Metropolitan Life Insurance Co.
03/11/2026 | Press release | Distributed by Public on 03/11/2026 04:02
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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
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Page
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Forward-Looking Statements and Other Financial Information
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26
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Business Overview
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26
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Current Market Conditions
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26
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Summary of Critical Accounting Estimates
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26
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Results of Operations
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33
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Investments
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35
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Derivatives
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50
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Liquidity and Capital Resources
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50
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Adopted Accounting Pronouncements
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55
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Future Adoption of Accounting Pronouncements
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55
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Risk Management
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55
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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 Company's results of operations is presented pursuant to General Instruction I(2)(a) of Form 10-K. This narrative analysis should be read in conjunction with "Note Regarding Forward-Looking Statements," "Risk Factors," "Quantitative and Qualitative Disclosures About Market Risk" and the Company's 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. See "Note Regarding Forward-Looking Statements" for cautionary language regarding forward-looking statements.
Business Overview
MLIC is a provider of insurance, annuities and employee benefits. In the fourth quarter of 2025, the Company reorganized from three reportable segments (Group Benefits, RIS, and MetLife Holdings) to a single reportable segment to align with MetLife's strategic initiatives, and the manner in which the CODM evaluates the performance of the business and allocates resources. This change was applied retrospectively for all years presented. Accordingly, certain products have been reclassified within the product rollforwards for the year ended December 31, 2025. The foregoing changes did not impact prior period consolidated net income (loss). See "- Results of Operations - Overview" and Notes 1 and 2 of the Notes to the Consolidated Financial Statements for further information.
Current Market Conditions
In the U.S., the Federal Open Market Committee took various actions in 2025 to promote employment and combat inflation, including lowering interest rates in the second half of the year and ending the process of quantitative tightening. Future policy adjustments in 2026 could be affected by labor market conditions, inflation, and financial and international developments, as well as other factors. We are closely monitoring these and other political and economic conditions that might contribute to global market volatility and impact our business operations, investment portfolio and derivatives, such as global inflation, supply chain disruptions, acts of war, banking sector volatility and employment and work policies of the federal government. See "- Investments - Current Environment" for additional information.
Summary of Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported on the consolidated financial statements. For a discussion of our significant accounting policies, see Note 1 of the Notes to the Consolidated Financial Statements. The most critical estimates include those used in determining:
(i)future policy benefit liabilities ("FPBs"), market risk benefits ("MRBs") and reinsurance recoverables;
(ii)estimated fair values of investments in the absence of quoted market values;
(iii)investment allowance for credit loss ("ACL") and impairments;
(iv)estimated fair values of freestanding derivatives;
(v)measurement of employee benefit plan liabilities;
(vi)measurement of income taxes and the valuation of deferred tax assets; and
(vii)liabilities for litigation and regulatory matters.
In applying these policies and estimates, management makes subjective and complex judgments that frequently require assumptions about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our business and operations. Actual results could differ from these estimates.
Future Policy Benefit Liabilities
Effective January 1, 2023, the Company adopted an accounting pronouncement related to targeted improvements to the accounting for long-duration contracts ("LDTI") with a January 1, 2021 transition date (the "LDTI Transition Date"). Generally, FPBs are payable over an extended period of time and calculated as the present value of future expected benefits and claim settlement expenses to be paid, reduced by the present value of future expected net premiums. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of FPBs for traditional long-duration non-participating products are expectations related to mortality, morbidity, termination, claim settlement expense, policy lapse, renewal, retirement, disability incidence, disability terminations, inflation, and other contingent events as appropriate to the respective product type and geographical area. These assumptions are reviewed at least annually and updated as needed to reflect our expected experience for future periods. If net premiums exceed gross premiums (i.e., expected benefits exceed expected gross premiums), the FPBs are increased, and a corresponding adjustment is recognized in net income.
Liabilities for unpaid claims are estimated based upon our historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs.
Traditional non-participating long-duration and limited-payment contracts comprise the majority of MLIC's FPBs, inclusive of deferred profit liabilities, as described in Note 3 of the Notes to the Consolidated Financial Statements. For such contracts, cash flow assumptions are used to project the amount and timing of expected future benefits and claim settlement expenses to be paid and the expected future premiums to be collected for a cohort. Generally, the liabilities for these products are updated retrospectively on a quarterly basis for actual experience and at least once a year (generally during the third quarter as part of the Company's annual actuarial assumption review) for any changes in cash flow assumptions. The change in FPBs reflected in the statement of operations is calculated using a locked-in discount rate. For contracts issued prior to the LDTI Transition Date, the Company developed a cohort level locked-in discount rate that reflects the interest accretion rates that were locked in at inception of the underlying contracts (unless there was a historical premium deficiency event that resulted in updating the interest accretion rate prior to the LDTI Transition Date), or the acquisition date for contracts acquired through an assumed in-force reinsurance transaction or a business combination. As described in Note 1 of the Notes to the Consolidated Financial Statements, for contracts issued subsequent to the LDTI Transition Date, the upper-medium grade discount rate is locked-in for the cohort and used to discount the estimated cash flows. The Company generally interprets this as a rate comparable to that of a corporate single A discount rate and reflects the duration characteristics of the liability. The FPB for all cohorts is remeasured to a current upper-medium grade discount rate at each reporting period through other comprehensive income (loss) ("OCI").
Liabilities for universal and variable universal life secondary and paid-up guarantees ("additional insurance liabilities") are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating the secondary and paid-up guarantee liabilities are investment income, mortality, lapse, and premium payment pattern and persistency. In addition, the projected account balance and assessments used in this calculation are impacted by the earned rate on investments and the interest crediting rates, which are typically subject to guaranteed minimums. The assumptions of investment performance and volatility for variable products' separate account funds are consistent with historical experience of the appropriate underlying equity indices, such as the Standard & Poor's Global Ratings ("S&P") 500 Index. These assumptions are monitored and updated retrospectively based on market conditions and historical experience on a periodic basis and at least once a year (generally during the third quarter as part of the Company's annual actuarial assumption review) for any changes in cash flow assumptions.
Accounting for reinsurance generally presents the income statement effect of direct policies on a net-of-reinsurance basis by using assumptions and methodologies consistent with those used to project the future performance of the underlying direct business. Further, the potential impact of counterparty credit risks is considered when measuring the reinsurance recoverables. We periodically review actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluate the financial strength of counterparties to our reinsurance agreements using criteria similar to that evaluated in our security impairment process. See "- Investment Allowance for Credit Loss and Impairments." Additionally, for each of our reinsurance agreements, we determine whether the agreement provides indemnification against loss or liability relating to insurance risk, in accordance with applicable accounting standards. We review all contractual features, including those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. If we determine that a reinsurance agreement does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, we record the agreement using the deposit method of accounting.
We measure market risk related to our market sensitive traditional long-duration non-participating and limited-payment contracts, additional insurance liabilities and reinsurance recoverables based on changes in interest rates utilizing a sensitivity analysis. The results of this sensitivity analysis are included in "Quantitative and Qualitative Disclosures About Market Risk - Risk Measurement: Sensitivity Analysis." We have also assessed the sensitivities of hypothetical changes in significant assumptions to reported amounts related to our traditional long-duration non-participating and limited-payment contracts, additional insurance liabilities and reinsurance recoverables for products including, but not limited to, those within the disaggregated rollforwards included in Note 3 of the Notes to the Consolidated Financial Statements, as reflected in the following table:
Traditional long-duration non-participating and limited-payment contracts, additional insurance liabilities and reinsurance recoverables
| December 31, 2025 | ||||||||||||||||||||||||||
| FPBs (1) | Reinsurance Recoverables |
Net Effect to
Pre-tax
Net Income
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Net Effect to OCI | |||||||||||||||||||||||
| Increase / (Decrease) (In millions) | ||||||||||||||||||||||||||
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Assumptions (2):
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| Mortality | ||||||||||||||||||||||||||
| Effect of an increase by 1% | $ | (85) | $ | (5) | $ | 93 | $ | (13) | ||||||||||||||||||
| Effect of a decrease by 1% | $ | 85 | $ | 5 | $ | (94) | $ | 14 | ||||||||||||||||||
| Morbidity (3) | ||||||||||||||||||||||||||
| Effect of an increase by 5% | $ | 457 | $ | 3 | $ | (505) | $ | 51 | ||||||||||||||||||
| Effect of a decrease by 5% | $ | (372) | $ | (3) | $ | 420 | $ | (51) | ||||||||||||||||||
| Lapse (4) | ||||||||||||||||||||||||||
| Effect of an increase by 10% | $ | (295) | $ | (12) | $ | 389 | $ | (106) | ||||||||||||||||||
| Effect of a decrease by 10% | $ | 404 | $ | 12 | $ | (517) | $ | 125 | ||||||||||||||||||
__________________
(1)FPBs are inclusive of deferred profit liabilities where applicable.
(2)All sensitivities exclude potential changes in our future premium rate assumptions.
(3)For products which are subject to morbidity risk, MLIC applied sensitivities to the incidence rate assumptions only.
(4)For long-term care and individual disability products, the lapse impacts include mortality as both mortality and lapse result in termination of these contracts without any additional benefit payment.
See Note 3 of the Notes to the Consolidated Financial Statements for additional information, including the significant inputs, judgments, valuation methods and assumptions used in the establishment of FPBs, as well as the effect of changes in such factors on the measurement of our FPBs during the year. See Note 8 of the Notes to the Consolidated Financial Statements for additional information on our reinsurance transactions.
Traditional participating contracts comprise a significant portion of MLIC's FPBs, as described in Note 3 of the Notes to the Consolidated Financial Statements. For such contracts, original assumptions developed at the time of issue are locked-in and used in all future liability calculations. An additional reserve would be required if the resulting liabilities are not adequate to provide for future benefits and expenses (i.e., there is a premium deficiency). For these contracts, MLIC's risk of adverse experience may be mitigated through adjustments to the dividend scales.
For all insurance assets and liabilities, MLIC holds capital and surplus to mitigate potential adverse experience development. The Company's approaches for managing liquidity and capital are described in "- Liquidity and Capital Resources."
Market Risk Benefits
MRBs are contracts or contract features that guarantee benefits, such as guaranteed minimum benefits (referred to as "GMXBs"), in addition to an account balance which expose insurance companies to other than nominal capital market risk (e.g., equity price, interest rate, and/or foreign currency exchange risk) and protect the contractholder from the same risk. Certain contracts may have multiple contract features or guarantees that meet the definition of an MRB. Those benefits are aggregated and measured as a single compound MRB.
All identified MRBs are required to be measured at estimated fair value, which is determined based on the present value of projected future benefits minus the present value of projected future fees attributable to those benefit features. The projections of future benefits and future fees require capital market and actuarial assumptions, including expectations concerning policyholder behavior. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk-free rates. The valuation of these MRBs also includes an adjustment for nonperformance risk and risk margins for non-capital market inputs. For direct and assumed MRBs, the nonperformance risk adjustment, which is captured as a spread over the risk-free rate in determining the discount rate to discount the cash flows of the liability, 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. For ceded MRBs, the nonperformance risk adjustment considers the claims paying ability of the reinsurer. 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 in certain actuarial assumptions. 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.
Changes in the estimated fair value of direct, assumed and ceded MRBs are recognized in net income, except for fair value changes attributable to a change in nonperformance risk of the Company which is recorded within OCI.
Market conditions including changes in interest rates, equity indices, market volatility and foreign currency exchange rates, 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, and changes in the Company's nonperformance risk could materially affect OCI.
As part of the Company's annual actuarial assumption review process (see "- Future Policy Benefit Liabilities" section above), we also reassess the long-term policyholder behavior and mortality assumptions used in determining the fair value of our net MRB liabilities. Changes in these underlying actuarial assumptions (e.g., updates to lapse rates, benefit utilization rates, mortality levels and long-term market expectations based on emerging experience) are incorporated into the MRB valuation model. Accordingly, our annual assumption updates can result in remeasurement of MRB fair values, leading to gains or losses recognized in net income.
We measure market risk related to our MRBs based on changes in interest rates, foreign currency exchange rates and equity market prices utilizing a sensitivity analysis. The results of this sensitivity analysis are included in "Quantitative and Qualitative Disclosures About Market Risk - Risk Measurement: Sensitivity Analysis." We have also assessed the sensitivities of hypothetical changes in significant assumptions to reported amounts related to our MRBs for products including, but not limited to, those within the disaggregated rollforwards in Note 5 of the Notes to the Consolidated Financial Statements, as reflected in the following table:
| December 31, 2025 | ||||||||||||||||||||||||||
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Direct & Assumed
MRBs
(Liabilities net of Assets)
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Ceded MRB Assets
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Net Effect to Pre-tax Net Income |
Net Effect to OCI | |||||||||||||||||||||||
| Increase / (Decrease) (In millions) | ||||||||||||||||||||||||||
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Assumptions:
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| Mortality | ||||||||||||||||||||||||||
| Effect of an increase by 1% | $ | 2 | $ | - | $ | (2) | $ | - | ||||||||||||||||||
| Effect of a decrease by 1% | $ | (2) | $ | - | $ | 2 | $ | - | ||||||||||||||||||
| Lapse | ||||||||||||||||||||||||||
| Effect of an increase by 10% | $ | (11) | $ | (2) | $ | 11 | $ | (2) | ||||||||||||||||||
| Effect of a decrease by 10% | $ | 9 | $ | 1 | $ | (10) | $ | 2 | ||||||||||||||||||
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Nonperformance risk (1)
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||||||||||||||||||||||||||
| Effect of an increase by 50 bps | $ | (154) | $ | (21) | $ | (21) | $ | 154 | ||||||||||||||||||
| Effect of a decrease by 50 bps | $ | 171 | $ | 24 | $ | 24 | $ | (171) | ||||||||||||||||||
__________________
(1)For direct and assumed MRBs, nonperformance risk relates to the Company's claims paying ability, and for ceded MRBs, it relates to the claims paying ability of the reinsurer.
See Note 5 of the Notes to the Consolidated Financial Statements for additional information, including the significant inputs, judgments, valuation methods and assumptions used in the establishment of the MRBs, as well as the effect of changes in such factors on the measurement of our MRBs during the year. Also, see Note 12 of the Notes to the Consolidated Financial Statements for additional information on the fair value measurement of MRBs.
Estimated Fair Value of Investments
The estimated fair values of our investments are based on unadjusted quoted prices for identical investments in active markets that are readily and regularly obtainable. When such unadjusted quoted prices are not available, estimated fair values are based on quoted prices in markets that are not active, quoted prices for similar but not identical investments, or other observable inputs. If these inputs are not available, or observable inputs are not determinable, unobservable inputs and/or adjustments to observable inputs requiring significant management judgment, including assumptions or estimates, are used to determine the estimated fair value of investments. Unobservable inputs are based on management's assumptions about the inputs market participants would use in pricing such investments. The methodologies, assumptions and inputs utilized are described in Note 12 of the Notes to the Consolidated Financial Statements.
For most of our investments, sensitivity analysis regarding unobservable inputs is not necessary or appropriate, as they are valued using quoted prices, as described above. Quantitative information about the significant unobservable inputs used in 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 estimated fair value on a recurring basis is presented in Note 12 of the Notes to the Consolidated Financial Statements.
Financial markets are susceptible to severe events evidenced by rapid depreciation in asset values accompanied by a reduction in asset liquidity. Our ability to sell investments, or the price ultimately realized for investments, depends upon the demand and liquidity in the market and increases the use of judgment in determining the estimated fair value of certain investments.
Investment Allowance for Credit Loss and Impairments
The significant estimates and inherent uncertainties related to our evaluation of credit loss and impairments on our investment portfolio are summarized below. See "Quantitative and Qualitative Disclosures About Market Risk" for information regarding the sensitivity of our fixed maturity securities and mortgage loan portfolios to changes in interest rates and foreign currency exchange rates.
Fixed Maturity Securities
The assessment of whether a credit loss has occurred is based on our case-by-case evaluation of whether the net amount expected to be collected is less than the amortized cost basis. We consider a wide range of factors about the security issuer and use our best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. We evaluate credit loss by considering information that changes from time to time about past events, current and forecasted economic conditions, and we measure credit loss by estimating recovery value using a discounted cash flow analysis. We estimate recovery value based on our best estimate of future cash flows, which is inherently subjective, and methodologies can vary depending on the facts and circumstances specific to each security. We record an ACL for the amount of the credit loss instead of recording a reduction of the amortized cost. The evaluation processes and measurement methodologies, as well as the significant inputs, judgments and assumptions used to determine the amount of credit loss are described in Notes 1 and 10 of the Notes to the Consolidated Financial Statements. The determination of the amount of ACL is subjective, as it includes our estimates and assumptions and assessment of known and inherent risks. We revise these estimates and assumptions as conditions change and new information becomes available. The valuation of our fixed maturity securities portfolio is sensitive to changes in interest rates, and the estimated fair value of the portion of our fixed maturities securities portfolio that is foreign denominated is sensitive to changes in foreign currency exchange rates.
Mortgage Loans
The ACL is established both for pools of loans with similar risk characteristics and for loans with dissimilar risk characteristics, collateral dependent loans and certain modified loans, individually on a loan specific basis. We record an allowance for expected lifetime credit loss in an amount that represents the portion of the amortized cost basis of mortgage loans that we do not expect to collect, resulting in mortgage loans being presented at the net amount expected to be collected. To determine the mortgage loan ACL, we apply significant judgment to estimate expected lifetime credit loss over the contractual term of our mortgage loans adjusted for expected prepayments and any extensions; we consider past events and current and forecasted economic conditions which are subject to inherent uncertainty and which may change from time to time. The ACL methodologies, significant inputs and significant judgments and assumptions used to determine the amount of credit loss are described in Notes 1 and 10 of the Notes to the Consolidated Financial Statements. The determination of the amount of ACL is subjective as it includes our estimates and assumptions and assessment of known and inherent risks. We revise these estimates as conditions change and new information becomes available. The estimated fair value of our mortgage loan portfolio is sensitive to changes in interest rates, and the estimated fair value of the portion of our mortgage loan portfolio that is foreign denominated is sensitive to changes in foreign currency exchange rates.
Leases, Real Estate and Other Asset Classes
The determination of the amount of ACL on leases and impairments on real estate and the remaining asset classes is highly subjective and is based upon our quarterly evaluation and assessment of known and inherent risks associated with the respective asset class. The evaluation processes, measurement methodologies, significant inputs and significant judgments and assumptions used to determine the amount of ACL and impairments are described in Notes 1 and 10 of the Notes to the Consolidated Financial Statements. Such evaluations and assessments are revised as conditions change and new information becomes available.
Freestanding Derivatives
The determination of the estimated fair value of freestanding derivatives, 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 the 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. See Note 12 of the Notes to the Consolidated Financial Statements for additional details on significant inputs into the OTC derivative pricing models and credit risk adjustment.
See Note 11 of the Notes to the Consolidated Financial Statements for additional information on our derivatives and hedging programs. See also "Quantitative and Qualitative Disclosures About Market Risk" for information regarding the sensitivity of our derivatives to changes in interest rates, foreign currency exchange rates, and equity market prices.
Employee Benefit Plans
The Company sponsors a nonqualified defined benefit pension plan covering MetLife employees who meet specified eligibility requirements. See Note 17 of the Notes to the Consolidated Financial Statements for further information on our benefit plan. The calculation of the obligations and expenses associated with this plan requires an extensive use of assumptions such as the discount rate and rate of future compensation increases, as well as assumptions regarding participant demographics such as rate and age of retirement, withdrawal rates and mortality. In consultation with external actuarial firms, we determine these assumptions based upon a variety of factors such as the historical experience of the plan, currently available market and industry data, and expected benefit payout streams.
We determine the discount rate used to value the Company's pension obligations based upon rates commensurate with current yields on high quality corporate bonds. Given our pension obligations as of December 31, 2024, the beginning of the measurement year, if we had assumed a discount rate for our pension plan that was 100 basis points higher or 100 basis points lower than the rate we assumed, the change in our net periodic benefit costs in 2025 would have been as follows:
| Year Ended December 31, 2025 | |||||
| Increase/(Decrease) in Net Periodic Pension Costs | |||||
| (In millions) | |||||
|
Increase in discount rate by 100 bps
|
$ | (4) | |||
|
Decrease in discount rate by 100 bps
|
$ | 4 | |||
Given our pension obligations as of December 31, 2025, if we had assumed a discount rate for our pension plan that was 100 basis points higher or 100 basis points lower than the rate we assumed, the change in our pension benefit obligation would have been as follows:
| Year Ended December 31, 2025 | |||||
|
Increase/(Decrease) in Pension Benefit Obligations
|
|||||
| (In millions) | |||||
| Increase in discount rate by 100 bps | $ | (77) | |||
| Decrease in discount rate by 100 bps | $ | 90 | |||
The above tables consider only changes in our assumed discount rates without consideration of possible changes in any of the other assumptions described above that could ultimately accompany any changes in our assumed discount rate. The assumptions used may differ materially from actual results due to, among other factors, changing market and economic conditions and changes in participant demographics. These differences may have a significant impact on the Company's consolidated financial statements and liquidity.
See Note 17 of the Notes to the Consolidated Financial Statements for additional discussion of assumptions used in measuring liabilities relating to our employee benefit plans.
Income Taxes and Valuation of Deferred Tax Assets
Our accounting for income taxes represents our best estimate of various events and transactions. Tax laws are often complex and may be subject to differing interpretations by the taxpayer and the relevant governmental taxing authorities. In establishing a provision for income tax expense, we must make judgments and interpretations about the application of inherently complex tax laws. We must also make estimates about when in the future certain items will affect taxable income in the various tax jurisdictions in which we conduct business.
The Company considers all available factors, both positive and negative, to determine whether, based on the weight of these factors, a partial or full valuation allowance for categories of deferred tax assets is required. The weight given to these factors is commensurate with the extent to which it can be objectively verified. Examples of factors considered in determining deferred tax asset realizability include past earnings history, projections of taxable income and tax planning strategies, including the intent and ability to hold certain securities until they recover in value. Changes in tax laws or interpretations of such laws and/or statutory tax rates in countries in which we operate could have an impact on our valuation of net deferred tax assets. If there had been a 1% increase in the effective income tax rate, the change would have resulted in an approximate $119 million increase in the net deferred income tax asset balance at December 31, 2025.
See Notes 1 and 18 of the Notes to the Consolidated Financial Statements for additional information on our income taxes.
Litigation Contingencies
We are a defendant in a large number of litigation matters and are involved in a number of regulatory investigations. Given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company's consolidated net income or cash flows in particular quarterly or annual periods. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Liabilities related to certain lawsuits, including our asbestos-related liability, are especially difficult to estimate due to the limitation of reliable data and uncertainty regarding numerous variables that can affect liability estimates. On a quarterly and annual basis, we review relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in our consolidated financial statements. It is possible that an adverse outcome in certain of our litigation and regulatory investigations, including asbestos-related cases, or the use of different assumptions in the determination of amounts recorded could have a material effect upon our consolidated net income or cash flows in particular quarterly or annual periods.
See Note 19 of the Notes to the Consolidated Financial Statements for additional information regarding our assessment of litigation contingencies.
Results of Operations
Overview
In the fourth quarter of 2025, the Company reorganized from three reportable segments (Group Benefits, RIS, and MetLife Holdings) to a single reportable segment to align with MetLife's strategic initiatives, and the manner in which the CODM evaluates the performance of the business and allocates resources. This change was applied retrospectively for all years presented. Accordingly, certain products have been reclassified within the product rollforwards for the year ended December 31, 2025. Additionally, the measure used to evaluate segment profitability changed from adjusted earnings to net income. The foregoing changes did not impact prior period consolidated net income (loss). Period-to-period changes in net income (loss) are evaluated by the Company as it relates to maintaining sufficient equity and capital to support insurance products and regulatory requirements. See Notes 1 and 2 of the Notes to the Consolidated Financial Statements for further information.
Reinsurance Transactions
In 2025, the Company entered into a number of reinsurance agreements. See Note 8 of the Notes to the Consolidated Financial Statements for further information on these reinsurance transactions.
Net Income (Loss) Attributable to MLIC
Net income attributable to MLIC decreased by $1.9 billion to $1.6 billion in 2025, compared to $3.5 billion in 2024. This includes an unfavorable change of $64 million from our annual actuarial assumption review.
Consolidated Results
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Revenues | |||||||||||
| Premiums | $ | 30,576 | $ | 27,561 | |||||||
| Universal life and investment-type product policy fees | 1,534 | 1,500 | |||||||||
| Net investment income | 11,611 | 11,635 | |||||||||
| Other revenues | 1,722 | 1,775 | |||||||||
| Net investment gains (losses) | (992) | (450) | |||||||||
| Net derivative gains (losses) | (1,141) | (106) | |||||||||
| Total revenues | 43,310 | 41,915 | |||||||||
| Expenses | |||||||||||
| Policyholder benefits and claims and policyholder dividends | 32,560 | 29,236 | |||||||||
| Policyholder liability remeasurement (gains) losses | 30 | (148) | |||||||||
|
Market risk benefit remeasurement (gains) losses
|
(319) | (932) | |||||||||
| Interest credited to policyholder account balances | 3,769 | 3,819 | |||||||||
|
Amortization of deferred policy acquisition costs and value of business acquired
|
265 | 279 | |||||||||
| Interest expense on debt | 102 | 123 | |||||||||
|
Other expenses, net of capitalization of deferred policy acquisition costs
|
5,089 | 5,277 | |||||||||
|
Total expenses
|
41,496 | 37,654 | |||||||||
| Income (loss) before provision for income tax | 1,814 | 4,261 | |||||||||
| Provision for income tax expense (benefit) | 255 | 776 | |||||||||
|
Net income (loss)
|
1,559 | 3,485 | |||||||||
| Less: Net income (loss) attributable to noncontrolling interests | (6) | (9) | |||||||||
|
Net income (loss) attributable to Metropolitan Life Insurance Company
|
$ | 1,565 | $ | 3,494 | |||||||
Year Ended December 31, 2025 Compared with the Year Ended December 31, 2024
Revenues
Total revenues increased $1.4 billion, or 3%, to $43.3 billion in 2025 from $41.9 billion in 2024 primarily due to the following:
•Higher premiums, primarily reflecting higher volume in the pension risk transfer business.
Partially offset by:
•Higher net investment losses driven by higher (i) ACLs on mortgage loans, (ii) impairments on real estate investments and leveraged leases, and (iii) foreign currency transaction losses. See "- Investments - Overview" for information regarding management of our investment portfolio.
•Higher net derivative losses reflecting unfavorable changes in the estimated fair value of the underlying assets from embedded derivatives related to funds withheld on reinsurance agreements and the impact of the U.S. dollar weakening in 2025 compared to strengthening in 2024 relative to major currencies. See "- Derivatives - Net Derivative Gains (Losses)" for information regarding the use of derivatives to hedge market risk.
Expenses
Total expenses increased $3.8 billion, or 10%, to $41.5 billion in 2025 from $37.7 billion in 2024, primarily due to the following:
•Higher policyholder benefits and claims, largely driven by higher pension risk transfer activity.
•Lower market risk benefit remeasurement gains, primarily driven by less significant increases in certain U.S. long-term interest rates in 2025 compared to 2024. See Note 5 of the Notes to the Consolidated Financial Statements for information on the Company's MRBs.
•Policyholder liability remeasurement losses in 2025 compared to gains in 2024, driven by our annual actuarial assumption review and other insurance adjustments.
Partially offset by:
•Lower other expenses, net of capitalization of deferred policy acquisition costs, primarily due to changes in the allocation of legal entity expenses and lower corporate-related expenses.
Income Taxes
The 2025 effective tax rate on income before provision for income tax was 14% compared to the U.S. statutory rate of 21% primarily due to tax benefits from:
•Non-taxable investment income
•Low income housing and other tax credits, partially offset by the impact of tax equity investments
The 2024 effective tax rate on income before provision for income tax was 18% compared to the U.S. statutory rate of 21% primarily due to tax benefits from:
•Non-taxable investment income
•Low income housing and other tax credits, partially offset by the impact of tax equity investments
Investments
Overview
We maintain a diversified global general account investment portfolio to support our mix of liabilities in our global businesses. We position our portfolio based on relative value and our view of the economy and financial markets. We maintain our focus on the appropriate level of diversification and asset quality.
We manage our investment portfolio using disciplined asset/liability management ("ALM") principles, focusing on cash flow and duration to support our current and future liabilities. Our intent is to match the timing and amount of liability cash outflows with invested assets that have cash inflows of comparable timing and amount, while optimizing risk-adjusted investment income and risk-adjusted total return. Our investment portfolio is heavily weighted toward fixed income investments, with most of our portfolio invested in fixed maturity securities available-for-sale ("AFS") and mortgage loans. These securities and loans have varying maturities and other characteristics which cause them to be generally well suited for matching the cash flow and duration of insurance liabilities.
Invested Assets and Cash and Cash Equivalents Subject to Ceded Reinsurance
The Company maintains invested assets and cash and cash equivalents that are subject to ceded reinsurance arrangements with third parties. "Reinsurance activity" relates to amounts subject to ceded reinsurance arrangements with third parties, including (i) the related investment returns and expenses which are passed through to the reinsurers and (ii) the corresponding invested assets and cash and cash equivalents. Reinsurance activity, unless otherwise stated, has been excluded from the amounts within the Investments sections of Management's Discussion and Analysis of Financial Condition and Results of Operations. See Note 8 of the Notes to the Consolidated Financial Statements for further information about reinsurance.
The following table presents the carrying value of invested assets and cash and cash equivalents subject to ceded reinsurance at:
| December 31, 2025 | December 31, 2024 | ||||||||||
|
(In millions)
|
|||||||||||
| Fixed maturity securities AFS: | |||||||||||
| U.S. government and agency | $ | 3,210 | $ | - | |||||||
| U.S. corporate | 1,810 | - | |||||||||
|
Residential mortgage-backed securities ("RMBS")
|
550 | - | |||||||||
|
Asset-backed securities and collateralized loan obligations (collectively, "ABS & CLO")
|
506 | - | |||||||||
| Foreign corporate | 478 | - | |||||||||
|
Commercial mortgage-backed securities ("CMBS")
|
224 | - | |||||||||
| Foreign government | 58 | - | |||||||||
| Municipals | 57 | - | |||||||||
| Total fixed maturity securities AFS | 6,893 | - | |||||||||
|
Equity securities
|
66 | - | |||||||||
| Other limited partnership interests | 112 | - | |||||||||
|
Other invested assets - derivatives
|
16 | - | |||||||||
| Short-term investments, cash and cash equivalents | 1,081 | - | |||||||||
| Total invested assets and cash and cash equivalents subject to ceded reinsurance | $ | 8,168 | $ | - | |||||||
Current Environment
As a large insurer with a diverse investment portfolio, we continue to be impacted by the changing global financial and economic environment, the fiscal and monetary policy of governments and central banks around the world and other governmental measures. Global inflation, supply chain disruptions and acts of war continue to impact the global economy and financial markets and have caused volatility in the global equity, credit and real estate markets. These factors may persist for some time and may continue to impact pricing levels of risk-bearing investments, as well as our business operations, investment portfolio and derivatives. See "- Current Market Conditions" for further information regarding conditions in the global financial markets and the economy generally which may affect us. See also "- Results of Operations - Consolidated Results" for impacts on our derivatives and analysis of the period over period changes in investment portfolio results and "Investments - Fixed Maturity Securities AFS - Evaluation of Fixed Maturity Securities AFS for Credit Loss - Evaluation of Fixed Maturity Securities AFS in an Unrealized Loss Position" in Note 10 of the Notes to the Consolidated Financial Statements for impacts on the net unrealized gain (loss) on our fixed maturity securities AFS.
Selected Country Investments
Our investment portfolio, which supports our insurance operations and related policyholder liabilities, as well as our global portfolio diversification objectives, is exposed to risks posed by local political and economic conditions. The countries included in the following table have been the most affected by these risks. The table below presents a summary of selected country fixed maturity securities AFS, at estimated fair value, on a "country of risk basis" (i.e., where the issuer primarily conducts business).
|
Selected Country Fixed Maturity Securities AFS at December 31, 2025
|
|||||||||||||||||
| Country | Sovereign (1) |
Financial Services |
Total (2) | ||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| Russian Federation | $ | 14 | $ | - | $ | 14 | |||||||||||
| Ukraine | 2 | 2 | 4 | ||||||||||||||
| Total | $ | 16 | $ | 2 | $ | 18 | |||||||||||
| Investment grade % | - | % | - | % | - | % | |||||||||||
______________
(1)Sovereign includes government and agency.
(2)The par value and amortized cost, net of ACL, of these securities were $52 million and $19 million, respectively, at December 31, 2025.
We manage direct and indirect investment exposure in the selected countries through fundamental analysis, and we continually monitor and adjust our level of investment exposure. We do not expect that our general account investments in these countries will have a material adverse effect on our results of operations or financial condition.
Fixed Maturity Securities AFS
The following table presents public and private fixed maturity securities AFS held at:
|
December 31,
|
|||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Securities by Type |
Estimated Fair Value |
% of Total |
Estimated Fair Value |
% of Total | |||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
|
Fixed maturity securities AFS
|
|||||||||||||||||||||||
| Publicly-traded | $ | 101,512 | 66.6 | % | $ | 94,313 | 67.0 | % | |||||||||||||||
| Privately-placed | 50,926 | 33.4 | 46,519 | 33.0 | |||||||||||||||||||
|
Total fixed maturity securities AFS, excluding Reinsurance activity
|
$ | 152,438 | 100.0 | % | $ | 140,832 | 100.0 | % | |||||||||||||||
|
Reinsurance activity
|
6,894 | - | |||||||||||||||||||||
|
Total fixed maturity securities AFS
|
$ | 159,332 | $ | 140,832 | |||||||||||||||||||
|
Percentage of cash and invested assets, excluding Reinsurance activity
|
60.0 | % | 56.4 | % | |||||||||||||||||||
See Note 10 of the Notes to the Consolidated Financial Statements for information about fixed maturity securities AFS by sector, contractual maturities, and continuous gross unrealized losses, as well as realized gains (losses) on sales and disposals.
Included within fixed maturity securities AFS are structured securities, including RMBS, ABS & CLO and CMBS (collectively, "Structured Products"). See"- Structured Products" for further information.
Valuation of Securities. We are responsible for the determination of the estimated fair value of our investments. We determine the estimated fair value of publicly traded securities after considering one of three primary sources of information: quoted market prices in active markets, independent pricing services, or independent broker quotations. We determine the estimated fair value of privately placed securities after considering one of three primary sources of information: market standard internal matrix pricing, market standard internal discounted cash flow techniques, or independent pricing services (after we determine the independent pricing services' use of available observable market data). For publicly traded securities, the number of quotations obtained varies by instrument and depends on the liquidity of the particular instrument. Generally, we obtain prices from multiple pricing services to cover all asset classes and obtain multiple prices for certain securities, but ultimately utilize the price with the highest placement in the fair value hierarchy. Independent pricing services that value these instruments use market standard valuation methodologies based on data about market transactions and inputs from multiple pricing sources that are market observable or can be derived principally from or corroborated by observable market data. See Note 12 of the Notes to the Consolidated Financial Statements for a discussion of the types of market standard valuation methodologies utilized and key assumptions and observable inputs used in applying these standard valuation methodologies. When a price is not available in the active market or through an independent pricing service, management values the security primarily using market standard internal matrix pricing or discounted cash flow techniques, and non-binding quotations from independent brokers who are knowledgeable about these securities. Independent non-binding broker quotations utilize inputs that may be difficult to corroborate with observable market data. As shown in the following section, less than 1% of our fixed maturity securities AFS were valued using non-binding quotations from independent brokers at December 31, 2025.
Senior management, independent of the trading and investing functions, is responsible for the oversight of control systems and valuation policies for securities, mortgage loans, real estate and derivatives. On a quarterly basis, new transaction types and markets are reviewed and approved to ensure that observable market prices and market-based parameters are used for valuation, wherever possible, and for determining that valuation adjustments, when applied, are based upon established policies and are applied consistently over time. Senior management oversees the selection of independent third-party pricing providers and the controls and procedures to evaluate third-party pricing.
We review our valuation methodologies on an ongoing basis and revise 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 guidance 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. We ensure that prices received from independent brokers, also referred to herein as "consensus pricing," are representative of estimated fair value by considering such pricing relative to our knowledge of the current market dynamics and current pricing for similar investments.
On a quarterly basis, we also apply 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, 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 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.
We have reviewed the significance and observability of inputs used in the valuation methodologies to determine the appropriate fair value hierarchy level for each of our securities. Based on the results of this review and investment class analysis, each instrument is categorized as Level 1, 2 or 3 based on the lowest level significant input to its valuation. See Note 12 of the Notes to the Consolidated Financial Statements for valuation approaches and key inputs by major category of assets or liabilities that are classified within Level 2 and Level 3 of the fair value hierarchy.
Fair Value of Fixed Maturity Securities AFS
Fixed maturity securities AFS measured at estimated fair value on a recurring basis and their corresponding fair value pricing sources were as follows:
| Level | December 31, 2025 | ||||||||||
| (Dollars in millions) | |||||||||||
| Level 1 | |||||||||||
| Quoted prices in active markets for identical assets | $ | 11,500 | 7.5 | % | |||||||
| Level 2 | |||||||||||
| Independent pricing sources | 122,578 | 80.4 | |||||||||
| Significant other observable inputs | 122,578 | 80.4 | |||||||||
| Level 3 | |||||||||||
| Independent pricing sources | 17,609 | 11.6 | |||||||||
| Internal matrix pricing or discounted cash flow techniques | 639 | 0.4 | |||||||||
| Independent broker quotations | 112 | 0.1 | |||||||||
| Significant unobservable inputs | 18,360 | 12.1 | |||||||||
|
Total fixed maturity securities AFS at estimated fair value, excluding Reinsurance activity
|
$ | 152,438 | 100.0 | % | |||||||
|
Reinsurance activity
|
6,894 | ||||||||||
|
Total fixed maturity securities AFS at estimated fair value
|
$ | 159,332 | |||||||||
See Note 12 of the Notes to the Consolidated Financial Statements for the fixed maturity securities AFS fair value hierarchy; a rollforward of the fair value measurements for securities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs; transfers into and/or out of Level 3; and further information about the valuation approaches and inputs by level by major classes of invested assets that affect the amounts reported above.
The majority of the Level 3 fixed maturity securities AFS were concentrated in three sectors at December 31, 2025: foreign corporate securities, U.S. corporate securities and RMBS. During the year ended December 31, 2025, Level 3 fixed maturity securities AFS decreased by $2.3 billion, or 11.3%. The decrease was driven by transfers out of Level 3 in excess of transfers into Level 3 and, to a lesser extent, by a decrease in realized and unrealized gains (losses) included in net income (loss), offset by an increase in estimated fair value recognized in OCI and by purchases in excess of sales.
Fixed Maturity Securities AFS Credit Quality - Ratings
The Securities Valuation Office of the NAIC evaluates the fixed maturity securities of insurers for regulatory reporting and capital assessment purposes. The NAIC assigns securities to one of six credit quality categories defined as "NAIC designations." In general, securities with NAIC designations of 1 and 2 are considered investment grade and securities with NAIC designations of 3 through 6 are considered below investment grade. If no NAIC designation is available, then, as permitted by the NAIC, an internally developed designation is used.
NAIC designations for non-agency RMBS and CMBS are based on a modeling methodology that estimates security level expected losses under a variety of economic scenarios. The modeling methodology for non-agency RMBS and CMBS issued prior to January 1, 2013 incorporates the amortized cost of the security (including any purchase discounts and prior impairments) and the likelihood of recovery of the amortized cost; while for non-agency RMBS and CMBS issued after January 1, 2013, the modeling methodology does not incorporate the amortized cost of the security. The NAIC's objective with the modeling methodology is to increase accuracy in estimating expected losses and recovery value, and to use this credit quality assessment to determine an appropriate RBC charge for non-agency RMBS and CMBS. We utilize these NAIC designations for our non-agency RMBS and CMBS in our disclosures below. The NAIC evaluates non-agency RMBS and CMBS held by insurers on an annual basis. When we acquire non-agency RMBS and CMBS that have not been previously evaluated by the NAIC, an internally developed designation is used until a NAIC designation becomes available.
In addition to the six NAIC designations, the NAIC maintains 20 "NAIC designation categories" which is an additional, more granular credit quality categorization. These NAIC designation categories correspond more closely to the NRSRO's alpha-numeric credit quality ratings. The NAIC maintains unique RBC factors for each of the 20 NAIC designation categories. The NAIC's goal is to better align RBC charges on securities with the instruments' actual credit risk.
Rating agency ratings are based on availability of applicable ratings from rating agencies on the NAIC credit rating provider list, including Moody's Investors Service, Inc. ("Moody's"), S&P, Fitch Ratings Inc. ("Fitch"), Morningstar DBRS, A.M. Best Company, Inc. ("A.M. Best"), Kroll Bond Rating Agency, LLC and Egan-Jones Ratings Company. If no rating is available from a rating agency, then an internally developed rating is used.
NAIC designations are generally similar to the credit quality ratings of the NRSROs, except for (i) non-agency RMBS and CMBS as described above, and (ii) securities rated Ca or C by NRSROs, included within Caa and lower in our disclosures below, that are designated NAIC 6; accordingly, NAIC designations may not correspond to NRSRO ratings.
The following table presents total fixed maturity securities AFS by NRSRO rating, except for non-agency RMBS and CMBS, which are presented using NAIC designations for modeled securities. In addition, in the following table, the applicable NAIC designation from the NAIC published comparison of NRSRO ratings to NAIC designations is provided.
| December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NRSRO Rating |
NAIC Designation |
Amortized Cost net of ACL |
Unrealized Gains (Losses) |
Estimated Fair Value |
% of Total |
Amortized Cost net of ACL |
Unrealized Gains (Losses) |
Estimated Fair Value |
% of Total |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Aaa/Aa/A | 1 | $ | 108,428 | $ | (6,672) | $ | 101,756 | 66.8 | % | $ | 101,948 | $ | (9,220) | $ | 92,728 | 65.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Baa | 2 | 44,931 | (1,209) | 43,722 | 28.7 | 43,932 | (3,284) | 40,648 | 28.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Subtotal investment grade
|
153,359 | (7,881) | 145,478 | 95.5 | 145,880 | (12,504) | 133,376 | 94.7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ba | 3 | 4,922 | 68 | 4,990 | 3.3 | 5,678 | (166) | 5,512 | 3.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| B | 4 | 1,709 | (2) | 1,707 | 1.1 | 1,580 | (53) | 1,527 | 1.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Caa and lower | 5 | 216 | (23) | 193 | 0.1 | 418 | (49) | 369 | 0.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
In or near default
|
6 | 86 | (16) | 70 | - | 76 | (28) | 48 | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Subtotal below investment grade | 6,933 | 27 | 6,960 | 4.5 | 7,752 | (296) | 7,456 | 5.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total fixed maturity securities AFS, excluding Reinsurance activity
|
$ | 160,292 | $ | (7,854) | $ | 152,438 | 100.0 | % | $ | 153,632 | $ | (12,800) | $ | 140,832 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||
|
Reinsurance activity
|
6,898 | (4) | 6,894 | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Total fixed maturity securities AFS
|
$ | 167,190 | $ | (7,858) | $ | 159,332 | $ | 153,632 | $ | (12,800) | $ | 140,832 | ||||||||||||||||||||||||||||||||||||||||||||||||||
The following tables present total fixed maturity securities AFS, at estimated fair value, by sector and by NRSRO rating, except for non-agency RMBS and CMBS, which are presented using NAIC designations for modeled securities. In addition, in the following table, the applicable NAIC designation from the NAIC published comparison of the NRSRO ratings to NAIC designations is provided.
| Fixed Maturity Securities AFS - by Sector & Credit Quality Rating | |||||||||||||||||||||||||||||||||||||||||
| NRSRO Rating | Aaa/Aa/A | Baa | Ba | B |
Caa and Lower |
In or Near Default |
Total Estimated Fair Value |
||||||||||||||||||||||||||||||||||
| NAIC Designation | 1 | 2 | 3 | 4 | 5 | 6 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| U.S. corporate | $ | 23,300 | $ | 21,684 | $ | 2,462 | $ | 1,226 | $ | 84 | $ | 36 | $ | 48,792 | |||||||||||||||||||||||||||
| RMBS | 25,611 | 925 | 128 | 17 | 4 | 4 | 26,689 | ||||||||||||||||||||||||||||||||||
| Foreign corporate | 6,780 | 17,109 | 1,659 | 396 | 42 | 7 | 25,993 | ||||||||||||||||||||||||||||||||||
|
U.S. government and agency
|
23,233 | 257 | - | - | - | - | 23,490 | ||||||||||||||||||||||||||||||||||
| ABS & CLO | 11,623 | 2,138 | 222 | 30 | 31 | 1 | 14,045 | ||||||||||||||||||||||||||||||||||
| Municipals | 5,270 | 240 | 22 | - | - | - | 5,532 | ||||||||||||||||||||||||||||||||||
| CMBS | 4,772 | 95 | - | - | 15 | 7 | 4,889 | ||||||||||||||||||||||||||||||||||
| Foreign government | 1,167 | 1,274 | 497 | 38 | 17 | 15 | 3,008 | ||||||||||||||||||||||||||||||||||
|
Total fixed maturity securities AFS, excluding Reinsurance activity
|
$ | 101,756 | $ | 43,722 | $ | 4,990 | $ | 1,707 | $ | 193 | $ | 70 | $ | 152,438 | |||||||||||||||||||||||||||
|
Percentage of total
|
66.8 | % | 28.7 | % | 3.3 | % | 1.1 | % | 0.1 | % | - | % | 100.0 | % | |||||||||||||||||||||||||||
|
Reinsurance activity
|
5,620 | 1,179 | - | 43 | 52 | - | 6,894 | ||||||||||||||||||||||||||||||||||
| Total fixed maturity securities AFS | $ | 107,376 | $ | 44,901 | $ | 4,990 | $ | 1,750 | $ | 245 | $ | 70 | $ | 159,332 | |||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| U.S. corporate | $ | 22,156 | $ | 20,899 | $ | 2,750 | $ | 1,096 | $ | 206 | $ | 21 | $ | 47,128 | |||||||||||||||||||||||||||
| Foreign corporate | 6,599 | 15,413 | 1,826 | 317 | 120 | 10 | 24,285 | ||||||||||||||||||||||||||||||||||
|
U.S. government and agency
|
21,538 | 305 | - | - | - | - | 21,843 | ||||||||||||||||||||||||||||||||||
| RMBS | 20,422 | 708 | 33 | 38 | 8 | 4 | 21,213 | ||||||||||||||||||||||||||||||||||
| ABS & CLO | 10,766 | 2,078 | 315 | 26 | 19 | 1 | 13,205 | ||||||||||||||||||||||||||||||||||
| Municipals | 4,814 | 100 | 17 | - | - | - | 4,931 | ||||||||||||||||||||||||||||||||||
| CMBS | 5,238 | 24 | 16 | - | - | 1 | 5,279 | ||||||||||||||||||||||||||||||||||
| Foreign government | 1,195 | 1,121 | 555 | 50 | 16 | 11 | 2,948 | ||||||||||||||||||||||||||||||||||
|
Total fixed maturity securities AFS, excluding Reinsurance activity
|
$ | 92,728 | $ | 40,648 | $ | 5,512 | $ | 1,527 | $ | 369 | $ | 48 | $ | 140,832 | |||||||||||||||||||||||||||
|
Percentage of total
|
65.8 | % | 28.9 | % | 3.9 | % | 1.1 | % | 0.3 | % | - | % | 100.0 | % | |||||||||||||||||||||||||||
|
Reinsurance activity
|
- | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||
| Total fixed maturity securities AFS | $ | 92,728 | $ | 40,648 | $ | 5,512 | $ | 1,527 | $ | 369 | $ | 48 | $ | 140,832 | |||||||||||||||||||||||||||
U.S. and Foreign Corporate Fixed Maturity Securities AFS
We maintain a broadly diversified portfolio of corporate fixed maturity securities AFS across many industries and issuers. This portfolio did not have any exposure to any single issuer in excess of 1% of total investments at either December 31, 2025 or 2024. The top 10 holdings comprised 1% of total investments at both December 31, 2025 and 2024. The table below presents our U.S. and foreign corporate securities portfolios by industry at:
| December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Industry |
Estimated Fair Value |
% of Total |
Estimated Fair Value |
% of Total |
|||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Finance | $ | 17,035 | 22.9 | % | $ | 15,714 | 22.1 | % | |||||||||||||||
|
Consumer (cyclical and non-cyclical)
|
14,654 | 19.6 | 14,162 | 19.8 | |||||||||||||||||||
| Utility | 13,038 | 17.4 | 12,697 | 17.8 | |||||||||||||||||||
|
Industrial (basic, capital goods and other)
|
8,454 | 11.3 | 8,433 | 11.8 | |||||||||||||||||||
| Transportation | 7,726 | 10.3 | 7,095 | 9.9 | |||||||||||||||||||
| Energy | 5,100 | 6.8 | 4,672 | 6.5 | |||||||||||||||||||
| Communications | 5,009 | 6.7 | 5,191 | 7.3 | |||||||||||||||||||
| Technology | 2,474 | 3.3 | 2,164 | 3.0 | |||||||||||||||||||
| Other | 1,295 | 1.7 | 1,285 | 1.8 | |||||||||||||||||||
|
Total U.S. and foreign corporate fixed maturity securities AFS, excluding Reinsurance activity
|
$ | 74,785 | 100.0 | % | $ | 71,413 | 100.0 | % | |||||||||||||||
|
Reinsurance activity
|
2,288 | - | |||||||||||||||||||||
|
Total U.S. and foreign corporate fixed maturity securities AFS
|
$ | 77,073 | $ | 71,413 | |||||||||||||||||||
Structured Products
Our investments in Structured Products are collateralized by residential mortgages, commercial mortgages, bank loans and other assets. Our investment selection criteria and monitoring include review of credit ratings, characteristics of the assets underlying the securities, borrower characteristics and the level of credit enhancement. We held $45.6 billion and $39.7 billion of Structured Products at estimated fair value, at December 31, 2025 and 2024, respectively, as presented in the RMBS, ABS & CLO and CMBS sections below.
RMBS
Our RMBS portfolio is broadly diversified by security type and risk profile.
On a security type basis, RMBS includes collateralized mortgage obligations and pass-through mortgage-backed securities. Collateralized mortgage obligations are structured by dividing the cash flows of mortgage loans into separate pools or tranches of risk that create multiple classes of bonds with varying maturities and priority of payments. Pass-through mortgage-backed securities are secured by a mortgage loan or collection of mortgage loans. The monthly mortgage loan payments from homeowners pass from the originating bank through an intermediary, such as a government agency or investment bank, which collects the payments and, for a fee, remits or passes these payments through to the holders of the pass-through securities.
On a risk profile basis, RMBS includes Agency and Non-Agency securities. Agency RMBS were guaranteed or otherwise supported by the Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association. Non-Agency securities include prime, prime investor, non-qualified residential mortgage ("NQM"), and alternative residential mortgage loans ("Alt-A"), and reperforming and sub-prime mortgage-backed securities. Prime (owner-occupied) and prime investor (non-owner-occupied) loans were originated to the most creditworthy borrowers with high quality credit profiles. NQM and Alt-A are classifications of mortgage loans where the risk profile of the borrower is between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles, while reperforming loans were previously delinquent that returned to performing status.
The following table presents our RMBS portfolio by security type, risk profile and ratings profile at:
| December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
|
Estimated Fair Value |
% of Total |
Net Unrealized Gains (Losses) |
Estimated Fair Value |
% of Total |
Net Unrealized Gains (Losses) |
||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| Security type | |||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | $ | 16,337 | 61.2 | % | $ | (316) | $ | 12,992 | 61.2 | % | $ | (844) | |||||||||||||||||||||||
| Pass-through mortgage-backed securities | 10,352 | 38.8 | (575) | 8,221 | 38.8 | (1,022) | |||||||||||||||||||||||||||||
|
Total RMBS, excluding Reinsurance activity
|
$ | 26,689 | 100.0 | % | $ | (891) | $ | 21,213 | 100.0 | % | $ | (1,866) | |||||||||||||||||||||||
|
Reinsurance activity
|
550 | 2 | - | - | |||||||||||||||||||||||||||||||
| Total RMBS | $ | 27,239 | $ | (889) | $ | 21,213 | $ | (1,866) | |||||||||||||||||||||||||||
| Risk profile | |||||||||||||||||||||||||||||||||||
| Agency | $ | 16,070 | 60.1 | % | $ | (770) | $ | 12,370 | 58.3 | % | $ | (1,451) | |||||||||||||||||||||||
| Non-Agency | |||||||||||||||||||||||||||||||||||
| Prime and prime investor | 5,623 | 21.1 | (95) | 4,035 | 19.0 | (262) | |||||||||||||||||||||||||||||
| NQM and Alt-A | 1,377 | 5.2 | 8 | 1,267 | 6.0 | (20) | |||||||||||||||||||||||||||||
| Reperforming and sub-prime | 2,288 | 8.6 | (38) | 2,329 | 11.0 | (114) | |||||||||||||||||||||||||||||
| Other (1) | 1,331 | 5.0 | 4 | 1,212 | 5.7 | (19) | |||||||||||||||||||||||||||||
| Subtotal Non-Agency | 10,619 | 39.9 | % | (121) | 8,843 | 41.7 | % | (415) | |||||||||||||||||||||||||||
|
Total RMBS, excluding Reinsurance activity
|
$ | 26,689 | 100.0 | % | $ | (891) | $ | 21,213 | 100.0 | % | $ | (1,866) | |||||||||||||||||||||||
|
Reinsurance activity
|
550 | 2 | - | - | |||||||||||||||||||||||||||||||
| Total RMBS | $ | 27,239 | $ | (889) | $ | 21,213 | $ | (1,866) | |||||||||||||||||||||||||||
| Ratings profile | |||||||||||||||||||||||||||||||||||
| Rated Aaa and Aa | $ | 23,267 | 87.2 | % | $ | 17,901 | 84.4 | % | |||||||||||||||||||||||||||
| Designated NAIC 1 | $ | 25,611 | 96.0 | % | $ | 20,421 | 96.3 | % | |||||||||||||||||||||||||||
__________________
(1)Other Non-Agency RMBS are broadly diversified across several subsectors and issuers, including securities collateralized by the following mortgage loan types: single family rental, early buyout securitization and small business commercial.
We manage our exposure to reperforming and sub-prime RMBS holdings by focusing primarily on senior tranche securities, stress testing the portfolio with severe loss assumptions and closely monitoring the performance of the portfolio. Our reperforming RMBS are generally newer vintage securities and higher quality at purchase and the vast majority are investment grade under NAIC designations (e.g., NAIC 1 and NAIC 2). Our sub-prime RMBS portfolio consists predominantly of securities that were purchased at significant discounts to par value and discounts to the expected principal recovery value of these securities, and most are investment grade under NAIC designations.
ABS & CLO
Our non-mortgage loan-backed structured securities are comprised of two broad categories of securitizations: ABS and CLO. These portfolios are broadly diversified by collateral type and issuer. The following table presents our ABS & CLO portfolios by collateral type and ratings profile at:
| December 31, | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||
|
Estimated Fair Value |
% of Total |
Net Unrealized Gains (Losses) |
Estimated Fair Value |
% of Total |
Net Unrealized Gains (Losses) |
||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| ABS | |||||||||||||||||||||||||||||||||||
| Collateral type | |||||||||||||||||||||||||||||||||||
| Digital infrastructure | $ | 1,540 | 10.8 | % | $ | (11) | $ | 1,220 | 9.2 | % | $ | (28) | |||||||||||||||||||||||
| Consumer loans | 857 | 6.1 | (3) | 848 | 6.5 | (29) | |||||||||||||||||||||||||||||
| Student loans | 685 | 4.9 | (7) | 482 | 3.7 | (20) | |||||||||||||||||||||||||||||
| Franchise | 556 | 4.0 | (9) | 622 | 4.7 | (30) | |||||||||||||||||||||||||||||
| Vehicle and equipment loans | 527 | 3.8 | 4 | 718 | 5.4 | (2) | |||||||||||||||||||||||||||||
| Credit card | 501 | 3.6 | 9 | 499 | 3.8 | 4 | |||||||||||||||||||||||||||||
| Other (1) | 4,492 | 32.0 | (41) | 3,664 | 27.7 | (119) | |||||||||||||||||||||||||||||
| Total ABS | $ | 9,158 | 65.2 | % | $ | (58) | $ | 8,053 | 61.0 | % | $ | (224) | |||||||||||||||||||||||
| CLO (2) | $ | 4,887 | 34.8 | % | $ | 4 | $ | 5,152 | 39.0 | % | $ | 4 | |||||||||||||||||||||||
| Total ABS & CLO, excluding Reinsurance activity | $ | 14,045 | 100.0 | % | $ | (54) | $ | 13,205 | 100.0 | % | $ | (220) | |||||||||||||||||||||||
|
Reinsurance activity
|
506 | - | - | - | |||||||||||||||||||||||||||||||
|
Total ABS & CLO
|
$ | 14,551 | $ | (54) | $ | 13,205 | $ | (220) | |||||||||||||||||||||||||||
| ABS ratings profile | |||||||||||||||||||||||||||||||||||
| Rated Aaa and Aa | $ | 2,018 | 22.0 | % | $ | 1,933 | 24.0 | % | |||||||||||||||||||||||||||
| Designated NAIC 1 | $ | 7,034 | 76.8 | % | $ | 6,018 | 74.7 | % | |||||||||||||||||||||||||||
| CLO ratings profile | |||||||||||||||||||||||||||||||||||
| Rated Aaa and Aa | $ | 3,603 | 73.7 | % | $ | 3,876 | 75.2 | % | |||||||||||||||||||||||||||
| Designated NAIC 1 | $ | 4,547 | 93.0 | % | $ | 4,622 | 89.7 | % | |||||||||||||||||||||||||||
| ABS & CLO ratings profile | |||||||||||||||||||||||||||||||||||
| Rated Aaa and Aa | $ | 5,621 | 40.0 | % | $ | 5,809 | 44.0 | % | |||||||||||||||||||||||||||
| Designated NAIC 1 | $ | 11,581 | 82.5 | % | $ | 10,640 | 80.6 | % | |||||||||||||||||||||||||||
______________
(1)Other ABS are broadly diversified across several subsectors and issuers, including securities with the following collateral types: foreign residential loans, transportation equipment and renewable energy.
(2)Includes primarily securities collateralized by broadly syndicated bank loans.
CMBS
Our CMBS portfolio is comprised primarily of conduit, single asset and single borrower securities. Conduit securities are collateralized by many commercial mortgage loans and are broadly diversified by property type, borrower and geography. The following tables present our CMBS portfolio by collateral type and ratings profile at:
|
December 31,
|
||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| Estimated Fair Value | % of Total | Net Unrealized Gains (Losses) | Estimated Fair Value | % of Total | Net Unrealized Gains (Losses) | |||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||||||||
| Collateral type | ||||||||||||||||||||||||||||||||||||||
| Conduit | $ | 2,639 | 54.0 | % | $ | (95) | $ | 3,187 | 60.4 | % | $ | (233) | ||||||||||||||||||||||||||
| Single asset and single borrower | 1,383 | 28.3 | (23) | 1,300 | 24.6 | (53) | ||||||||||||||||||||||||||||||||
| Agency | 323 | 6.6 | (42) | 303 | 5.7 | (41) | ||||||||||||||||||||||||||||||||
| Commercial real estate collateralized loan obligations | 80 | 1.6 | - | 135 | 2.6 | (1) | ||||||||||||||||||||||||||||||||
| Other | 464 | 9.5 | 5 | 354 | 6.7 | 10 | ||||||||||||||||||||||||||||||||
| Total CMBS, excluding Reinsurance activity | $ | 4,889 | 100.0 | % | $ | (155) | $ | 5,279 | 100.0 | % | $ | (318) | ||||||||||||||||||||||||||
|
Reinsurance activity
|
224 | 2 | - | - | ||||||||||||||||||||||||||||||||||
|
Total CMBS
|
$ | 5,113 | $ | (153) | $ | 5,279 | $ | (318) | ||||||||||||||||||||||||||||||
| Ratings profile | ||||||||||||||||||||||||||||||||||||||
| Rated Aaa and Aa | $ | 3,727 | 76.2 | % | $ | 4,313 | 81.7 | % | ||||||||||||||||||||||||||||||
| Designated NAIC 1 | $ | 4,772 | 97.6 | % | $ | 5,239 | 99.2 | % | ||||||||||||||||||||||||||||||
Evaluation of Fixed Maturity Securities AFS for Credit Loss, Rollforward of Allowance for Credit Loss and Credit Loss on Fixed Maturity Securities AFS Recognized in Earnings
See Note 10 of the Notes to the Consolidated Financial Statements for information about the evaluation of fixed maturity securities AFS for credit loss, rollforward of the ACL, net credit loss provision (release) and impairment (losses), as well as realized gross gains (losses) on sales and disposals of fixed maturity securities AFS at December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023.
Securities Lending Transactions and Repurchase Agreements
We participate in securities lending transactions and repurchase agreements with unaffiliated financial institutions in the normal course of business for the purpose of enhancing the total return on our investment portfolio. We account for these arrangements as secured borrowings and record a liability in the amount of the cash received. We obtain collateral, usually cash, from the borrower, which must be returned to the borrower when the securities are returned to us. Through these arrangements, we were liable for cash collateral under our control of $10.0 billionand $9.2 billion at December 31, 2025 and 2024, respectively, including a portion that may require the immediate return of cash collateral we hold. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for further information about the secured borrowings accounting and the classification of revenues and expenses.
Mortgage Loans
Our mortgage loan investments are principally collateralized by commercial, agricultural and residential properties. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for further information.
Mortgage loans carried at amortized cost and the related ACL are summarized as follows at:
| December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Portfolio Segment | Amortized Cost |
% of Total |
ACL |
ACL as % of Amortized Cost |
Amortized Cost |
% of Total |
ACL |
ACL as % of Amortized Cost |
|||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | 29,546 | 52.2 | % | $ | 436 | 1.5 | % | $ | 34,692 | 57.3 | % | $ | 312 | 0.9 | % | |||||||||||||||||||||||||||||||
| Agricultural | 15,203 | 26.9 | 81 | 0.5 | % | 15,208 | 25.1 | 63 | 0.4 | % | |||||||||||||||||||||||||||||||||||||
| Residential | 11,815 | 20.9 | 184 | 1.6 | % | 10,628 | 17.6 | 128 | 1.2 | % | |||||||||||||||||||||||||||||||||||||
|
Mortgage loans held-for-sale
|
7 | - | - | - | % | - | - | - | - | % | |||||||||||||||||||||||||||||||||||||
|
Mortgage loans
|
$ | 56,571 | 100.0 | % | $ | 701 | 1.2 | % | $ | 60,528 | 100.0 | % | $ | 503 | 0.8 | % | |||||||||||||||||||||||||||||||
We diversify our mortgage loan investments by both geographic region and property type to reduce the risk of concentration. Of our commercial and agricultural mortgage loans carried at amortized cost, 91% are collateralized by properties located in the U.S., with the remaining 9% collateralized by properties located primarily in Mexico at December 31, 2025. The carrying values of our commercial and agricultural mortgage loans collateralized by properties located in California, New York and Texas were 17%, 7% and 7%, respectively, of total commercial and agricultural mortgage loans at December 31, 2025. Additionally, we manage risk when originating commercial and agricultural mortgage loan investments by generally lending up to 75% of the estimated fair value of the underlying real estate collateral. Of our residential mortgage loans carried at amortized cost, 100% are collateralized by properties located in the U.S. The carrying values of our residential mortgage loans collateralized by properties located in California, Florida and New York were 36%, 11% and 8%, respectively, of total residential mortgage loans at December 31, 2025.
Commercial Mortgage Loans by Geographic Region and Property Type. Commercial mortgage loans are the largest mortgage loan portfolio segment. The tables below present, at amortized cost, the diversification of these investments across geographic regions and property types:
|
December 31,
|
|||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
|
Amount
|
% of Total |
Amount
|
% of Total |
||||||||||||||||||||
|
(Dollars in millions)
|
|||||||||||||||||||||||
| Region | |||||||||||||||||||||||
| Pacific | $ | 5,997 | 20.3 | % | $ | 6,146 | 17.7 | % | |||||||||||||||
| Middle Atlantic | 4,094 | 13.8 | 5,058 | 14.6 | |||||||||||||||||||
| South Atlantic | 3,713 | 12.6 | 4,225 | 12.2 | |||||||||||||||||||
| Non-U.S. | 3,357 | 11.4 | 4,086 | 11.8 | |||||||||||||||||||
| West South Central | 2,481 | 8.4 | 2,462 | 7.1 | |||||||||||||||||||
| Mountain | 1,572 | 5.3 | 1,471 | 4.2 | |||||||||||||||||||
| New England | 1,405 | 4.7 | 1,681 | 4.9 | |||||||||||||||||||
| East North Central | 851 | 2.9 | 1,108 | 3.2 | |||||||||||||||||||
| East South Central | 317 | 1.1 | 346 | 1.0 | |||||||||||||||||||
| West North Central | 286 | 1.0 | 291 | 0.8 | |||||||||||||||||||
| Multi-Region and Other | 5,473 | 18.5 | 7,818 | 22.5 | |||||||||||||||||||
| Total amortized cost | $ | 29,546 | 100.0 | % | $ | 34,692 | 100.0 | % | |||||||||||||||
| Less: ACL | 436 | 312 | |||||||||||||||||||||
| Carrying value, net of ACL | $ | 29,110 | $ | 34,380 | |||||||||||||||||||
| Property Type | |||||||||||||||||||||||
| Office | $ | 11,042 | 37.4 | % | $ | 12,313 | 35.5 | % | |||||||||||||||
| Apartment | 6,319 | 21.4 | 7,579 | 21.8 | |||||||||||||||||||
| Retail | 3,982 | 13.5 | 4,563 | 13.2 | |||||||||||||||||||
| Single Family Rental | 3,667 | 12.4 | 4,535 | 13.1 | |||||||||||||||||||
| Industrial | 2,466 | 8.3 | 3,551 | 10.2 | |||||||||||||||||||
| Hotel | 2,070 | 7.0 | 2,151 | 6.2 | |||||||||||||||||||
| Total amortized cost | $ | 29,546 | 100.0 | % | $ | 34,692 | 100.0 | % | |||||||||||||||
| Less: ACL | 436 | 312 | |||||||||||||||||||||
| Carrying value, net of ACL | $ | 29,110 | $ | 34,380 | |||||||||||||||||||
Our commercial mortgage loan investments are well positioned with exposures concentrated in high quality underlying properties located in primary markets typically with institutional investors who are better positioned to manage their assets during periods of market volatility. Our portfolio is comprised primarily of lower risk loans with higher debt service coverage ratios ("DSCR") and lower loan-to-value ("LTV") ratios, as shown below.
Credit Quality -Monitoring Process. We monitor our mortgage loan investments on an ongoing basis, including a review by credit quality indicator and by the performance indicators of current, past due, restructured and under foreclosure. See below for further information on mortgage loans by credit quality indicator. See Note 10 of the Notes to the Consolidated Financial Statements for further information by performance indicator.
We review our commercial mortgage loan investments on an ongoing basis. These reviews may include an analysis of the property financial statements and rent roll, lease rollover analysis, property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios, DSCR and tenant creditworthiness. The monitoring process focuses on higher risk loans, which include those that are classified as restructured, delinquent or in foreclosure, as well as loans with higher LTV ratios and lower DSCR. The monitoring process for agricultural mortgage loan investments is generally similar, with a focus on higher risk loans, such as loans with higher LTV ratios. Agricultural mortgage loan investments are reviewed on an ongoing basis which include property inspections, market analysis, estimated valuations of the underlying collateral, LTV ratios and borrower creditworthiness, including reviews on a geographic and property-type basis. We review our residential mortgage loan investments on an ongoing basis, with a focus on higher risk loans, such as nonperforming loans. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for information on our evaluation of residential mortgage loan investments and related ACL methodology.
LTV ratios and DSCR are common measures in the assessment of the quality of commercial mortgage loan investments. LTV ratios are a common measure in the assessment of the quality of agricultural mortgage loan investments. LTV ratios compare the amount of the loan to the estimated fair value of the underlying collateral. An LTV ratio greater than 100% indicates that the loan amount is greater than the collateral value. An LTV ratio of less than 100% indicates an excess of collateral value over the loan amount. Generally, the higher the LTV ratio, the higher the risk of experiencing a credit loss. The DSCR compares a property's net operating income to amounts needed to service the principal and interest due under the loan. Generally, the lower the DSCR, the higher the risk of experiencing a credit loss. For our commercial mortgage loans, our average LTV ratio was 68% and 69% at December 31, 2025 and 2024, respectively, and our average DSCR was 1.9x at both December 31, 2025 and 2024. The DSCR and the values utilized in calculating the ratio are updated routinely. In addition, the LTV ratio is routinely updated for all but the lowest risk loans as part of our ongoing review of our commercial mortgage loan investments. For our agricultural mortgage loans, our average LTV ratio was 46% at both December 31, 2025 and 2024. The values utilized in calculating the LTV ratio of our agricultural mortgage loan investments are developed in connection with the ongoing review of our portfolio and are routinely updated.
The distribution of our commercial mortgage loan portfolios totaling $29.5 billion at amortized cost at December 31, 2025 by key credit quality indicators of LTV and DSCR was as follows:
| December 31, 2025 | ||||||||||||||||||||||||||
| DSCR | ||||||||||||||||||||||||||
| LTV |
> 1.2x
|
1.0-1.2x
|
< 1.0x
|
Total
|
||||||||||||||||||||||
| <65% | 53.5 | % | 0.8 | % | 1.9 | % | 56.2 | % | ||||||||||||||||||
| 65% - 75% | 12.5 | % | 2.0 | % | 1.7 | % | 16.2 | % | ||||||||||||||||||
| 76% - 80% | 4.2 | % | 0.3 | % | 0.3 | % | 4.8 | % | ||||||||||||||||||
| >80% | 12.3 | % | 6.6 | % | 3.9 | % | 22.8 | % | ||||||||||||||||||
| Total | 82.5 | % | 9.7 | % | 7.8 | % | 100.0 | % | ||||||||||||||||||
The distribution of our agricultural mortgage loan portfolios totaling $15.2 billion at amortized cost at December 31, 2025 by the key credit quality indicator of LTV was as follows:
| December 31, 2025 | ||||||||
|
LTV
|
Total
|
|||||||
| <65% | 91.2 | % | ||||||
| 65% - 75% | 7.4 | % | ||||||
| 76% - 80% | 0.4 | % | ||||||
| >80% | 1.0 | % | ||||||
| Total | 100.0 | % | ||||||
Mortgage Loan Allowance for Credit Loss.Our ACL is established for both pools of loans with similar risk characteristics and for mortgage loan investments with dissimilar risk characteristics, such as collateral dependent loans, individually and on a loan specific basis. We record an allowance for expected lifetime credit loss in earnings within net investment gains (losses) in an amount that represents the portion of the amortized cost basis of mortgage loan investments that the Company does not expect to collect, resulting in mortgage loan investments being presented at the net amount expected to be collected.
In determining our ACL, management (i) pools mortgage loans that share similar risk characteristics, (ii) considers expected lifetime credit loss over contractual terms of mortgage loans, as adjusted for expected prepayments and any extensions, and (iii) considers past events and current and forecasted economic conditions. Actual credit loss realized could be different from the amount of the ACL recorded. These evaluations and assessments are revised as conditions change and new information becomes available, which can cause the ACL to increase or decrease over time as such evaluations are revised. Negative credit migration, including an actual or expected increase in the level of problem loans, will result in an increase in the ACL. Positive credit migration, including an actual or expected decrease in the level of problem loans, will result in a decrease in the ACL. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements for information on how the ACL is established and monitored, and activity in and balances of the ACL.
Real Estate and REJVs
Our real estate investments are comprised of wholly-owned properties, and interests in both REJVs and real estate funds which invest in a wide variety of properties and property types, consisting of single and multi-property projects, and are broadly diversified across multiple property types and geographies.
The carrying value of our real estate investments was $8.8 billion and $8.9 billion, or 3.5% and 3.6% of cash and invested assets, at December 31, 2025 and 2024, respectively.
Our real estate investments are typically stabilized properties that we intend to hold for the longer-term for portfolio diversification and long-term appreciation. Our real estate investment portfolio had appreciated to a $1.7 billionand $2.3 billion unrealized gain position at December 31, 2025 and 2024, respectively.
We continuously monitor and assess our real estate investments for impairment when facts and circumstances indicate that the real estate may be impaired. As a result of our impairment analysis, we recorded an impairment loss of $169 million and $19 million during the years ended December 31, 2025 and 2024, respectively.
We diversify our real estate investments by property type, form of equity interest (wholly-owned, joint venture and funds) and geographic region to reduce risk of concentration. See Note 10 of the Notes to the Consolidated Financial Statements for a summary of our real estate investments, by income type, as well as income earned.
Property type diversification: Our real estate investments are categorized by property type as follows at:
| December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Property Type |
Carrying Value |
% of Total |
Carrying Value |
% of Total |
|||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Office | $ | 3,170 | 36.0 | % | $ | 3,015 | 33.9 | % | |||||||||||||||
| Retail | 652 | 7.4 | 681 | 7.6 | |||||||||||||||||||
| Apartment | 625 | 7.1 | 719 | 8.1 | |||||||||||||||||||
| Hotel | 558 | 6.3 | 578 | 6.5 | |||||||||||||||||||
| Land | 323 | 3.7 | 299 | 3.4 | |||||||||||||||||||
| Industrial | 217 | 2.5 | 233 | 2.6 | |||||||||||||||||||
| Agriculture | 21 | 0.2 | 33 | 0.4 | |||||||||||||||||||
| Other | 17 | 0.2 | 18 | 0.2 | |||||||||||||||||||
| Wholly-owned properties and REJVs | $ | 5,583 | 63.4 | % | $ | 5,576 | 62.7 | % | |||||||||||||||
| Diversified property types and multi-property projects | 1,240 | 14.1 | 1,287 | 14.4 | |||||||||||||||||||
| Real estate funds | 1,975 | 22.5 | 2,039 | 22.9 | |||||||||||||||||||
| Total real estate and REJVs | $ | 8,798 | 100.0 | % | $ | 8,902 | 100.0 | % | |||||||||||||||
Geographical diversification: Wholly-owned properties and REJVs totaled $5.6 billion, substantially all of which were located in the U.S., at December 31, 2025, at carrying value. The portion of these properties located in Washington, D.C., Georgia, and Massachusetts were 13%, 13% and 12%, respectively, at December 31, 2025, at carrying value.
Other Limited Partnership Interests
Other limited partnership interests are comprised of investments in private funds, including private equity funds. At December 31, 2025 and 2024, the carrying value of other limited partnership interests was $6.8 billionand $7.1 billion, respectively. Other limited partnership interests were 2.7% and 2.8% of cash and invested assets at December 31, 2025 and 2024, respectively. Cash distributions on these investments are generated from investment gains, operating income from the underlying investments of the funds and liquidation of the underlying investments of the funds.
We use the equity method of accounting for most of our private equity funds. We generally recognize our share of a private equity fund's earnings in net investment income on a three-month lag, which is when the information is reported to us. Accordingly, changes in equity market levels, which can impact the underlying results of these private equity funds, are recognized in earnings within our net investment income on a three-month lag.
Other Invested Assets
The following table presents the carrying value of our other invested assets by type at:
| December 31, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Asset Type | Carrying Value | % of Total | Carrying Value | % of Total | |||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Freestanding derivatives with positive estimated fair values | $ | 5,372 | 35.7 | % | $ | 6,012 | 34.0 | % | |||||||||||||||
| Funds withheld | 2,700 | 17.9 | % | 2,825 | 16.0 | % | |||||||||||||||||
| Annuities funding structured settlement claims | 1,244 | 8.2 | % | 1,248 | 7.1 | % | |||||||||||||||||
| Affiliated investments | 1,168 | 7.7 | % | 1,166 | 6.6 | % | |||||||||||||||||
| Company-owned life insurance policies | 1,148 | 7.6 | % | 1,088 | 6.2 | % | |||||||||||||||||
| Fair value option ("FVO") securities | 867 | 5.8 | % | 872 | 4.9 | % | |||||||||||||||||
| Tax credit and renewable energy partnerships | 676 | 4.4 | % | 714 | 4.0 | % | |||||||||||||||||
| FHLBNY common stock | 628 | 4.2 | % | 628 | 3.6 | % | |||||||||||||||||
| Leveraged leases | 364 | 2.4 | % | 623 | 3.5 | % | |||||||||||||||||
| Operating joint venture | 313 | 2.1 | % | 1,358 | 7.7 | % | |||||||||||||||||
| Equity securities | 239 | 1.6 | % | 172 | 1.0 | % | |||||||||||||||||
| Direct financing leases | 71 | 0.5 | % | 106 | 0.6 | % | |||||||||||||||||
| Other | 280 | 1.9 | % | 862 | 4.8 | % | |||||||||||||||||
|
Total other invested assets, excluding Reinsurance activity
|
$ | 15,070 | 100.0 | % | $ | 17,674 | 100.0 | % | |||||||||||||||
|
Reinsurance activity
|
16 | - | |||||||||||||||||||||
| Total other invested assets | $ | 15,086 | $ | 17,674 | |||||||||||||||||||
| Percentage of cash and invested assets, excluding Reinsurance activity | 5.9 | % | 7.1 | % | |||||||||||||||||||
See Notes 1, 8, 10 and 11 of the Notes to the Consolidated Financial Statements for information regarding freestanding derivatives with positive estimated fair values, funds withheld, which is comprised primarily of affiliated funds withheld, annuities funding structured settlement claims, affiliated investments, company-owned life insurance policies, FVO securities, tax credit and renewable energy partnerships, Federal Home Loan Bank of New York ("FHLBNY") common stock, leveraged and direct financing leases, our operating joint venture and equity securities.
Investment Commitments
We enter into the following commitments in the normal course of business for the purpose of enhancing the total return on our investment portfolio: mortgage loan commitments and commitments to fund partnership investments, bank credit facilities and private corporate bond investments. See Note 19 of the Notes to the Consolidated Financial Statements for the amount of our unfunded investment commitments at December 31, 2025 and 2024. See "Net Investment Income" and "Net Investment Gains (Losses)" in Note 10 of the Notes to the Consolidated Financial Statements for information on the investment income, investment expense, gains and losses from such investments and the liability for credit loss for unfunded mortgage loan commitments. See also "- Fixed Maturity Securities AFS," "- Mortgage Loans," "- Real Estate and REJVs" and "- Other Limited Partnership Interests."
Derivatives
Overview
We are exposed to various risks relating to our ongoing business operations, including interest rate, foreign currency exchange rate, credit and equity market. We use a variety of strategies to manage these risks, including the use of derivatives, such as market standard purchased and written credit default swap contracts. See Note 11 of the Notes to the Consolidated Financial Statements for:
•A comprehensive description of the nature of our derivatives, including the strategies for which derivatives are used in managing various risks.
•Information about the primary underlying risk exposure, gross notional amount, and estimated fair value of our derivatives by type of hedge designation, excluding embedded derivatives held at December 31, 2025 and 2024.
•The statement of operations effects of derivatives in cash flow, fair value, or nonqualifying hedging relationships for the years ended December 31, 2025, 2024 and 2023.
See "- Summary of Critical Accounting Estimates - Freestanding Derivatives" for further information on the estimates and assumptions that affect derivatives. See also "Quantitative and Qualitative Disclosures About Market Risk - Management of Market Risk Exposures - Hedging Activities" for more information about our use of derivatives by major hedge program.
Net Derivative Gains (Losses)
A portion of our derivatives are designated and qualify as accounting hedges, which reduce volatility in earnings. For those derivatives not designated as accounting hedges, changes in market factors lead to the recognition of fair value changes in net derivative gains (losses) generally without an offsetting gain or loss recognized in earnings for the item being hedged, which creates volatility in earnings. We actively evaluate market risk hedging needs and strategies to ensure our free cash flow and capital objectives are met under a range of market conditions.
Certain variable annuity products with guaranteed minimum benefits are accounted for as MRBs and measured at estimated fair value. We use freestanding derivatives to hedge the market risks inherent in these variable annuity guarantees.
We continuously review and refine our hedging strategy in light of changing economic and market conditions, evolving NAIC and the NYDFS statutory requirements, and accounting rule changes. As a part of our current hedging strategy, we maintain portfolio level derivatives in our macro hedge program. These macro hedge program derivatives mitigate the potential deterioration in our capital positions from significant adverse economic conditions.
See "- Results of Operations - Consolidated Results" for an analysis of the year-over-year changes in net derivative gains (losses).
Liquidity and Capital Resources
Overview
Our business and results of operations are materially affected by conditions in the global financial markets and the economy generally due to our large investment portfolio and the sensitivity of our insurance liabilities and derivatives to changing market factors. Such conditions may affect our financing costs and market interest for our debt securities. For further information regarding market factors that could affect our ability to meet liquidity and capital needs, see "- Current Market Conditions" and "- Investments - Current Environment."
This discussion should also be read in conjunction with the following sections included elsewhere herein for additional information regarding the topics noted below:
| Notes to the Consolidated Financial Statements: | |||||
|
Note
|
Topic
|
||||
| 4 |
Funding agreements, reported in Policyholder Account Balances ("PABs") and the related pledged collateral
|
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| 14 | Long-term debt, Credit Facility, and debt and facility covenants | ||||
| 15 | Restrictions on dividends and dividend payments | ||||
|
Risk Factors:
|
||
|
"- Investment Risks - We May Have Difficulty Selling Holdings in Our Investment Portfolio or in Our Securities Lending Program in a Timely Manner to Realize Their Full Value"
|
||
|
"- Economic Environment and Capital Markets Risks - We May Lose Business Due to a Downgrade or a Potential Downgrade in Our Financial Strength or Credit Ratings"
|
||
|
"- Economic Environment and Capital Markets Risks - We May Not Meet Our Liquidity Needs, Access Capital, or May Face Significantly Increased Cost of Capital Due to Adverse Capital and Credit Market Conditions"
|
||
Liquidity Management
Liquidity refers to the ability to generate adequate amounts of cash to meet our needs. Based upon our trusted global brand, resilient businesses, strong financial fundamentals and the substantial funding sources available to us as described herein, we continue to believe we have access to ample liquidity to meet business requirements under current market conditions and reasonably possible stress scenarios. We continuously monitor and adjust our liquidity and capital plans for MLIC in light of market conditions, as well as changing needs and opportunities.
Short-term Liquidity and Liquid Assets
At December 31, 2025 and 2024, our short-term liquidity position was $4.2 billion and $4.7 billion, respectively, while liquid assets were $70.2 billion and $63.3 billion, respectively.
Short-term liquidity consists of cash and cash equivalents and short-term investments. Liquid assets includes these short-term liquidity amounts, plus publicly traded securities. Both short-term liquidity and liquid assets exclude assets pledged or otherwise committed, such as amounts received in connection with securities lending, repurchase agreements, derivatives, regulatory deposits, funding agreements and secured borrowings, as well as amounts held in the closed block.
Liquidity
We determine our liquidity needs based on a rolling 12-month forecast by portfolio of invested assets which we monitor daily. We adjust the asset mix and asset maturities based on this rolling 12-month forecast. To support this forecast, we conduct cash flow and stress testing, which include various scenarios of the potential risk of early contractholder and policyholder withdrawal. We include provisions limiting withdrawal rights on many of our products, including general account pension products sold to employee benefit plan sponsors. Certain of these provisions prevent the customer from making withdrawals prior to the maturity date of the product. In the event of significant cash requirements beyond anticipated liquidity needs, we have various alternatives available depending on market conditions and the amount and timing of the liquidity need. These available alternatives include cash flows from operations, sales of liquid assets, and global funding sources, including commercial paper and the Credit Facility.
Under certain stressful market and economic conditions, our access to liquidity may deteriorate, or the cost to access liquidity may increase. A downgrade in our credit or insurer financial strength ratings, or the credit or insurer financial strength ratings of MetLife, Inc. or its other subsidiaries, could also negatively affect our liquidity. If we require significant amounts of cash on short notice in excess of anticipated cash requirements or if we are required to post or return cash collateral in connection with derivatives or our securities lending program, we may have difficulty selling investments in a timely manner, be forced to sell them for less than we otherwise would have been able to realize, or both. In addition, in the event of such forced sale, for securities in an unrealized loss position, realized losses would be incurred on securities sold and impairments would be incurred, if there is a need to sell securities prior to recovery, which may negatively impact our financial condition.
All general account assets within a particular legal entity, other than those which may have been pledged to a specific purpose, are generally available to fund obligations of the general account of that legal entity.
Capital
We manage our capital position to maintain our financial strength and credit ratings. See "- Rating Agencies" for information regarding such ratings. Our capital position is supported by our ability to generate strong cash flows within our operating companies and borrow funds at competitive rates, as well as by our demonstrated ability to raise additional capital to meet operating and growth needs despite adverse market and economic conditions.
Statutory Capital and Dividends
Metropolitan Life Insurance Company has statutory surplus well above levels to meet current regulatory requirements.
RBC requirements are used as minimum capital requirements by the NAIC and the state insurance departments to identify companies that merit regulatory action. RBC is based on a formula calculated by applying factors to various asset, premium, claim, expense and statutory reserve items. The formula takes into account the risk characteristics of the insurer, including asset risk, insurance risk, interest rate risk, market risk and business risk and is calculated on an annual basis. The formula is used as an early warning regulatory tool to identify possible inadequately capitalized insurers for purposes of initiating regulatory action, and not as a means to rank insurers generally. These rules apply to Metropolitan Life Insurance Company. State insurance laws provide insurance regulators the authority to require various actions by, or take various actions against, insurers whose total adjusted capital does not meet or exceed certain RBC levels. As of the date of the most recent annual statutory financial statement filed with insurance regulators, the total adjusted capital of Metropolitan Life Insurance Company was in excess of each of those RBC levels.
The amount of dividends that Metropolitan Life Insurance Company can pay to MetLife, Inc. is constrained by the amount of surplus Metropolitan Life Insurance Company holds to maintain its ratings, which provides an additional margin for risk protection and investment in its businesses. We proactively take actions to maintain capital consistent with these ratings objectives, which may include adjusting dividend amounts and deploying financial resources from internal or external sources of capital. Certain of these activities may require regulatory approval. Furthermore, the payment of dividends and other distributions to MetLife, Inc. by Metropolitan Life Insurance Company is governed by insurance laws and regulations. See "Business - Regulation - State Insurance Regulation."
Affiliated Reinsurance Transactions
Metropolitan Life Insurance Company cedes certain products to two affiliated U.S. captive reinsurers and a wholly-owned non-U.S. reinsurer for risk and capital management purposes, as well as to manage statutory reserve requirements. The reinsurance ceded to the wholly-owned non-U.S. reinsurer is eliminated within our consolidated results of operations.
Our affiliated U.S. captive reinsurers are licensed under the Special Purpose Financial Captive law adopted by Vermont and South Carolina, their states of domicile. The statutory reserves of the affiliated ceding companies are supported by a combination of funds withheld assets, investment assets and letters of credit issued by unaffiliated financial institutions. MetLife, Inc. has entered into various support agreements in connection with the activities of these U.S. captive reinsurers.
Our wholly-owned non-U.S. reinsurer is licensed as an insurance company under the laws of the Cayman Islands. MetLife, Inc. had agreed to guarantee certain of the obligations of this non-U.S. reinsurer under a retrocession agreement with a third party, which was recaptured in October 2025.
See Note 8 of the Notes to the Consolidated Financial Statements for further information on our reinsurance activities.
Rating Agencies
Rating agencies assign insurer financial strength and credit ratings to Metropolitan Life Insurance Company and MetLife, Inc.'s other insurance subsidiaries, as well as credit ratings to MetLife, Inc. Financial strength ratings represent the opinion of rating agencies regarding the ability of an insurance company to pay obligations under insurance policies and contracts in accordance with their terms. Insurer financial strength ratings are not statements of fact nor are they recommendations to purchase, hold or sell any security, contract or policy. Each rating should be evaluated independently of any other rating.
Rating agencies use an "outlook statement" of "positive," "stable," ''negative'' or "developing" to indicate a medium- or long-term trend in credit fundamentals which, if continued, may lead to a rating change. A rating may have a "stable" outlook to indicate that the rating is not expected to change; however, a "stable" rating does not preclude a rating agency from changing a rating at any time, without notice. Certain rating agencies assign rating modifiers such as "CreditWatch" or "under review" to indicate their opinion regarding the potential direction of a rating. These ratings modifiers are generally assigned in connection with certain events such as potential mergers, acquisitions, dispositions or material changes in a company's results, in order for the rating agency to perform its analysis to fully determine the rating implications of the event.
Our insurer financial strength ratings at the date of this filing are indicated in the following table. Outlook is stable unless otherwise indicated. Additional information about financial strength ratings can be found on the websites of the respective rating agencies.
| A.M. Best | Fitch | Moody's | S&P | ||||||||||||||||||||
| Ratings Structure | "A++ (Superior)" to "S (Suspended)" | "AAA (Exceptionally Strong)" to "C (Distressed)" | "Aaa (Highest Quality)" to "C (Lowest Rated)" | "AAA (Extremely Strong)" to "SD (Selective Default)" or "D (Default)" | |||||||||||||||||||
| Metropolitan Life Insurance Company | A+ | AA- | Aa3 | AA- | |||||||||||||||||||
| 2nd of 16 | 4th of 19 | 4th of 21 | 4th of 21 | ||||||||||||||||||||
Credit ratings indicate the rating agency's opinion regarding a debt issuer's ability to meet the terms of debt obligations in a timely manner. They are important factors in our overall funding profile and ability to access certain types of liquidity. The level and composition of regulatory capital of Metropolitan Life Insurance Company are among the many factors considered in determining our insurer financial strength ratings and credit ratings. Each agency has its own capital adequacy evaluation methodology, and assessments are generally based on a combination of factors. A downgrade in our insurer financial strength or credit ratings, or the credit ratings or insurer financial strength ratings of MetLife, Inc. or its other subsidiaries could adversely impact us.
Summary of Primary Sources and Uses of Liquidity and Capital
Our primary sources and uses of liquidity and capital are summarized as follows:
| Years Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Sources: | |||||||||||
| Operating activities, net | $ | 8,971 | $ | 6,530 | |||||||
| Investing activities, net | - | 1,869 | |||||||||
| Net change in payables for collateral under securities loaned and other transactions | 427 | - | |||||||||
|
Derivatives with certain financing elements and other derivative-related transactions, net
|
38 | - | |||||||||
| Other, net | 109 | 96 | |||||||||
| Effect of change in foreign currency exchange rates on cash and cash equivalents balances | 6 | - | |||||||||
| Total sources | 9,551 | 8,495 | |||||||||
| Uses: | |||||||||||
| Investing activities, net | 3,158 | - | |||||||||
|
Net change in PABs
|
2,429 | 3,708 | |||||||||
| Net change in payables for collateral under securities loaned and other transactions | - | 519 | |||||||||
| Long-term debt repaid | 511 | 245 | |||||||||
|
Derivatives with certain financing elements and other derivative-related transactions, net
|
- | 66 | |||||||||
| Dividends paid to MetLife, Inc. | 2,332 | 3,476 | |||||||||
| Effect of change in foreign currency exchange rates on cash and cash equivalents balances | - | 5 | |||||||||
| Total uses | 8,430 | 8,019 | |||||||||
| Net increase (decrease) in cash and cash equivalents | $ | 1,121 | $ | 476 | |||||||
Cash Flows from Operations
The principal cash inflows from our insurance activities come from insurance premiums, net investment income, annuity considerations and deposit funds. The principal cash outflows are the result of various life insurance, annuity and pension products, operating expenses and income tax, as well as interest expense.
Cash Flows from Investments
The principal cash inflows from our investment activities come from repayments of principal, proceeds from maturities and sales of investments and settlements of freestanding derivatives. The principal cash outflows relate to purchases of investments, issuances of policy loans and settlements of freestanding derivatives. We typically have a net cash outflow from investing activities because cash inflows from insurance operations are reinvested in accordance with our ALM discipline to fund insurance liabilities. We closely monitor and manage these risks through our comprehensive investment risk management process.
Cash Flows from Financing
The principal cash inflows from our financing activities come from issuances of debt, deposits of funds associated with PABs and lending of securities. The principal cash outflows come from repayments of debt, payments of dividends on Metropolitan Life Insurance Company's common stock, withdrawals associated with PABs and the return of securities on loan.
Liquidity and Capital Sources and Uses
Liquidity and capital are provided by a variety of global funding sources, including: (i) short-term debt, which includes commercial paper; (ii) long-term debt; (iii) PABs, which includes funding agreements; and (iv) the Credit Facility.
The primary uses of liquidity and capital include: (i) dividends on common stock paid to MetLife, Inc.; (ii) debt repayments; (iii) contractual obligations, including PABs and insurance liabilities; (iv) pledged collateral; and (v) securities lending transactions and repurchase agreements.
Additional details regarding certain of our primary sources and uses of liquidity and capital are included in the Notes to the Consolidated Financial Statements referenced in "- Overview" and are discussed below.
The diversity of our global funding sources enhances our funding flexibility, limits dependence on any one market or source of funds and generally lowers the cost of funds. We have no reason to believe that our lending counterparties will be unable to fulfill their respective contractual obligations under our Credit Facility. As commitments under this facility may expire unused, these amounts do not necessarily reflect our actual future cash funding requirements.
Debt Outstanding
At December 31, 2025 and 2024, the Company's outstanding long-term debt of $1.0 billion and $1.6 billion, respectively, included $299 million and $348 million, respectively, which is non-recourse to the Company, subject to customary exceptions. Certain investment subsidiaries have pledged assets to secure this debt.
Certain of our debt instruments and the Credit Facility contain various administrative, reporting, legal and financial covenants. We believe we were in compliance with all applicable financial covenants at December 31, 2025.
Support Agreements
Metropolitan Life Insurance Company is a party to a capital support commitment with its subsidiary, MetLife Funding. Under the arrangement, Metropolitan Life Insurance Company has agreed to cause such entity to meet specified capital requirements. We anticipate that in the event this arrangement places demands upon us, there will be sufficient liquidity and capital to enable us to meet such demands.
Pledged Collateral
We pledge collateral to, and have collateral pledged to us by, counterparties in connection with our derivatives and funding agreements. See Note 11 of the Notes to the Consolidated Financial Statements for information regarding derivatives.
Securities Lending Transactions and Repurchase Agreements
See "- Investments - Securities Lending Transactions and Repurchase Agreements."
Contractual Obligations
Policyholder Account Balances
For details on PABs and funding agreements, see Notes 1 and 4 of the Notes to the Consolidated Financial Statements.
Estimated cash flows of $133.1 billion ($33.8 billion within one year) exceed the liability amount of $104.1 billion included on the consolidated balance sheet principally due to (i) the time value of money, which accounts for a substantial portion of the difference; (ii) differences in assumptions since the liabilities were initially established; and (iii) exclusions of certain liabilities related to accounting conventions which are not contractually due.
The estimated cash flows represent cash payments undiscounted as to interest and including assumptions related to the receipt of future premiums and deposits; withdrawals, including unscheduled or partial withdrawals; policy lapses; surrender charges; annuitization; mortality; future interest credited; policy loans and other contingent events as appropriate for the respective product type. Such estimated cash payments are net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable with foreign currency payments estimated at current rates.
Insurance Liabilities
Insurance liabilities (FPBs, MRBs, at estimated fair value, other policy-related balances and policyholder dividends payable) are described in Notes 1, 3 and 5 of the Notes to the Consolidated Financial Statements. Estimated cash flows of $227.7 billion ($25.3 billion within one year) exceed the liability amounts of $147.5 billion included on the consolidated balance sheet principally due to (i) the time value of money, which accounts for a substantial portion of the difference; (ii) differences in assumptions, most significantly mortality, since the liabilities were initially established; and (iii) exclusions of certain liabilities related to accounting conventions which are not contractually due.
Estimated cash flows are based on mortality, morbidity, lapse and other assumptions comparable with our experience and expectations of future payment patterns; and consider future premium receipts on current policies in-force. Estimated cash payments are undiscounted as to interest, net of estimated future premiums on in-force policies and gross of any reinsurance recoverable. Payment of amounts related to policyholder dividends left on deposit are projected based on assumptions of policyholder withdrawal activity.
Actual cash payments may differ significantly from the liabilities as presented on the consolidated balance sheet and the estimated cash payments due to differences between actual experience and the assumptions used in the establishment of these liabilities and the estimation of these cash payments.
For the majority of our insurance operations, estimated contractual obligations for FPBs and PABs are derived from the annual asset adequacy analysis used to develop actuarial opinions of statutory reserve adequacy for state regulatory purposes. These cash flows are materially representative of the cash flows under GAAP.
Liabilities arising from our insurance activities primarily relate to benefit payments under various life insurance, annuity and group pension products, as well as payments for policy surrenders, withdrawals and loans.
Adopted Accounting Pronouncements
See Note 1 of the Notes to the Consolidated Financial Statements.
Future Adoption of Accounting Pronouncements
See Note 1 of the Notes to the Consolidated Financial Statements.
Risk Management
MetLife has an integrated process for managing risk, that is supported by a Risk Appetite Statement approved by the Board of Directors. Risk management is overseen and conducted through multiple Board and senior management risk committees (financial and non-financial). The risk committees are established at the enterprise and local levels, as needed, to oversee capital and risk positions, approve ALM strategies and risk limits, and establish certain corporate risk standards and policies. The risk committees are comprised of senior leaders from the lines of business and corporate functions, which ensures comprehensive coverage and sharing of risk reporting. The ERC is responsible for reviewing all material risks impacting the enterprise and deciding on actions, if necessary, in the event risks exceed desired tolerances, taking into consideration industry best practices and the current environment to resolve or mitigate those risks.
Three Lines of Defense
MetLife operates under the "Three Lines of Defense" model. Under this model, the lines of business and corporate functions are the first and primary line of defense in identifying, measuring, monitoring, managing, and reporting risks. Global Risk Management forms the second line of defense providing strategic advisory services and effective challenge and oversight to the business and corporate functions in the first line of defense. Internal Audit serves as the third line of defense, providing independent assurance and testing over the risk and control environment and related processes and controls.
Global Risk Management
Independent from the lines of business, the centralized Global Risk Management department, led by the CRO, coordinates across all risk committees to ensure that all material risks are properly identified, measured, monitored, managed and reported across MetLife. The CRO reports to the Chief Executive Officer ("CEO") and is primarily responsible for maintaining and communicating MetLife's enterprise risk policies and for monitoring and analyzing all material risks.
Global Risk Management considers and monitors a full range of risks relating to MetLife's and the Company's solvency, liquidity, earnings, business operations and reputation. Global Risk Management's primary responsibilities consist of:
•implementing an enterprise risk framework, which outlines our enterprise approach for managing financial and non-financial risk;
•developing policies and procedures for identifying, measuring, monitoring, managing and reporting those risks identified in the enterprise risk framework;
•coordinating Own Risk Solvency Assessment for Board, senior management and regulator use;
•establishing appropriate corporate risk tolerance levels;
•measuring capital on an economic basis;
•mitigating compliance risk and establishing controls;
•integrating climate risk into MetLife's risk management framework and developing climate risk capabilities; and
•reporting to (i) the Finance and Risk Committee of MetLife, Inc.'s Board of Directors; (ii) the Compensation Committee of MetLife, Inc.'s Board of Directors; and (iii) the financial and non-financial senior management committees on various aspects of risk.
Key Risk Types
MetLife has defined each material risk to which it is exposed and has established individual frameworks to monitor, manage and report on the respective risk.
•Market Risk: is the risk of loss due to potential changes in the value of assets and liabilities arising from fluctuations in financial market, real estate, and other economic factors. Market risk is comprised of interest rate risk, equity risk, foreign currency exchange rate risk, spread risk and inflation risk.
•Credit Risk: is the risk of loss or credit rating downgrade arising from an obligor or counterparty with a direct or contingent financial obligation to MetLife that is either unable or unwilling to meet its obligation in full and on a timely basis. These risks arise from public and private fixed income assets, private loans including real estate, derivative transactions, bank deposits, reinsurance agreements and other similar contracts.
•Insurance Risk: is the risk of loss or adverse change in insurance liabilities from changes in the level, trend, and volatility of insurance and policyholder behavior experience varying from best estimate assumptions. These variances can be driven by catastrophic events such as pandemics or can be the result of misestimating base assumptions. Insurance risks to MetLife generally arise from mortality, morbidity, longevity, and policyholder behavior.
•Non-Financial Risk: is the risk of failed or inadequate internal processes, human errors, system errors or external events that may result in financial loss, non-financial damage, and/or non-compliance with applicable laws and regulations. Non-Financial risk captures operational and compliance risks, including risks such as business interruption, customer protection, money laundering, sanctions, bribery and corruption, fraud, privacy, and information security risk.
•Liquidity Risk: refers to the risk that MetLife is unable to raise cash or collateral necessary to meet current obligations.
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 can be 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. 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.
Asset/Liability Management
MetLife actively manages our assets using an approach that is liability driven and balances quality, diversification, asset/liability matching, liquidity, concentration and investment return. The goals of the investment process are to optimize, net of income tax, risk-adjusted investment income and risk-adjusted total return while ensuring that the assets and liabilities are reasonably aligned on a cash flow and duration basis. The ALM process is the shared responsibility of the ALM, Global Risk Management, and Investments departments, with the engagement of senior members of the business segments and Finance, and is governed by the ALM Committees. The ALM Committees' duties include reviewing and approving investment guidelines and limits, approving significant portfolio and ALM strategies and providing oversight of the ALM process. The directives of the ALM Committees are carried out and monitored through ALM Working Groups which are set up to manage risk by geography, product or portfolio type. The ALM Steering Committee oversees the activities of the underlying ALM Committees and Working Groups. The ALM Steering Committee reports to the ERC.
MetLife establishes portfolio guidelines that define ranges and limits related to asset allocation, interest rate risk, liquidity, concentration and other risks for each major business segment, legal entity and insurance product group. These guidelines support implementation of investment strategies used to adequately fund our liabilities within acceptable levels of risk. MetLife also establishes hedging programs and associated investment portfolios for different blocks of business. The ALM Working Groups monitor these strategies and programs through regular review of portfolio metrics, such as effective duration, yield curve sensitivity, convexity, value at risk, market sensitivities (to interest rates, equity market levels, equity volatility, foreign currency exchange rates and inflation), stress scenario payoffs, liquidity, asset sector concentration and credit quality.
MetLife manages credit risk through in-house fundamental credit analysis of the underlying obligors, issuers, transaction structures and real estate properties. MetLife also manages credit, market valuation and liquidity risk through industry and issuer diversification and asset allocation limits. These risk limits, approved annually by the Investment Risk Committee, promote diversification by asset sector, avoid concentrations in any single issuer and limit overall aggregate credit and equity risk exposure, as measured by MetLife's economic capital framework. For real estate assets, MetLife manages credit and market risk through asset allocation limits and by diversifying by geography, property and product type.
Information Security Risk Management
For details on information security risk management, see "Cybersecurity."
Metropolitan Life Insurance Co. published this content on March 11, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 11, 2026 at 10:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]