| Insurance | 3. Insurance Insurance Liabilities Insurance liabilities, including affiliated insurance liabilities on reinsurance assumed and ceded, are comprised of future policy benefits, policyholder account balances and other policy-related balances. Information regarding insurance liabilities by segment, as well as Corporate & Other, was as follows at: December 31, 2022 2021 (In millions) U.S. $ 148,060 $ 145,463 MetLife Holdings 87,284 88,991 Corporate & Other 6,211 373 Total $ 241,555 $ 234,827 See Note 5 for discussion of affiliated reinsurance liabilities included in the table above. Future policy benefits are measured as follows: Product Type: Measurement Assumptions: Participating life Aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the non-forfeiture interest rate, ranging from 3% to 7%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts); and (ii) the liability for terminal dividends. Nonparticipating life Aggregate of the present value of future expected benefit payments and related expenses less the present value of future expected net premiums. Assumptions as to mortality and persistency are based upon the Company’s experience when the basis of the liability is established. Interest rate assumptions for the aggregate future policy benefit liabilities range from 2% to 11%. Individual and group Present value of future expected payments. Interest rate assumptions used in establishing such liabilities range from 1% to 11%. Non-medical health The net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a margin for adverse deviation. Interest rate assumptions used in establishing such liabilities range from 1% to 7%. Disabled lives Present value of benefits method and experience assumptions as to claim terminations, expenses and interest. Interest rate assumptions used in establishing such liabilities range from 2% to 8%. Participating business represented 3% of the Company’s life insurance in-force at both December 31, 2022 and 2021. Participating policies represented 13%, 14% and 17% of gross traditional life insurance premiums for the years ended December 31, 2022, 2021 and 2020, respectively. Policyholder account balances are equal to: (i) policy account values, which consist of an accumulation of gross premium payments; and (ii) credited interest, ranging from less than 1% to 8%, less expenses, mortality charges and withdrawals. Guarantees The Company issues directly and assumes through reinsurance variable annuity products with guaranteed minimum benefits. GMABs, the non-life contingent portion of GMWBs and certain non-life contingent portions of GMIBs are accounted for as embedded derivatives in policyholder account balances and are further discussed in Note 8. Guarantees accounted for as insurance liabilities include: Guarantee: Measurement Assumptions: GMDBs • A return of purchase payment upon death even if the account value is reduced to zero. • Present value of expected death benefits in excess of the projected account balance recognizing the excess ratably over the accumulation period based on the present value of total expected assessments. • An enhanced death benefit may be available for an additional fee. • Assumptions are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. • Investment performance and volatility assumptions are consistent with the historical experience of the appropriate underlying equity index, such as the S&P 500 Index. • Benefit assumptions are based on the average benefits payable over a range of scenarios. GMIBs • After a specified period of time determined at the time of issuance of the variable annuity contract, a minimum accumulation of purchase payments, even if the account value is reduced to zero, that can be annuitized to receive a monthly income stream that is not less than a specified amount. • Present value of expected income benefits in excess of the projected account balance at any future date of annuitization and recognizing the excess ratably over the accumulation period based on present value of total expected assessments. • Certain contracts also provide for a guaranteed lump sum return of purchase premium in lieu of the annuitization benefit. • Assumptions are consistent with those used for estimating GMDB liabilities. • Calculation incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder. GMWBs • A return of purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that cumulative withdrawals in a contract year do not exceed a certain limit. • Expected value of the life contingent payments and expected assessments using assumptions consistent with those used for estimating the GMDB liabilities. • Certain contracts include guaranteed withdrawals that are life contingent. The Company also issues other annuity contracts that apply a lower rate on funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize. These guarantees include benefits that are payable in the event of death, maturity or at annuitization. Certain other annuity contracts contain guaranteed annuitization benefits that may be above what would be provided by the current account value of the contract. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee or a guaranteed paid-up benefit. Information regarding the liabilities for guarantees (excluding base policy liabilities and embedded derivatives) relating to annuity and universal and variable life contracts was as follows: Annuity Contracts Universal and Variable GMDBs and GMIBs Secondary Paid-Up Total (In millions) Direct: Balance at January 1, 2020 $ 361 $ 757 $ 1,075 $ 166 $ 2,359 Incurred guaranteed benefits 144 206 320 (12) 658 Paid guaranteed benefits (12) (4) (44) (14) (74) Balance at December 31, 2020 493 959 1,351 140 2,943 Incurred guaranteed benefits 123 82 164 16 385 Paid guaranteed benefits (14) (7) (52) (15) (88) Balance at December 31, 2021 602 1,034 1,463 141 3,240 Incurred guaranteed benefits 247 (193) 65 44 163 Paid guaranteed benefits (31) (8) (60) (13) (112) Balance at December 31, 2022 $ 818 $ 833 $ 1,468 $ 172 $ 3,291 Ceded: Balance at January 1, 2020 $ — $ — $ 396 $ 95 $ 491 Incurred guaranteed benefits — — 93 13 106 Paid guaranteed benefits — — (20) (9) (29) Balance at December 31, 2020 — — 469 99 568 Incurred guaranteed benefits — — 63 10 73 Paid guaranteed benefits — — (32) (10) (42) Balance at December 31, 2021 — — 500 99 599 Incurred guaranteed benefits — — 43 18 61 Paid guaranteed benefits — — (24) (9) (33) Balance at December 31, 2022 $ — $ — $ 519 $ 108 $ 627 Net: Balance at January 1, 2020 $ 361 $ 757 $ 679 $ 71 $ 1,868 Incurred guaranteed benefits 144 206 227 (25) 552 Paid guaranteed benefits (12) (4) (24) (5) (45) Balance at December 31, 2020 493 959 882 41 2,375 Incurred guaranteed benefits 123 82 101 6 312 Paid guaranteed benefits (14) (7) (20) (5) (46) Balance at December 31, 2021 602 1,034 963 42 2,641 Incurred guaranteed benefits 247 (193) 22 26 102 Paid guaranteed benefits (31) (8) (36) (4) (79) Balance at December 31, 2022 $ 818 $ 833 $ 949 $ 64 $ 2,664 Information regarding the Company’s guarantee exposure, which includes direct business, but excludes offsets from hedging or reinsurance, if any, was as follows at: December 31, 2022 2021 In the At In the At (Dollars in millions) Annuity Contracts: Variable Annuity Guarantees: Total account value (1), (2) $ 36,646 $ 14,515 $ 48,868 $ 20,140 Separate account value (1) $ 28,259 $ 13,778 $ 39,882 $ 19,347 Net amount at risk $ 4,325 (3) $ 371 (4) $ 1,160 (3) $ 461 (4) Average attained age of contractholders 69 years 68 years 69 years 66 years Other Annuity Guarantees: Total account value (1), (2) N/A $ 136 N/A $ 135 Net amount at risk N/A $ 65 (5) N/A $ 70 (5) Average attained age of contractholders N/A 56 years N/A 55 years December 31, 2022 2021 Secondary Paid-Up Secondary Paid-Up (Dollars in millions) Universal and Variable Life Contracts: Total account value (1), (2) $ 4,748 $ 791 $ 5,935 $ 826 Net amount at risk (6) $ 37,051 $ 4,855 $ 37,482 $ 5,181 Average attained age of policyholders 60 years 66 years 59 years 65 years ______________ (1) The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2) Includes the contractholders’ investments in the general account and separate account, if applicable. (3) Defined as the death benefit less the total account value, as of the balance sheet date. It represents the amount of the claim that the Company would incur if death claims were filed on all contracts on the balance sheet date and includes any additional contractual claims associated with riders purchased to assist with covering income taxes payable upon death. (4) Defined as the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. This amount represents the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date, even though the contracts contain terms that allow annuitization of the guaranteed amount only after the 10th anniversary of the contract, which not all contractholders have achieved. (5) Defined as either the excess of the upper tier, adjusted for a profit margin, less the lower tier, as of the balance sheet date or the amount (if any) that would be required to be added to the total account value to purchase a lifetime income stream, based on current annuity rates, equal to the minimum amount provided under the guaranteed benefit. These amounts represent the Company’s potential economic exposure to such guarantees in the event all contractholders were to annuitize on the balance sheet date. (6) 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. Guarantees — Separate Accounts Account balances of contracts with guarantees were invested in separate account asset classes as follows at: December 31, 2022 2021 (In millions) Fund Groupings: Equity $ 17,185 $ 24,519 Balanced 11,666 16,228 Bond 2,147 2,874 Money Market 37 41 Total $ 31,035 $ 43,662 Obligations Assumed Under Structured Settlement Assignments The Company assumed structured settlement claim obligations as an assignment company. These liabilities are measured at the present value of the future periodic claims to be provided and reported as other policy-related balances. The Company received a fee for assuming these claim obligations and, as the assignee of the claim, is legally obligated to ensure periodic payments are made to the claimant. The Company purchased annuities to fund these future periodic payment claim obligations and designates payments to be made directly to the claimant by the annuity writer. These annuities funding structured settlement claims are recorded as an investment. The Company has recorded unpaid claim obligations and annuity contracts of equal a mounts of $1.2 billion and $1.3 billion at December 31, 2022 and 2021, respectively. See Note 1. Obligations Under Funding Agreements The Company issues fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign currencies, to certain unconsolidated special purpose entities that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. For the years ended December 31, 2022, 2021 and 2020, the Company issued $45.8 billion, $39.5 billion and $39.3 billion, respectively, and repaid $44.9 billion, $41.2 billion and $36.7 billion, respectively, of such funding agreements. At December 31, 2022 and 2021, liabilities for funding agreements outstanding, which are included in policyholder account balances, were $38.2 billion and $37.2 billion, respectively. Metropolitan Life Insurance Company is a member of FHLBNY. Holdings of common stock of FHLBNY, included in other invested assets, were $659 million and $718 million at December 31, 2022 and 2021, respectively. The Company has also entered into funding agreements with FHLBNY and a subsidiary of the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the U.S. (“Farmer Mac”). The liability for such funding agreements is included in policyholder account balances. Information related to such funding agreements was as follows at: Liability Collateral December 31, 2022 2021 2022 2021 (In millions) FHLBNY (1) $ 13,535 $ 14,745 $ 15,946 (2) $ 16,645 (2) Farmer Mac (3) $ 2,050 $ 2,050 $ 2,148 $ 2,159 __________________ (1) Represents funding agreements issued to FHLBNY in exchange for cash and for which it has been granted a lien on certain assets, some of which are in the custody of FHLBNY, including residential mortgage-backed securities (“RMBS”), to collateralize obligations under such funding agreements. The Company is permitted to withdraw any portion of the collateral in the custody of FHLBNY as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by the Company, FHLBNY’s recovery on the collateral is limited to the amount of the Company’s liability to FHLBNY. (2) Advances are collateralized primarily by mortgage-backed securities presented at estimated fair value. The remaining collateral is mortgage loans presented at carrying value. (3) Represents funding agreements issued to a subsidiary of Farmer Mac. The obligations under these funding agreements are secured by a pledge of certain eligible agricultural mortgage loans and may, under certain circumstances, be secured by other qualified collateral. The amount of collateral presented is at carrying value. Liabilities for Unpaid Claims and Claim Expenses The following is information about incurred and paid claims development by segment at December 31, 2022. Such amounts are presented net of reinsurance, and are not discounted. The tables present claims development and cumulative claim payments by incurral year. The development tables are only presented for significant short-duration product liabilities within each segment. The information about incurred and paid claims development prior to 2022 is presented as supplementary information. U.S. Group Life - Term Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance At December 31, 2022 Years Ended December 31, Total IBNR Cumulative (Unaudited) Incurral Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Dollars in millions) 2013 $ 6,637 $ 6,713 $ 6,719 $ 6,720 $ 6,730 $ 6,720 $ 6,723 $ 6,724 $ 6,726 $ 6,726 $ 1 213,283 2014 6,986 6,919 6,913 6,910 6,914 6,919 6,920 6,918 6,920 1 216,148 2015 7,040 7,015 7,014 7,021 7,024 7,025 7,026 7,026 1 218,782 2016 7,125 7,085 7,095 7,104 7,105 7,104 7,107 2 220,671 2017 7,432 7,418 7,425 7,427 7,428 7,428 3 263,546 2018 7,757 7,655 7,646 7,650 7,651 6 251,446 2019 7,935 7,900 7,907 7,917 11 252,015 2020 8,913 9,367 9,389 23 297,022 2021 10,555 10,795 64 327,725 2022 9,640 1,129 276,784 Total 80,599 Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance (77,480) All outstanding liabilities for incurral years prior to 2013, net of reinsurance 22 Total unpaid claims and claim adjustment expenses, net of reinsurance $ 3,141 Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, (Unaudited) Incurral Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (In millions) 2013 $ 5,216 $ 6,614 $ 6,664 $ 6,678 $ 6,711 $ 6,715 $ 6,720 $ 6,721 $ 6,723 $ 6,724 2014 5,428 6,809 6,858 6,869 6,902 6,912 6,915 6,916 6,917 2015 5,524 6,913 6,958 6,974 7,008 7,018 7,022 7,024 2016 5,582 6,980 7,034 7,053 7,086 7,096 7,100 2017 5,761 7,292 7,355 7,374 7,400 7,414 2018 6,008 7,521 7,578 7,595 7,629 2019 6,178 7,756 7,820 7,853 2020 6,862 9,103 9,242 2021 8,008 10,476 2022 7,101 Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance $ 77,480 Average Annual Percentage Payout The following is supplementary information about average historical claims duration at December 31, 2022: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Group Life - Term 76.8% 20.8% 0.8% 0.3% 0.5% 0.1% 0.1% —% —% —% Group Long-Term Disability Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance At December 31, 2022 Years Ended December 31, Total IBNR Liabilities Plus Expected Development on Reported Claims Cumulative Number of Reported Claims (Unaudited) Incurral Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (Dollars in millions) 2013 $ 1,008 $ 1,027 $ 1,032 $ 1,049 $ 1,070 $ 1,069 $ 1,044 $ 1,032 $ 1,025 $ 1,027 $ — 21,139 2014 1,076 1,077 1,079 1,101 1,109 1,098 1,097 1,081 1,078 — 22,853 2015 1,082 1,105 1,093 1,100 1,087 1,081 1,067 1,086 — 21,216 2016 1,131 1,139 1,159 1,162 1,139 1,124 1,123 — 17,973 2017 1,244 1,202 1,203 1,195 1,165 1,181 — 16,328 2018 1,240 1,175 1,163 1,147 1,170 — 15,214 2019 1,277 1,212 1,169 1,177 — 15,392 2020 1,253 1,223 1,155 6 15,719 2021 1,552 1,608 43 19,189 2022 1,695 760 9,970 Total 12,300 Cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance (6,251) All outstanding liabilities for incurral years prior to 2013, net of reinsurance 1,496 Total unpaid claims and claim adjustment expenses, net of reinsurance $ 7,545 Cumulative Paid Claims and Paid Allocated Claim Adjustment Expenses, Net of Reinsurance Years Ended December 31, (Unaudited) Incurral Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (In millions) 2013 $ 43 $ 234 $ 382 $ 475 $ 551 $ 622 $ 676 $ 722 $ 764 $ 798 2014 51 266 428 526 609 677 732 778 818 2015 50 264 427 524 601 665 718 764 2016 49 267 433 548 628 696 750 2017 56 290 476 579 655 719 2018 54 314 497 594 666 2019 57 342 522 620 2020 59 355 535 2021 95 505 2022 76 Total cumulative paid claims and paid allocated claim adjustment expenses, net of reinsurance $ 6,251 Average Annual Percentage Payout The following is supplementary information about average historical claims duration at December 31, 2022: Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Years 1 2 3 4 5 6 7 8 9 10 Group Long-Term Disability 4.8% 21.7% 15.2% 9.0% 7.0% 6.1% 5.0% 4.3% 3.9% 3.3% Significant Methodologies and Assumptions Group Life - Term and Group Long-Term Disability incurred but not paid (“IBNP”) liabilities are developed using a combination of loss ratio and development methods. Claims in the course of settlement are then subtracted from the IBNP liabilities, resulting in the IBNR liabilities. The loss ratio method is used in the period in which the claims are neither sufficient nor credible. In developing the loss ratios, any material rate increases that could change the underlying premium without affecting the estimated incurred losses are taken into account. For periods where sufficient and credible claim data exists, the development method is used based on the claim triangles which categorize claims according to both the period in which they were incurred and the period in which they were paid, adjudicated or reported. The end result is a triangle of known data that is used to develop known completion ratios and factors. Claims paid are then subtracted from the estimated ultimate incurred claims to calculate the IBNP liability. An expense liability is held for the future expenses associated with the payment of incurred but not yet paid claims (IBNR and pending). This is expressed as a percentage of the underlying claims liability and is based on past experience and the anticipated future expense structure. For Group Life - Term, first year incurred claims and allocated loss adjustment expenses decreased in 2022 compared to the 2021 incurral year due to the decline in COVID-19 claims. For Group Long-Term Disability, first year incurred claims and allocated loss adjustment expenses increased in 2022 compared to 2021 incurral year due to the growth in the size of the business. The assumptions used in calculating the unpaid claims and claim adjustment expenses for Group Life - Term and Group Long-Term Disability are updated annually to reflect emerging trends in claim experience. Certain of our Group Life - Term customers have experience-rated contracts, whereby the group sponsor participates in the favorable and/or adverse claim experience, including favorable and/or adverse prior year development. Claim experience adjustments on these contracts are not reflected in the foregoing incurred and paid claim development tables, but are instead reflected as an increase (adverse experience) or decrease (favorable experience) to premiums on the consolidated statements of operations. Liabilities for Group Life - Term unpaid claims and claim adjustment expenses are not discounted. The liabilities for Group Long-Term Disability unpaid claims and claim adjustment expenses were $6.5 billion and $6.2 billion at December 31, 2022 and 2021, respectively. Using interest rates ranging from 3% to 8%, based on the incurral year, the total discount applied to these liabilities was $1.2 billion and $1.1 billion at December 31, 2022 and 2021, respectively. The amount of interest accretion recognized was $ 461 million 518 million 452 million For Group Life - Term, claims were based upon individual death claims. For Group Long-Term Disability, claim frequency was determined by the number of reported claims as identified by a unique claim number assigned to individual claimants. Claim counts initially include claims that do not ultimately result in a liability. These claims are omitted from the claim counts once it is determined that there is no liability. The incurred and paid claims disclosed for the Group Life - Term product includes activity related to the product’s continued protection feature; however, the associated actuarial reserve for future benefit obligations under this feature is excluded from the liability for unpaid claims. The Group Long-Term Disability IBNR, included in the development tables above, was developed using discounted cash flows, and is presented on a discounted basis. Reconciliation of the Disclosure of Incurred and Paid Claims Development to the Liability for Unpaid Claims and Claim Adjustment Expenses The reconciliation of the net incurred and paid claims development tables to the liability for unpaid claims and claims adjustment expenses on the consolidated balance sheet was as follows at: December 31, 2022 (In millions) Short-Duration: Unpaid claims and allocated claims adjustment expenses, net of reinsurance: U.S.: Group Life - Term $ 3,141 Group Long-Term Disability 7,545 Total $ 10,686 Other insurance lines - all segments combined 883 Total unpaid claims and allocated claims adjustment expenses, net of reinsurance 11,569 Reinsurance recoverables on unpaid claims: U.S.: Group Life - Term 8 Group Long-Term Disability 205 Total 213 Other insurance lines - all segments combined 36 Total reinsurance recoverable on unpaid claims 249 Total unpaid claims and allocated claims adjustment expense 11,818 Discounting (1,207) Liability for unpaid claims and claim adjustment liabilities - short-duration 10,611 Liability for unpaid claims and claim adjustment liabilities - all long-duration lines 4,837 Total liability for unpaid claims and claim adjustment expense (included in future policy benefits and other policy-related balances) $ 15,448 Rollforward of Claims and Claim Adjustment Expenses Information regarding the liabilities for unpaid claims and claim adjustment expenses was as follows: Years Ended December 31, 2022 2021 2020 (In millions) Balance at January 1, $ 15,059 $ 13,523 $ 13,140 Less: Reinsurance recoverables 2,263 1,639 1,525 Net balance at January 1, 12,796 11,884 11,615 Incurred related to: Current year 20,769 21,201 18,620 Prior years (1) 457 582 (19) Total incurred 21,226 21,783 18,601 Paid related to: Current year (14,565) (15,405) (13,854) Prior years (6,025) (5,466) (4,478) Total paid (20,590) (20,871) (18,332) Net balance at December 31, 13,432 12,796 11,884 Add: Reinsurance recoverables 2,016 2,263 1,639 Balance at December 31, $ 15,448 $ 15,059 $ 13,523 ______________ (1) For the years ended December 31, 2022 and 2021, incurred claim activity and claim adjustment expenses associated with prior years increased primarily due to the impacts related to the COVID-19 pandemic, partially offset by additional premiums recorded for experience-rated contracts that are not reflected in the table above. For the year ended December 31, 2020, claim and claim adjustment expenses associated with prior years decreased due to favorable claims experience in the current year. Separate Accounts Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $52.4 billion and $78.8 billion at December 31, 2022 and 2021, respectively, for which the policyholder assumes all investment risk, and separate accounts for which the Company contractually guarantees either a minimum return or account value to the policyholder which totaled $36.8 billion and $45.0 billion at December 31, 2022 and 2021, respectively. The latter category consisted primarily of guaranteed interest contracts (“GICs”). The average interest rate credited on these contracts was 2.49% and 2.16% at December 31, 2022 and 2021, respectively. |
