily hedging long duration liability portfolios. The weakening of the U.S. dollar relative to other key currencies unfavorably impacted foreign currency swaps that primarily hedge foreign denominated fixed maturity securities. This unfavorable change was partially offset by a change in the value of underlying assets and the recapture of a certain reinsurance agreement from an affiliate favorably impacting non-VA embedded derivatives related to affiliated ceded reinsurance written on a coinsurance with funds withheld basis. Because certain of these hedging strategies are not designated or do not qualify as accounting hedges, the changes in the estimated fair value of these freestanding derivatives are recognized in net derivative gains (losses) without an offsetting gain or loss recognized in earnings for the item being hedged.

The unfavorable change in net derivative gains (losses) on VA program derivatives was $112 million ($73 million, net of income tax). This was due to an unfavorable change of $97 million ($63 million, net of income tax) in market and other 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, and an unfavorable change of $15 million ($10 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 the nonperformance risk adjustment on the ceded variable annuity embedded derivatives. Other risks relate primarily to the impact of policyholder behavior and other non-market risks that generally cannot be hedged.

93

The foregoing unfavorable change in net derivative gains (losses) on VA program derivatives of $112 million ($73 million, net of income tax) was primarily driven by changes in market factors, as well as by the recapture of certain variable annuities previously reinsured to an affiliate.

The primary changes in market factors are summarized as follows:

• Long-term interest rates increased in the current period and decreased in the prior period, contributing to an unfavorable change in our ceded reinsurance assets and freestanding derivatives and a favorable change in our direct and assumed embedded derivatives. For example, the 10-year U.S. swap rate increased by 44 basis points in the current period and decreased by 21 basis points in the prior period.

• On average, key equity index levels increased less in the current period than in the prior period, contributing to an unfavorable change in our direct and assumed embedded derivatives and a favorable change in our ceded reinsurance assets and freestanding derivatives. For example, the Russell 2000 Index was unchanged in the current period and increased by 2% in the prior period.

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

We calculate the nonperformance risk adjustment 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. The unfavorable change in the nonperformance risk adjustment on the direct and assumed variable annuity embedded derivatives of $20 million ($13 million, net of income tax) was primarily due to the impact of changes in capital market inputs, such as long-term interest rates and key equity index levels, on the variable annuity guarantees. The favorable change in the nonperformance risk adjustment on the ceded variable annuity embedded derivatives of $5 million ($3 million, net of income tax) was due to a favorable change of $6 million, before income tax, as a result of the impact of changes in capital market inputs, such as long-term interest rates and key equity index levels, on the variable annuity guarantees, partially offset by an unfavorable change of $1 million, before income tax, related to changes in our own credit spread.

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 interest 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 benefit (“GMIBs”) is accounted for as an embedded derivative as compared to the direct guarantees since the settlement provisions of the reinsurance agreements 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.

Net Investment Gains (Losses). The unfavorable change in net investment gains (losses) of $36 million ($23 million, net of income tax) primarily reflects an unfavorable change in other gains (losses), primarily driven by the impact of changes in foreign currency exchange rates and a decrease in net gains on sales and disposals of equity securities. These unfavorable changes were partially offset by net gains on sales and disposals of fixed maturity securities and lower impairments of other limited partnership interests in the current period and an increase in net gains on sales of real estate joint ventures.

94

Taxes. Income tax expense for the three months ended June 30, 2015 was $220 million, or 25% of income (loss) from continuing operations before provision for income tax, compared with $293 million, or 28% of income (loss) from continuing operations before provision for income tax, for the three months ended June 30, 2014. The Company’s current and prior period effective tax rates differ from the U.S. statutory rate of 35% primarily due to non-taxable investment income, and tax credits for low income housing.

On April 9, 2015, the U.S. Internal Revenue Service (“IRS”) issued to MetLife a Statutory Notice of Deficiency (the “Notice”) for years 2000, 2001 and 2002. The Notice asserted that MetLife owes additional taxes and interest for these years primarily due to the disallowance of foreign tax credits. The transactions that are the subject of the Notice continue through 2009, and it is likely that the IRS will seek to challenge these later periods. MetLife currently intends to pay in a timely manner the assessed tax plus interest for 2000 through 2002, and will subsequently file a claim for a refund. MetLife will defend its position vigorously, and continues to believe that its reserves are sufficient to fund any income tax liability that could result from the IRS actions.

Operating Earnings. As more fully described in “— Non-GAAP and Other Financial Disclosures,” we use operating earnings, which does not equate to income (loss) from continuing operations, net of income tax, 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 income (loss) from continuing operations, net of income tax. Operating earnings decreased $23 million, net of income tax, to $883 million, net of income tax, for the three months ended June 30, 2015 from $906 million, net of income tax, for the three months ended June 30, 2014.

Six Months Ended June 30, 2015 Compared with the Six Months Ended June 30, 2014

During the six months ended June 30, 2015, income (loss) from continuing operations, before provision for income tax, increased $390 million ($281 million, net of income tax) over the prior period primarily driven by favorable changes in net investment gains (losses) and net derivative gains (losses).

95

Net Derivative Gains (Losses). Direct, assumed and ceded variable annuity embedded derivatives are referred to as “VA program derivatives” in the following table. All other embedded derivatives and all freestanding 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:

	Six Months   Ended  June 30,
	2015			2014
	(In millions)
Non-VA program derivatives
Interest rate	$	(130	)	$	313
Foreign currency exchange rate	106			(12		)
Credit	15			37
Non-VA embedded derivatives	300			(461		)
Total non-VA program derivatives	291			(123		)
VA program derivatives
Embedded derivatives-direct and assumed guarantees:
Market risks	222			107
Nonperformance risk adjustment	(4		)	—
Other risks	(58		)	(62		)
Total	160			45
Embedded derivatives-ceded reinsurance:
Market and other risks	(60		)	142
Nonperformance risk adjustment	3			(1		)
Total	(57		)	141
Freestanding derivatives hedging direct and assumed embedded derivatives	(125		)	—
Total VA program derivatives	(22		)	186
Net derivative gains (losses)	$	269		$	63

The favorable change in net derivative gains (losses) on non-VA program derivatives was $414 million ($269 million, net of income tax). This was primarily due to a change in the value of underlying assets and the recapture of a certain reinsurance agreement from an affiliate which favorably impacted non-VA embedded derivatives related to affiliated ceded reinsurance written on a coinsurance with funds withheld basis. In addition, the strengthening of the U.S. dollar relative to other key currencies favorably impacted foreign currency swaps that primarily hedge foreign denominated fixed maturity securities. Long-term interest rates increasing in the current period and decreasing in the prior period unfavorably impacted receive-fixed interest rate swaps and receiver swaptions primarily hedging long duration liability portfolios. Because certain of these hedging strategies are not designated or do not qualify as accounting hedges, the changes in the estimated fair value of these freestanding derivatives are recognized in net derivative gains (losses) without an offsetting gain or loss recognized in earnings for the item being hedged.

The unfavorable change in net derivative gains (losses) on VA program derivatives was $208 million ($135 million, net of income tax) related to market and other 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. Other risks relate primarily to the impact of policyholder behavior and other non-market risks that generally cannot be hedged. The foregoing unfavorable change of $208 million ($135 million, net of income tax) was primarily driven by changes in market factors, as well as by the recapture of certain variable annuities previously reinsured to an affiliate.

96

The primary changes in market factors are summarized as follows:

• Long-term interest rates increased in the current period and decreased in the prior period, contributing to an unfavorable change in our ceded reinsurance assets and freestanding derivatives and a favorable change in our direct and assumed embedded derivatives. For example, the 10-year U.S. swap rate increased by 18 basis points in the current period and decreased by 46 basis points in the prior period.

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

Net Investment Gains (Losses). The favorable change in net investment gains (losses) of $221 million ($144 million, net of income tax) primarily reflects net gains on sales and disposals of fixed maturity securities in the current period, combined with the impact of changes in foreign currency exchange rates and lower impairments of other limited partnership interests. These favorable changes were partially offset by increases to the mortgage loan valuation allowance in the current period, higher impairments on real estate holdings and a decrease in net gains on sales and disposals of equity securities in the current period.

Taxes. Income tax expense for the six months ended June 30, 2015 was $722 million, or 28% of income (loss) from continuing operations before provision for income tax, compared with $613 million, or 28% of income (loss) from continuing operations before provision for income tax, for the six months ended June 30, 2014. The Company’s current and prior period effective tax rates differ from the U.S. statutory rate of 35% primarily due to non-taxable investment income, and tax credits for low income housing.

Operating Earnings. Operating earnings decreased $48 million, net of income tax, to $1.7 billion, net of income tax, for the six months ended June 30, 2015 from $1.8 billion, net of income tax, for the six months ended June 30, 2014.

Reconciliation of income (loss) from continuing operations, net of income tax, to operating earnings

Three Months Ended June 30, 2015

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Income (loss) from continuing operations, net of income tax	$	205		$	6		$	237		$	220		$	668
Less: Net investment gains (losses)	(13		)	6			(32		)	(54		)	(93		)
Less: Net derivative gains (losses)	(184		)	(267		)	(111		)	331			(231		)
Less: Other adjustments to continuing operations (1)	26			(42		)	—			8			(8		)
Less: Provision for income tax (expense) benefit	60			106			50			(99		)	117
Operating earnings	$	316		$	203		$	330		$	34		$	883

97

Three Months Ended June 30, 2014

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Income (loss) from continuing operations, net of income tax	$	356		$	205		$	289		$	(101	)	$	749
Less: Net investment gains (losses)	14			10			(59		)	(22		)	(57		)
Less: Net derivative gains (losses)	14			71			45			(186		)	(56		)
Less: Other adjustments to continuing operations (1)	(83		)	(41		)	(2		)	(1		)	(127		)
Less: Provision for income tax (expense) benefit	19			(15		)	6			73			83
Operating earnings	$	392		$	180		$	299		$	35		$	906

__________________

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

Six Months Ended June 30, 2015

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Income (loss) from continuing operations, net of income tax	$	614		$	326		$	685		$	233		$	1,858
Less: Net investment gains (losses)	51			9			154			(82		)	132
Less: Net derivative gains (losses)	95			(60		)	(55		)	289			269
Less: Other adjustments to continuing operations (1)	(109		)	(84		)	(12		)	5			(200		)
Less: Provision for income tax (expense) benefit	(13		)	47			(30		)	(74		)	(70		)
Operating earnings	$	590		$	414		$	628		$	95		$	1,727

Six Months Ended June 30, 2014

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Income (loss) from continuing operations, net of income tax	$	802		$	404		$	548		$	(177	)	$	1,577
Less: Net investment gains (losses)	11			(2		)	(108		)	10			(89		)
Less: Net derivative gains (losses)	170			188			92			(387		)	63
Less: Other adjustments to continuing operations (1)	(200		)	(81		)	9			(5		)	(277		)
Less: Provision for income tax (expense) benefit	7			(37		)	2			133			105
Operating earnings	$	814		$	336		$	553		$	72		$	1,775

__________________

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

98

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

Three Months Ended June 30, 2015

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Total revenues	$	2,578		$	4,150		$	1,596		$	509		$	8,833
Less: Net investment gains (losses)	(13		)	6			(32		)	(54		)	(93		)
Less: Net derivative gains (losses)	(184		)	(267		)	(111		)	331			(231		)
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	—			—			—			—			—
Less: Other adjustments to revenues (1)	(28		)	(41		)	(10		)	(1		)	(80		)
Total operating revenues	$	2,803		$	4,452		$	1,749		$	233		$	9,237
Total expenses	$	2,291		$	4,130		$	1,230		$	294		$	7,945
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	(73		)	—			—			—			(73		)
Less: Other adjustments to expenses (1)	20			—			(12		)	(7		)	1
Total operating expenses	$	2,344		$	4,130		$	1,242		$	301		$	8,017

Three Months Ended June 30, 2014

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Total revenues	$	2,768		$	4,415		$	1,985		$	84		$	9,252
Less: Net investment gains (losses)	14			10			(59		)	(22		)	(57		)
Less: Net derivative gains (losses)	14			71			45			(186		)	(56		)
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	(6		)	—			—			—			(6		)
Less: Other adjustments to revenues (1)	(62		)	(41		)	7			1			(95		)
Total operating revenues	$	2,808		$	4,375		$	1,992		$	291		$	9,466
Total expenses	$	2,241		$	4,089		$	1,546		$	334		$	8,210
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	(1		)	—			—			—			(1		)
Less: Other adjustments to expenses (1)	16			—			9			2			27
Total operating expenses	$	2,226		$	4,089		$	1,537		$	332		$	8,184

__________________

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

99

Six Months Ended June 30, 2015

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Total revenues	$	5,627		$	8,787		$	3,579		$	702		$	18,695
Less: Net investment gains (losses)	51			9			154			(82		)	132
Less: Net derivative gains (losses)	95			(60		)	(55		)	289			269
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	—			—			—			—			—
Less: Other adjustments to revenues (1)	(71		)	(83		)	(24		)	(4		)	(182		)
Total operating revenues	$	5,552		$	8,921		$	3,504		$	499		$	18,476
Total expenses	$	4,736		$	8,264		$	2,528		$	587		$	16,115
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	(7		)	—			—			—			(7		)
Less: Other adjustments to expenses (1)	45			—			(13		)	(7		)	25
Total operating expenses	$	4,698		$	8,264		$	2,541		$	594		$	16,097

Six Months Ended June 30, 2014

	Retail			Group, Voluntary & Worksite Benefits			Corporate Benefit Funding			Corporate & Other			Total
	(In millions)
Total revenues	$	5,640		$	8,815		$	3,613		$	221		$	18,289
Less: Net investment gains (losses)	11			(2		)	(108		)	10			(89		)
Less: Net derivative gains (losses)	170			188			92			(387		)	63
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	(15		)	—			—			—			(15		)
Less: Other adjustments to revenues (1)	(126		)	(81		)	13			(4		)	(198		)
Total operating revenues	$	5,600		$	8,710		$	3,616		$	602		$	18,528
Total expenses	$	4,449		$	8,177		$	2,776		$	697		$	16,099
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses)	23			—			—			—			23
Less: Other adjustments to expenses (1)	36			—			4			1			41
Total operating expenses	$	4,390		$	8,177		$	2,772		$	696		$	16,035

__________________

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

100

Consolidated Results — Operating

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Operating revenues
Premiums	$	5,065		$	5,344		$	10,203		$	10,328
Universal life and investment-type product policy fees	622			581			1,233			1,167
Net investment income	3,164			3,104			6,257			6,170
Other revenues	386			437			783			863
Total operating revenues	9,237			9,466			18,476			18,528
Operating expenses
Policyholder benefits and claims and policyholder dividends	5,949			6,187			12,076			12,190
Interest credited to policyholder account balances	543			542			1,079			1,068
Capitalization of DAC	(117		)	(107		)	(229		)	(207		)
Amortization of DAC and VOBA	164			149			299			364
Interest expense on debt	32			36			64			75
Other expenses	1,446			1,377			2,808			2,545
Total operating expenses	8,017			8,184			16,097			16,035
Provision for income tax expense (benefit)	337			376			652			718
Operating earnings	$	883		$	906		$	1,727		$	1,775

Three Months Ended June 30, 2015 Compared with the Three Months Ended June 30, 2014

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

Overview. The primary drivers of the decrease in operating earnings were a prior period favorable reserve adjustment related to disability premium waivers in our life business and higher expenses, partially offset by higher net investment income from portfolio growth and improved underwriting results. Our financial results include fees earned related to an affiliated reinsurance agreement, which were recorded in other revenues, but were almost entirely offset by related charges in other expenses.

Business Growth. We benefited from higher sales and business growth across many of our products. An increase in our investment portfolio from deposits and funding agreement issuances in our Corporate Benefit Funding segment and growth in premiums and an increase in long-duration insurance contract liabilities in our Group, Voluntary & Worksite Benefits segment, generated higher net investment income. This was partially offset by the related increase in interest credited expense. Higher deferred annuity benefits also drove lower operating earnings. The changes in business growth discussed above resulted in a $46 million increase in operating earnings.

Market Factors. Investment yields were negatively impacted by the adverse impact of the sustained low interest rate environment on fixed maturity securities and mortgage loans, as well as our securities lending program. These decreases were partially offset by higher income on real estate and real estate joint ventures, higher returns on foreign currency derivatives, increased prepayment fees and the favorable impact of a conversion of the securities accounting system for our general account. Many of our funding agreement and guaranteed interest contract liabilities have interest credited rates that are contractually tied to external indices and, as a result, we set lower interest credited rates on new business, as well as on existing business with terms that can fluctuate. In our Retail segment, an increase in asset-based fee income resulted in an increase in operating earnings. The changes in market factors discussed above resulted in a $23 million decrease in operating earnings.

Underwriting and Other Insurance Adjustments. Favorable mortality experience, driven by our Retail and Group Voluntary & Worksite Benefits segments, combined with favorable morbidity experience in our Group, Voluntary & Worksite Benefits segment, improved operating earnings by $48 million. Refinements to DAC and certain insurance-related liabilities that were recorded in both the current and prior periods resulted in a $56 million decrease in operating earnings, primarily driven by a favorable reserve adjustment related to disability premium waivers in our Retail segment in the prior period.

101

Expenses. An increase in expenses, mainly due to higher employee-related costs, partially offset by lower costs associated with corporate initiatives and projects, resulted in a $60 million decrease in operating earnings.

Taxes. 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 for low income housing. In the current period, the Company realized additional tax benefits of $17 million compared to the prior period, primarily from the higher utilization of tax preferenced investments.

Six Months Ended June 30, 2015 Compared with the Six Months Ended June 30, 2014

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

Overview. The primary driver of the decrease in operating earnings was a prior period adjustment that decreased expenses by $140 million to better align the allocation of acquisition expenses with affiliates’ sales revenue. Excluding this prior period adjustment, operating earnings improved as a result of higher net investment income from portfolio growth and improved underwriting results, partially offset by the prior period favorable reserve adjustment related to disability premium waivers in our life business and the impact of lower investment yields on net investment income. Our financial results include fees earned related to an affiliated reinsurance agreement, which were recorded in other revenues, but were almost entirely offset by related charges in other expenses.

Business Growth. We benefited from higher sales and business growth across many of our products. An increase in our investment portfolio from deposits and funding agreement issuances in our Corporate Benefit Funding segment and growth in premiums and an increase in long-duration insurance contract liabilities in our Group, Voluntary & Worksite Benefits segment, generated higher net investment income. This was partially offset by the related increase in interest credited expense. Higher deferred annuity benefits also drove lower operating earnings. The changes in business growth discussed above resulted in an $84 million increase in operating earnings.

Market Factors. Investment yields were negatively impacted by the adverse impact of the sustained low interest rate environment on fixed maturity securities and mortgage loans, as well as lower returns on other limited partnership interests. These decreases were partially offset by higher income on alternative investments and foreign currency derivatives, increased prepayment fees and the favorable impact of a conversion of the securities accounting system for our general account. Many of our funding agreement and guaranteed interest contract liabilities have interest credited rates that are contractually tied to external indices and, as a result, we set lower interest credited rates on new business, as well as on existing business with terms that can fluctuate. In our Retail segment, higher asset-based fee income and lower DAC amortization resulted in an increase in operating earnings. The changes in market factors discussed above resulted in a $19 million decrease in operating earnings.

Underwriting and Other Insurance Adjustments. Favorable mortality experience, driven by our Group, Voluntary & Worksite Benefits segment, combined with favorable morbidity experience in our Retail and Group, Voluntary & Worksite Benefits segments, improved operating earnings by $42 million. Refinements to DAC and certain insurance-related liabilities that were recorded in both the current and prior periods resulted in a $37 million decrease in operating earnings, primarily driven by a favorable reserve adjustment related to disability premium waivers in our Retail segment in the prior period.

Expenses. An increase in expenses, mainly due to higher employee-related costs, partially offset by lower costs associated with corporate initiatives and projects, resulted in a $21 million decrease in operating earnings. In addition, in our Group, Voluntary & Worksite Benefits segment, an increase in other operating expenses was more than offset by the remaining increase in premiums, fees and other revenues.

Taxes. 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 for low income housing. In the current period, the Company realized additional tax benefits of $26 million compared to the prior period, primarily from the higher utilization of tax preferenced investments.

102

Segment Results and Corporate & Other

Retail

Business Overview. Variable annuity sales increased 14% as a result of new products and enhancements made in late 2014 and early 2015; however, fixed annuity sales were lower by 7% as a result of the sustained low interest rate environment. Life sales increased 24% driven by increases in our term life products (due to pricing actions) and universal life products. Individual disability sales increased 17% as a result of focused marketing and increased engagement across our distribution channels. A significant portion of our operating earnings is driven by separate account balances. Most directly, these balances determine asset-based fee income but they also impact DAC amortization and asset-based commissions. Separate account balances are driven by sales, movements in the market, surrenders, withdrawals, benefit payments, transfers and policy charges. Separate account balances continue to increase as a result of strong market performance, partially offset by negative net flows, as surrenders and withdrawals exceeded sales.

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Operating revenues
Premiums	$	1,027		$	999		$	2,010		$	1,968
Universal life and investment-type product policy fees	388			355			767			715
Net investment income	1,346			1,363			2,690			2,741
Other revenues	42			91			85			176
Total operating revenues	2,803			2,808			5,552			5,600
Operating expenses
Policyholder benefits and claims and policyholder dividends	1,558			1,498			3,214			3,088
Interest credited to policyholder account balances	239			244			474			484
Capitalization of DAC	(109		)	(85		)	(211		)	(180		)
Amortization of DAC and VOBA	151			139			272			344
Interest expense on debt	1			1			2			2
Other expenses	504			429			947			652
Total operating expenses	2,344			2,226			4,698			4,390
Provision for income tax expense (benefit)	143			190			264			396
Operating earnings	$	316		$	392		$	590		$	814

Three Months Ended June 30, 2015 Compared with the Three Months Ended June 30, 2014

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

Business Growth. A $3 million increase in operating earnings was attributable to business growth. In our deferred annuities business, asset-based fee income increased as a result of the recapture of a ceded variable annuity reinsurance agreement from an affiliate. We also earned more income on a larger invested asset base, which resulted from a higher amount of allocated equity as compared to the prior period. In our direct deferred variable annuity business, negative net flows contributed to a decrease in average separate account balances and, consequently, lower asset-based fee income. Higher deferred annuity benefits also drove lower operating earnings. Operating earnings also decreased in the current period as a result of the disposition of our former broker-dealer subsidiary, NES, in the fourth quarter of 2014.

103

Market Factors. A $14 million decrease in operating earnings was attributable to market factors, including equity markets and interest rates. The sustained low interest rate environment resulted in a decline in net investment income on our fixed maturity securities and mortgage loans as proceeds from maturing investments were reinvested at lower yields. This reduction in current period income from lower yields was partially offset by a decrease in DAC amortization in our fixed annuity business. Also negatively impacting current period net investment income were lower returns on interest rate derivatives. This reduction in investment income was partially offset by higher returns on other limited partnerships interests and increased prepayment fees. While the current period equity returns were lower than the prior period resulting in higher DAC amortization, the overall cumulative positive equity markets since the prior period increased our average separate account balances which resulted in an increase in asset-based fee income.

Underwriting and Other Insurance Adjustments. Favorable mortality experience in our life businesses resulted in a $19 million increase in operating earnings. In addition, favorable morbidity experience in our individual disability income business resulted in a slight increase in operating earnings.Refinements to DAC and certain insurance-related liabilities that were recorded in both the current and prior periods resulted in a $24 million decrease in operating earnings, primarily driven by a favorable reserve adjustment related to disability premium waivers in our life business in the prior period.

Expenses and Taxes. Anincrease in expenses, mainly due to higher employee-related costs, resulted in a $66 million decrease in operating earnings. In the current period, we realized additional tax benefits of $6 million related to the separate account dividends received deduction.

Six Months Ended June 30, 2015 Compared with the Six Months Ended June 30, 2014

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

Business Growth. Operating earnings attributable to business growth was essentially flat. In our deferred annuities business, asset-based fee income increased as a result of the recapture of a ceded variable annuity reinsurance agreement from an affiliate. In our direct deferred variable annuity business, negative net flows contributed to a decrease in average separate account balances and, consequently, lower asset-based fee income. Higher deferred annuity benefits also drove lower operating earnings. Lower interest credited expense increased operating earnings. Operating earnings decreased in the current period as a result of the disposition of our former broker-dealer subsidiary, NES, in the fourth quarter of 2014. We also earned more income on a larger invested asset base, which resulted from a higher amount of allocated equity as compared to the prior period.

Market Factors. A $17 million increase in operating earnings was attributable to market factors, including equity markets and interest rates. While the current period equity returns were lower than in the prior period, the overall cumulative positive equity markets since the prior period increased our average separate account balances which resulted in an increase in asset-based fee income. The sustained low interest rate environment resulted in a decline in net investment income on our fixed maturity securities and mortgage loans as proceeds from maturing investments were reinvested at lower yields. This reduction in current period income from lower yields was partially offset by a decrease in DAC amortization in our fixed annuity business. Stronger equity market performance in the prior period compared to the current period drove lower returns on other limited partnership interests. Lower returns on interest rate derivatives also decreased operating earnings but were partially offset by increased prepayment fees and income on alternative investments.

Underwriting and Other Insurance Adjustments. Favorable morbidity experience in our individual disability income business resulted in a $7 million increase in operating earnings. This was offset by unfavorable mortality experience in our life business which resulted in an $11 million decrease in operating earnings.Refinements to DAC and certain insurance-related liabilities that were recorded in both the current and prior periods resulted in a $31 million decrease in operating earnings, primarily driven by a favorable reserve adjustment related to disability premium waivers in our life business in the prior period.

Expenses and Taxes. A prior period adjustment that decreased expenses by $140 million to better align the allocation of acquisition expenses with affiliates’ sales revenue resulted in a decrease in operating earnings in the current period. In addition, an increase in expenses, mainly due to higher employee-related costs, resulted in a $69 million decrease in operating earnings. In the current period, we realized additional tax benefits of $8 million related to the separate account dividends received deduction.

104

Group, Voluntary & Worksite Benefits 

Business Overview.Premiums increased for most of our businesses as a result of gradual growth in the U.S. economy, a decrease in the U.S. unemployment rate and low inflation. Our term life, dental, and voluntary benefits businesses generated premium growth through sales and persistency, with the dental business also benefiting from pricing actions on existing business. Premium growth in our disability business declined as a result of relatively lower sales. Although we have discontinued selling our long-term care product, we continue to collect premiums and administer the existing block of business, which contributed to asset growth in the segment. While premiums have increased, sales are lower as a result of an increase in competition, particularly in the dental business.

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Operating revenues
Premiums	$	3,696		$	3,643		$	7,407		$	7,257
Universal life and investment-type product policy fees	183			180			371			358
Net investment income	462			447			921			886
Other revenues	111			105			222			209
Total operating revenues	4,452			4,375			8,921			8,710
Operating expenses
Policyholder benefits and claims and policyholder dividends	3,519			3,512			7,054			7,028
Interest credited to policyholder account balances	38			39			75			79
Capitalization of DAC	(3		)	(4		)	(7		)	(8		)
Amortization of DAC and VOBA	7			5			16			11
Other expenses	569			537			1,126			1,067
Total operating expenses	4,130			4,089			8,264			8,177
Provision for income tax expense (benefit)	119			106			243			197
Operating earnings	$	203		$	180		$	414		$	336

Three Months Ended June 30, 2015 Compared with the Three Months Ended June 30, 2014

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

Business Growth.A $5 million increase in operating earnings was attributable to business growth. Growth in premiums, as well as increases in allocated equity and long-duration contract liabilities were partially offset by a reduction in policyholder account balances. This resulted in an increase in our average invested assets, improving operating earnings. Consistent with the growth in average invested assets from premiums, primarily in our long-term care business, interest credited on long-duration contracts and policyholder account balances increased. An increase in the annual assessment of the Patient Protection and Affordable Care Act (“PPACA”) fee increased other expenses in the current period; however, the impact of the assessment was virtually offset by a related increase in premiums from our dental business. The remaining increase in other operating expenses, mainly the result of growth across the segment, partially offset by lower post-retirement benefit costs, was more than offset by the remaining increase in premiums, fees and other revenues.

Market Factors.Investment yields declined slightly as a result of a decrease in the size of our securities lending program and lower returns on equity securities, partially offset by higher returns on alternative investments and foreign currency derivatives. Unlike in the Retail and Corporate Benefit Funding segments, in the Group Voluntary & Worksite Benefits segment, a change in investment yield does not necessarily drive a corresponding change in the rates credited on certain insurance liabilities.The impact of lower crediting rates in the current period, partially offset by the decline in investment yields, resulted in a slight increase in operating earnings.

105

Underwriting and Other Insurance Adjustments.Our group universal life and accidental death and dismemberment (“AD&D”) businesses experienced favorable mortality in the current period, mainly due to favorable claims experience, which resulted in a $12 million increase in operating earnings. Favorable morbidity experience in our disability business, primarily driven by fewer approvals, a reduction in the average size of claims and higher net closures, resulted in an $18 million increase in operating earnings. Increased utilization, coupled with unfavorable reserve development in our dental business, was virtually offset by higher net closures and the impact of lapses on certain insurance liabilities in our long-term care business. Refinements to certain insurance and other liabilities, which were recorded in the prior period, resulted in a $16 million decrease in operating earnings.

Six Months Ended June 30, 2015 Compared with the Six Months Ended June 30, 2014

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

Business Growth.A $21 million increase in operating earnings was attributable to business growth. Growth in premiums, as well as increases in allocated equity and long-duration contract liabilities, were partially offset by a reduction in policyholder account balances. This resulted in an increase in our average invested assets, improving operating earnings. Consistent with the growth in average invested assets from premiums, primarily in our long-term care business, interest credited on long-duration contracts and policyholder account balances increased. An increase in the annual assessment of the PPACA fee increased other expenses in the current period; however, the impact of the assessment was significantly offset by a related increase in premiums from our dental business. The remaining increase in other operating expenses, mainly the result of growth across the segment, partially offset by lower post-retirement benefit costs, was more than offset by the remaining increase in premiums, fees and other revenues.

Market Factors.Investment yields improved as a result of higher returns on alternative investments, foreign currency derivatives and increased prepayment fees. This was partially offset by lower yields on our mortgage loans as a result of the sustained low interest rate environment, as well as lower returns on other limited partnership interests and a decrease in the size of our securities lending program. The increase in investment yields, coupled with lower crediting rates in the current period, increased operating earnings by $8 million.

Underwriting and Other Insurance Adjustments.Our life and AD&D businesses experienced favorable mortality in the current period, mainly due to favorable claims experience, which resulted in a $23 million increase in operating earnings.Favorable morbidity experience in our long-term care and disability businesses was partially offset by increased utilization in our dental business and resulted in a $16 million increase in operating earnings.The favorable claims experience in our long-term care business was due to higher net closures and the impact of lapses on certain insurance liabilities. In our disability business, the favorable claims experience was primarily driven by fewer approvals, a reduction in the average size of claims and higher net closures. Refinements to certain insurance and other liabilities, which were recorded in both periods, resulted in an $11 million increase in operating earnings.

106

Corporate Benefit Funding

Business Overview.Funding ratios for defined benefit pension plans of S&P 500 companies continued to fall in 2015, limiting their ability to engage in full pension plan buyouts. However, we expect that customers may choose to close out portions of pension plans over time, with the largest volume of business generally occurring near the end of any year. Lower pension plan closeouts resulted in a decrease in premiums. In addition, more competitive pricing in the market drove a decrease in structured settlement annuity sales. Changes in premiums for these businesses were almost entirely offset by the related changes in policyholder benefits and claims.

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Operating revenues
Premiums	$	315		$	671		$	730		$	1,037
Universal life and investment-type product policy fees	51			46			95			94
Net investment income	1,305			1,197			2,530			2,340
Other revenues	78			78			149			145
Total operating revenues	1,749			1,992			3,504			3,616
Operating expenses
Policyholder benefits and claims and policyholder dividends	847			1,161			1,764			2,036
Interest credited to policyholder account balances	266			259			530			505
Capitalization of DAC	(4		)	(18		)	(10		)	(19		)
Amortization of DAC and VOBA	6			5			11			9
Interest expense on debt	2			2			3			5
Other expenses	125			128			243			236
Total operating expenses	1,242			1,537			2,541			2,772
Provision for income tax expense (benefit)	177			156			335			291
Operating earnings	$	330		$	299		$	628		$	553

Three Months Ended June 30, 2015 Compared with the Three Months Ended June 30, 2014

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

Business Growth. The impact of current period deposits and funding agreement issuances resulted in higher invested assets, which drove an increase in net investment income, partially offset by the related increase in interest credited expense, and resulted in a $51 million increase in operating earnings.

Market Factors. The sustained low interest rate environment impacted our investment yields, as well as our interest credited rates. Lower interest rates drove lower investment yields on mortgage loans and fixed maturity securities, as well as from our securities lending program. In addition, weaker equity markets in the current period resulted in lower returns on other limited partnership interests. These unfavorable changes were partially offset by higher income on interest rate and foreign currency derivatives and improved earnings on real estate and real estate joint ventures, as well as the favorable impact of a conversion of the securities accounting system. Many of our funding agreements and guaranteed interest contract liabilities have interest credited rates that are contractually tied to external indices and, as a result, we set lower interest credited rates on new business, as well as on existing business with terms that can fluctuate. The impact of lower interest credited expense, partially offset by lower investment returns, resulted in an increase in operating earnings of $9 million.

Underwriting and Other Insurance Adjustments. Less favorable mortality, primarily from our pension closeout and specialized life insurance products, was partially offset by more favorable mortality in our income annuity business in the current period and resulted in a $4 million decrease in operating earnings. The net impact of insurance liability refinements that were recorded in both periods decreased operating earnings by $16 million.

Expenses. Slightly higher employee-related costs and annual premium tax adjustments decreased operating earnings by $7 million.

107

Six Months Ended June 30, 2015 Compared with the Six Months Ended June 30, 2014

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

Business Growth. The impact of current period deposits and funding agreement issuances resulted in higher invested assets, which drove an increase in net investment income, partially offset by the related increase in interest credited expense, and resulted in a $97 million increase in operating earnings.

Market Factors. The sustained low interest rate environment impacted our investment yields, as well as our interest credited rates. Lower interest rates drove lower investment yields on fixed maturity securities and mortgage loans, as well as from our securities lending program. In addition, weaker equity markets in the current period resulted in lower returns on other limited partnership interests. These unfavorable changes were partially offset by higher income on interest rate and foreign currency derivatives and improved earnings on alternative investments, real estate and real estate joint ventures, as well as the favorable impact of a conversion of the securities accounting system. The impact of lower investment returns, partially offset by lower interest credited expense, resulted in a decrease in operating earnings of $8 million.

Underwriting and Other Insurance Adjustments. More favorable mortality, primarily from our income annuity and specialized life insurance products, in the current period resulted in a $7 million increase in operating earnings. The net impact of insurance liability refinements that were recorded in both periods decreased operating earnings by $17 million.

Expenses. Slightly higher employee-related costs and annual premium tax adjustments decreased operating earnings by $7 million.

Corporate & Other

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Operating revenues
Premiums	$	27		$	31		$	56		$	66
Net investment income	51			97			116			203
Other revenues	155			163			327			333
Total operating revenues	233			291			499			602
Operating expenses
Policyholder benefits and claims and policyholder dividends	25			16			44			38
Capitalization of DAC	(1		)	—			(1		)	—
Interest expense on debt	29			33			59			68
Other expenses	248			283			492			590
Total operating expenses	301			332			594			696
Provision for income tax expense (benefit)	(102		)	(76		)	(190		)	(166		)
Operating earnings	$	34		$	35		$	95		$	72

108

The table below presents operating earnings by source net of income tax:

	Three Months   Ended  June 30,						Six Months   Ended  June 30,
	2015			2014			2015			2014
	(In millions)
Net investment income	$	33		$	63		$	75		$	132
Interest expense on debt	(19		)	(21		)	(39		)	(44		)
Acquisition costs	—			(1		)	—			(2		)
Corporate initiatives and projects	(23		)	(37		)	(42		)	(63		)
Incremental tax benefit	78			62			157			133
Other	(35		)	(31		)	(56		)	(84		)
Operating earnings	$	34		$	35		$	95		$	72

Three Months Ended June 30, 2015 Compared with the Three Months Ended June 30, 2014

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

Net Investment Income. A $30 million decrease in net investment income was driven by an increase in the amount credited to the segments due to growth in the economic capital managed by Corporate & Other on their behalf, lower yields on fixed maturity securities as a result of the sustained low interest rate environment and lower returns on alternative investments. This decrease was partially offset by higher returns on real estate and real estate joint ventures and other limited partnership interests.

Corporate Initiatives and Projects. Expenses associated with corporate initiatives and projects decreased by $14 million primarily due to lower relocation costs, severance and consulting expenses associated with certain enterprise-wide initiatives.

Incremental Tax Benefit. Corporate & Other benefits from the impact of certain permanent tax differences, including non-taxable investment income and tax credits for investments in low income housing. As a result, our effective tax rate differs from the U.S. statutory rate of 35%. In the current period we benefited primarily from higher utilization of tax preferenced investments which improved operating earnings by $16 million over the prior period.

Other. The financial results of Corporate & Other include fees earned related to an affiliated reinsurance agreement, which were recorded in other revenues, but were almost entirely offset by related charges in other expenses. Our results included an increase in employee-related costs of $18 million, which was offset by lower direct business and reinsurance costs totaling $17 million.

Six Months Ended June 30, 2015 Compared with the Six Months Ended June 30, 2014

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

Net Investment Income. A $57 million decrease in net investment income was driven by an increase in the amount credited to the segments due to growth in the economic capital managed by Corporate & Other on their behalf, as well as lower yields on fixed maturity securities as a result of the sustained low interest rate environment. This decrease was partially offset by higher returns on other limited partnership interests and real estate and real estate joint ventures.

Corporate Initiatives and Projects. Expenses associated with corporate initiatives and projects decreased by $21 million primarily due to lower relocation costs, severance and consulting expenses associated with certain enterprise-wide initiatives.

Incremental Tax Benefit. Corporate & Other benefits from the impact of certain permanent tax differences, including non-taxable investment income and tax credits for investments in low income housing. As a result, our effective tax rate differs from the U.S. statutory rate of 35%. In the current period we benefited primarily from higher utilization of tax preferenced investments which improved operating earnings by $24 million over the prior period.

Other. The financial results of Corporate & Other include fees earned related to an affiliated reinsurance agreement, which were recorded in other revenues, but were almost entirely offset by related charges in other expenses. Our results benefited from lower direct business and reinsurance costs of $24 million, as well as lower corporate overhead, higher state tax credits and lower advertising expenses totaling $12 million. These benefits were partially offset by an increase in employee-related costs of $11 million.

109

Adoption of New Accounting Pronouncements

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

Future Adoption of New Accounting Pronouncements

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

Non-GAAP and Other Financial Disclosures

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

Operating revenues excludes net investment gains (losses) and net derivative gains (losses).

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, and (iv) excludes certain amounts related to securitization entities that are variable interest entities (“VIEs”) consolidated under GAAP.

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

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

• Interest credited to policyholder account balances includes adjustments for 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;

• 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 noncontrolling interests and goodwill impairments.

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 income (loss) from continuing operations, net of income tax, 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. The following additional information is relevant to an understanding of our financial results:

• Allocated equity is defined as the portion of common stockholders’ equity that management allocates to each of its segments and sub-segments based on MetLife’s economic capital model, coupled with considerations of local capital requirements. See “— Economic Capital.”

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 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the 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 13a-15(f) during the quarter ended June 30, 2015 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 the 2014 Annual Report; (ii) Part II, Item 1, of Metropolitan Life Insurance Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015; and (iii) Note 11 of the Notes to the Interim Condensed Consolidated Financial Statements in Part I of this report.

Asbestos-Related Claims

Metropolitan Life Insurance Company is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual and punitive damages.

As reported in the 2014 Annual Report, Metropolitan Life Insurance Company received approximately 4,636 asbestos-related claims in 2014. During the six months ended June 30, 2015 and 2014, Metropolitan Life Insurance Company received approximately 2,022 and 2,569 new asbestos-related claims, respectively. See Note 17 of the Notes to the Consolidated Financial Statements included in the 2014 Annual Report for historical information concerning asbestos claims and Metropolitan Life Insurance Company’s increase in its recorded liability at December 31, 2014. The number of asbestos cases that may be brought, the aggregate amount of any liability that Metropolitan Life Insurance Company may incur, and the total amount paid in settlements in any given year are uncertain and may vary significantly from year to year.

Metropolitan Life Insurance Company reevaluates on a quarterly and annual basis its exposure from asbestos litigation, including studying its claims experience, reviewing external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims involving serious disease, the number of new claims filed against it and other defendants and the jurisdictions in which claims are pending. Based upon its reevaluation of its exposure from asbestos litigation, Metropolitan Life Insurance Company has updated its liability analysis for asbestos-related claims through June 30, 2015.

Unclaimed Property Litigation

West Virginia Lawsuits

On September 20, 2012, the West Virginia Treasurer filed an action against Metropolitan Life Insurance Company in West Virginia state court (West Virginia ex rel. John D. Perdue v. Metropolitan Life Insurance Company, Circuit Court of Putnam County, Civil Action No. 12-C-295)alleging that Metropolitan Life Insurance Company 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 21, 2012 and January 9, 2013, the Treasurer filed substantially identical suits against New England Life Insurance Company and General American Life Insurance Company, respectively. On June 16, 2015, the West Virginia Supreme Court of Appeals reversed the Circuit Court’s order that had granted defendants’ motions to dismiss the actions and remanded them to the Circuit Court for further proceedings. The defendants intend to defend these actions vigorously.

Total Control Accounts Litigation

Keife, et al. v. Metropolitan Life Insurance Company (D. Nev., filed in state court on July 30, 2010 and removed to federal court on September 7, 2010); and Simon v. Metropolitan Life Insurance Company (D. Nev., filed November 3, 2011)

These putative class action lawsuits, which have been consolidated, raise breach of contract claims arising from Metropolitan Life Insurance Company’s use of the total control accounts to pay life insurance benefits under the Federal Employees’ Group Life Insurance program. On March 8, 2013, the court granted Metropolitan Life Insurance Company’s motion for summary judgment. On June 12, 2015, the United States Court of Appeals for the Ninth Circuit affirmed the order granting summary judgment to Metropolitan Life Insurance Company.

Summary

Putative or certified class action litigation and other litigation and 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 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.

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It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings. In some of the matters referred to previously, very 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 net income or cash flows in particular quarterly or annual periods.

Item 1A. Risk Factors

Certain factors that may affect the Company’s business or operations are described under “Risk Factors” in Part I, Item 1A, of the 2014 Annual Report, as amended or supplemented by the information under “Risk Factors” in Part II, Item 1A, of Metropolitan Life Insurance Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015. There have been no other material changes to our risk factors from the risk factors previously disclosed in the 2014 Annual Report, as amended or supplemented by such information in Metropolitan Life Insurance Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.

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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 Metropolitan Life Insurance Company 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 Metropolitan Life Insurance Company and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and Metropolitan Life Insurance Company’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission 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.

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

Date: August 12, 2015

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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 Metropolitan Life Insurance Company 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 Metropolitan Life Insurance Company and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and Metropolitan Life Insurance Company’s other public filings, which are available without charge through the U.S. Securities and Exchange Commission 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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