METLIFE INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 001-15787

METLIFE, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 13-4075851
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

200 PARK AVENUE
NEW YORK, NEW YORK 10166-0188
(212) 578-2211
(Address and telephone number of registrant's principal executive offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (sec. 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant as of June 30, 2004 was approximately $27
billion. As of March 1, 2005, 732,924,389 shares of the registrant's Common
Stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

THE INFORMATION REQUIRED TO BE FURNISHED PURSUANT TO PART OF ITEM 10, ITEM
11, PART OF ITEM 12, AND ITEMS 13 AND 14 OF PART III OF THIS FORM 10-K IS SET
FORTH IN, AND IS HEREBY INCORPORATED BY REFERENCE HEREIN FROM, THE REGISTRANT'S
DEFINITIVE PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
APRIL 26, 2005, TO BE FILED BY THE REGISTRANT WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO REGULATION 14A NOT LATER THAN 120 DAYS AFTER THE YEAR
ENDED DECEMBER 31, 2004.

TABLE OF CONTENTS

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including the Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains statements
which constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, including statements relating to
trends in the operations and financial results and the business and the products
of the Registrant and its subsidiaries, as well as other statements including
words such as "anticipate," "believe," "plan," "estimate," "expect," "intend"
and other similar expressions. "MetLife" or the "Company" refers to MetLife,
Inc., a Delaware corporation (the "Holding Company"), and its subsidiaries,
including Metropolitan Life Insurance Company ("Metropolitan Life").
Forward-looking statements are made based upon management's current expectations
and beliefs concerning future developments and their potential effects on the
Company. Such forward-looking statements are not guarantees of future
performance. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

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PART I

ITEM 1. BUSINESS

As used in this Form 10-K, "MetLife" or the "Company" refers to MetLife,
Inc., a Delaware corporation incorporated in 1999 (the "Holding Company"), and
its subsidiaries, including Metropolitan Life Insurance Company ("Metropolitan
Life").

MetLife, Inc., through its subsidiaries and affiliates, is a leading
provider of insurance and other financial services to individual and
institutional customers. The Company offers life insurance, annuities,
automobile and homeowner's insurance and retail banking services to individuals,
as well as group insurance, reinsurance, and retirement & savings products and
services to corporations and other institutions. The MetLife companies serve
individuals in approximately 13 million households in the United States and
provide benefits to 37 million employees and family members through their plan
sponsors, including 88 of the top one hundred FORTUNE(R) 500 companies. Outside
the United States, the MetLife companies serve approximately 9 million customers
through direct insurance operations in Argentina, Brazil, Chile, China, Hong
Kong, India, Indonesia, Mexico, South Korea, Taiwan and Uruguay.

MetLife is one of the largest insurance and financial services companies in
the United States. The Company's franchises and brand names uniquely position it
to be the preeminent provider of protection and savings and investment products
in the United States. In addition, MetLife's international operations are
focused on markets where the demand for insurance and savings and investment
products is expected to grow rapidly in the future.

MetLife's well-recognized brand names, leading market positions,
competitive and innovative product offerings and financial strength and
expertise should help drive future growth and enhance shareholder value,
building on a long history of fairness, honesty and integrity.

Over the course of the next several years, MetLife will pursue the
following specific strategies to achieve its goals:

- Build on widely recognized brand names

- Capitalize on a large customer base

- Enhance capital efficiency

- Expand distribution channels

- Continue to introduce innovative and competitive products

- Focus on international operations

- Maintain balanced focus on asset accumulation and protection products

- Manage operating expenses commensurate with revenue growth

- Further commitment to a diverse workplace

MetLife is organized into five operating segments: Institutional,
Individual, Auto & Home, International and Reinsurance, as well as Corporate &
Other. Financial information, including revenues, expenses, income and loss, and
total assets by segment, is provided in Note 16 of Notes to Consolidated
Financial Statements.

INSTITUTIONAL
- -------------

The Company's Institutional segment offers a broad range of group insurance
and retirement & savings products and services to corporations and other
institutions.

Group insurance products and services include group life insurance,
non-medical health insurance products and related administrative services, as
well as other benefits, such as employer-sponsored auto and homeowner's
insurance provided through the Auto & Home segment and prepaid legal services
plans. Non-

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medical health insurance is comprised of products such as accidental death and
dismemberment, long-term care, short- and long-term disability and dental
insurance. The Company offers group insurance products as employer-paid benefits
or as voluntary benefits where all or a portion of the premiums are paid by the
employee. Revenues applicable to these group insurance products and services
were $11 billion in 2004, representing 69% of total Institutional revenues of
$16 billion.

MetLife has built a leading position in the U.S. group insurance market
through long-standing relationships with many of the largest corporate employers
in the United States. MetLife serves companies and institutions with 37 million
employees and family members through their plan sponsors, including 88 of the
top one hundred FORTUNE(R) 500 companies.

MetLife's retirement & savings products and services include an array of
annuity and investment products, as well as bundled administrative and
investment services sold to sponsors of small- and mid-sized 401(k) and other
defined contribution plans, guaranteed interest products and other stable value
products, accumulation and income annuities, and separate account contracts for
the investment of defined benefit and defined contribution plan assets. Revenues
applicable to MetLife's retirement & savings products were $5 billion in 2004,
representing 31% of total Institutional revenues.

The employee benefit market served by Institutional is a dynamic one.
Employers continue to seek ways to reduce the costs of their benefit plans while
still attracting and retaining a motivated workforce. The continued high annual
increases in the cost of providing employee medical care benefits and retiree
benefits have resulted in many employers reviewing all of their benefit
programs. The employee benefit market also reflects employees' increasing
concern about the future of government-funded retirement and safety-net
programs, an increasingly mobile workforce and the desire of employers to share
the market risk of retirement benefits with employees. MetLife believes these
trends are facilitating the introduction and increasing employer support of
"voluntary" products, such as supplemental group life, long-term care insurance,
annuities, auto and homeowner's insurance, and certain critical care products,
as well as leading more employers to adopt defined contribution pension
arrangements, such as 401(k) plans.

MARKETING AND DISTRIBUTION

Institutional markets its products and services through separate sales
forces, comprised of MetLife employees, for both its group insurance and
retirement & savings lines.

MetLife distributes its group insurance products and services through a
regional sales force that is segmented by the size of the target customer.
Marketing representatives sell either directly to corporate and other
institutional customers or through an intermediary, such as a broker or a
consultant. Voluntary products are sold through the same sales channels, as well
as by specialists for these products. As of December 31, 2004, the group
insurance sales channels had approximately 374 marketing representatives.

MetLife group insurance products and services are distributed through the
following channels:

- The national accounts unit focuses exclusively on MetLife's largest
customers, generally those having more than 25,000 employees. This unit
assigns account executives and other administrative and technical
personnel to a discrete customer or group of customers in order to
provide them with individualized products and services;

- The mid-sized market and large market are served by a regional sales
force which operates from 32 offices and generally concentrates on sales
to employers with fewer than 25,000 employees, through selected national
and regional brokers, as well as through consultants;

- The small market sales force operates out of 36 individual offices
staffed with sales and administrative employees located throughout the
United States. These centers provide comprehensive support services on a
local basis to brokers and other intermediaries by providing an array of
products and services designed for smaller businesses, generally those
with fewer than 500 employees; and

- The voluntary benefits sales force is located in the same offices as the
mid-large market sales force. It specializes in voluntary benefits for
the mid-large market through select brokers and consultants. In
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addition, there are specialized sales personnel for the sale of
individual disability income policies through brokers.

MetLife's retirement & savings organization markets retirement, savings,
investment and payout annuity products and services to sponsors and advisors of
benefit plans of all sizes. These products and services are offered to private
and public pension plans, collective bargaining units, nonprofit organizations,
recipients of structured settlements and the current and retired members of
these and other institutions.

MetLife distributes retirement & savings products and services through
dedicated sales teams and relationship managers located in 21 offices around the
country. In addition, the retirement & savings organization works with the
distribution channels in the Individual segment and in the group insurance area
to better reach and service customers, brokers, consultants and other
intermediaries.

The Company has entered into several joint ventures and other arrangements
with third parties to expand the marketing and distribution opportunities of
institutional products and services. The Company also seeks to sell its
institutional products and services through sponsoring organizations and
affinity groups. For example, the Company is a preferred provider of long-term
care products for the American Association of Retired Persons and the National
Long-Term Care Coalition, a group of some of the nation's largest employers. In
addition, the Company, together with John Hancock Financial Services, Inc., a
wholly owned subsidiary of Manulife Financial, is a provider for the Federal
Long-Term Care Insurance program. The program, available to most federal
employees and their families, is the largest employer-sponsored long-term care
insurance program in the country based on the number of enrollees.

GROUP INSURANCE PRODUCTS AND SERVICES

MetLife's group insurance products and services include:

Group life. Group life insurance products and services include group
term life (both employer paid basic life and employee paid supplemental
life), group universal life, group variable universal life, dependent life
and survivor income benefits. These products and services are offered as
standard products or may be tailored to meet specific customer needs. This
category also includes specialized life insurance products designed
specifically to provide solutions for non-qualified benefit and retiree
benefit funding purposes.

Non-medical health. Non-medical health insurance consists of short
and long-term disability, disability income, long-term care, dental and
accidental death and dismemberment coverages. MetLife also sells excess
risk and administrative services only arrangements to some employers.

Other products and services. Other products and services include
employer-sponsored auto and homeowner's insurance provided through the Auto
& Home segment and prepaid legal plans.

RETIREMENT & SAVINGS PRODUCTS AND SERVICES

MetLife's retirement & savings products and services include:

Guaranteed interest and stable value products. MetLife offers
guaranteed investment contracts ("GICs"), including separate account and
synthetic (trust) GICs, funding agreements and similar products.

Accumulation and income products. MetLife also sells fixed and
variable annuity products, generally in connection with defined
contribution plans, the termination of pension plans or the funding of
structured settlements.

Defined contribution plan services. MetLife provides full service
defined contribution programs to small- and mid-sized companies.

Other retirement & savings products and services. Other retirement &
savings products and services include separate account contracts for the
investment management of defined benefit and defined contribution plans on
behalf of corporations and other institutions.

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INDIVIDUAL
- ----------

MetLife's Individual segment offers a wide variety of protection and asset
accumulation products aimed at serving the financial needs of its customers
throughout their entire life cycle. Products offered by Individual include
insurance products, such as traditional, universal and variable life insurance
and variable and fixed annuities. In addition, Individual sales representatives
distribute disability insurance and long-term care insurance products offered
through the Institutional segment, investment products such as mutual funds, as
well as other products offered by the Company's other businesses. Individual's
principal distribution channels are the MetLife Financial Services career agency
system, the New England Financial general agency system, and Independent
Distribution. Individual distributes its products through several additional
distribution channels, including Walnut Street Securities, MetLife Resources and
Texas Life. In total, Individual had approximately 10,800 active sales
representatives at December 31, 2004.

MetLife's broadly recognized brand names and strong distribution channels
have allowed it to become the third largest provider of individual life
insurance and annuities in the United States, with $13 billion of total
statutory individual life and annuity premiums and deposits through September
30, 2004, the latest period for which OneSource, a database that aggregates U.S.
insurance company statutory financial statements, is available. According to
research performed by the Life Insurance Marketing and Research Association
("LIMRA"), based on sales through December 31, 2004, MetLife was the third
largest issuer of individual variable life insurance in the United States and
the eighth largest issuer of all individual life insurance products in the
United States. In addition, according to research done by LIMRA and based on new
annuity deposits through September 30, 2004, MetLife was the fifth largest
annuity writer in the United States.

Reflecting overall trends in the insurance industry, sales of MetLife's
traditional life insurance products have declined in recent years. However,
during the period from 2000 to 2004, the statutory deposits for annuity products
increased at a compound annual growth rate of approximately 19.6%. Annuity
deposits represented approximately 59% of total statutory premiums and deposits
for Individual in 2004. Individual had $12.7 billion of total revenues, or 33%
of MetLife's total revenues in 2004.

MARKETING AND DISTRIBUTION

The Company targets the large middle-income market, as well as affluent
individuals, owners of small businesses and executives of small- to medium-sized
companies. The Company has also been successful in selling its products in
various multicultural markets. Individual products are distributed nationwide
through multiple channels, with the primary distribution systems being the
MetLife Financial Services career agency system, the New England Financial
general agency system, and Independent Distribution.

MetLife Financial Services career agency system. The MetLife Financial
Services career agency system had 5,597 agents under contract in 126 agencies at
December 31, 2004. The career agency sales force focuses on the large
middle-income and affluent markets, including multicultural markets. The Company
supports its efforts in multicultural markets through targeted advertising,
specially trained agents and sales literature written in various languages.
Multicultural markets represented approximately 33% of MetLife Financial
Services' individual life sales in 2004. The average face amount of a life
insurance policy sold through the career agency system in 2004 was approximately
$280,000.

Agents in the career agency system are full-time MetLife employees who are
compensated primarily with commissions based on sales. As MetLife employees,
they also receive certain benefits. Agents in the career agency system are not
authorized to sell other insurers' products without MetLife's approval. At
December 31, 2004, approximately 87% of the agents in the career agency system
were licensed to sell one or more of the following products: variable life
insurance, variable annuities and mutual funds.

From 2000 through 2004, the number of agents under contract in the MetLife
Financial Services career agency system increased from 5,531 to 5,597. The
increase in the number of agents is due to improving retention, which in-turn
drives increased productivity. During the same period, the career agency system

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increased productivity, with net sales credits per agent, an industry measure
for agent productivity, growing at a compound annual rate of 17%.

New England Financial general agency system. New England Financial's
general agency system targets high net-worth individuals, owners of small
businesses and executives of small- to medium-sized companies. The average face
amount of a life insurance policy sold through the New England Financial general
agency system in 2004 was approximately $460,000.

At December 31, 2004, New England Financial's sales force included 58
general agencies providing support to 2,383 agents and a network of independent
brokers throughout the United States. The compensation of agents who are
independent contractors and general agents who have exclusive contracts with New
England Financial is based on sales, although general agents are also provided
with an allowance for benefits and other expenses. At December 31, 2004,
approximately 85% of New England Financial's agents were licensed to sell one or
more of the following products: variable life insurance, variable annuities and
mutual funds.

Independent Distribution. GenAmerica Financial markets a portfolio of
individual life insurance, annuity contracts, and related financial services to
high net-worth individuals and small- to medium-sized businesses through
multiple distribution channels. These distribution channels include independent
general agents, financial advisors, consultants, brokerage general agencies and
other independent marketing organizations. The average face amount of a life
insurance policy sold through the GenAmerica Financial independent general
agency system in 2004 was approximately $420,000.

The GenAmerica Financial distribution channel sells universal life,
variable universal life, and traditional life insurance products through 1,654
independent general agencies with which it has contractual arrangements. This
reflects a 13% increase in independent general agencies from 2003 to 2004. There
are 380 independent general agents who produced at least $25,000 in first-year
insurance sales in 2004. These agents market GenAmerica Financial products and
are independent contractors who are generally responsible for the expenses of
operating their agencies, including office and overhead expenses, and the
recruiting, selection, contracting, training, and development of agents and
brokers in their agencies. Recruiting and wholesaling efforts are directed from
a nationwide network of regional offices. GenAmerica Financial is actively
developing and implementing programs designed to increase the scale and
productivity of its distribution channels.

In 2003, MetLife Investors Group's management became responsible for the
GenAmerica Financial distribution channel, building on its success in third
party distribution and taking advantage of its scale and established systems.

MetLife Investors Group is a wholesale distribution channel dedicated to
the distribution of variable and fixed annuities and insurance products through
financial intermediaries, including regional broker/dealers, New York Stock
Exchange brokerage firms, financial planners and banks. For the year ended
December 31, 2004, MetLife Investors Group had 534 selling agreements, 458 for
regional broker/dealers and financial planners, 70 for banks, 5 for brokerage
firms and 1 for a third party administrator. As of December 31, 2004, MetLife
Investors Group's sales force consisted of 100 regional vice presidents, or
wholesalers.

MetLife Investors Group plans to continue growing existing distribution
relationships and acquiring new relationships by capitalizing on an experienced
management team, leveraging the MetLife brand and resources, and developing high
service, low-cost operations while also adding distribution of other MetLife
products.

Additional distribution channels: The Company distributes its individual
insurance and investment products through several additional distribution
channels, including Walnut Street Securities, MetLife Resources and Texas Life.

Walnut Street Securities. Walnut Street Securities, Inc., a MetLife,
Inc. subsidiary, is a broker/ dealer that markets mutual funds and other
securities, as well as variable life insurance and variable annuity
products, through 1,359 independent registered representatives.

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MetLife Resources. MetLife Resources, a division of MetLife, markets
retirement, annuity and other financial products on a national basis
through 427 agents and independent brokers. MetLife Resources targets the
nonprofit, educational and healthcare markets.

Texas Life. Texas Life Insurance Company, a MetLife, Inc. subsidiary,
markets whole life and universal life insurance products under the Texas
Life name through approximately 1,300 active independent insurance brokers.
These brokers are independent contractors who sell insurance for Texas Life
on a nonexclusive basis. A number of MetLife career agents also market
Texas Life products. Texas Life sells universal life insurance policies
with low cash values that are marketed through the use of brochures, as
well as payroll deduction life insurance products.

PRODUCTS

The Company offers a wide variety of individual insurance, as well as
annuities and investment-type products aimed at serving its customers' financial
needs throughout their entire life cycle.

INSURANCE PRODUCTS

The Company's individual insurance products include variable life products,
universal life products, traditional life products, including whole life and
term life, and other individual products, including individual disability and
long-term care insurance.

The Company continually reviews and updates its products. It has introduced
new products and features designed to increase the competitiveness of its
portfolio and the flexibility of its products to meet the broad range of asset
accumulation, life-cycle protection and distribution needs of its customers.
Some of these updates have included new universal life policies, updated
variable universal life products, an improved term insurance portfolio, and
enhancements to one of MetLife's whole life products.

Variable life. Variable life products provide insurance coverage through a
contract that gives the policyholder flexibility in investment choices and,
depending on the product, in premium payments and coverage amounts, with certain
guarantees. Most importantly, with variable life products, premiums and account
balances can be directed by the policyholder into a variety of separate accounts
or directed to the Company's general account. In the separate accounts, the
policyholder bears the entire risk of the investment results. MetLife collects
specified fees for the management of these various investment accounts and any
net return is credited directly to the policyholder's account. In some
instances, third-party money management firms manage investment accounts that
support variable insurance products. With some products, by maintaining a
certain premium level, policyholders may have the advantage of various
guarantees that may protect the death benefit from adverse investment
experience.

Universal life. Universal life products provide insurance coverage on the
same basis as variable life, except that premiums, and the resulting accumulated
balances, are allocated only to the MetLife general account. Universal life
products may allow the insured to increase or decrease the amount of death
benefit coverage over the term of the contract and the owner to adjust the
frequency and amount of premium payments. The Company credits premiums to an
account maintained for the policyholder. Premiums are credited net of specified
expenses and interest, at interest rates it determines, subject to specified
minimums. Specific charges are made against the policyholder's account for the
cost of insurance protection and for expenses. With some products, by
maintaining a certain premium level, policyholders may have the advantage of
various guarantees that may protect the death benefit from adverse investment
experience.

Whole life. Whole life products provide a guaranteed benefit upon the
death of the insured in return for the periodic payment of a fixed premium over
a predetermined period. Premium payments may be required for the entire life of
the contract period, to a specified age or period, and may be level or change in
accordance with a predetermined schedule. Whole life insurance includes policies
that provide a participation feature in the form of dividends. Policyholders may
receive dividends in cash or apply them to increase death benefits, increase
cash values available upon surrender or reduce the premiums required to maintain
the contract in-force. Because the use of dividends is specified by the
policyholder, this group of products provides significant

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flexibility to individuals to tailor the product to suit their specific needs
and circumstances, while at the same time providing guaranteed benefits.

Term life. Term life provides a guaranteed benefit upon the death of the
insured for a specified time period in return for the periodic payment of
premiums. Specified coverage periods range from one year to 20 years, but in no
event are they longer than the period over which premiums are paid. Death
benefits may be level over the period or decreasing. Decreasing coverage is used
principally to provide for loan repayment in the event of death. Premiums may be
guaranteed at a level amount for the coverage period or may be non-level and
non-guaranteed. Term insurance products are sometimes referred to as pure
protection products, in that there are typically no savings or investment
elements. Term contracts expire without value at the end of the coverage period
when the insured party is still living.

Other individual products. Individual disability products provide a
benefit in the event of the disability of the insured. In most instances, this
benefit is in the form of monthly income paid until the insured reaches age 65.
In addition to income replacement, the product may be used to provide for the
payment of business overhead expenses for disabled business owners or mortgage
payment protection.

MetLife's long-term care insurance provides a fixed benefit for certain
costs associated with nursing home care and other services that may be provided
to individuals unable to perform certain activities of daily living.

In addition to these products, MetLife's Individual segment supports a
group of low face amount life insurance policies, known as industrial policies,
that its agents sold until 1964.

ANNUITIES AND INVESTMENT PRODUCTS

The Company offers a variety of individual annuities and investment
products, including variable and fixed annuities, mutual funds, and securities.

Variable annuities. The Company offers variable annuities for both asset
accumulation and asset distribution needs. Variable annuities allow the
contractholder to make deposits into various investment accounts, as determined
by the contractholder. The investment accounts are separate accounts and risks
associated with such investments are borne entirely by the contractholder. In
certain variable annuity products, contractholders may also choose to allocate
all or a portion of their account to the Company's general account and are
credited with interest at rates the Company determines, subject to certain
minimums. In addition, contractholders may also elect certain minimum death
benefit and minimum living benefit guarantees for which additional premium and
fees are charged.

Fixed annuities. Fixed annuities are used for both asset accumulation and
asset distribution needs. Fixed annuities do not allow the same investment
flexibility provided by variable annuities, but provide guarantees related to
the preservation of principal and interest credited. Deposits made into these
contracts are allocated to the general account and are credited with interest at
rates the Company determines, subject to certain minimums. Credited interest
rates may be guaranteed not to change for certain limited periods of time,
ranging from one to ten years.

Mutual funds and securities. MetLife, through its broker-dealer
affiliates, offers a full range of mutual funds and other securities products.

AUTO & HOME
- -----------

Auto & Home, operating through Metropolitan Property and Casualty Insurance
Company and its subsidiaries, offers personal lines property and casualty
insurance directly to employees through employer-sponsored programs, as well as
through a variety of retail distribution channels, including the MetLife
Financial Services career agency system, independent agents, property and
casualty specialists and direct response marketing. Auto & Home primarily sells
auto insurance, which represented 73.1% of Auto & Home's total net premiums
earned in 2004, and homeowner's insurance, which represented 25.2% of Auto &
Home's total net premiums earned in 2004.

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PRODUCTS

Auto & Home's insurance products include:

- auto, including both standard and non-standard private passenger;

- homeowner's, renters, condominium and dwelling; and

- other personal lines, including umbrella (protection against losses in
excess of amounts covered by other liability insurance policies),
recreational vehicles and boat owners.

Auto coverages. Auto insurance policies include coverages for private
passenger automobiles, utility automobiles and vans, motorcycles, motor homes,
antique or classic automobiles and trailers. Auto & Home offers traditional
coverages such as liability, uninsured motorist, no fault or personal injury
protection and collision and comprehensive coverages. Auto & Home also offers
non-standard auto insurance, which accounted for approximately $80 million in
net premiums earned in 2004 and represented approximately 3.7% of total auto net
premiums earned in 2004.

Homeowner's coverages. Homeowner's insurance provides protection for
homeowner's, renters, condominium owners and residential landlords against
losses arising out of damage to dwellings and contents from a wide variety of
perils, as well as coverage for liability arising from ownership or occupancy.

Traditional insurance policies for dwellings represent the majority of Auto
& Home's homeowner's policies providing protection for loss on a "replacement
cost" basis. These policies provide additional coverage for reasonable, normal
living expenses incurred by policyholders that have been displaced from their
homes.

MARKETING AND DISTRIBUTION

Personal lines auto and homeowner's insurance products are directly
marketed to employees through employer-sponsored programs. Auto & Home products
are also marketed and sold by the MetLife Financial Services career agency sales
force, independent agents, property and casualty specialists and through a
direct response channel.

EMPLOYER-SPONSORED PROGRAMS

Auto & Home is a leading provider of employer-sponsored auto and
homeowner's products. Net premiums earned through Auto & Home's
employer-sponsored distribution channel grew at a compound annual rate of 10.8%,
from $638 million in 2000 to $963 million in 2004. At December 31, 2004,
approximately 1,800 employers offered MetLife Auto & Home products to their
employees.

Institutional marketing representatives market the employer-sponsored Auto
& Home products to employers through a variety of means, including broker
referrals and cross-selling to MetLife group customers. Once endorsed by the
employer, MetLife commences marketing efforts to employees. Employees who are
interested in the employer-sponsored auto and homeowner's products can call a
toll-free number for a quote, purchase coverage and authorize payroll deduction
over the telephone. Auto & Home has also developed proprietary software that
permits an employee in most states to obtain a quote for employer-sponsored auto
insurance through Auto & Home's Internet website.

RETAIL DISTRIBUTION CHANNELS

MetLife markets and sells Auto & Home products through its MetLife
Financial Services career agency sales force, independent agents, property and
casualty specialists and through a direct response channel. In recent years,
MetLife has increased its use of independent agents and property and casualty
specialists to sell these products.

MetLife Financial Services career agency system. The MetLife Financial
Services career agency system has approximately 1,500 agents that sell Auto &
Home insurance products. Sales of Auto & Home products by these agents have been
declining since the early 1990s, due principally to the reduction in the number
of

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agents in the MetLife Financial Services career agency sales force. See
"-- Individual -- Marketing and Distribution."

Independent agencies. At December 31, 2004, Auto & Home maintained
contracts with more than 3,800 agencies and brokers.

Property and casualty specialists. Auto & Home has 544 specialists located
in 34 states. Auto & Home's strategy is to utilize property and casualty
specialists, who are MetLife employees, in geographic markets that are
underserved by its career agents.

Other distribution channels. The Company also utilizes a direct response
marketing channel which permits sales to be generated through sources such as
target mailings, career agent referrals and the Internet.

In 2004, Auto & Home's business was concentrated in the following states,
as measured by net premiums earned: New York $400 million or 13.6%,
Massachusetts $371 million or 12.6%, Illinois $209 million or 7.1%, Connecticut
$141 million or 4.8%, and Minnesota $134 million or 4.5%.

CLAIMS

Auto & Home's claims department includes approximately 2,200 employees
located in Auto & Home's Warwick, Rhode Island home office, 12 field claim
offices, 6 in-house counsel offices and drive-in inspection and other sites
throughout the United States. These employees include claim adjusters,
appraisers, attorneys, managers, medical specialists, investigators, customer
service representatives, claim financial analysts and support staff. Claim
adjusters, representing the majority of employees, investigate, evaluate and
settle over 700,000 claims annually, principally by telephone.

INTERNATIONAL
- -------------

International provides life insurance, accident and health insurance,
annuities and retirement & savings products to both individuals and groups. The
Company focuses on emerging markets primarily within the Latin America and
Asia/Pacific regions. The Company operates in international markets through
subsidiaries and joint ventures. See "Quantitative and Qualitative Disclosures
About Market Risk."

LATIN AMERICA

The Company operates in the Latin America region in the following
countries: Mexico, Chile, Brazil, Argentina and Uruguay. The operations in
Mexico and Chile represent approximately 93% of the total premiums and fees in
this region for the year ended December 31, 2004. The Mexican operation is the
leading life insurance company in both the individual and group businesses in
Mexico. The Chilean operation is the third largest annuity company in Chile,
based on market share. The Chilean operation also offers individual life
insurance and group insurance products.

ASIA/PACIFIC

The Company operates in the Asia/Pacific region in the following countries:
South Korea, Taiwan, Hong Kong, Indonesia, India and China. The operations in
South Korea and Taiwan represent approximately 95% of the total premiums and
fees in this region for the year ended December 31, 2004. The South Korean
operation offers individual life insurance, annuities, savings and retirement
and non-medical health products, as well as group life and retirement products.
The Taiwanese operation offers individual life, accident and health, and
personal travel insurance products, annuities, as well as group life and group
accident and health insurance products. During the first quarter of 2004, the
Company formed a joint venture operation and commenced operations in China.

11

REINSURANCE
- -----------

MetLife's Reinsurance segment is primarily comprised of the life
reinsurance business of Reinsurance Group of America, Incorporated ("RGA"), a
publicly traded company (NYSE: RGA), and MetLife's ancillary life reinsurance
business. MetLife owns approximately 52% of RGA's outstanding common shares at
December 31, 2004. In 2003, RGA issued additional common shares in a public
offering. MetLife purchased approximately 25% of these newly issued shares. The
Company is contemplating selling some or all of its beneficially owned shares of
RGA.

RGA's operations in North America are its largest and include operations of
its Canadian and U.S. subsidiaries. In addition to its North American
operations, RGA has subsidiary companies, branch offices, or representative
offices in Australia, Barbados, Hong Kong, India, Ireland, Japan, Mexico, South
Africa, South Korea, Spain, Taiwan and the United Kingdom.

In addition to its life reinsurance business, RGA provides reinsurance of
asset-intensive products and financial reinsurance. RGA and its predecessor, the
reinsurance division of General American Life Insurance Company ("General
American"), have been engaged in the business of life reinsurance since 1973. As
of December 31, 2004, RGA had approximately $14 billion in consolidated assets
and worldwide life reinsurance in-force of approximately $1,459 billion.

RGA'S PRODUCTS AND SERVICES

RGA's operational segments are segregated primarily by geographic region:
United States, Canada, Asia/Pacific, Europe and South Africa, and Corporate and
Other. The U.S. operations, which represented 66% of RGA's 2004 net premiums,
provide traditional life, asset-intensive and financial reinsurance to domestic
clients. Traditional life reinsurance involves RGA indemnifying another
insurance company for all or a portion of the insurance risk, primarily
mortality risk, it has written. Asset-intensive products primarily include the
reinsurance of corporate-owned life insurance ("COLI") and annuities. Financial
reinsurance involves assisting RGA's clients (other insurance companies) in
managing their regulatory capital or in achieving other financial goals. The
Canadian operations, which represented 8% of RGA's 2004 net premiums, primarily
provide insurers with traditional life reinsurance. The Asia/Pacific, Europe and
South Africa operations, which represented, collectively, 26% of RGA's 2004 net
premiums, provide primarily traditional life and critical illness reinsurance
and, to a lesser extent, financial reinsurance. Traditional life reinsurance
pays upon the death of the insured and critical illness coverage pays on the
earlier of death or diagnosis of a pre-defined illness.

CORPORATE & OTHER
- -----------------

Corporate & Other contains the excess capital not allocated to the business
segments, various start-up entities, including MetLife Bank, N.A. ("MetLife
Bank"), a national bank, and run-off entities, as well as interest expense
related to the majority of the Company's outstanding debt and expenses
associated with certain legal proceedings and income tax audit issues. Corporate
& Other also includes the elimination of all intersegment amounts, which
generally relate to intersegment loans, which bear interest rates commensurate
with related borrowings, as well as intersegment transactions. Additionally, the
Company's asset management business, including amounts reported as discontinued
operations, is included in the results of operations for Corporate & Other.

POLICYHOLDER LIABILITIES
- ------------------------

MetLife establishes, and carries as liabilities, actuarially determined
amounts that are calculated to meet its policy obligations when an annuitant
takes income, a policy matures or surrenders, an insured dies or becomes
disabled or upon the occurrence of other covered events. MetLife computes the
amounts for actuarial liabilities reported in its consolidated financial
statements in conformity with accounting principles generally accepted in the
United States of America ("GAAP").

The liability for future policy benefits for participating traditional life
insurance is the net level reserve using the policy's guaranteed mortality rates
and the dividend fund interest rate or nonforfeiture interest rate,

12

as applicable. MetLife amortizes deferred policy acquisition costs ("DAC") in
relation to the product's estimated gross margins.

In establishing actuarial liabilities for certain other insurance
contracts, MetLife distinguishes between short duration and long duration
contracts. Short duration contracts generally arise from the property and
casualty business. The actuarial liability for short duration contracts consists
of gross unearned premiums as of the valuation date and the discounted amount of
the future payments on pending and approved claims as of the valuation date.
Long duration contracts consist of (i) guaranteed renewable term life, (ii) non-
participating whole life, (iii) individual disability, (iv) group life, dental
and disability, and (v) long-term care contracts. MetLife determines actuarial
liabilities for long duration contracts using assumptions based on experience,
plus a margin for adverse deviation for these policies. Where they exist,
MetLife amortizes DAC, including value of business acquired ("VOBA"), in
relation to the associated gross margins or premium.

Liabilities for investment-type and universal life-type products primarily
consist of policyholders' account balances. Investment-type products include
individual annuity contracts in the accumulation phase and certain group pension
contracts that have limited or no mortality risk. Universal life-type products
consist of universal and variable life contracts and contain group pension
contracts. For universal life-type contracts with front-end loads, MetLife
defers the charge and amortizes the unearned revenue using the product's
estimated gross profits. MetLife amortizes DAC on investment-type and universal
life-type contracts in relation to estimated gross profits. Limited pay
contracts primarily consist of single premium immediate individual and group
pension annuities. Actuarial liabilities for limited pay contracts are equal to
the present value of future benefit payments and related expenses less the
present value of future net premiums plus premium deficiency reserves, if any.
For limited pay contracts, the Company also defers the excess of the gross
premium over the net premium and recognizes such excess into income in a
constant relationship with insurance in force for life insurance contracts and
in relation to anticipated future benefit payments for annuity contracts. The
Company amortizes DAC for limited pay contracts over the premium payment period.
The Company also establishes actuarial liabilities for future policy benefits
(associated with base policies and riders, unearned mortality charges and future
disability benefits), for other policyholder liabilities (associated with
unearned revenues and claims payable) and for unearned revenue (the unamortized
portion of front-end loads charged). The Company also establishes liabilities
for minimum death and income benefit guarantees relating to certain annuity
contracts and secondary and paid up guarantees relating to certain life
policies.

The Auto & Home segment establishes actuarial liabilities to account for
the estimated ultimate costs of losses and loss adjustment expenses for claims
that have been reported but not yet settled, and claims incurred but not
reported. It bases unpaid losses and loss adjustment expenses on:

- case estimates for losses reported on direct business, adjusted in the
aggregate for ultimate loss expectations;

- estimates of incurred but not reported losses based upon past experience;

- estimates of losses on insurance assumed primarily from involuntary
market mechanisms; and

- estimates of future expenses to be incurred in settlement of claims.

For the Auto & Home segment, MetLife deducts estimated amounts of salvage
and subrogation from unpaid losses and loss adjustment expenses. Implicit in all
these estimates are underlying assumptions about rates of inflation because
MetLife determines all estimates using expected amounts to be paid. MetLife
derives estimates for the development of reported claims and for incurred but
not reported claims principally from actuarial analyses of historical patterns
of claims and claims development for each line of business. Similarly, MetLife
derives estimates of unpaid loss adjustment expenses principally from actuarial
analyses of historical development patterns of the relationship of loss
adjustment expenses to losses for each line of business. MetLife anticipates
ultimate recoveries from salvage and subrogation principally on the basis of
historical recovery patterns. MetLife calculates and records a single best
estimate liability, in conformance with generally accepted actuarial standards,
for reported losses and for incurred but not reported losses. MetLife aggregates
these estimates to form the reserve liability recorded in the consolidated
balance sheets.

13

Pursuant to state insurance laws, MetLife's insurance subsidiaries
establish statutory reserves, reported as liabilities, to meet their obligations
on their respective policies. These statutory reserves are established in
amounts sufficient to meet policy and contract obligations, when taken together
with expected future premiums and interest at assumed rates. Statutory reserves
generally differ from actuarial liabilities for future policy benefits
determined using GAAP.

The New York Insurance Law and regulations require certain MetLife entities
to submit to the New York Superintendent of Insurance or other state insurance
departments, with each annual report, an opinion and memorandum of a "qualified
actuary" that the statutory reserves and related actuarial amounts recorded in
support of specified policies and contracts, and the assets supporting such
statutory reserves and related actuarial amounts, make adequate provision for
their statutory liabilities with respect to these obligations. See
"-- Regulation -- Insurance Regulation -- Policy and contract reserve
sufficiency analysis."

Due to the nature of the underlying risks and the high degree of
uncertainty associated with the determination of its actuarial liabilities,
MetLife cannot precisely determine the amounts that it will ultimately pay with
respect to these actuarial liabilities, and the ultimate amounts may vary from
the estimated amounts, particularly when payments may not occur until well into
the future.

However, MetLife believes its actuarial liabilities for future benefits are
adequate to cover the ultimate benefits required to be paid to policyholders.
MetLife periodically reviews its estimates of actuarial liabilities for future
benefits and compares them with its actual experience. It revises estimates, to
the extent permitted or required under GAAP, if it determines that future
expected experience differs from assumptions used in the development of
actuarial liabilities.

The Company has experienced, and will likely in the future experience,
catastrophe losses and possibly acts of terrorism that may have an adverse
impact on its business, results of operations and financial condition.
Catastrophes can be caused by various events, including hurricanes, windstorms,
earthquakes, hail, tornadoes, explosions, severe winter weather (including snow,
freezing water, ice storms and blizzards) and fires. Due to their nature, the
Company cannot predict the incidence, timing and severity of catastrophes and
acts of terrorism, but the Company makes broad use of catastrophic and
non-catastrophic reinsurance to manage risk from these perils.

UNDERWRITING AND PRICING
- ------------------------

INSTITUTIONAL AND INDIVIDUAL

The Company's underwriting for the Institutional and Individual segments
involves an evaluation of applications for life, disability, dental, retirement
& savings, and long-term care insurance products and services by a professional
staff of underwriters and actuaries, who determine the type and the amount of
risk that the Company is willing to accept. The Company employs detailed
underwriting policies, guidelines and procedures designed to assist the
underwriter to properly assess and quantify risks before issuing policies to
qualified applicants or groups.

Individual underwriting considers not only an applicant's medical history,
but also other factors such as financial profiles, foreign travel, vocations and
alcohol, drug and tobacco use. The Company's group underwriters generally
evaluate the risk characteristics of each prospective insured group, although
with certain voluntary products, employees may be underwritten on an individual
basis. Generally, the Company is not obligated to accept any risk or group of
risks from, or to issue a policy or group of policies to, any employer or
intermediary. Requests for coverage are reviewed on their merits and generally a
policy is not issued unless the particular risk or group has been examined and
approved for underwriting. Underwriting is generally done by the Company's
employees, although some policies are reviewed by intermediaries under strict
guidelines established by the Company.

In order to maintain high standards of underwriting quality and
consistency, the Company engages in a multilevel series of ongoing internal
underwriting audits, and is subject to external audits by its reinsurers, at
both its remote underwriting offices and its corporate underwriting office.

14

The Company has established senior level oversight of the underwriting
process that facilitates quality sales and serving the needs of its customers,
while supporting its financial strength and business objectives. The Company's
goal is to achieve the underwriting, mortality and morbidity levels reflected in
the assumptions in its product pricing. This is accomplished by determining and
establishing underwriting policies, guidelines, philosophies and strategies that
are competitive and suitable for the customer, the agent and the Company.

Pricing for the Institutional and Individual segments reflects the
Company's insurance underwriting standards. Product pricing of insurance
products is based on the expected payout of benefits calculated through the use
of assumptions for mortality, morbidity, expenses, persistency and investment
returns, as well as certain macroeconomic factors, such as inflation. Product
specifications are designed to mitigate the risks of greater than expected
mortality, and the Company periodically monitors mortality and morbidity
assumptions. Investment-oriented products are priced based on various factors,
which may include investment return, expenses, persistency, and optionality.

Unique to the Institutional segment's pricing is experience rating. MetLife
employs both prospective and retrospective experience rating. Prospective
experience rating involves the evaluation of past experience for the purpose of
determining future premium rates. Retrospective experience rating involves the
evaluation of past experience for the purpose of determining the actual cost of
providing insurance for the customer for the period of time in question.

MetLife continually reviews its underwriting and pricing guidelines so that
its policies remain competitive and supportive of its marketing strategies and
profitability goals. Decisions are based on established actuarial pricing and
risk selection principles to ensure that MetLife's underwriting and pricing
guidelines are appropriate.

AUTO & HOME

Auto & Home's underwriting function has six principal aspects:

- evaluating potential worksite marketing employer accounts and independent
agencies;

- establishing guidelines for the binding of risks by agents with binding
authority;

- reviewing coverage bound by agents;

- on a case by case basis, underwriting potential insureds presented by
agents outside the scope of their binding authority;

- pursuing information necessary in certain cases to enable Auto & Home to
issue a policy within the Company's guidelines; and

- ensuring that renewal policies continue to be written at rates
commensurate with risk.

Subject to very few exceptions, agents in each of Auto & Home's
distribution channels, as well as in MetLife's Institutional segment, have
binding authority for risks which fall within Auto & Home's published
underwriting guidelines. Risks falling outside the underwriting guidelines may
be submitted for approval to the underwriting department; alternatively, agents
in such a situation may call the underwriting department to obtain authorization
to bind the risk themselves. In most states, Auto & Home generally has the right
within a specified period (usually the first 60 days) to cancel any policy.

Auto & Home establishes prices for its major lines of insurance based on
its proprietary database, rather than relying on rating bureaus. Auto & Home
determines prices in part from a number of variables specific to each risk. The
pricing of personal lines insurance products takes into account, among other
things, the expected frequency and severity of losses, the costs of providing
coverage (including the costs of acquiring policyholders and administering
policy benefits and other administrative and overhead costs), competitive
factors and profit considerations.

The major pricing variables for personal lines automobile insurance include
characteristics of the automobile itself, such as age, make and model,
characteristics of insureds, such as driving record and experience, and the
insured's personal financial management. Auto & Home's ability to set and change
rates is subject to regulatory oversight.

15

As a condition of MetLife's license to do business in each state, Auto &
Home, like all other automobile insurers, is required to write or share the cost
of private passenger automobile insurance for higher risk individuals who would
otherwise be unable to obtain such insurance. This "involuntary" market, also
called the "shared market," is governed by the applicable laws and regulations
of each state, and policies written in this market are generally written at
rates higher than standard rates.

REINSURANCE

Reinsurance is written on a facultative basis or an automatic treaty basis.
Facultative reinsurance is individually underwritten by the reinsurer for each
policy to be reinsured. Factors considered in underwriting facultative
reinsurance are medical history, impairments, employment, hobbies and financial
information. An automatic reinsurance treaty provides that risks will be ceded
on specified blocks of business where the underlying policies meet the ceding
company's underwriting criteria. In contrast to facultative reinsurance, the
reinsurer does not approve each individual risk. Automatic reinsurance treaties
generally provide that the reinsurer will be liable for a portion of the risk
associated with specified policies written by the ceding company. Factors
considered in underwriting automatic reinsurance are the product's underwriting,
pricing, distribution and optionality, as well as the ceding company's retention
and financial strength.

REINSURANCE ACTIVITY
- --------------------

In addition to the activity of the Reinsurance Segment, MetLife cedes
premiums to other insurers under various agreements that cover individual risks,
group risks or defined blocks of business, on a coinsurance, yearly renewable
term, excess or catastrophe excess basis. These reinsurance agreements spread
the risk and minimize the effect of losses. The amount of each risk retained by
MetLife depends on its evaluation of the specific risk, subject, in certain
circumstances, to maximum limits based on the characteristics of coverages. The
Company also cedes first dollar mortality risk under certain contracts. It
obtains reinsurance when capital requirements and the economic terms of the
reinsurance make it appropriate to do so.

Under the terms of the reinsurance agreements, the reinsurer agrees to
reimburse MetLife for the ceded amount in the event the claim is paid. However,
MetLife remains liable to its policyholders with respect to ceded insurance if
any reinsurer fails to meet the obligations assumed by it. Since it bears the
risk of nonpayment by one or more of its reinsurers, MetLife cedes reinsurance
to well-capitalized, highly rated reinsurers.

INDIVIDUAL

MetLife currently reinsures up to 90% of the mortality risk for all new
individual life insurance policies that it writes through its various insurance
companies. This practice was initiated for different products starting at
various points in time between 1992 and 2000. MetLife evaluates its reinsurance
programs routinely and may increase or decrease its retention at any time. The
Company retains up to $25 million on single life policies and up to $30 million
on survivorship policies and reinsures in excess of the Company's retention
limits. The Company reinsures a portion of mortality risk on its universal life
policies.

MetLife reinsures its business through a diversified group of reinsurers.
Placement of reinsurance is done primarily on an automatic basis and also on a
facultative basis for risks with specific characteristics.

In addition to reinsuring mortality risk, MetLife reinsures other risks and
specific coverages. The Company routinely reinsures certain classes of risks in
order to limit its exposure to particular travel, vocation and lifestyle
hazards. MetLife's retention limits per life vary by franchise and according to
the characteristics of the particular risks. MetLife also reinsures certain
guarantees in connection with benefit features offered under some of its
individual variable annuities.

16

AUTO & HOME

Auto & Home purchases reinsurance to control the Company's exposure to
large losses (primarily catastrophe losses) and to protect statutory surplus.
Auto & Home cedes to reinsurers a portion of risks and pays premiums based upon
the risk and exposure of the policy subject to reinsurance.

To control the Company's exposure to large property and casualty losses,
Auto & Home utilizes property catastrophe, casualty, and property per risk
excess loss agreements.

REGULATION
- ----------

INSURANCE REGULATION

Metropolitan Life is licensed to transact insurance business in, and is
subject to regulation and supervision by, all 50 states, the District of
Columbia, Puerto Rico, the U.S. Virgin Islands and Canada. Each of MetLife's
other insurance subsidiaries is licensed and regulated in all U.S. and
international jurisdictions where it conducts insurance business. The extent of
such regulation varies, but most jurisdictions have laws and regulations
governing the financial aspects of insurers, including standards of solvency,
reserves, reinsurance and capital adequacy, and the business conduct of
insurers. In addition, statutes and regulations usually require the licensing of
insurers and their agents, the approval of policy forms and certain other
related materials and, for certain lines of insurance, the approval of rates.
Such statutes and regulations also prescribe the permitted types and
concentration of investments.

The New York Insurance Law limits the sales commissions and certain other
marketing expenses that may be incurred in connection with the sale of life
insurance policies and annuity contracts. MetLife's insurance subsidiaries are
each required to file reports, generally including detailed annual financial
statements, with insurance regulatory authorities in each of the jurisdictions
in which they do business, and their operations and accounts are subject to
periodic examination by such authorities. These subsidiaries must also file, and
in many jurisdictions and in some lines of insurance obtain regulatory approval
for, rules, rates and forms relating to the insurance written in the
jurisdictions in which they operate.

The National Association of Insurance Commissioners ("NAIC") has
established a program of accrediting state insurance departments. NAIC
accreditation permits accredited states to conduct periodic examinations of
insurers domiciled in such states. NAIC-accredited states will not accept
reports of examination of insurers from unaccredited states, except under
limited circumstances. As a direct result, insurers domiciled in unaccredited
states may be subject to financial examination by accredited states in which
they are licensed, in addition to any examinations conducted by their
domiciliary states. The New York State Department of Insurance (the
"Department"), Metropolitan Life's principal insurance regulator, has not
received its accreditation as a result of the New York legislature's failure to
adopt certain model NAIC laws. The Company does not believe that this will have
a significant impact upon its ability to conduct its insurance businesses.

State and federal insurance and securities regulatory authorities and other
state law enforcement agencies and attorneys general from time to time make
inquiries regarding compliance by the Holding Company and its insurance
subsidiaries with insurance, securities and other laws and regulations regarding
the conduct of MetLife's insurance and securities businesses. MetLife cooperates
with such inquiries and takes corrective action when warranted. See "Legal
Proceedings."

Holding Company regulation. The Holding Company and its insurance
subsidiaries are subject to regulation under the insurance holding company laws
of various jurisdictions. The insurance holding company laws and regulations
vary from jurisdiction to jurisdiction, but generally require a controlled
insurance company (insurers that are subsidiaries of insurance holding
companies) to register with state regulatory authorities and to file with those
authorities certain reports, including information concerning their capital
structure, ownership, financial condition, certain intercompany transactions and
general business operations.

State insurance statutes also typically place restrictions and limitations
on the amount of dividends or other distributions payable by insurance company
subsidiaries to their parent companies, as well as on

17

transactions between an insurer and its affiliates. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- The Holding Company." The New York Insurance Law and the
regulations thereunder also restrict the aggregate amount of investments
Metropolitan Life may make in non-life insurance subsidiaries, and provide for
detailed periodic reporting on subsidiaries.

Guaranty associations and similar arrangements. Most of the jurisdictions
in which MetLife's insurance subsidiaries are admitted to transact business
require life and property and casualty insurers doing business within the
jurisdiction to participate in guaranty associations, which are organized to pay
certain contractual insurance benefits owed pursuant to insurance policies
issued by impaired, insolvent or failed insurers. These associations levy
assessments, up to prescribed limits, on all member insurers in a particular
state on the basis of the proportionate share of the premiums written by member
insurers in the lines of business in which the impaired, insolvent or failed
insurer is engaged. Some states permit member insurers to recover assessments
paid through full or partial premium tax offsets.

In the past five years, the aggregate assessments levied against MetLife's
insurance subsidiaries have not been material. The Company has established
liabilities for guaranty fund assessments that it considers adequate for
assessments with respect to insurers that are currently subject to insolvency
proceedings. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Insolvency Assessments."

Statutory insurance examination. As part of their regulatory oversight
process, state insurance departments conduct periodic detailed examinations of
the books, records, accounts, and business practices of insurers domiciled in
their states. On November 1, 2000, the Department completed an examination of
Metropolitan Life for each of the five years in the period ended December 31,
1998 which included recommendations for certain changes in recordkeeping
processes, but did not result in a fine. For the three-year period ended
December 31, 2004, MetLife, Inc. has not received any material adverse findings
resulting from state insurance department examinations of its insurance
subsidiaries.

Regulatory authorities in a small number of states have had investigations
or inquiries relating to Metropolitan Life's, New England Life Insurance
Company's ("New England Life") or General American's sales of individual life
insurance policies or annuities. Over the past several years, these and a number
of investigations by other regulatory authorities were resolved for monetary
payments and certain other relief. The Company may continue to resolve
investigations in a similar manner.

Policy and contract reserve sufficiency analysis. Under the New York
Insurance Law, Metropolitan Life is required to conduct annually an analysis of
the sufficiency of all life and health insurance and annuity statutory reserves.
Additionally, other life insurance affiliates are subject to similar
requirements in their states of domicile. In each case, a qualified actuary must
submit an opinion which states that the statutory reserves, when considered in
light of the assets held with respect to such reserves, make good and sufficient
provision for the associated contractual obligations and related expenses of the
insurer. If such an opinion cannot be provided, the insurer must set up
additional reserves by moving funds from surplus. Since inception of this
requirement, Metropolitan Life and all other insurance subsidiaries required by
other jurisdictions to provide similar opinions have provided them without
qualifications.

Surplus and capital. The New York Insurance Law requires New York domestic
stock life insurers to maintain minimum capital. At December 31, 2004,
Metropolitan Life's capital was in excess of such required minimum. Since its
demutualization, Metropolitan Life has continued to offer participating
policies. Metropolitan Life is subject to statutory restrictions that limit to
10% the amount of statutory profits on participating policies written after the
demutualization (measured before dividends to policyholders) that can inure to
the benefit of stockholders. Since the demutualization, the impact of these
restrictions on net income has not been, and Metropolitan Life believes that in
the future it will not be, significant.

MetLife's U.S. insurance subsidiaries are subject to the supervision of the
regulators in each jurisdiction in which they are licensed to transact business.
Regulators have discretionary authority, in connection with the continued
licensing of these insurance subsidiaries, to limit or prohibit sales to
policyholders if, in their

18

judgment, the regulators determine that such insurer has not maintained the
minimum surplus or capital or that the further transaction of business will be
hazardous to policyholders. See "-- Risk-based capital."

Risk-based capital ("RBC"). The New York Insurance Law requires that New
York domestic life insurers report their RBC based on a formula calculated by
applying factors to various asset, premium and statutory reserve items. Similar
rules apply to each of the Company's domestic insurance subsidiaries. The
formula takes into account the risk characteristics of the insurer, including
asset risk, insurance risk, interest rate risk and business risk. The Department
uses the formula 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. The New York Insurance Law
imposes broad confidentiality requirements on those engaged in the insurance
business (including insurers, agents, brokers and others) and on the Department
as to the use and publication of RBC data.

The New York Insurance Law gives the New York Superintendent of Insurance
explicit regulatory authority to require various actions by, or take various
actions against, insurers whose total adjusted capital does not exceed certain
RBC levels. At December 31, 2004, Metropolitan Life's total adjusted capital was
in excess of each of those RBC levels.

Each of the U.S. insurance subsidiaries of the Holding Company is also
subject to certain RBC requirements. At December 31, 2004, the total adjusted
capital of each of these insurance subsidiaries also was in excess of each of
those RBC levels. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources -- The
Company -- Capital."

The NAIC adopted the Codification of Statutory Accounting Principles
("Codification") in 2001. Codification was intended to standardize regulatory
accounting and reporting to state insurance departments. However, statutory
accounting principles continue to be established by individual state laws and
permitted practices. The Department has adopted Codification with certain
modifications for the preparation of statutory financial statements of insurance
companies domiciled in New York. Modifications by the various state insurance
departments may impact the effect of Codification on the statutory capital and
surplus of Metropolitan Life and the Holding Company's other insurance
subsidiaries.

Regulation of investments. Each of the Holding Company's insurance
subsidiaries is subject to state laws and regulations that require
diversification of its investment portfolios and limit the amount of investments
in certain asset categories, such as below investment grade fixed income
securities, equity real estate, other equity investments, and derivatives.
Failure to comply with these laws and regulations would cause investments
exceeding regulatory limitations to be treated as non-admitted assets for
purposes of measuring surplus, and, in some instances, would require divestiture
of such non-qualifying investments. The Company believes that the investments
made by each of its insurance subsidiaries complied with such regulations at
December 31, 2004.

Federal initiatives. Although the federal government generally does not
directly regulate the insurance business, federal initiatives often have an
impact on the business in a variety of ways. From time to time, federal measures
are proposed which may significantly affect the insurance business, including
the repeal of the federal estate tax, tax benefits associated with COLI, and the
creation of tax advantaged or tax exempt savings accounts that would favor
short-term savings over long-term savings. In addition, a bill reforming
asbestos litigation may be voted on by the Senate in 2005. The Company cannot
predict whether these initiatives will be adopted as proposed, or what impact,
if any, such proposals may have on the Company's business, results of operations
or financial condition.

Legislative Developments. On May 28, 2003, President Bush signed into law
the Jobs and Growth Tax Relief Reconciliation Act of 2003, which includes a
major reduction in rates for long term capital gains and cash dividends on
equity securities. It is unclear what the effect of this tax rate reduction may
have on the demand for products which do not benefit from such measures.

On October 22, 2004, President Bush signed into law the American Jobs
Creation Act of 2004, which includes changes to requirements for non-qualified
deferred compensation. The Company believes that the changes to such
requirements will not have a material impact on its non-qualified deferred
compensation arrangements.

19

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Application of Recent Accounting Pronouncements" for a
discussion of the Medicare Prescription Drug Improvement and Modernization Act
of 2003.

Management cannot predict what other proposals may be made, what
legislation may be introduced or enacted or the impact of any such legislation
on the Company's business, results of operations and financial condition.

BROKER/DEALER AND SECURITIES REGULATION

Some of MetLife, Inc.'s subsidiaries and certain policies and contracts
offered by them, are subject to various levels of regulation under the federal
securities laws administered by the Securities and Exchange Commission. Some of
MetLife, Inc.'s subsidiaries are investment advisers registered under the
Investment Advisers Act of 1940, as amended. In addition, some separate accounts
and a variety of mutual funds are registered under the Investment Company Act of
1940, as amended. Some annuity contracts and insurance policies issued by the
Company are funded by separate accounts, the interests in which are registered
under the Securities Act of 1933, as amended. Some of MetLife, Inc.'s
subsidiaries are registered as broker/dealers under the Securities Exchange Act
of 1934, as amended, and are members of the National Association of Securities
Dealers, Inc. ("NASD"). These broker/dealers may also be registered under
various state securities laws.

Some of MetLife, Inc.'s subsidiaries also have certain pooled investment
vehicles that are exempt from registration under the Securities Act and the
Investment Company Act, but may be subject to certain other provisions of such
acts.

Federal and state securities regulatory authorities from time to time make
inquiries regarding compliance by MetLife, Inc. and its subsidiaries with
securities and other laws and regulations regarding the conduct of their
securities businesses. MetLife cooperates with such inquiries and takes
corrective action when warranted.

These laws and regulations are primarily intended to protect investors in
the securities markets and generally grant supervisory agencies broad
administrative powers, including the power to limit or restrict the conduct of
business for failure to comply with such laws and regulations. The Company may
also be subject to similar laws and regulations in the states and foreign
countries in which it provides investment advisory services, offers the products
described above or conducts other securities-related activities.

ENVIRONMENTAL CONSIDERATIONS

As an owner and operator of real property, the Company is subject to
extensive federal, state and local environmental laws and regulations. Inherent
in such ownership and operation is also the risk that there may be potential
environmental liabilities and costs in connection with any required remediation
of such properties. In addition, the Company holds equity interests in companies
that could potentially be subject to environmental liabilities. The Company
routinely has environmental assessments performed with respect to real estate
being acquired for investment and real property to be acquired through
foreclosure. The Company cannot provide assurance that unexpected environmental
liabilities will not arise. However, based on information currently available to
management, management believes that any costs associated with compliance with
environmental laws and regulations or any remediation of such properties will
not have a material adverse effect on the Company's business, results of
operations or financial condition.

ERISA CONSIDERATIONS

The Company provides products and services to certain employee benefit
plans that are subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or the Internal Revenue Code of 1986, as amended (the
"Code"). As such, its activities are subject to the restrictions imposed by
ERISA and the Code, including the requirement under ERISA that fiduciaries must
perform their duties solely in the interests of ERISA plan participants and
beneficiaries and the requirement under ERISA and the Code that fiduciaries may
not cause a covered plan to engage in prohibited transactions with persons who
have certain relationships with respect to such plans. The applicable provisions
of ERISA and the Code are subject to

20

enforcement by the Department of Labor, the Internal Revenue Service and the
Pension Benefit Guaranty Corporation.

In John Hancock Mutual Life Insurance Company v. Harris Trust and Savings
Bank (1993), the U.S. Supreme Court held that certain assets in excess of
amounts necessary to satisfy guaranteed obligations under a participating group
annuity general account contract are "plan assets." Therefore, these assets are
subject to certain fiduciary obligations under ERISA, which requires fiduciaries
to perform their duties solely in the interest of ERISA plan participants and
beneficiaries. On January 5, 2000, the Secretary of Labor issued final
regulations indicating, in cases where an insurer has issued a policy backed by
the insurer's general account to or for an employee benefit plan, the extent to
which assets of the insurer constitute plan assets for purposes of ERISA and the
Code. The regulations apply only with respect to a policy issued by an insurer
on or before December 31, 1998 ("Transition Policy"). No person will generally
be liable under ERISA or the Code for conduct occurring prior to July 5, 2001,
where the basis of a claim is that insurance company general account assets
constitute plan assets. An insurer issuing a new policy that is backed by its
general account and is issued to or for an employee benefit plan after December
31, 1998 will generally be subject to fiduciary obligations under ERISA, unless
the policy is a guaranteed benefit policy.

The regulations indicate the requirements that must be met so that assets
supporting a Transition Policy will not be considered plan assets for purposes
of ERISA and the Code. These requirements include detailed disclosures to be
made to the employee benefits plan and the requirement that the insurer must
permit the policyholder to terminate the policy on 90 day notice and receive
without penalty, at the policyholder's option, either (i) the unallocated
accumulated fund balance (which may be subject to market value adjustment) or
(ii) a book value payment of such amount in annual installments with interest.
The Company has taken and continues to take steps designed to ensure compliance
with these regulations.

FINANCIAL HOLDING COMPANY REGULATION

Regulatory agencies. In connection with its acquisition of a
federally-chartered commercial bank, the Holding Company became a bank holding
company and financial holding company on February 28, 2001. As such, the Holding
Company is subject to regulation under the Bank Holding Company Act of 1956, as
amended (the "BHC Act"), and to inspection, examination, and supervision by the
Board of Governors of the Federal Reserve System (the "FRB"). In addition, the
Holding Company's banking subsidiary is subject to regulation and examination
primarily by the Office of the Comptroller of the Currency ("OCC") and
secondarily by the FRB and the Federal Deposit Insurance Corporation.

Financial Holding Company Activities. As a financial holding company,
MetLife, Inc.'s activities and investments are restricted by the BHC Act, as
amended by the Gramm-Leach-Bliley Act of 1999 (the "GLB Act"), to those that are
"financial" in nature or "incidental" or "complementary" to such financial
activities. Activities that are financial in nature include securities
underwriting, dealing and market making, sponsoring mutual funds and investment
companies, insurance underwriting and agency, merchant banking and activities
that the FRB has determined to be closely related to banking. In addition, under
the insurance company investment portfolio provision of the GLB Act, financial
holding companies are authorized to make investments in other financial and
non-financial companies, through their insurance subsidiaries, that are in the
ordinary course of business and in accordance with state insurance law, provided
the financial holding company does not routinely manage or operate such
companies except as may be necessary to obtain a reasonable return on
investment.

Other Restrictions and Limitations on Bank Holding Companies and Financial
Holding Companies -- Capital. MetLife, Inc. and its insured depository
institution subsidiary, MetLife Bank, are subject to risk-based and leverage
capital guidelines issued by the federal banking regulatory agencies for banks
and financial holding companies. The federal banking regulatory agencies are
required by law to take specific prompt corrective actions with respect to
institutions that do not meet minimum capital standards. At December 31, 2004,
MetLife, Inc. and MetLife Bank were in compliance with the aforementioned
guidelines.

Other Restrictions and Limitations on Bank Holding Companies and Financial
Holding Companies -- Consumer Protection Laws. Numerous other federal and state
laws also affect the Holding Company's and
21

MetLife Bank's earnings and activities, including federal and state consumer
protection laws. The GLB Act included consumer privacy provisions that, among
other things, require disclosure of a financial institution's privacy policy to
customers. In addition, these provisions permit states to adopt more extensive
privacy protections through legislation or regulation.

Other Restrictions and Limitations on Bank Holding Companies and Financial
Holding Companies -- Change of Control. Because MetLife, Inc. is a "financial
holding company" and "bank holding company" under the federal banking laws, no
person may acquire control of MetLife, Inc. without the prior approval of the
FRB. A change of control is conclusively presumed upon acquisitions of 25% or
more of any class of voting securities and rebuttably presumed upon acquisitions
of 10% or more of any class of voting securities. Further, as a result of
MetLife, Inc.'s ownership of MetLife Bank, approval from the OCC would be
required in connection with a change of control (generally presumed upon the
acquisition of 10% or more of any class of voting securities) of MetLife, Inc.

COMPETITION
- -----------

The Company believes that competition with its business segments is based
on a number of factors, including service, product features, scale, price,
commission structure, financial strength, claims-paying ratings, credit ratings,
ebusiness capabilities and name recognition. It competes with a large number of
other insurers, as well as non-insurance financial services companies, such as
banks, broker/dealers and asset managers, for individual consumers, employer and
other group customers and agents and other distributors of insurance and
investment products. Some of these companies offer a broader array of products,
have more competitive pricing or, with respect to other insurers, have higher
claims paying ability ratings. Some may also have greater financial resources
with which to compete. National banks, which may sell annuity products of life
insurers in some circumstances, also have pre-existing customer bases for
financial services products.

In 1999, the GLB Act was adopted, implementing fundamental changes in the
regulation of the financial services industry in the United States. With the
passage of this Act, among other things, bank holding companies may acquire
insurers, and insurance holding companies may acquire banks. The ability of
banks to affiliate with insurers may materially adversely affect all of the
Company's product lines by substantially increasing the number, size and
financial strength of potential competitors.

The Company must attract and retain productive sales representatives to
sell its insurance, annuities and investment products. Strong competition exists
among insurers for sales representatives with demonstrated ability. The Company
competes with other insurers for sales representatives primarily on the basis of
its financial position, support services and compensation and product features.
See "-- Individual -- Marketing and Distribution." MetLife continues to
undertake several initiatives to grow the MetLife Financial Services career
agency force while continuing to enhance the efficiency and production of the
existing sales force. The Company cannot provide assurance that these
initiatives will succeed in attracting and retaining new agents. Sales of
individual insurance, annuities and investment products and the Company's
results of operations and financial position could be materially adversely
affected if it is unsuccessful in attracting and retaining agents.

Many of the Company's insurance products, particularly those offered by its
Institutional segment, are underwritten annually, and, accordingly, there is a
risk that group purchasers may be able to obtain more favorable terms from
competitors rather than renewing coverage with the Company. The effect of
competition may, as a result, adversely affect the persistency of these and
other products, as well as the Company's ability to sell products in the future.

The investment management and securities brokerage businesses have
relatively few barriers to entry and continually attract new entrants. Many of
the Company's competitors in these businesses offer a broader array of
investment products and services and are better known than it as sellers of
annuities and other investment products.

Congress periodically considers reforms to the nation's health care system.
While the Company offers non-medical health insurance products (such as group
dental insurance, long-term care and disability insurance), it generally does
not offer medical indemnity products or managed care products, and, accordingly,

22

it does not expect to be directly affected by such proposals to any significant
degree. However, the uncertain environment resulting from health care reform
could cause group health insurance providers to enter some of the markets in
which the Company does business, thereby increasing competition. Increasing
healthcare costs are causing consumers to seek alternative financial protection
products. As a result, the Company is entering the fixed benefit critical care
marketplace. Changes to the health care system may make this market more or less
attractive in the future.

COMPANY RATINGS
- ---------------

Insurer financial strength ratings represent the opinions of rating
agencies regarding the financial ability of an insurance company to meet its
senior policyholder financial obligations. Credit ratings represent the opinions
of rating agencies regarding an issuer's ability to repay its indebtedness. The
Company's insurer financial strength ratings and credit ratings as of the date
of this filing are listed in the table below:

INSURER FINANCIAL STRENGTH RATINGS

CREDIT RATINGS

23

- ---------------

(1) A.M. Best Company ("Best") insurer financial strength ratings range from
"A++ (superior)" to "F (in liquidation)." Ratings of "A+" and "A" are in the
"superior" and "excellent" categories, respectively.

Best's long-term credit ratings range from "aaa (exceptional)" to "d (in
default)." A "+" or "-" may be appended to ratings from "aa" to "ccc" to
indicate relative position within a category. Ratings of "a" and "bbb" are
in the "strong" and "adequate" categories.

Best's short-term credit ratings range from "AMB-1+ (strongest)" to "d (in
default)."

(2) Fitch Ratings ("Fitch") insurer financial strength ratings range from "AAA
(exceptionally strong)" to "D (distressed)." A "+" or "-" may be appended to
ratings from "AA" to "CCC" to indicate relative position within a category.
A rating of "AA" is in the "very strong" category.

Fitch long-term credit ratings range from "AAA (highest credit quality)," to
"D (default)." A "+" or "-" may be appended to ratings from "AA" to "CCC" to
indicate relative position within a category. Ratings of "A" and "BBB" are
in the "high" and "good" categories, respectively.

Fitch short-term credit ratings range from "F-1+ (exceptionally strong
credit quality)" to "D (in default)." A rating of "F1" is in the "highest
credit quality" category.

(3) Moody's Investors Service ("Moody's") long-term insurer financial strength
ratings range from "Aaa (exceptional)" to "C (extremely poor)." A numeric
modifier may be appended to ratings from "Aa" to "Caa" to indicate relative
position within a category, with 1 being the highest and 3 being the lowest.
A rating of "Aa" is in the "excellent" category.

Moody's short-term insurer financial strength ratings range from "P-1
(superior)" to "NP (not prime)."

Moody's long-term credit ratings range from "Aaa (exceptional)" to "C
(typically in default)." A numeric modifier may be appended to ratings from
"Aa" to "Caa" to indicate relative position within a category, with 1 being
the highest and 3 being the lowest. Ratings of "A" and "Baa" are in the
"upper-medium grade" and "medium-grade" categories, respectively.

Moody's short-term credit ratings range from "P-1 (superior)" to "NP (not
prime)."

(4) Standard & Poor's ("S&P") long term insurer financial strength ratings range
from "AAA (extremely strong)" to "R (regulatory action)." A "+" or "-" may
be appended to ratings from "AA" to "CCC" to indicate relative position
within a category. A rating of "AA" is in the "very strong" category.

S&P short-term insurer financial strength ratings range from "A-1+
(extremely strong)" to "R (regulatory action)."

S&P long-term credit ratings range from "AAA (extremely strong)" to "D
(payment default)." A "+" or "-" may be appended to ratings from "AA" to
"CCC" to indicate relative position within a category. A rating of "A" is in
the "strong" category. A rating of "BBB" has adequate protection parameters
and is considered investment grade.

S&P short-term credit ratings range from "A-1+ (extremely strong)" to "D
(payment default)." A rating of "A-1" is in the "strong" category.

N/R indicates not rated.

RATING STABILITY INDICATORS

Rating agencies use an "outlook statement" of "positive," "negative" or
"developing" to indicate a medium- or long-term trend in credit fundamentals
which, if continued, may lead to a rating change. These factors may be internal
to the issuer, such as a changing profitability profile, or may be brought about
by changes in the industry's landscape through new competition, regulation or
technological transformation. A rating may have a "stable" outlook to indicate
that the rating is not expected to change.

CREDIT RATING ACTIVELY UNDER REVIEW

"CreditWatch" or "Under Review" highlights the potential direction of a
short- or long-term rating. It focuses on identifiable events and short-term
trends that cause ratings to be placed under heightened or special

24

surveillance by the analyst and the rating committee. These events may include
mergers, acquisitions, recapitalizations or anticipated operating developments.
Ratings may be placed on "CreditWatch" or "Under Review" when such an event or
deviations from an expected trend occurs and additional information is needed to
evaluate the current rating level. This status does not mean that a rating
change is inevitable and ratings may change without first being placed on a
watch list. Rating changes are based upon the facts and circumstances known to
the analysts and views held by them as to the direction and status of the
issuer's credit profile. It may incorporate public and non-public information
and is strictly the opinion of the agency issuing the rating through the
committee process. "Positive" means that a rating may be raised, "Negative"
means that a rating may be lowered and "Developing" means that a rating may be
raised or lowered with equal probability.

OUTLOOK AND CREDITWATCH NOTES:

(5) Outlook is "stable"

(6) Outlook is "negative"

(7) Outlook is "developing"

(8) The rating is on CreditWatch or "Under Review" for a possible downgrade.

The foregoing ratings reflect each rating agency's opinion of Metropolitan
Life and the Company's other insurance subsidiaries' financial characteristics
with respect to its ability to pay under insurance policies and contracts in
accordance with their terms, and are not evaluations directed toward the
protection of MetLife, Inc.'s securityholders.

A ratings downgrade (or the potential for such a downgrade) of Metropolitan
Life or any of the Company's other insurance subsidiaries could, among other
things, increase the number of policies surrendered and withdrawals by
policyholders of cash values from their policies, adversely affect relationships
with broker/dealers, banks, agents, wholesalers and other distributors of the
Company's products and services, negatively impact new sales, and adversely
affect its ability to compete and thereby have a material adverse effect on its
business, results of operations and financial condition.

EMPLOYEES
- ---------

At December 31, 2004, the Company employed approximately 54,000 employees.
The Company believes that its relations with its employees are satisfactory.

EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------

Set forth below is information regarding the executive officers of MetLife,
Inc. and Metropolitan Life:

ROBERT H. BENMOSCHE, age 60, has been Chairman of the Board and Chief
Executive Officer of MetLife since September 1999. He also served as President
of MetLife from September 1999 to June 2004. He has been Chairman of the Board
and Chief Executive Officer of Metropolitan Life Insurance Company since July
1998, President of Metropolitan Life Insurance Company from November 1997 to
June 2004, Chief Operating Officer from November 1997 to June 1998, and
Executive Vice President from September 1995 to October 1997. Previously, he was
Executive Vice President of PaineWebber Group Incorporated, a full service
securities and commodities firm, from 1989 to 1995.

DANIEL J. CAVANAGH, age 65, had been Executive Vice President of Operations
and Technology of MetLife, Inc. from March 1999 until his retirement from the
Company as of December 31, 2004. He was Senior Vice President in charge of
information systems from 1983 to 1991. He was appointed president of
Metropolitan Property and Casualty Insurance Company in 1991 and served as its
Chief Executive Officer from 1993 to March 1999.

C. ROBERT HENRIKSON, age 57, has been President and Chief Operating Officer
of MetLife, Inc. since June 2004. Previously, he was President of the U.S.
Insurance and Financial Services businesses of MetLife, Inc. from July 2002 to
June 2004. He served as President of Institutional Business of MetLife, Inc.
from

25

September 1999 to July 2002 and President of Institutional Business of
Metropolitan Life from May 1999 through June 2002. He was Senior Executive Vice
President, Institutional Business, of Metropolitan Life from December 1997 to
May 1999, Executive Vice President, Institutional Business, from January 1996 to
December 1997, and Senior Vice President, Pensions, from January 1991 to January
1995. He is a director of MetLife Bank, N.A.

LELAND C. LAUNER, JR., age 49, has been Executive Vice President and Chief
Investment Officer of MetLife, Inc. and Metropolitan Life since July 2003.
Previously, he was a Senior Vice President of Metropolitan Life for more than
five years. Mr. Launer is a director of Reinsurance Group of America,
Incorporated and MetLife Bank, N.A.

JAMES L. LIPSCOMB, age 58, has been Executive Vice President and General
Counsel of MetLife, Inc. and Metropolitan Life since July 2003. He was Senior
Vice President and Deputy General Counsel from July 2001 to July 2003. Mr.
Lipscomb was President and Chief Executive Officer of Conning Corporation, a
former subsidiary of Metropolitan Life, from March 2000 to July 2001, prior to
which he served in various senior management positions with Metropolitan Life
for more than five years.

CATHERINE A. REIN, age 62, has been Senior Executive Vice President and
Chief Administrative Officer of MetLife, Inc. since January 2005. Previously,
she was Senior Executive Vice President of MetLife, Inc. from September 1999 and
President and Chief Executive Officer of Metropolitan Property and Casualty
Insurance Company from March 1999 to January 2005. She has been Senior Executive
Vice President of Metropolitan Life since February 1998 and was Executive Vice
President from October 1989 to February 1998.

WILLIAM J. TOPPETA, age 56, has been President of International of MetLife,
Inc. since June 2001. He was President of Client Services and Chief
Administrative Officer of MetLife, Inc. from September 1999 to June 2001 and
President of Client Services and Chief Administrative Officer of Metropolitan
Life from May 1999 to June 2001. He was Senior Executive Vice President, Head of
Client Services, of Metropolitan Life from March 1999 to May 1999, Senior
Executive Vice President, Individual, from February 1998 to March 1999,
Executive Vice President, Individual Business, from July 1996 to February 1998,
Senior Vice President from October 1995 to July 1996 and its President and Chief
Executive Officer, Canadian Operations, from July 1993 to October 1995.

LISA M. WEBER, age 42, has been President, Individual Business since June
2004. Previously, she was Senior Executive Vice President and Chief
Administrative Officer of MetLife, Inc. and Metropolitan Life from June 2001 to
June 2004. She was Executive Vice President of MetLife, Inc. and Metropolitan
Life from December 1999 to June 2001 and was head of Human Resources of
Metropolitan Life from March 1998 to December 2003. She was Senior Vice
President of MetLife, Inc. from September 1999 to November 1999 and Senior Vice
President of Metropolitan Life from March 1998 to November 1999. Previously, she
was Senior Vice President of Human Resources of PaineWebber Group Incorporated,
where she was employed for ten years. Ms. Weber is a director of Reinsurance
Group of America, Incorporated.

WILLIAM J. WHEELER, age 43, has been Executive Vice President and Chief
Financial Officer of MetLife, Inc. and Metropolitan Life since December 2003,
prior to which he was a Senior Vice President of Metropolitan Life from 1997 to
December 2003. Previously, he was a Senior Vice President of Donaldson, Lufkin &
Jenrette for more than five years.

TRADEMARKS
- ----------

MetLife has a worldwide trademark portfolio that it considers important in
the marketing of its products and services, including, among others, the
trademark "MetLife". Furthermore, MetLife has the exclusive license to use the
Peanuts(R) characters in the area of financial services and health care benefit
services in the United States and some foreign countries under an advertising
and premium agreement with United Feature Syndicate until December 31, 2012. The
Company believes that its rights in its trademarks and its Peanuts(R) characters
license are well protected.

26

AVAILABLE INFORMATION
- ---------------------

MetLife, Inc. files periodic reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). Such reports,
proxy statements and other information may be obtained by visiting the Public
Reference Room of the SEC at 450 Fifth Street, N.W., Washington D.C. 20549 or by
calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet
website (www.sec.gov) that contains reports, proxy statements, and other
information regarding issuers that file electronically with the SEC, including
MetLife, Inc.

MetLife makes available, free of charge, on its website (www.metlife.com)
through the Investor Relations page, its annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K, and amendments to all those
reports, as soon as reasonably practicable after filing (furnishing) such
reports to the SEC. The information found on the website is not part of this or
any other report filed with or furnished to the SEC.

ITEM 2. PROPERTIES

The Company owns 200 Park Avenue in New York, New York, which comprises
approximately 2.8 million square feet of space. The Company occupies
approximately 65,000 rentable square feet and the remainder has been leased to
third party tenants. Associates located in the 200 Park Avenue office include
those working in the Institutional and Individual segments.

At December 31, 2004, the Company leased approximately 685,000 rentable
square feet in Long Island City, New York under a long-term lease arrangement
and approximately 1,500 associates are located in Long Island City. Associates
located in Long Island City include those working in the Corporate & Other,
Institutional, Individual and International segments.

The Company continues to own 18 other buildings in the United States that
it uses in the operation of its business. These buildings contain approximately
3.8 million rentable square feet and are located in the following states:
Florida, Illinois, Massachusetts, Missouri, New Jersey, New York, Ohio,
Oklahoma, Pennsylvania, Rhode Island and Texas. The Company's computer center in
Rensselaer, New York is not owned in fee but rather is occupied pursuant to a
long-term ground lease. The Company leases space in approximately 640 other
locations throughout the United States, and these leased facilities consist of
approximately 6.8 million rentable square feet. Approximately 48% of these
leases are occupied as sales offices for the Individual segment, and the Company
uses the balance for its other business activities. It also owns eight buildings
outside the United States, comprising more than 382,000 rentable square feet.
The Company leases approximately 1.8 million rentable square feet in various
locations outside the United States Management believes that its properties are
suitable and adequate for the Company's current and anticipated business
operations.

The Company arranges for property and casualty coverage on its properties,
taking into consideration its risk exposures and the cost and availability of
commercial coverages, including deductible loss levels. In connection with its
renewal of those coverages, the Company has arranged $960 million of annual
terrorist coverage on its real estate portfolio through March 15, 2005.

ITEM 3. LEGAL PROCEEDINGS

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

27

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

On a quarterly and yearly basis, the Company reviews relevant information
with respect to liabilities for litigation and contingencies to be reflected in
the Company's consolidated financial statements. The review includes senior
legal and financial personnel. Unless stated below, estimates of possible
additional losses or ranges of loss for particular matters cannot in the
ordinary course be made with a reasonable degree of certainty. Liabilities are
established when it is probable that a loss has been incurred and the amount of
the loss can be reasonably estimated. It is possible that some of the matters
could require the Company to pay damages or make other expenditures or establish
accruals in amounts that could not be estimated as of December 31, 2004.

Sales Practices Claims

Over the past several years, Metropolitan Life, New England Mutual Life
Insurance Company ("New England Mutual") and General American Life Insurance
Company ("General American") have faced numerous claims, including class action
lawsuits, alleging improper marketing and sales of individual life insurance
policies or annuities. These lawsuits are generally referred to as "sales
practices claims."

In December 1999, a federal court approved a settlement resolving sales
practices claims on behalf of a class of owners of permanent life insurance
policies and annuity contracts or certificates issued pursuant to individual
sales in the United States by Metropolitan Life, Metropolitan Insurance and
Annuity Company or Metropolitan Tower Life Insurance Company between January 1,
1982 and December 31, 1997. The class includes owners of approximately six
million in-force or terminated insurance policies and approximately one million
in-force or terminated annuity contracts or certificates.

Similar sales practices class actions against New England Mutual, with
which Metropolitan Life merged in 1996, and General American, which was acquired
in 2000, have been settled. In October 2000, a federal court approved a
settlement resolving sales practices claims on behalf of a class of owners of
permanent life insurance policies issued by New England Mutual between January
1, 1983 through August 31, 1996. The class includes owners of approximately
600,000 in-force or terminated policies. A federal court has approved a
settlement resolving sales practices claims on behalf of a class of owners of
permanent life insurance policies issued by General American between January 1,
1982 through December 31, 1996. An appellate court has affirmed the order
approving the settlement. The class includes owners of approximately 250,000
in-force or terminated policies.

Certain class members have opted out of the class action settlements noted
above and have brought or continued non-class action sales practices lawsuits.
In addition, other sales practices lawsuits have been brought. As of December
31, 2004, there are approximately 328 sales practices lawsuits pending against
Metropolitan Life; approximately 49 sales practices lawsuits pending against New
England Mutual, New England Life Insurance Company, and New England Securities
Corporation (collectively, "New England"); and approximately 54 sales practices
lawsuits pending against General American. Metropolitan Life, New England and
General American continue to defend themselves vigorously against these
lawsuits. Some individual sales practices claims have been resolved through
settlement, won by dispositive motions, or, in a few instances, have gone to
trial. Most of the current cases seek substantial damages, including in some
cases punitive and treble damages and attorneys' fees. Additional litigation
relating to the Company's marketing and sales of individual life insurance may
be commenced in the future.

The Metropolitan Life class action settlement did not resolve two putative
class actions involving sales practices claims filed against Metropolitan Life
in Canada, and these actions remain pending.

28

The Company believes adequate provision has been made in its consolidated
financial statements for all probable and reasonably estimable losses for sales
practices claims against Metropolitan Life, New England and General American.

Regulatory authorities in a small number of states have had investigations
or inquiries relating to Metropolitan Life's, New England's, or General
American's sales of individual life insurance policies or annuities. Over the
past several years, these and a number of investigations by other regulatory
authorities were resolved for monetary payments and certain other relief. The
Company may continue to resolve investigations in a similar manner.

Asbestos-Related Claims

Metropolitan Life is also a defendant in thousands of lawsuits seeking
compensatory and punitive damages for personal injuries allegedly caused by
exposure to asbestos or asbestos-containing products. Metropolitan Life has
never engaged in the business of manufacturing, producing, distributing or
selling asbestos or asbestos-containing products nor has Metropolitan Life
issued liability or workers' compensation insurance to companies in the business
of manufacturing, producing, distributing or selling asbestos or
asbestos-containing products. Rather, these lawsuits principally have been based
upon allegations relating to certain research, publication and other activities
of one or more of Metropolitan Life's employees during the period from the
1920's through approximately the 1950's and have alleged that Metropolitan Life
learned or should have learned of certain health risks posed by asbestos and,
among other things, improperly publicized or failed to disclose those health
risks. Metropolitan Life believes that it should not have legal liability in
such cases.

Legal theories asserted against Metropolitan Life have included negligence,
intentional tort claims and conspiracy claims concerning the health risks
associated with asbestos. Although Metropolitan Life believes it has meritorious
defenses to these claims, and has not suffered any adverse monetary judgments in
respect of these claims, due to the risks and expenses of litigation, almost all
past cases have been resolved by settlements. Metropolitan Life's defenses
(beyond denial of certain factual allegations) to plaintiffs' claims include
that: (i) Metropolitan Life owed no duty to the plaintiffs -- it had no special
relationship with the plaintiffs and did not manufacture, produce, distribute or
sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs
cannot demonstrate justifiable detrimental reliance; and (iii) plaintiffs cannot
demonstrate proximate causation. In defending asbestos cases, Metropolitan Life
selects various strategies depending upon the jurisdictions in which such cases
are brought and other factors which, in Metropolitan Life's judgment, best
protect Metropolitan Life's interests. Strategies include seeking to settle or
compromise claims, motions challenging the legal or factual basis for such
claims or defending on the merits at trial. In 2002, 2003 or 2004, trial courts
in California, Utah, Georgia, New York, Texas, and Ohio granted motions
dismissing claims against Metropolitan Life on some or all of the above grounds.
Other courts have denied motions brought by Metropolitan Life to dismiss cases
without the necessity of trial. There can be no assurance that Metropolitan Life
will receive favorable decisions on motions in the future. Metropolitan Life
intends to continue to exercise its best judgment regarding settlement or
defense of such cases, including when trials of these cases are appropriate.

Metropolitan Life continues to study its claims experience, review external
literature regarding asbestos claims experience in the United States and
consider numerous variables that can affect its asbestos liability exposure,
including bankruptcies of other companies involved in asbestos litigation and
legislative and judicial developments, to identify trends and to assess their
impact on the recorded asbestos liability.

Bankruptcies of other companies involved in asbestos litigation, as well as
advertising by plaintiffs' asbestos lawyers, may be resulting in an increase in
the cost of resolving claims and could result in an increase in the number of
trials and possible adverse verdicts Metropolitan Life may experience.
Plaintiffs are seeking additional funds from defendants, including Metropolitan
Life, in light of such bankruptcies by certain other defendants. In addition,
publicity regarding legislative reform efforts may result in an increase or
decrease in the number of claims.

29

The total number of asbestos personal injury claims pending against
Metropolitan Life as of the dates indicated, the number of new claims during the
years ended on those dates and the total settlement payments made to resolve
asbestos personal injury claims during those years are set forth in the
following table:

- ---------------

(1) Settlement payments represent payments made by Metropolitan Life during the
year in connection with settlements made in that year and in prior years.
Amounts do not include Metropolitan Life's attorneys' fees and expenses and
do not reflect amounts received from insurance carriers.

The Company believes adequate provision has been made in its consolidated
financial statements for all probable and reasonably estimable losses for
asbestos-related claims. The ability of Metropolitan Life to estimate its
ultimate asbestos exposure is subject to considerable uncertainty due to
numerous factors. The availability of data is limited and it is difficult to
predict with any certainty numerous variables that can affect liability
estimates, including the number of future claims, the cost to resolve claims,
the disease mix and severity of disease, the jurisdiction of claims filed, tort
reform efforts and the impact of any possible future adverse verdicts and their
amounts.

The number of asbestos cases that may be brought or the aggregate amount of
any liability that Metropolitan Life may ultimately incur is uncertain.
Accordingly, it is reasonably possible that the Company's total exposure to
asbestos claims may be greater than the liability recorded by the Company in its
consolidated financial statements and that future charges to income may be
necessary. While the potential future charges could be material in particular
quarterly or annual periods in which they are recorded, based on information
currently known by management, it does not believe any such charges are likely
to have a material adverse effect on the Company's consolidated financial
position.

Metropolitan Life increased its recorded liability for asbestos-related
claims by $402 million from approximately $820 million to $1,225 million at
December 31, 2002. This total recorded asbestos-related liability (after the
self-insured retention) was within the coverage of the excess insurance policies
discussed below. Metropolitan Life regularly reevaluates its exposure from
asbestos litigation and has updated its liability analysis for asbestos-related
claims through December 31, 2004.

During 1998, Metropolitan Life paid $878 million in premiums for excess
insurance policies for asbestos-related claims. The excess insurance policies
for asbestos-related claims provide for recovery of losses up to $1,500 million,
which is in excess of a $400 million self-insured retention. The
asbestos-related policies are also subject to annual and per-claim sublimits.
Amounts are recoverable under the policies annually with respect to claims paid
during the prior calendar year. Although amounts paid by Metropolitan Life in
any given year that may be recoverable in the next calendar year under the
policies will be reflected as a reduction in the Company's operating cash flows
for the year in which they are paid, management believes that the payments will
not have a material adverse effect on the Company's liquidity.

Each asbestos-related policy contains an experience fund and a reference
fund that provides for payments to Metropolitan Life at the commutation date if
the reference fund is greater than zero at commutation or pro rata reductions
from time to time in the loss reimbursements to Metropolitan Life if the
cumulative return on the reference fund is less than the return specified in the
experience fund. The return in the reference fund is tied to performance of the
Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. A
claim was made under the excess insurance policies in 2003 and 2004 for the
amounts paid with respect to asbestos litigation in excess of the retention. As
the performance of the indices impacts the return in the reference fund, it is
possible that loss reimbursements to the Company and the recoverable with
respect to later periods may be less than the amount of the recorded losses.
Such foregone loss reimbursements may be

30

recovered upon commutation depending upon future performance of the reference
fund. If at some point in the future, the Company believes the liability for
probable and reasonably estimable losses for asbestos-related claims should be
increased, an expense would be recorded and the insurance recoverable would be
adjusted subject to the terms, conditions and limits of the excess insurance
policies. Portions of the change in the insurance recoverable would be recorded
as a deferred gain and amortized into income over the estimated remaining
settlement period of the insurance policies. The foregone loss reimbursements
were approximately $8.3 million with respect to 2002 claims, $15.5 million with
respect to 2003 claims and are estimated to be $10.2 million with respect to
2004 claims and estimated to be approximately $54 million in the aggregate
including future years.

Property and Casualty Actions

A purported class action has been filed against Metropolitan Property and
Casualty Insurance Company's subsidiary, Metropolitan Casualty Insurance
Company, in Florida alleging breach of contract and unfair trade practices with
respect to allowing the use of parts not made by the original manufacturer to
repair damaged automobiles. Discovery is ongoing and a motion for class
certification is pending. Two purported nationwide class actions have been filed
against Metropolitan Property and Casualty Insurance Company in Illinois. One
suit claims breach of contract and fraud due to the alleged underpayment of
medical claims arising from the use of a purportedly biased provider fee pricing
system. A motion for class certification has been filed and discovery is
ongoing. The second suit claims breach of contract and fraud arising from the
alleged use of preferred provider organizations to reduce medical provider fees
covered by the medical claims portion of the insurance policy. A motion to
dismiss has been filed.

A purported class action has been filed against Metropolitan Property and
Casualty Insurance Company in Montana. This suit alleges breach of contract and
bad faith for not aggregating medical payment and uninsured coverages provided
in connection with the several vehicles identified in insureds' motor vehicle
policies. A recent decision by the Montana Supreme Court in a suit involving
another insurer determined that aggregation is required. Metropolitan Property
and Casualty Insurance Company has posted adequate reserves to resolve the
claims underlying this matter. The amount to be paid will not be material to
Metropolitan Property and Casualty Insurance Company. Certain plaintiffs'
lawyers in another action have alleged that the use of certain automated
databases to provide total loss vehicle valuation methods was improper.
Metropolitan Property and Casualty Insurance Company, along with a number of
other insurers, has tentatively agreed in January 2004 to resolve this issue in
a class action format. The amount to be paid in resolution of this matter will
not be material to Metropolitan Property and Casualty Insurance Company.

Demutualization Actions

Several lawsuits were brought in 2000 challenging the fairness of
Metropolitan Life's plan of reorganization, as amended (the "plan") and the
adequacy and accuracy of Metropolitan Life's disclosure to policyholders
regarding the plan. These actions named as defendants some or all of
Metropolitan Life, MetLife, Inc. (the "Holding Company"), the individual
directors, the New York Superintendent of Insurance (the "Superintendent") and
the underwriters for MetLife, Inc.'s initial public offering, Goldman Sachs &
Company and Credit Suisse First Boston. On February 21, 2003, a trial court
within the commercial part of the New York State court granted the defendants'
motions to dismiss two purported class actions. On April 27, 2004, the appellate
court modified the trial court's order by reinstating certain claims against
Metropolitan Life, the Holding Company and the individual directors. Plaintiffs
in these actions have filed a consolidated amended complaint. Defendants' motion
to dismiss part of the consolidated amended complaint, and plaintiffs' motion to
certify a litigation class are pending. Another purported class action filed in
New York State court in Kings County has been consolidated with this action. The
plaintiffs in the state court class actions seek compensatory relief and
punitive damages. Five persons have brought a proceeding under Article 78 of New
York's Civil Practice Law and Rules challenging the Opinion and Decision of the
Superintendent who approved the plan. In this proceeding, petitioners seek to
vacate the Superintendent's Opinion and Decision and enjoin him from granting
final approval of the plan. Respondents have moved to dismiss the proceeding. In
a purported class action against Metropolitan Life and the Holding Company

31

pending in the United States District Court for the Eastern District of New
York, plaintiffs served a second consolidated amended complaint on April 2,
2004. In this action, plaintiffs assert violations of the Securities Act of 1933
and the Securities Exchange Act of 1934 in connection with the plan, claiming
that the Policyholder Information Booklets failed to disclose certain material
facts. They seek rescission and compensatory damages. On June 22, 2004, the
court denied the defendants' motion to dismiss the claim of violation of the
Securities Exchange Act of 1934. The court had previously denied defendants'
motion to dismiss the claim for violation of the Securities Act of 1933. On
December 10, 2004, the court reaffirmed its earlier decision denying defendants'
motion for summary judgment as premature. Metropolitan Life, the Holding Company
and the individual defendants believe they have meritorious defenses to the
plaintiffs' claims and are contesting vigorously all of the plaintiffs' claims
in these actions.

In 2001, a lawsuit was filed in the Superior Court of Justice, Ontario,
Canada on behalf of a proposed class of certain former Canadian policyholders
against the Holding Company, Metropolitan Life, and Metropolitan Life Insurance
Company of Canada. Plaintiffs' allegations concern the way that their policies
were treated in connection with the demutualization of Metropolitan Life; they
seek damages, declarations, and other non-pecuniary relief. The defendants
believe they have meritorious defenses to the plaintiffs' claims and will
contest vigorously all of plaintiffs' claims in this matter.

On April 30, 2004, a lawsuit was filed in New York state court in New York
County against the Holding Company and Metropolitan Life on behalf of a proposed
class comprised of the settlement class in the Metropolitan Life sales practices
class action settlement approved in December 1999 by the United States District
Court for the Western District of Pennsylvania. In July 2004, the plaintiffs
served an amended complaint. The amended complaint challenges the treatment of
the cost of the sales practices settlement in the demutualization of
Metropolitan Life and asserts claims of breach of fiduciary duty, common law
fraud, and unjust enrichment. Plaintiffs seek compensatory and punitive damages,
as well as attorneys' fees and costs. The Holding Company and Metropolitan Life
have moved to dismiss the amended complaint. In October 2003, the United States
District Court for the Western District of Pennsylvania dismissed plaintiffs'
similar complaint alleging that the demutualization breached the terms of the
1999 settlement agreement and unjustly enriched the Holding Company and
Metropolitan Life. The Holding Company and Metropolitan Life intend to contest
this matter vigorously.

Race-Conscious Underwriting Claims

Insurance departments in a number of states initiated inquiries in 2000
about possible race-conscious underwriting of life insurance. These inquiries
generally have been directed to all life insurers licensed in their respective
states, including Metropolitan Life and certain of its affiliates. The New York
Insurance Department concluded its examination of Metropolitan Life concerning
possible past race-conscious underwriting practices. On April 28, 2003, the
United States District Court for the Southern District of New York approved a
class action settlement of a consolidated action against Metropolitan Life
alleging racial discrimination in the marketing, sale, and administration of
life insurance policies. Metropolitan Life also entered into settlement
agreements to resolve the regulatory examination.

Twenty lawsuits involving approximately 140 plaintiffs were filed in
federal and state court in Alabama, Mississippi and Tennessee alleging federal
and/or state law claims of racial discrimination in connection with the sale,
formation, administration or servicing of life insurance policies. Metropolitan
Life resolved the claims of some of these plaintiffs through settlement, and
some additional plaintiffs have voluntarily dismissed their claims. Metropolitan
Life resolved claims of some additional persons who opted out of the settlement
class referenced in the preceding paragraph but who had not filed suit. The
actions filed in Alabama and Tennessee have been dismissed; one action filed in
Mississippi remains pending. In the pending action, Metropolitan Life is
contesting plaintiffs' claims vigorously.

The Company believes that adequate provision has been made to cover the
costs associated with the resolution of these matters.

32

Other

A putative class action lawsuit is pending in the United States District
Court for the District of Columbia, in which plaintiffs allege that they were
denied certain ad hoc pension increases awarded to retirees under the
Metropolitan Life retirement plan. The ad hoc pension increases were awarded
only to retirees (i.e., individuals who were entitled to an immediate retirement
benefit upon their termination of employment) and not available to individuals
like these plaintiffs whose employment, or whose spouses' employment, had
terminated before they became eligible for an immediate retirement benefit. The
plaintiffs seek to represent a class consisting of former Metropolitan Life
employees, or their surviving spouses, who are receiving deferred vested annuity
payments under the retirement plan and who were allegedly eligible to receive
the ad hoc pension increases awarded in 1977, 1980, 1989, 1992, 1996 and 2001,
as well as increases awarded in earlier years. Metropolitan Life is vigorously
defending itself against these allegations.

As previously reported, the SEC is conducting a formal investigation of New
England Securities Corporation ("NES"), a subsidiary of New England Life
Insurance Company ("NELICO"), in response to NES informing the SEC that certain
systems and controls relating to one NES advisory program were not operating
effectively. NES is cooperating fully with the SEC.

Prior to filing the Company's June 30, 2003 Form 10-Q, MetLife announced a
$31 million charge, net of income taxes, resulting from certain improperly
deferred expenses at an affiliate, New England Financial. MetLife notified the
SEC about the nature of this charge prior to its announcement. The SEC is
pursuing a formal investigation of the matter and, in December 2004, NELICO
received a so-called "Wells Notice" in connection with the SEC investigation.
The Wells Notice provides notice that the SEC staff is considering recommending
that the SEC bring a civil action alleging violations of the U.S. securities
laws. Under the SEC's procedures, a recipient can respond to the SEC staff
before the staff makes a formal recommendation regarding whether any action
alleging violations of the U.S. securities laws should be considered. MetLife
continues to cooperate fully with the SEC in its investigation.

The American Dental Association and two individual providers have sued
MetLife, Mutual of Omaha and Cigna in a purported class action lawsuit brought
in a Florida federal district court. The plaintiffs purport to represent a
nationwide class of in-network providers who allege that their claims are being
wrongfully reduced by downcoding, bundling, and the improper use and programming
of software. The complaint alleges federal racketeering and various state law
theories of liability. MetLife is vigorously defending the case and a motion to
dismiss has been filed and argued.

On November 16, 2004, a New York state court granted plaintiffs' motion to
certify a litigation class of owners of certain participating life insurance
policies and a sub-class of New York owners of such policies in an action
asserting that Metropolitan Life breached their policies and violated New York's
General Business Law in the manner in which it allocated investment income
across lines of business during a period ending with the 2000 demutualization.
Metropolitan has filed a notice of appeal from the order granting this motion.
In August 2003, an appellate court affirmed the dismissal of fraud claims in
this action. Plaintiffs seek compensatory damages. Metropolitan Life is
vigorously defending the case.

Regulatory bodies have contacted the Company and have requested information
relating to market timing and late trading of mutual funds and variable
insurance products and, generally, the marketing of products. The Company
believes that many of these inquiries are similar to those made to many
financial services companies as part of industry-wide investigations by various
regulatory agencies. The SEC has commenced an investigation with respect to
market timing and late trading in a limited number of privately-placed variable
insurance contracts that were sold through General American. As previously
reported, in May 2004, General American received a so called "Wells Notice"
stating that the SEC staff is considering recommending that the SEC bring a
civil action alleging violations of the U.S. securities laws against General
American. Under the SEC procedures, General American can avail itself of the
opportunity to respond to the SEC staff before it makes a formal recommendation
regarding whether any action alleging violations of the U.S. securities laws
should be considered. General American has responded to the Wells Notice. The
Company is fully cooperating with regard to these information requests and
investigations. The Company at

33

the present time is not aware of any systemic problems with respect to such
matters that may have a material adverse effect on the Company's consolidated
financial position.

In October 2004, the SEC informed MetLife that it anticipates issuing a
formal order of investigation related to certain sales by a former MetLife sales
representative to the Sheriff's Department of Fulton County, Georgia. The
Company is fully cooperating with respect to inquiries from the SEC.

The Company has received a number of subpoenas and other requests from the
Office of the Attorney General of the State of New York seeking, among other
things, information regarding and relating to compensation agreements between
insurance brokers and the Company, whether MetLife has provided or is aware of
the provision of "fictitious" or "inflated" quotes and information regarding
tying arrangements with respect to reinsurance. Based upon an internal review,
the Company advised the Attorney General for the State of New York that MetLife
was not aware of any instance in which MetLife had provided a "fictitious" or
"inflated" quote. MetLife also has received a subpoena, including a set of
interrogatories, from the Office of the Attorney General of the State of
Connecticut seeking information and documents concerning contingent commission
payments to brokers and MetLife's awareness of any "sham" bids for business.
MetLife also has received a Civil Investigative Demand from the Office of the
Attorney General for the State of Massachusetts seeking information and
documents concerning bids and quotes that the Company submitted to potential
customers in Massachusetts, the identity of agents, brokers, and producers to
whom the Company submitted such bids or quotes, and communications with a
certain broker. MetLife is continuing to conduct an internal review of its
commission payment practices. The Company continues to fully cooperate with
these inquiries and is responding to the subpoenas and other requests.

Approximately twelve broker related lawsuits have been received. Two class
action lawsuits were filed in the United States District Court for the Southern
District of New York on behalf of proposed classes of all persons who purchased
the securities of MetLife, Inc. between April 5, 2000 and October 19, 2004
against MetLife, Inc. and certain officers of MetLife, Inc. In the context of
contingent commissions, the complaints allege that defendants violated the
federal securities laws by issuing materially false and misleading statements
and failing to disclose material facts regarding MetLife, Inc.'s financial
performance throughout the class period that had the effect of artificially
inflating the market price of MetLife Inc.'s securities. Three class action
lawsuits were filed in the United States District Court for the Southern
District of New York on behalf of proposed classes of participants in and
beneficiaries of Metropolitan Life Insurance Company's Savings and Investment
Plan against MetLife, Inc., the MetLife, Inc. Employee Benefits Committee,
certain officers of Metropolitan Life Insurance Company, and members of MetLife,
Inc.'s board of directors. In the context of contingent commissions, the
complaints allege that defendants violated their fiduciary obligations under
ERISA by failing to disclose to plan participants who had the option of
allocating funds in the plan to the MetLife Company Stock Fund material facts
regarding MetLife, Inc.'s financial performance. The plaintiffs in these actions
seek compensatory and other relief. Two cases have been brought in California
state court against MetLife, Inc., other companies, and an insurance broker. One
of these cases alleges that the insurers and the broker violated Section 17200
of the California Business and Professions Code by engaging in unfair trade
practices concerning contingent commissions and fees paid to the broker; the
other case has been brought by the California Insurance Commissioner and alleges
that the defendants violated certain provisions of the California Insurance
Code. Additionally, two civil RICO or antitrust related class action lawsuits
have been brought against MetLife, Inc., and other companies in California
federal court with respect to issues concerning contingent commissions and fees
paid to one or more brokers. Three class action lawsuits have been brought in
Illinois federal court against MetLife, Inc. and other companies alleging that
insurers and brokers violated antitrust laws or engaged in civil RICO
violations. The Company intends to vigorously defend these cases.

In addition to those discussed above, regulators and others have made a
number of inquiries of the insurance industry regarding industry brokerage
practices and related matters and others may begin. It is reasonably possible
that MetLife will receive additional subpoenas, interrogatories, requests and
lawsuits. MetLife will fully cooperate with all regulatory inquiries and intends
to vigorously defend all lawsuits.

34

Metropolitan Life also has been named as a defendant in a number of
silicosis, welding and mixed dust cases in various states. The Company intends
to defend itself vigorously against these cases.

Various litigation, claims and assessments against the Company, in addition
to those discussed above and those otherwise provided for in the Company's
consolidated financial statements, have arisen in the course of the Company's
business, including, but not limited to, in connection with its activities as an
insurer, employer, investor, investment advisor and taxpayer. Further, state
insurance regulatory authorities and other federal and state authorities
regularly make inquiries and conduct investigations concerning the Company's
compliance with applicable insurance and other laws and regulations.

Summary

It is not feasible to predict or determine the ultimate outcome of all
pending investigations and legal proceedings or provide reasonable ranges of
potential losses, except as noted above in connection with specific matters. In
some of the matters referred to above, very large and/or indeterminate amounts,
including punitive and treble damages, are sought. Although in light of these
considerations it is possible that an adverse outcome in certain cases could
have a material adverse effect upon the Company's consolidated financial
position, based on information currently known by the Company's management, in
its opinion, the outcomes of such pending investigations and legal proceedings
are not likely to have such an effect. However, given the large and/or
indeterminate amounts sought in certain of these matters and the inherent
unpredictability of litigation, it is possible that an adverse outcome in
certain matters could, from time to time, have a material adverse effect on the
Company's consolidated net income or cash flows in particular quarterly or
annual periods.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the fourth
quarter of 2004.

35

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

ISSUER COMMON EQUITY

MetLife, Inc.'s common stock, par value $0.01 per share (the "Common
Stock"), began trading on the New York Stock Exchange ("NYSE") under the symbol
"MET" on April 5, 2000.

The following table presents high and low closing prices for the Common
Stock on the NYSE for the periods indicated, and the dividends declared per
share:

As of March 1, 2005, there were 50,725 shareholders of record of Common
Stock.

On September 28, 2004, the Holding Company's Board of Directors approved an
annual dividend for 2004 of $0.46 per share payable on December 13, 2004 to
shareholders of record on November 5, 2004. On October 21, 2003, the Holding
Company's Board of Directors approved an annual dividend for 2003 of $0.23 per
share. The dividend was paid on December 15, 2003 to shareholders of record on
November 7, 2003. Future dividend decisions will be determined by the Holding
Company's Board of Directors after taking into consideration factors such as the
Holding Company's current earnings, expected medium- and long-term earnings,
financial condition, regulatory capital position, and applicable governmental
regulations and policies. See "Business -- Regulation", "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and Note 12 to Notes to Consolidated Financial Statements.

36

ISSUER PURCHASES OF EQUITY SECURITIES

Purchases of common stock made by or on behalf of the Holding Company
during the three months ended December 31, 2004 are set forth below:

- ---------------

(1) During the periods October 1-October 31, 2004, November 1-November 30, 2004
and December 1-December 31, 2004, separate account affiliates of the Holding
Company purchased 1,665 shares, 3,104 shares and 3,189 shares, respectively,
of Common Stock on the open market in nondiscretionary transactions to
rebalance index funds. Except as disclosed above, there were no shares of
Common Stock which were repurchased by the Holding Company other than
through a publicly announced plan or program.

(2) On October 26, 2004, the Holding Company's Board of Directors authorized a
$1 billion common stock repurchase program. This program began after the
completion of the February 19, 2002 and March 28, 2001 repurchase programs,
each of which authorized the repurchase of $1 billion of common stock. Under
these authorizations, the Holding Company may purchase its common stock from
the MetLife Policyholder Trust, in the open market and in privately
negotiated transactions.

On December 16, 2004, the Holding Company repurchased 7,281,553 shares of
its outstanding common stock at an aggregate cost of approximately $300
million under an accelerated share repurchase agreement with a major bank.
The bank borrowed the stock sold to the Holding Company from third parties
and is purchasing the shares in the open market over the next few months to
return to the lenders. The Holding Company will either pay or receive an
amount based on the actual amount paid by the bank to purchase the shares.
The final purchase price is expected to be determined in April 2005 and will
be settled in either cash or Holding Company stock at the Holding Company's
option. The Holding Company recorded the initial repurchase of shares as
treasury stock and will record any amount paid or received as an adjustment
to the cost of the treasury stock. As a result of the Holding Company's
agreement to acquire Travelers Life & Annuity from Citigroup, the Holding
Company has suspended its share repurchase activity.

37

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial information
for the Company. The selected consolidated financial information for the years
ended December 31, 2004, 2003, and 2002, and at December 31, 2004 and 2003 has
been derived from the Company's audited consolidated financial statements
included elsewhere herein. The selected consolidated financial information for
the years ended December 31, 2001 and 2000 and at December 31, 2002, 2001 and
2000 has been derived from the Company's audited consolidated financial
statements not included elsewhere herein. The following information should be
read in conjunction with and is qualified in its entirety by the information
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and the consolidated financial statements appearing
elsewhere herein. Some previously reported amounts have been reclassified to
conform with the presentation at and for the year ended December 31, 2004.

- ---------------

(1) In accordance with Statement of Financial Accounting Standards ("SFAS") No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS
144"), income related to real estate sold or classified as held-for-sale
for transactions initiated on or after January 1, 2002 is presented as
discontinued operations. The following table presents the components of
income from discontinued real estate operations (see footnote 4):

(2) Net investment gains (losses) exclude amounts related to real estate
operations reported as discontinued operations in accordance with SFAS 144.

(3) Net investment gains (losses) presented include scheduled periodic
settlement payments on derivative instruments that do not qualify for hedge
accounting under SFAS No. 133, Accounting for Derivative

40

Instruments and Hedging Activities, as amended, of $51 million, $84
million, $32 million and $24 million for the years ended December 31, 2004,
2003, 2002 and 2001, respectively.

(4) During the third quarter of 2004, the Company entered into an agreement to
sell its wholly-owned subsidiary, SSRM Holdings, Inc. ("SSRM"), to a third
party, which was sold on January 31, 2005. In accordance with SFAS 144, the
assets, liabilities and operations of SSRM have been reclassified into
discontinued operations for all periods presented. The following tables
present the operations of SSRM:

(5) Includes the following combined financial statement data of Conning
Corporation ("Conning"), which was sold in 2001, and MetLife's interest in
Nvest Companies, L.P. ("Nvest") and its affiliates, which was sold in 2000:

As a result of these sales, investment gains of $25 million and $663
million were recorded for the years ended December 31, 2001 and 2000,
respectively.

(6) Included in total revenues and total expenses for the year ended December
31, 2002 are $421 million and $358 million, respectively, related to
Aseguradora Hidalgo S.A., which was acquired in June 2002.

(7) In July 1998, Metropolitan Life sold a substantial portion of its Canadian
operations to Clarica Life Insurance Company ("Clarica Life"). As part of
that sale, a large block of policies in effect with Metropolitan Life in
Canada was transferred to Clarica Life, and the holders of the transferred
Canadian policies became policyholders of Clarica Life. Those transferred
policyholders are no longer policyholders of Metropolitan Life and,
therefore, were not entitled to compensation under the plan of
reorganization. However, as a result of a commitment made in connection
with obtaining Canadian regulatory approval of that sale and in connection
with the demutualization, Metropolitan Life's Canadian branch made cash
payments to those who were, or were deemed to be, holders of these
transferred Canadian policies. The payments were determined in a manner
that is consistent with the treatment of, and fair and equitable to,
eligible policyholders of Metropolitan Life.
41

(8) Provision for income taxes includes a credit of $145 million for surplus
taxes for the year ended December 31, 2000. Prior to its demutualization,
Metropolitan Life was subject to surplus tax imposed on mutual life
insurance companies under Section 809 of the Internal Revenue Code.

(9) Policyholder liabilities include future policy benefits and other
policyholder funds. Life and health policyholder liabilities also include
policyholder account balances, policyholder dividends payable and the
policyholder dividend obligation.

(10) For additional information regarding these items, see Notes 1 and 12 to the
Consolidated Financial Statements.

(11) Return on equity is defined as net income divided by average total equity.

(12) Includes MetLife's general account and separate account assets and assets
managed on behalf of third parties. Includes $21 billion of assets under
management managed by Conning at December 31, 2000, which was sold in 2001.
Includes assets managed on behalf of third parties related to SSRM, which
was sold on January 31, 2005, of $30 billion, $23 billion, $22 billion, $26
billion and $26 billion at December 31, 2004, 2003, 2002, 2001 and 2000,
respectively.

(13) Based on earnings subsequent to the date of demutualization. For additional
information regarding net income per share data, see Note 14 to the
Consolidated Financial Statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

For purposes of this discussion, the terms "MetLife" or the "Company"
refers to MetLife, Inc., a Delaware corporation (the "Holding Company"), and its
subsidiaries, including Metropolitan Life Insurance Company ("Metropolitan
Life"). Following this summary is a discussion addressing the consolidated
results of operations and financial condition of the Company for the periods
indicated. This discussion should be read in conjunction with the Company's
consolidated financial statements included elsewhere herein.

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

Actual results may differ materially from those included in the
forward-looking statements as a result of risks and uncertainties including, but
not limited to, the following: (i) changes in general economic conditions,
including the performance of financial markets and interest rates; (ii)
heightened competition, including with respect to pricing, entry of new
competitors and the development of new products by new and existing competitors;
(iii) unanticipated changes in industry trends; (iv) MetLife, Inc.'s primary
reliance, as a holding company, on dividends from its subsidiaries to meet debt
payment obligations and the applicable regulatory restrictions on the ability of
the subsidiaries to pay such dividends; (v) deterioration in the experience of
the "closed block" established in connection with the reorganization of
Metropolitan Life; (vi) catastrophe losses; (vii) adverse results or other
consequences from litigation, arbitration or regulatory investigations; (viii)
regulatory, accounting or tax changes that may affect the cost of, or demand
for, the Company's products or services; (ix) downgrades in the Company's and
its affiliates' claims paying ability, financial strength or credit ratings; (x)
changes in rating agency policies or practices; (xi) discrepancies between
actual claims experience and assumptions used in setting prices for the
Company's products and establishing the liabilities for the Company's
obligations for future policy benefits and claims; (xii) discrepancies between
actual experience and assumptions used in establishing liabilities related to
other contingencies or obligations; (xiii) the effects of business disruption or
economic contraction due to terrorism or other hostilities; (xiv) the Company's
ability to identify and consummate on successful terms any future acquisitions,
and to successfully integrate acquired businesses with minimal disruption; and
(xv) other risks and uncertainties described from time to time in MetLife,
Inc.'s filings with the United States Securities and Exchange Commission
("SEC"), including its S-1 and S-3 registration statements. The Company
specifically disclaims any obligation to update
42

or revise any forward-looking statement, whether as a result of new information,
future developments or otherwise.

ECONOMIC CAPITAL

Beginning in 2003, the Company changed its methodology of allocating
capital to its business segments from Risk-Based Capital ("RBC") to Economic
Capital. Prior to 2003, the Company's business segments' allocated equity was
primarily based on RBC, an internally developed formula based on applying a
multiple to the National Association of Insurance Commissioners ("NAIC")
Statutory Risk-Based Capital and included certain adjustments in accordance with
accounting principles generally accepted in the United States of America
("GAAP"). Economic Capital is an internally developed risk capital model, the
purpose of which is to measure the risk in the business and to provide a basis
upon which capital is deployed. The Economic Capital model accounts for the
unique and specific nature of the risks inherent in MetLife's businesses. This
is in contrast to the standardized regulatory RBC formula, which is not as
refined in its risk calculations with respect to the nuances of the Company's
businesses.

The change in methodology is being applied prospectively. This change has
and will continue to impact the level of net investment income and net income of
each of the Company's business segments. A portion of net investment income is
credited to the segments based on the level of allocated equity. This change in
methodology of allocating equity does not impact the Company's consolidated net
investment income or net income.

The following table presents actual and pro forma net investment income
with respect to the Company's segments for the year ended December 31, 2002. The
amounts shown as pro forma reflect net investment income that would have been
reported in 2002 had the Company allocated capital based on Economic Capital
rather than on the basis of RBC.

ACQUISITIONS AND DISPOSITIONS

On January 31, 2005, the Holding Company completed the sale of SSRM
Holdings, Inc. ("SSRM") to a third party for $328 million of cash and stock. As
a result of the sale of SSRM, the Company recognized income from discontinued
operations of approximately $150 million, net of income taxes, comprised of a
realized gain of $166 million, net of income taxes, and an operating expense
related to a lease abandonment of $16 million, net of income taxes. Under the
terms of the agreement, MetLife will have an opportunity to receive, prior to
the end of 2006, additional payments aggregating up to approximately 25% of the
base purchase price, based on, among other things, certain revenue retention and
growth measures. The purchase price is also subject to reduction over five
years, depending on retention of certain MetLife-related business. The Company
has reclassified the assets, liabilities and operations of SSRM into
discontinued operations for all periods presented in the consolidated financial
statements. Additionally, the sale of SSRM resulted in the elimination of the
Company's Asset Management segment. The remaining asset management business,
which is insignificant, has been reclassified into Corporate & Other. The
Company's discontinued

43

operations for the year ended December 31, 2004 also includes expenses of
approximately $20 million, net of income taxes, related to the sale of SSRM.

In 2003, a subsidiary of the Company, Reinsurance Group of America,
Incorporated ("RGA"), entered into a coinsurance agreement under which it
assumed the traditional U.S. life reinsurance business of Allianz Life Insurance
Company of North America ("Allianz Life"). The transaction added approximately
$278 billion of life reinsurance in-force, $246 million of premium and $11
million of income before income tax expense, excluding minority interest
expense, in 2003. The effects of such transaction are included within the
Reinsurance segment.

In 2002, the Company acquired Aseguradora Hidalgo S.A. ("Hidalgo"), an
insurance company based in Mexico with approximately $2.5 billion in assets as
of the date of acquisition (June 20, 2002). During the second quarter of 2003,
as a part of its acquisition and integration strategy, the International segment
completed the legal merger of Hidalgo into its original Mexican subsidiary,
Seguro Genesis, S.A., forming MetLife Mexico, S.A. As a result of the merger of
these companies, the Company recorded $62 million of earnings, net of income
taxes, from the merger and a reduction in policyholder liabilities resulting
from a change in reserve methodology. Such benefit was recorded in the second
quarter of 2003 in the International segment.

See "-- Subsequent Events" below.

SUMMARY OF CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with GAAP requires
management to adopt accounting policies and make estimates and assumptions that
affect amounts reported in the consolidated financial statements. The most
critical estimates include those used in determining: (i) investment
impairments; (ii) the fair value of investments in the absence of quoted market
values; (iii) application of the consolidation rules to certain investments;
(iv) the fair value of and accounting for derivatives; (v) the capitalization
and amortization of deferred policy acquisition costs ("DAC"), including value
of business acquired ("VOBA"); (vi) the liability for future policyholder
benefits; (vii) the liability for litigation and regulatory matters; and (viii)
accounting for reinsurance transactions and employee benefit plans. In applying
these policies, management makes subjective and complex judgments that
frequently require estimates about matters that are inherently uncertain. Many
of these policies, estimates and related judgments are common in the insurance
and financial services industries; others are specific to the Company's
businesses and operations. Actual results could differ from those estimates.

INVESTMENTS

The Company's principal investments are in fixed maturities, mortgage and
other loans and real estate, all of which are exposed to three primary sources
of investment risk: credit, interest rate and market valuation. The financial
statement risks are those associated with the recognition of impairments and
income, as well as the determination of fair values. The assessment of whether
impairments have occurred is based on management's case-by-case evaluation of
the underlying reasons for the decline in fair value. Management considers a
wide range of factors about the security issuer and uses its 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. Inherent in management's
evaluation of the security are assumptions and estimates about the operations of
the issuer and its future earnings potential. Considerations used by the Company
in the impairment evaluation process include, but are not limited to: (i) the
length of time and the extent to which the market value has been below cost or
amortized cost; (ii) the potential for impairments of securities when the issuer
is experiencing significant financial difficulties; (iii) the potential for
impairments in an entire industry sector or sub-sector; (iv) the potential for
impairments in certain economically depressed geographic locations; (v) the
potential for impairments of securities where the issuer, series of issuers or
industry has suffered a catastrophic type of loss or has exhausted natural
resources; (vi) the Company's ability and intent to hold the security for a
period of time sufficient to allow for the recovery of its value to an amount
equal to or greater than cost or amortized cost; (vii) unfavorable changes in
forecasted cash flows on asset-backed securities; and (viii) other subjective
factors, including concentrations and information obtained from regulators and
rating agencies. In

44

addition, the earnings on certain investments are dependent upon market
conditions, which could result in prepayments and changes in amounts to be
earned due to changing interest rates or equity markets. The determination of
fair values in the absence of quoted market values is based on: (i) valuation
methodologies; (ii) securities the Company deems to be comparable; and (iii)
assumptions deemed appropriate given the circumstances. The use of different
methodologies and assumptions may have a material effect on the estimated fair
value amounts. In addition, the Company enters into certain structured
investment transactions, real estate joint ventures and limited partnerships for
which the Company may be deemed to be the primary beneficiary and, therefore,
may be required to consolidate such investments. The accounting rules for the
determination of the primary beneficiary are complex and require evaluation of
the contractual rights and obligations associated with each party involved in
the entity, an estimate of the entity's expected losses and expected residual
returns and the allocation of such estimates to each party.

DERIVATIVES

The Company enters into freestanding derivative transactions primarily to
manage the risk associated with variability in cash flows or changes in fair
values related to the Company's financial assets and liabilities. The Company
also uses derivative instruments to hedge its currency exposure associated with
net investments in certain foreign operations. The Company also purchases
investment securities, issues certain insurance policies and engages in certain
reinsurance contracts that have embedded derivatives. The associated financial
statement risk is the volatility in net income which can result from (i) changes
in fair value of derivatives not qualifying as accounting hedges; (ii)
ineffectiveness of designated hedges; and (iii) counterparty default. In
addition, there is a risk that embedded derivatives requiring bifurcation are
not identified and reported at fair value in the consolidated financial
statements. Accounting for derivatives is complex, as evidenced by significant
authoritative interpretations of the primary accounting standards which continue
to evolve, as well as the significant judgments and estimates involved in
determining fair value in the absence of quoted market values. These estimates
are based on valuation methodologies and assumptions deemed appropriate in the
circumstances. Such assumptions include estimated volatility and interest rates
used in the determination of fair value where quoted market values are not
available. The use of different assumptions may have a material effect on the
estimated fair value amounts.

DEFERRED POLICY ACQUISITION COSTS

The Company incurs significant costs in connection with acquiring new and
renewal insurance business. These costs, which vary with and are primarily
related to the production of that business, are deferred. The recovery of such
costs is dependent upon the future profitability of the related business. The
amount of future profit is dependent principally on investment returns in excess
of the amounts credited to policyholders, mortality, morbidity, persistency,
interest crediting rates, expenses to administer the business, creditworthiness
of reinsurance counterparties and certain economic variables, such as inflation.
Of these factors, the Company anticipates that investment returns are most
likely to impact the rate of amortization of such costs. The aforementioned
factors enter into management's estimates of gross margins and profits, which
generally are used to amortize such costs. Revisions to estimates result in
changes to the amounts expensed in the reporting period in which the revisions
are made and could result in the impairment of the asset and a charge to income
if estimated future gross margins and profits are less than amounts deferred. In
addition, the Company utilizes the reversion to the mean assumption, a common
industry practice, in its determination of the amortization of DAC, including
VOBA. This practice assumes that the expectation for long-term appreciation in
equity markets is not changed by minor short-term market fluctuations, but that
it does change when large interim deviations have occurred.

LIABILITY FOR FUTURE POLICY BENEFITS AND UNPAID CLAIMS AND CLAIM EXPENSES

The Company establishes liabilities for amounts payable under insurance
policies, including traditional life insurance, traditional annuities and
non-medical health insurance. Generally, amounts are payable over an extended
period of time and liabilities are established based on methods and underlying
assumptions in accordance with GAAP and applicable actuarial standards.
Principal assumptions used in the establishment of

45

liabilities for future policy benefits are mortality, morbidity, expenses,
persistency, investment returns and inflation.

The Company also establishes liabilities for unpaid claims and claim
expenses for property and casualty claim insurance which represent the amount
estimated for claims that have been reported but not settled and claims incurred
but not reported. Liabilities for unpaid claims are estimated based upon the
Company's historical experience and other actuarial assumptions that consider
the effects of current developments, anticipated trends and risk management
programs, reduced for anticipated salvage and subrogation.

Differences between actual experience and the assumptions used in pricing
these policies and in the establishment of liabilities result in variances in
profit and could result in losses. The effects of changes in such estimated
reserves are included in the results of operations in the period in which the
changes occur.

REINSURANCE

The Company enters into reinsurance transactions as both a provider and a
purchaser of reinsurance. Accounting for reinsurance requires extensive use of
assumptions and estimates, particularly related to the future performance of the
underlying business and the potential impact of counterparty credit risks. The
Company periodically reviews actual and anticipated experience compared to the
aforementioned assumptions used to establish assets and liabilities relating to
ceded and assumed reinsurance and evaluates the financial strength of
counterparties to its reinsurance agreements using criteria similar to that
evaluated in the security impairment process discussed previously. Additionally,
for each of its reinsurance contracts, the Company must determine if the
contract provides indemnification against loss or liability relating to
insurance risk, in accordance with applicable accounting standards. The Company
must review all contractual features, particularly 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 the Company determines that a
reinsurance contract does not expose the reinsurer to a reasonable possibility
of a significant loss from insurance risk, the Company records the contract
using the deposit method of accounting.

LITIGATION

The Company is a party to a number of legal actions and regulatory
investigations. Given the inherent unpredictability of these matters, it is
difficult to estimate the impact on the Company's consolidated financial
position. 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 the Company's asbestos-related liability,
are especially difficult to estimate due to the limitation of available data and
uncertainty regarding numerous variables used to determine amounts recorded. The
data and variables that impact the assumptions used to estimate the Company's
asbestos-related liability include the number of future claims, the cost to
resolve claims, the disease mix and severity of disease, the jurisdiction of
claims filed, tort reform efforts and the impact of any possible future adverse
verdicts and their amounts. On a quarterly and annual basis the Company reviews
relevant information with respect to liabilities for litigation, regulatory
investigations and litigation-related contingencies to be reflected in the
Company's consolidated financial statements. The review includes senior legal
and financial personnel. It is possible that an adverse outcome in certain of
the Company's 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 the Company's consolidated
net income or cash flows in particular quarterly or annual periods.

EMPLOYEE BENEFIT PLANS

The Company sponsors pension and other retirement plans in various forms
covering employees who meet specified eligibility requirements. The reported
expense and liability associated with these plans requires an extensive use of
assumptions which include the discount rate, expected return on plan assets and
rate of future compensation increases as determined by the Company. Management
determines these assumptions based upon currently available market and industry
data, historical performance of the plan and its assets, and consultation with
an independent consulting actuarial firm. These assumptions used by the Company
may

46

differ materially from actual results due to changing market and economic
conditions, higher or lower withdrawal rates or longer or shorter life spans of
the participants. These differences may have a significant effect on the
Company's consolidated financial statements and liquidity.

RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

MetLife, Inc., through its subsidiaries and affiliates, is a leading
provider of insurance and other financial services to individual and
institutional customers. The Company offers life insurance, annuities,
automobile and homeowner's insurance and retail banking services to individuals,
as well as group insurance, reinsurance, and retirement & savings products and
services to corporations and other institutions. The MetLife companies serve
individuals in approximately 13 million households in the United States and
provide benefits to 37 million employees and family members through their plan
sponsors including 88 of the top one hundred FORTUNE(R) 500 companies. Outside
the United States, the MetLife companies serve approximately 9 million customers
through direct insurance operations in Argentina, Brazil, Chile, China, Hong
Kong, India, Indonesia, Mexico, South Korea, Taiwan and Uruguay. MetLife is
organized into five operating segments: Institutional, Individual, Auto & Home,
International and Reinsurance, as well as Corporate & Other.

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2003

The Company reported $2,758 million in net income and diluted earnings per
share of $3.65 for the year ended December 31, 2004 compared to $2,217 million
in net income and diluted earnings per share of $2.94 for the year ended
December 31, 2003. Continued top-line revenue growth across all of the Company's
business segments, strong interest rate spreads and an improvement in net
investment gains (losses) are the leading contributors to the 24% increase in
net income for the year ended December 31, 2004 over the comparable 2003 period.
Total premiums, fees and other revenues increased to $26.4 billion, up 8%, from
the year ended December 31, 2003, primarily from continued sales growth across
most of the Company's business segments, as well as the positive impact of the
U.S. financial markets on policy fees. Policy fees from variable life and
annuity and investment-type products are typically calculated as a percentage of
the average assets in policyholder accounts. The value of these assets can
fluctuate depending on equity performance. Continued strong investment spreads
are largely due to higher than expected net investment income from corporate
joint venture income and bond and commercial mortgage prepayment fees. In
addition, an improvement in net investment gains (losses), net of income taxes,
of $485 million is primarily due to the more favorable economic environment in
2004. These increases are partially offset by an $86 million, net of income
taxes, cumulative effect of a change in accounting principle in 2004 recorded in
accordance with Statement of Position 03-1, Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for
Separate Accounts ("SOP 03-1"). In comparison, in the 2003 period the Company
recorded a $26 million charge for a cumulative effect of a change in accounting
in accordance with FASB Statement 133 Implementation Issue B36 ("Issue B36").

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31, 2002

The marketplace for financial services is extremely competitive. MetLife
reported $2,217 million in net income and diluted earnings per share of $2.94
for the year ended December 31, 2003. In 2003, after a three-year economic
slowdown, there were improvements in both the credit and equity markets. At the
same time, interest rates remained at historic lows and the S&P 500 Index was up
26% for the year. Total premiums and fees increased to $23.2 billion, up 9% over
the prior year, which primarily stems from continued sales growth across most of
the Company's segments, as well as the positive impact of the U.S. financial
markets on policy fees. Assets under management grew to $350.2 billion, up 17%
over the prior year, and Individual annuity deposits grew to $11.2 billion, up
42% over the prior year. MetLife generated over $11 billion of net investment
income while adhering to rigorous asset-liability management principles and
portfolio diversification. An increase in expenses year over year is primarily
attributable to employee-related expenses, including pension and postretirement
benefit expense and severance, expenses associated with strengthening the
Company's

47

distribution systems and taking action in consolidating office space and
reducing redundancies, while continuing to invest heavily in infrastructure. In
addition, regulatory capital increased and the Company repurchased stock through
its buyback program.

INDUSTRY TRENDS

The Company's segments continue to be influenced by a variety of industry
trends and the Company believes that each of its businesses is well positioned
to capitalize on those trends. In general, the Company sees more employers, both
large and small, outsourcing their benefits functions. Further, companies are
offering broader arrays of voluntary benefits to help retain employees while
adding little to their overall benefits costs. The Company believes that these
trends will likely continue and in fact expand across companies of all sizes.
Employers are also demanding substantial online access for their employees for
various self-service functions. This functionality requires substantial
information technology investment that smaller companies will find difficult to
absorb. This will put pressure on those smaller and mid-size companies to gain
scale quickly or exit the business. Additionally, the Company is seeing a
continuing trend of employers moving to defined contribution plans over defined
benefit plans.

In addition, alternative benefit structures, such as simple fixed benefit
products, are becoming more popular as the cost of traditional medical indemnity
products has continued to increase rapidly. These low cost fixed benefit
products can provide effective catastrophic protection for high cost illnesses
to supplement the basic health coverage provided by medical indemnity insurance.

From a demographics standpoint, the bulk of the United States population is
moving from an asset accumulation phase to an asset distribution phase. People
within ten years of retirement hold significant assets. With continually
lengthening lifespans and unstructured asset distribution, the Company believes
many of these people may outlive their retirement savings and/or require
long-term care. As a result, the Company expects that the demand for retirement
payout solutions with guarantees will increase dramatically over the next
decade. In each of these demographic scenarios, the quality of the guarantee
will be a key driver of growth. The Company believes that these guarantees will
be evaluated through balance sheet strength, the claims paying ability and
financial strength ratings of the guarantor, as well as the reputation of the
Company. The Company believes that in each of these comparisons, it will be at a
distinct advantage versus the industry on average.

The Company expects that these trends will continue to favor those with
scale, breadth of distribution and product, ability to provide advice and
financial strength to support long-term guarantees.

48

DISCUSSION OF RESULTS

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- THE COMPANY

Income from continuing operations increased by $809 million, or 43%, to
$2,708 million for the year ended December 31, 2004 from $1,899 million in the
comparable 2003 period. Income from continuing operations for the years ended
December 31, 2004 and 2003 includes the impact of certain transactions or
events, the timing, nature and amount of which are generally unpredictable.
These transactions are described in each applicable segment's discussion below.
These items contributed a benefit of $113 million, net of income taxes, to the
year ended December 31, 2004 and a benefit of $159 million, net of income taxes,
to the comparable 2003 period. Excluding the impact of these items, income from
continuing operations increased by $855 million for the year ended December 31,
2004 compared to the prior 2003 period. This increase is primarily the result of
an improvement in net investment gains (losses), net of income taxes, of $485
million. Also contributing to the increase is higher earnings from interest rate
spreads of approximately $302 million, net of income taxes, in the Institutional
and Individual segments. Additionally, the Individual segment contributed $154
million, net of income taxes, as a result of increased income from policy fees
on investment-type products partially offset by higher amortization associated
with DAC of $74 million, net of income taxes, and a reduction in earnings of $78
million, net of income taxes, resulting from an increase in the closed block
policyholder dividend obligation. In addition, the Auto & Home segment's
earnings increased primarily due to an improved non-catastrophe combined ratio
and favorable claim development related to prior accident years of $113 million,
net of income taxes. This increase was partially offset by higher catastrophe
losses of $73 million, net of income taxes.

Premiums, fees and other revenues increased by $2,046 million, or 8%, to
$26,414 million for the year ended December 31, 2004 from $24,368 million from
the comparable 2003 period. The Institutional segment

49

contributed 55% to the year over year increase. This increase stems largely from
sales growth and the acquisitions of new businesses in the group life and the
non-medical health & other businesses, as well as an increase in structured
settlements sales and pension close outs. The Reinsurance segment contributed
approximately 35% to the Company's year over year increase in premium, fees and
other revenues. This growth is primarily attributable to this segment's
coinsurance agreement with Allianz Life and continued growth in its traditional
life reinsurance operations. The Individual segment contributed 5% to the year
over year increase primarily due to higher fee income, partially offset by a
reduction in the Company's closed block premiums as the business continues to
run-off.

Interest rate spreads, which generally represent the margin between net
investment income and interest credited to policyholder account balances,
increased across the Institutional and Individual segments during the year ended
December 31, 2004 compared to the prior year period. Earnings from interest rate
spreads are influenced by several factors, including business growth, movement
in interest rates, and certain investment and investment-related transactions,
such as corporate joint venture income and bond and commercial mortgage
prepayment fees for which the timing and amount are generally unpredictable,
and, as a result, can fluctuate from period to period. If interest rates remain
low, it could result in compression of the Company's interest rate spreads on
several of its products, which provide guaranteed minimum rates of return to
policyholders. This compression could adversely impact the Company's future
financial results.

Underwriting results in the Institutional and Individual segments in the
year ended December 31, 2004 were less favorable compared to the 2003 period.
Underwriting results are significantly influenced by mortality and morbidity
trends, claim experience and the reinsurance activity related to certain blocks
of business, and, as a result, can fluctuate from period to period. Underwriting
results in the Auto & Home segment were favorable in 2004 as the combined ratio
declined to 90.4%, excluding catastrophes, from 97.1% in the prior year period.
This result is largely due to continued improvement in both auto and homeowner
claim frequencies, lower auto severities and an increase in average earned
premiums.

Other expenses increased by $670 million, or 9%, to $7,761 million for the
year ended December 31, 2004 from $7,091 million for the comparable 2003 period.
The 2004 period reflects a $49 million reduction of a premium tax liability and
a $22 million reduction of a liability for interest associated with the
resolution of all issues relating to the Internal Revenue Service's audit of
Metropolitan Life's and its subsidiaries' tax returns for the years 1997-1999.
These decreases were partially offset by a $50 million contribution of
appreciated stock to the MetLife Foundation. The 2003 period includes the impact
of a $144 million reduction of a previously established liability related to the
Company's race-conscious underwriting settlement. In addition, the 2003 period
includes a $48 million charge related to certain improperly deferred expenses at
New England Financial and a $45 million charge related to VOBA associated with a
change in reserve methodology in the Company's International segment. Excluding
the impact of these transactions, other expenses increased by $640 million, or
9%, from the comparable 2003 period. The Reinsurance segment contributed 35% to
this year over year variance primarily due to the growth in expenses with
Allianz Life and continued revenue growth, as mentioned above. In addition, 27%
of this variance is primarily attributable to increases in direct business
support expenses and non-deferrable commission expenses associated with general
business growth, as well as infrastructure improvements, partially offset by
costs in 2003 associated with office consolidations and an impairment of assets
in the Institutional segment. The Individual segment contributed 22% to this
increase primarily due to accelerated DAC amortization, as well as an increase
in expenses associated with general business growth. The remainder of the
increase is the result of general business growth across the remaining segments
and Corporate & Other.

Net investment gains (losses) increased by $764 million, or 131%, to a net
investment gain of $182 million for the year ended December 31, 2004 from a net
investment loss of ($582) million for the comparable 2003 period. This increase
is primarily due to the more favorable economic environment in 2004.

Income tax expense for the year ended December 31, 2004 was $1,071 million,
or 28% of income from continuing operations before provision for income taxes,
compared with $660 million, or 26%, for the comparable 2003 period. The 2004
effective tax rate differs from the corporate tax rate of 35% primarily due to
the impact of non-taxable investment income, tax credits for investments in low
income housing, a decrease in the deferred tax valuation allowance to recognize
the effect of certain foreign net operating loss carryforwards

50

in South Korea, and the contribution of appreciated stock to the MetLife
Foundation. In addition, the 2004 effective tax rate reflects an adjustment of
$91 million for the resolution of all issues relating to the Internal Revenue
Service's audit of Metropolitan Life's and its subsidiaries' tax returns for the
years 1997-1999. Also, the 2004 effective tax rate reflects an adjustment of $9
million consisting primarily of a revision in the estimate of income taxes for
2003. The 2003 effective tax rate differs from the corporate tax rate of 35%
primarily due to the impact of non-taxable investment income, tax credits for
investments in low income housing, and tax benefits related to the sale of
foreign subsidiaries. In addition, the 2003 effective tax rate reflects an
adjustment of $36 million consisting primarily of a revision in the estimate of
income taxes for 2002.

The income from discontinued operations is comprised of the operations of
SSRM and net investment income and net investment gains related to real estate
properties that the Company has classified as available-for-sale. The Company
entered into an agreement to sell SSRM during the third quarter of 2004. As
previously discussed, SSRM was sold effective January 31, 2005.

Income from discontinued operations, net of income taxes, decreased $208
million, or 60%, to $136 million for the year ended December 31, 2004 from $344
million for the comparable 2003 period. The decrease is primarily due to lower
recognized net investment gains from real estate properties sold in 2004 as
compared to the prior year. For the years ended December 31, 2004 and 2003, the
Company recognized $139 million and $420 million of net investment gains,
respectively, from discontinued operations related to real estate properties
sold or held-for-sale.

During the year ended December 31, 2004, the Company recorded an $86
million charge, net of income taxes, for a cumulative effect of a change in
accounting in accordance with SOP 03-1, which provides guidance on (i) the
classification and valuation of long-duration contract liabilities; (ii) the
accounting for sales inducements; and (iii) separate account presentation and
valuation. This charge is primarily related to those long-duration contract
liabilities where the amount of the liability is indexed to the performance of a
target portfolio of investment securities. During the year ended December 31,
2003, the Company recorded a $26 million charge, net of income taxes, for a
cumulative effect of a change in accounting in accordance with Issue B36.

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- THE COMPANY

Income from continuing operations increased by $786 million, or 71%, to
$1,899 million for the year ended December 31, 2003 from $1,113 million in the
comparable 2002 period. Income from continuing operations for the years 2003 and
2002 includes the impact of certain transactions or events that result in net
income not being indicative of future earnings, which are described in the
applicable segment's results of operations discussions. These items contributed
a benefit of $159 million, net of income taxes, in 2003 and a charge of $150
million, net of income taxes, in 2002. Excluding the impact of these items,
income from continuing operations increased by $477 million in 2003 compared to
the prior year. Declines in net investment losses account for $197 million, net
of income taxes, of this increase with the balance being contributed by the
Company's operations. The decline in net investment losses is largely
attributable to less credit-related losses, which is consistent with the U.S.
financial market environment.

Premiums, fees and other revenues increased 9% over the prior year
primarily as a result of growth in the annuities, retirement & savings and
variable and universal life product lines. This increase stems in part from
policy fee income earned on annuity deposits, which were $11.2 billion in 2003,
increasing 42% from the prior year. In addition, the annuity separate account
balance was $28.7 billion at December 31, 2003, up 57% versus the prior year
end. Growth in retirement & savings is primarily attributable to higher sales in
structured settlement products. Fee income from variable and universal life
products increased 12% over the prior year primarily as a result of a 25% growth
in separate account balances. In addition, the coinsurance agreement with
Allianz Life in the Reinsurance segment contributed approximately 1% to the year
over year increase. Partially offsetting these increases is a decline in
traditional life premiums, which is largely attributable to run off in the
Company's closed block of business.

Investment margins, which represent the spread between net investment
income and interest credited to policyholder account balances, remained
favorable in 2003 as the Company took appropriate crediting rate
51

reductions in most products in an effort to keep pace with the market
environment. In several product lines, where investment margins are a
substantial part of earnings, the Company still has a reasonable amount of
flexibility to reduce crediting rates further if portfolio yields were to
decline from year-end 2003 levels. Investment margins in 2003 did benefit from
higher than expected levels of prepayments.

Underwriting results varied in 2003. The group life mortality ratio
continues to be favorable at 92%. The Individual life mortality ratio was also
solid at 88%, which includes the impact of several large claims in the variable
and universal product line, some of which had lower levels of reinsurance. Group
disability's morbidity ratio increased to 98.5%, from 97.9% in the prior year
but is still within management's expected range. The Auto & Home combined ratio,
which is a measure of both the loss and loss adjustment expense ratio, as well
as the expense ratio, remained favorable at 97.1% excluding catastrophes. The
Company's International segment increased its loss recognition reserve in Taiwan
as a result of low interest rates relative to product guarantees. This action
resulted in a $19 million charge, net of income taxes.

Other expenses increased 4% over the prior year period primarily as a
result of an increase of $133 million in pension and postretirement expenses. As
a result of contributions made to the pension plan in late 2003 and early 2004,
which totaled approximately $750 million, and the stronger performance of the
pension plan assets in 2003, the Company anticipates the pension and
postretirement expenses to moderate in 2004. Other expenses in 2003 also include
the impact of several actions taken by management in the fourth quarter,
including lease terminations, office consolidations and closures, and asset
impairments. In addition, severance costs and expenses associated with strategic
initiatives at New England Financial contributed to the increase in expenses
year over year. Also, there was an increase in many of the product lines'
volume-related expenses, which are in line with 2003 business growth.

Net investment losses decreased by $310 million, or 35%, to $582 million
for the year ended December 31, 2003 from $892 million for the comparable 2002
period. This improvement is primarily due to lower credit-related losses.

Income tax expense for the year ended December 31, 2003 was $660 million,
or 26% of income from continuing operations before provision for income taxes
and cumulative effect of change in accounting, compared with $490 million, or
31%, for the comparable 2002 period. The 2003 effective tax rate differs from
the corporate tax rate of 35% primarily due to the impact of non-taxable
investment income, tax credits for investments in low income housing, a recovery
of prior year tax overpayments on tax-exempt bonds, and an adjustment consisting
primarily of a revision in the estimate of income taxes for 2002. In addition,
the 2003 effective tax rate includes a reduction of the deferred tax valuation
allowance related to certain foreign net operating loss carryforwards, and tax
benefits related to the sale and merger of foreign subsidiaries reflected in the
International segment. The 2002 effective tax rate differs from the corporate
tax rate of 35% primarily due to the impact of non-taxable investment income,
partially offset by the inability to utilize tax benefits on certain foreign
capital losses.

The income from discontinued operations is comprised of the operations of
SSRM and net investment income and net investment gains related to real estate
properties that the Company has classified as available-for-sale. The Company
sold SSRM on January 31, 2005.

Income from discontinued operations declined $148 million, or 30%, to $344
million for the year ended December 31, 2003 from $492 million in the comparable
prior year period. The decrease is primarily due to lower recognized net
investment gains from real estate properties sold in 2003 as compared to the
prior year. For the years ended December 31, 2003 and 2002, the Company
recognized $420 million and $582 million of net investment gains, respectively,
from discontinued operations related to real estate properties sold or held-
for-sale.

The Company changed its method of accounting for embedded derivatives in
certain insurance products as required by new accounting guidance which became
effective on October 1, 2003, and recorded the impact as a cumulative effect of
a change in accounting principle.

52

INSTITUTIONAL

The following table presents consolidated financial information for the
Institutional segment for the years indicated:

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- INSTITUTIONAL

Income from continuing operations increased by $483 million, or 58%, to
$1,321 million for the year ended December 31, 2004 from $838 million for the
comparable 2003 period. An improvement of $241 million, net of income taxes, in
net investment gains (losses), net of adjustments of $63 million to policyholder
benefit and claims related to net investment gains (losses), is a significant
component of the increase. In addition, favorable interest rate spreads
contributed $225 million, net of income taxes, to the increase compared to the
prior year period, with the retirement & savings products generating $183
million, net of income taxes, of this increase. Higher investment yields, growth
in the asset base and lower average crediting rates are the primary drivers of
the year over year increase in interest rate spreads. These spreads are
generally the percentage point difference between the yield earned on invested
assets and the interest rate the Company uses to credit on certain liabilities.
Therefore, given a constant value of assets and liabilities, an increase in
interest rate spreads would result in higher income to the Company. Interest
rate spreads for the year ended December 31, 2004 increased to 2.06%, 1.66% and
1.88% for group life, retirement & savings and the non-medical health & other
businesses, respectively, from 2.04%, 1.40% and 1.51% for the group life,
retirement & savings, and the non-medical health & other businesses,
respectively, in the comparable prior year period. Management generally expects
these spreads to be in the range of 1.60% to 1.80%, 1.30% to 1.45%, and 1.30% to
1.50% for the group life, retirement & savings, and the non-medical health &
other businesses, respectively. Earnings from interest rate spreads are
influenced by several factors, including

53

business growth, movement in interest rates, and certain investment and
investment-related transactions, such as corporate joint venture income and bond
and commercial mortgage prepayment fees for which the timing and amount are
generally unpredictable. As a result, income from these investment transactions
may fluctuate from period to period. Also contributing to the increase in income
from continuing operations is a reduction in a premium tax liability of $31
million in the second quarter of 2004, net of income taxes. These increases in
income from continuing operations are partially offset by less favorable
underwriting results, which are estimated to have declined $30 million, net of
income taxes, compared to the prior year period. Management attributes
approximately $20 million, net of income taxes, of this decrease to mixed claim
experience in the non-medical health & other business. Underwriting results are
significantly influenced by mortality and morbidity trends, as well as claim
experience and, as a result, can fluctuate from year to year.

Total revenues, excluding net investment gains (losses), increased by
$1,576 million, or 11%, to $15,924 million for the year ended December 31, 2004
from $14,348 million for the comparable 2003 period. Growth of $1,132 million in
premiums, fees, and other revenues contributed to the revenue increase. A $480
million increase in premiums, fees and other revenues in the non-medical health
& other business compared to the prior year is partly due to the continued
growth in long-term care of $148 million, of which $41 million is related to the
2004 acquisition of TIAA/CREF's long-term care business. Growth in the small
market products, disability business, and dental business contributed $305
million to the year over year increase. Group life insurance premiums, fees and
other revenues increased by $461 million, which management primarily attributes
to improved sales and favorable persistency, as well as the acquisition of the
John Hancock group life insurance business in late 2003, which contributed $20
million to the increase. Retirement & savings' premiums, fees and other revenues
increased by $191 million, which is largely due to a growth in premiums of $172
million, resulting primarily from an increase in structured settlement sales and
pension close-outs. Premiums, fees and other revenues from retirement & savings
products are significantly influenced by large transactions, and as a result,
can fluctuate from year to year. In addition, an increase of $444 million in net
investment income, which is primarily due to higher income from growth in the
asset base, earnings on corporate joint venture income and bond and commercial
mortgage prepayment fees contributed to the overall increase in revenues. This
increase is a component of the favorable interest rate spreads discussed above.

Total expenses increased by $1,368 million, or 11%, to $14,108 million for
the year ended December 31, 2004 from $12,740 million for the comparable 2003
period. Policyholder benefits and claims combined with policyholder dividends
increased by $1,200 million to $11,241 million for the year ended December 31,
2004 from $10,041 million for the comparable prior year period. This increase is
primarily attributable to a $459 million, $461 million, and $280 million
increase in the group life, non-medical health & other and retirement & savings
businesses, respectively. These increases are predominately attributable to the
business growth discussed in the revenue discussion above. The increases in
group life and the non-medical health & other businesses include the impact of
the acquisition of certain businesses from John Hancock and TIAA/ CREF of $11
million and $39 million, respectively. Also included in the increase is the
impact of less favorable claim experience, primarily in the non-medical health &
other business. Interest credited to policyholder account balances increased by
$45 million over the prior year period primarily as a result of the impact of
growth in guaranteed interest contracts within the retirement & savings
business. Other operating expenses increased $123 million. The largest component
of this expense growth is an increase of $97 million related to increases in
direct business support expenses. In addition, non-deferrable commissions and
premium taxes increased by $25 million. This is net of a $49 million reduction
in a premium tax liability in the second quarter of 2004. Excluding this item,
non-deferrable commissions and premium taxes increased by $74 million, which is
commensurate with the aforementioned revenue growth. In addition, the Company
incurred infrastructure improvement costs of $34 million and expenses of $12
million related to the closing of one of the Company's disability claims centers
which were partially offset by a decline of $45 million primarily relating to
expenses incurred in the prior year for office closures and consolidations and
an impairment of related assets.

54

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- INSTITUTIONAL

Income from continuing operations increased by $206 million, or 33%, to
$838 million for the year ended December 31, 2003 from $632 million for the
comparable 2002 period. Revenue growth combined with favorable underwriting
results and interest margins contributed to the year over year increase. Lower
net investment losses in 2003 versus 2002 contributed $124 million, net of
income taxes, to the year over year increase. Favorable underwriting experience
was partially offset by an increase in expenses associated with office closures
and other consolidations, as well as an increase in pension and postretirement
benefit costs. In addition, the prior year period includes a $20 million, net of
income taxes, benefit from the reduction of a previously established liability
for the Company's 2001 business realignment initiatives and a $17 million, net
of income taxes, benefit from the reduction of a previously established
liability for disability insurance-related losses from the September 11, 2001
tragedies.

Total revenues, excluding net investment gains and losses, increased by
$961 million, or 7%, to $14,348 million for the year ended December 31, 2003
from $13,387 million for the comparable 2002 period. The increase is
attributable to both the group insurance and the retirement & savings product
lines. Within group insurance, life insurance premiums and fees increased by
$248 million, or 5%, which is in line with management's expectations. This
increase is attributable primarily to higher sales and favorable persistency.
The late 2003 acquisition of the John Hancock block of group life business
contributed $72 million to this increase. In addition, the long-term care,
dental, and disability products experienced continued growth at a combined rate
of approximately 14%, which is in line with management's expectations.
Retirement & savings revenues increased approximately 12% primarily due to
higher sales in the structured settlement products partially offset by the
impact of a sale of a significant, single premium contract in the second quarter
of 2002. Premiums and fees from retirement and saving products are significantly
influenced by large transactions and, as a result, can fluctuate from year to
year. These increases were partially offset by a decrease in revenues primarily
due to a decline in retirement & savings administrative fees from the Company's
401(k) business. This decline resulted from the exit from the large market
401(k) business in late 2001. Consequently, revenue decreased as business was
transferred to other carriers throughout 2002.

Total expenses increased by $817 million, or 7%, to $12,740 million for the
year ended December 31, 2003 from $11,923 million for the comparable 2002
period. Policyholder-related expenses increased $564 million primarily as a
function of the growth in business. The increase in expenses is offset by
favorable underwriting results in the term life insurance, dental, long-term
care, and retirement & savings products. The term life mortality incurred loss
ratio, which represents actual life claims as a percentage of assumed claims
incurred used in the determination of future policy benefits, was 92% for 2003
as compared to 93.6% in 2002. Underwriting results declined in disability as the
morbidity incurred loss ratio, which represents actual disability claims as a
percentage of assumed claims incurred used in the determination of future policy
benefits, increased to 98.5% in 2003 from 97.9% in the prior year. The 2003
ratio was within management's expected range. In addition, the 2002 period
includes a $28 million release of a previously established liability for
disability insurance-related losses from the September 11, 2001 tragedies. Other
expenses increased by $253 million over the prior year period. Group insurance
and retirement & savings expenses increased $115 million primarily due to an
increase in non-deferrable expenses associated with the aforementioned revenue
growth, $77 million from an increase in pension and postretirement benefit
expense, and a $33 million increase in expenses associated with office closures
and other consolidations. In addition, the prior year period includes a $30
million reduction of a previously established liability for the Company's 2001
business realignment initiatives.

55

INDIVIDUAL

The following table presents consolidated financial information for the
Individual segment for the years indicated:

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- INDIVIDUAL

Income from continuing operations increased by $300 million, or 53%, to
$867 million for the year ended December 31, 2004 from $567 million for the
comparable 2003 period. Included in this increase is an improvement in net
investment gains (losses) of $242 million, net of income taxes. This increase
includes additional fee income of $154 million, net of income taxes, primarily
related to separate account products. In addition, improvement in interest rate
spreads contributed $77 million, net of income taxes, to the year over year
increase. These spreads are generally the percentage point difference between
the yield earned on invested assets and the interest rate the Company uses to
credit on certain liabilities. Therefore, given a constant value of assets and
liabilities, an increase in interest rate spreads would result in higher income
to the Company. Interest rate spreads include income from certain investment
transactions, including corporate joint venture income and bond and commercial
mortgage prepayment fees, the timing and amount of which are generally
unpredictable. As a result, income from these investment transactions may
fluctuate from year to year. These types of investment transactions contributed
$38 million, net of income taxes, to the improvement in interest rate spreads.
Additionally, the charge of $31 million, net of income taxes, in 2003 related to
certain improperly deferred expenses at New England Financial, and a reduction
in policyholder dividends of $39 million, net of income taxes, in 2004
contributed to the increase in income from continuing operations. These
increases in income from continuing operations are partially offset by a
reduction in earnings of $78 million, net of income taxes, resulting from an
increase in the closed block-related policyholder dividend obligation,
associated primarily with an improvement in net investment gains (losses).
Higher DAC amortization of $74 million, net of income taxes, also increased
expenses for the year ended December 31, 2004. Additionally, offsetting these
increases are lower net investment income on traditional life and income

56

annuity products of $43 million, net of income taxes. The application of SOP
03-1 and the corresponding cost of hedging guaranteed annuity benefit riders
reduced earnings by $30 million, net of income taxes. In addition, less
favorable underwriting results in the traditional and universal life products of
$20 million, net of income taxes, and higher general spending of $15 million,
net of income taxes, added to this offset. These underwriting results are
significantly influenced by mortality experience and the reinsurance activity
related to certain blocks of business, and as a result can fluctuate from year
to year.

Total revenues, excluding net investment gains (losses), increased by $43
million, or less than 1%, to $12,577 million for the year ended December 31,
2004 from $12,534 million for the comparable 2003 period. This increase includes
higher fee income primarily from separate account products of $252 million
resulting from a combination of growth in the business and improved overall
market performance. Policy fees from variable life and annuity and
investment-type products are typically calculated as a percentage of the average
assets in policyholder accounts. The value of these assets can fluctuate
depending on equity performance. In addition, management attributes higher
premiums of $37 million in 2004 to the active marketing of income annuity
products. The increased volume of sales in 2004 also resulted in higher
broker/dealer and other subsidiaries revenues of $27 million. Partially
offsetting the increases in total revenues for the year ended December 31, 2004
are lower premiums related to the Company's closed block of business of $209
million, which continues to run off at management's expected range of 3% to 6%
per year. In addition, lower net investment income of $64 million resulting from
lower investment yields offset other increases in revenues.

Total expenses decreased by $26 million, or less than 1%, to $11,353
million for the year ended December 31, 2004 from $11,379 million for the
comparable 2003 period. Lower expenses are primarily the result of a $181
million decrease in the closed block policyholder benefits partially
attributable to lower activity associated with the run off of this business and
a $119 million decline in interest credited to policyholder account balances due
to lower crediting rates. Also included in the decrease in expenses are lower
policyholder dividends of $62 million resulting from reductions in the dividend
scale in late 2003 and a charge in 2003 related to certain improperly deferred
expenses at New England Financial of $48 million. Partially offsetting these
decreases in expenses is a $123 million increase in the closed block-related
policyholder dividend obligation based on positive performance of the closed
block and higher DAC amortization of $116 million. The increase in DAC
amortization is a result of accelerated amortization resulting from improvement
in net investment gains (losses) and the update of management's assumptions used
to determine estimated gross margins. Additionally, offsetting the decrease to
expenses is a $46 million increase from the application of SOP 03-1 and the
corresponding cost of hedging guaranteed annuity benefit riders and a $35
million increase in future policy benefits commensurate with the increase in
income annuity premiums. Further, the decrease in expenses was offset by less
favorable underwriting results in the traditional and universal life products of
$32 million, higher general spending of $23 million and a $10 million increase
in broker/dealer and other subsidiaries related expenses.

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- INDIVIDUAL

Income from continuing operations decreased by $55 million, or 9%, to $567
million for the year ended December 31, 2003 from $622 million for the
comparable 2002 period. The decrease year over year is primarily driven by an
increase in expenses of $113 million, or 1%, which is largely attributable to an
increase in expenses associated with office closures and other consolidations,
pension and postretirement benefit costs, an increase in legal-related costs and
an adjustment related to certain improperly deferred expenses at New England
Financial. Although revenues are essentially flat year over year, policy fees
from variable life and annuity and investment-type products grew 15% year over
year. In addition, there is a slight increase in premiums related to other
traditional life products. These increases are offset by a 5% decline in
premiums from the Company's closed block business, which consists of
participating policies issued prior to the Company's demutualization. Premiums
on the closed block represent approximately 80% of this segment's premiums for
the year ended December 31, 2003.

Total revenues, excluding net investment gains and losses, decreased by $7
million, or less than 1%, to $12,534 million for the year ended December 31,
2003 from $12,541 million for the comparable 2002 period. Policy fees from
variable life and annuity and investment-type products grew by 15% over the
prior year
57

period. This growth is primarily a result of an 18% increase in the average
separate account balances, which is largely attributable to improvements in the
U.S. financial markets. Additionally, this increase is associated with the aging
of the in-force policies, as well as an increase in the sales of the enterprise
variable annuity product through non-traditional distribution channels. Policy
fees from variable life and annuity and investment-type products are typically
calculated as a percentage of average assets. The value of these assets can
fluctuate depending on equity market performance. This increase in policy fee
income was almost entirely offset by declines in premiums and net investment
income. Premiums associated with the Company's closed block of business declined
by $186 million, or 5%, which is in line with management's expectations, as this
business continues to run-off. Partially offsetting this decline is a slight
increase in the other traditional life products. The decline in net investment
income is mainly due to the change in capital allocation methodology and lower
investment yields year over year.

Total expenses increased by $113 million, or 1%, to $11,379 million for the
year ended December 31, 2003 from $11,266 million for the comparable 2002
period. Other expenses increased by $208 million over the prior year period
primarily as a result of expenses associated with certain efficiency initiatives
and events. The most significant items include an increase of $67 million from
pension and postretirement benefit expense, a $48 million expense recorded in
the second quarter of 2003 for an adjustment related to certain improperly
deferred expenses at New England Financial, $42 million in expenses associated
with office closures and other consolidations, $42 million increase in
legal-related costs, and other expenses associated with strategic initiatives at
New England Financial. Offsetting these expense increases are a decline in
policyholder benefits consistent with the aforementioned decline in the closed
block and a decrease in dividends due to the reduction of the dividend scale in
the fourth quarter of 2002, reflecting the impact of the low U.S. interest rate
environment on the asset portfolios supporting these policies.

AUTO & HOME

The following table presents consolidated financial information for the
Auto & Home segment for the years indicated:

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- AUTO & HOME

Net income increased by $51 million, or 32%, to $208 million for the year
ended December 31, 2004 from $157 million for the comparable 2003 period. This
increase is primarily attributable to an improved non-

58

catastrophe combined ratio, which resulted in a benefit of $52 million, net of
income taxes, improved claim development related to prior accident years of $61
million, net of income taxes, and an increase in net investment income of $13
million, net of income taxes. Partially offsetting these favorable variances are
increased catastrophe losses of $73 million, net of income taxes. This increase
resulted from the four hurricanes that struck the Southeastern United States in
August and September of 2004.

Total revenues, excluding net investment gains (losses), increased by $56
million, or 2%, to $3,154 million for the year ended December 31, 2004 from
$3,098 million for the comparable 2003 period. This increase is primarily
attributable to a $40 million increase in premiums, which is largely the result
of an increase in the average earned premium resulting from continued rate
increases. In addition, a $13 million increase in net investment income is
largely attributable to growth in the underlying asset base, an increase in the
investment yield and higher income related to tax advantaged municipal bonds.

Total expenses decreased by $20 million, or 1%, to $2,876 for the year
ended December 31, 2004 from $2,896 million for the comparable 2003 period. This
decrease is the result of an improvement in policyholder benefits and claims due
to a favorable change of $94 million in prior year claim development, as well as
a decrease in expenses of $80 million resulting from an improved non-catastrophe
combined ratio primarily attributable to lower automobile and homeowner's claim
frequencies. These favorable changes in expenses are partially offset by an
increase in losses from catastrophes of $112 million and a $39 million increase
in expenses primarily due to inflation and employee and other related labor
costs. The combined ratio excluding catastrophes declined to 90.4% for the year
ended December 31, 2004 from 97.1% for the comparable 2003 period.

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- AUTO & HOME

Net income increased by $25 million, or 19%, to $157 million for the year
ended December 31, 2003 from $132 million for the comparable 2002 period. The
increase in earnings year over year is mainly due to premium growth, lower
investment losses and a reduction in expenses, partially offset by adverse
claims development.

Total revenues, excluding net investment gains and losses, increased by $67
million, or 2%, to $3,098 million for the year ended December 31, 2003 from
$3,031 million for the comparable 2002 period. This variance is mainly due to
increases in the average earned premium due to rate increases, partially offset
by lower investment income primarily resulting from the change in capital
allocation methodology.

Total expenses increased by $84 million, or 3%, to $2,896 million for the
year ended December 31, 2003 from $2,812 million for the comparable 2002 period.
Adverse claims development related to prior accident years, resulting mostly
from bodily injury and uninsured motorists claims, accounted for $46 million of
the increase in policyholder benefits. Also contributing to this increase are
higher catastrophe losses of $22 million. Partially offsetting these increases
are improved non-catastrophe homeowner's claims frequencies, a reduction in the
number of auto and homeowner's policies in-force, and underwriting and agency
management actions. In addition, there was a $23 million reduction in expenses
resulting from the completion of the St. Paul integration and a $35 million
reduction in the cost associated with the New York assigned risk plan. The
combined ratio, excluding catastrophes, which represents losses and total
expenses including claims as a percentage of premiums, declined to 97.1% for the
year ended December 31, 2003 versus 97.4% for the comparable 2002 period.

59

INTERNATIONAL

The following table presents consolidated financial information for the
International segment for the years indicated:

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- INTERNATIONAL

Income from continuing operations decreased by $15 million, or 7%, to $193
million for the year ended December 31, 2004 from $208 million for the
comparable 2003 period. The prior year includes a $62 million benefit, net of
income taxes, from the merger of the Mexican operations and a reduction in
policyholder liabilities resulting from a change in reserve methodology, a $12
million tax benefit in Chile related to the merger of two subsidiaries and an $8
million benefit, net of income taxes, related to reinsurance treaties. These
increases are partially offset by a $19 million charge, net of income taxes, in
Taiwan related to an increased loss recognition reserve due to low interest
rates relative to product guarantees. The prior year also includes a $4 million
benefit, net of income taxes, related to the Spanish operations, which were sold
in 2003. Excluding these items, income from continuing operations increased by
$52 million or 37%. A significant component of this increase is attributable to
the application of SOP 03-1 in the current year, which resulted in a $21 million
decrease, net of income taxes, in policyholder liabilities in Mexico. The
primary driver of the current year impact is a decline in the fair value of the
underlying assets associated with these contracts. Additionally, a $10 million,
net of income taxes, increase in net investment gains is primarily due to the
gain from the sale of the Spanish operations. In addition, 2004 includes $8
million of certain tax-related benefits in South Korea. The remainder of the
increase can be attributed to business growth in other countries.

Total revenues, excluding net investment gains (losses), increased by $161
million, or 6%, to $2,693 million for the year ended December 31, 2004 from
$2,532 million for the comparable 2003 period. The prior year period includes
$230 million of revenues related to the Spanish operations, which were sold in
2003. Excluding the sale of these operations, revenues increased by $391
million, or 17%. The Company's Mexican and Chilean

60

operations increased revenues by $144 million and $58 million, respectively,
primarily due to growth in the business, as well as improved investment
earnings. The Company's operations in South Korea and Taiwan also have increased
revenues by $121 million and $34 million, respectively, primarily due to
increased new sales and renewal business. Changes in foreign currency exchange
rates contributed $14 million to the year over year increase in revenues. The
remainder of the increase can be attributed to business growth in other
countries.

Total expenses increased by $122 million, or 5%, to $2,437 million for the
year ended December 31, 2004 from $2,315 million for the comparable 2003 period.
The prior year includes expenses of $223 million related to the Spanish
operations, which were sold in 2003. The prior year also includes a $79 million
benefit related to a reduction in the Mexican operation's policyholder
liabilities resulting from a change in reserve methodology, partially offset by
a related increase of $45 million in amortization of VOBA. Additionally,
Taiwan's 2003 expenses include a $30 million pre-tax charge due to an increased
loss recognition reserve as a result of low interest rates relative to product
guarantees. Excluding these items, expenses increased $341 million, or 16%, over
the prior year. Expenses grew by $71 million, $98 million, $58 million and $36
million for the operations in Mexico, South Korea, Chile and Taiwan,
respectively, which is commensurate with the revenue growth discussed above. In
addition, 2004 includes a $33 million decrease in Mexico's policyholder
liabilities resulting from the application of SOP 03-1. Canada's expenses
increased by $13 million due primarily to the strengthening of the liability on
its pension business related to changes in mortality assumptions in the fourth
quarter of 2004. Changes in foreign currency exchange rates contributed $18
million to the year over year increase in expenses. The remainder of the
increase in total expenses is primarily related to the ongoing investment in
infrastructure.

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- INTERNATIONAL

Net income increased by $124 million, or 148%, to $208 million for the year
ended December 31, 2003 from $84 million for the comparable 2002 period. The
acquisition of Hidalgo accounted for $48 million of this increase. Also
contributing to the increase in earnings during 2003 is a $62 million benefit,
net of income taxes, from the merger of the Mexican operations and a reduction
in policyholder liabilities resulting from a change in reserve methodology, a
$12 million tax benefit in Chile and an $8 million benefit, net of income taxes,
related to reinsurance treaties. These increases are partially offset by a $19
million charge, net of income taxes, in Taiwan related to an increased loss
recognition reserve due to low interest rates relative to product guarantees.

Total revenues, excluding net investment gains and losses, increased by
$402 million, or 19%, to $2,532 million for the year ended December 31, 2003
from $2,130 million for the comparable 2002 period. This increase is primarily
due to the acquisition of Hidalgo, which accounted for $469 million of the
variance, partially offset by decreases in Canada of $106 million attributable
to a non-recurring sale of an annuity contract and $28 million relating to the
restructuring of a pension contract from an investment-type product to a
long-term annuity, both of which occurred in 2002. In addition, South Korea's,
Chile's and Taiwan's revenues increased by $102 million, $60 million and $36
million, respectively, primarily due to business growth. These increases are
partially offset by a $161 million decrease in Mexico, excluding Hidalgo.
Anticipated actions taken by the Mexican government adversely impacted the
insurance and annuities market and resulted in a decline in premiums in Mexico's
group and individual life businesses. In addition, the cancellation of a large
broker-sponsored case at the end of 2002 and the weakening of the peso also
contributed to the 2003 decline in Mexico.

Total expenses increased by $306 million, or 15%, to $2,315 million for the
year ended December 31, 2003 from $2,009 million for the comparable 2002 period.
The acquisition of Hidalgo contributed $394 million to this increase. Partially
offsetting this is a decrease of $106 million for the aforementioned
non-recurring sale of an annuity contract and a decrease of $28 million for the
restructuring of a pension contract, both of which occurred in 2002. In
addition, South Korea's, Chile's and Taiwan's expenses increased by $95 million,
$65 million and $64 million, respectively, commensurate with the revenue
increases in each country. Additionally, Taiwan's expenses include a $30 million
pre-tax charge due to an increased loss recognition reserve as a result of low
interest rates relative to product guarantees. These increases are partially
offset by a
61

$251 million decrease in Mexico, other than Hidalgo, primarily as a result of
the impact on expenses from the aforementioned revenue decline in Mexico and a
reduction in policyholder liabilities related to a change in reserve
methodology.

REINSURANCE

The following table presents consolidated financial information for the
Reinsurance segment for the years indicated:

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- REINSURANCE

Income from continuing operations increased $8 million, or 9%, to $100
million for the year ended December 31, 2004 from $92 million for the comparable
2003 period. This increase is attributable to a 26% increase in revenues,
primarily due to strong premium growth across all of RGA's geographical
segments, which includes the effect of the Allianz Life transaction. The growth
in income from continuing operations is partially offset by higher minority
interest expense as MetLife's ownership in RGA decreased from 59% to 52% in the
comparable periods and a negotiated claim settlement in RGA's accident and
health business, which is currently in run-off, of $8 million for the third
quarter of 2004, net of income taxes and minority interest.

Total revenues, excluding net investment gains (losses), increased by $822
million, or 26%, to $4,012 million for the year ended December 31, 2004 from
$3,190 million for the comparable 2003 period due primarily to a $699 million
increase in premiums. The premium increase during the year ended December 31,
2004 is partially the result of RGA's coinsurance agreement with Allianz Life
under which RGA assumed 100% of Allianz Life's United States traditional life
reinsurance business. This transaction closed during 2003, with six months of
reinsurance activity recorded in 2003, as compared to twelve months in 2004. New
premiums from facultative and automatic treaties and renewal premiums on
existing blocks of business in the United States and certain international
operations also contributed to the premium growth. Premium levels

62

are significantly influenced by large transactions, such as the Allianz Life
transaction, and reporting practices of ceding companies, and as a result, can
fluctuate from period to period. Net investment income also contributed to
revenue growth, increasing $115 million, or 24%, to $588 million in 2004 from
$473 million in 2003. The growth in net investment income is the result of the
growth in RGA's operations and asset base, as well as the conversion of a large
reinsurance treaty from a funds withheld to coinsurance basis which resulted in
an increase of $12 million in net investment income.

Total expenses increased by $840 million, or 27%, to $3,921 million for the
year ended December 31, 2004 from $3,081 million for the comparable 2003 period.
This increase is commensurate with the growth in revenues and is primarily
attributable to an increase of $617 million in policyholder benefits and claims
and interest credited to policyholder account balances, primarily associated
with RGA's growth in insurance in force of approximately $200 billion, a
negotiated claim settlement in RGA's accident and health business of $24
million, and the inclusion of only six months of results from the Allianz Life
transaction in the prior year. Also, during the fourth quarter of 2004, RGA
recorded approximately $18 million in policy benefits and claims as a result of
the Indian Ocean tsunami on December 26, 2004 and claims development associated
with its reinsurance of Argentine pension business. Other expenses increased
primarily due to an increase of $106 million in allowances and related expenses
on assumed reinsurance associated with RGA's growth in premiums and insurance in
force and $15 million in additional amortization of DAC from the conversion of a
large reinsurance treaty from a funds withheld to coinsurance basis. The balance
of the growth in other expenses is primarily due to the aforementioned increase
in minority interest expense from $114 million in 2003 to $161 million in 2004.

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- REINSURANCE

Net income increased by $8 million, or 10%, to $92 million for the year
ended December 31, 2003 from $84 million for the comparable 2002 period. The
increase in earnings year over year is primarily attributable to new business
growth, additional renewal premiums, as well as a large coinsurance agreement
with Allianz Life under which RGA assumed 100% of Allianz Life's U.S.
traditional life reinsurance business.

Total revenues, excluding net investment gains and losses, increased by
$721 million, or 29%, to $3,190 million for the year ended December 31, 2003
from $2,469 million for the comparable 2002 period. This increase is primarily
due to new premiums from facultative and automatic treaties and renewal premiums
on existing blocks of business, particularly in the United States and United
Kingdom reinsurance operations. In addition, there was a $252 million increase
in revenues due to the transaction with Allianz Life in late 2003.

Total expenses increased by $742 million, or 32%, to $3,081 million for the
year ended December 31, 2003 from $2,339 million for the comparable 2002 period.
This increase is consistent with the growth in revenues and is primarily
attributable to policyholder benefits and claims and allowances paid on assumed
reinsurance, particularly on certain higher commission business in the United
Kingdom. The aforementioned transaction with Allianz Life contributed $242
million to this increase.

63

CORPORATE & OTHER

The following table presents consolidated financial information for the
Corporate & Other for the years indicated:

YEAR ENDED DECEMBER 31, 2004 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2003 -- CORPORATE & OTHER

Income (Loss) from continuing operations decreased by $18 million, or 49%,
to $19 million for the year ended December 31, 2004 from $37 million for the
comparable 2003 period. The 2004 period includes a $105 million benefit
associated with the resolution of issues relating to the Internal Revenue
Service's audit of Metropolitan Life's and its subsidiaries' tax returns for the
years 1997-1999. Also included in the 2004 year is an expense related to a $32
million contribution, net of income taxes, to the MetLife Foundation and a $9
million benefit from a revision of the estimate of income taxes for 2003. The
year ended December 31, 2003 includes a $92 million benefit, net of income
taxes, from the reduction of a previously established liability related to the
Company's race-conscious underwriting settlement, as well as a $36 million
benefit from a revision of the estimate of income taxes for 2002. Excluding the
impact of these items, income from continuing operations increased by $28
million in the year ended December 31, 2004 from the comparable 2003 period. The
increase in earnings in 2004 over the prior year period is primarily
attributable to an increase in net investment income of $183 million and a
decrease in policyholder benefits and claims of $27 million, both of which are
net of income taxes. This is partially offset by an increase in net investment
losses of $93 million and an increase in interest on bank holder deposits of $14
million, a charge related to unoccupied space of $10 million, as well as
expenses associated with the piloting of a new product of $7 million, all net of
income taxes. In addition, the tax benefit increased by $41 million as a result
of a change in the Company's allocation of tax expense among segments.

Total revenues, excluding net investment gains (losses), increased by $267
million, or 130%, to $472 million for the year ended December 31, 2004 from $205
million for the comparable 2003 period. The increase in revenue is primarily
attributable to increases in income on fixed maturity securities, corporate
joint

64

venture income, mortgage loans on real estate and equity securities due to
increased invested assets and higher yields.

Total expenses increased by $185 million, or 52%, to $540 million for the
year ended December 31, 2004 from $355 million for the comparable 2003 period.
The year ended December 31, 2004 includes a $50 million contribution to the
MetLife Foundation, partially offset by a $22 million reduction of interest
expense associated with the resolution of all issues relating to the Internal
Revenue Service's audit of Metropolitan Life's and its subsidiaries' tax returns
for the years 1997-1999. The year ended December 31, 2003 includes a $144
million benefit from a reduction of a previously established liability
associated with the Company's race-conscious underwriting settlement. Excluding
these items, other expenses increased by $13 million for the year ended December
31, 2004. This increase is attributable to higher interest expense of $61
million as a result of the issuance of senior notes at the end of 2003 and
during 2004, as well as higher interest credited to bank holder deposits of $22
million as a result of growth in MetLife Bank, N.A., ("MetLife Bank"), a
national bank's, business. This increase is partially offset by a decrease of
$54 million from lower interest expense on surplus notes, as well as lower
expenses from policyholder benefits and claims of $43 million, a charge related
to unoccupied space of $15 million, as well as expenses associated with the
piloting of a new product of $11 million.

YEAR ENDED DECEMBER 31, 2003 COMPARED WITH THE YEAR ENDED DECEMBER 31,
2002 -- CORPORATE & OTHER

Income (Loss) from continuing operations increased by $478 million, or
108%, to $37 million for the year ended December 31, 2003 from ($441) million
for the comparable 2002 period. The 2003 period includes a $92 million benefit,
net of income taxes, from a reduction of a previously established liability
related to the Company's race conscious underwriting settlement and a $36
million benefit from a revision of the estimate of income tax for 2002. The 2002
period includes a $169 million charge, net of income taxes, to cover costs
associated with asbestos-related claims, a $48 million charge, net of income
taxes, to cover costs associated with the resolution of a federal government
investigation of General American Life Insurance Company's ("General American")
former Medicare business, and a $30 million reduction, net of income taxes, of a
previously established liability related to the Company's sales practice class
action settlement in 1999. Excluding the impact of these items, the increase in
earnings year over year is mainly due to higher investment income.

Total revenues, excluding net investment gains and losses, increased by
$190 million, or 1,267%, to $205 million for the year ended December 31, 2003
from $15 million for the comparable 2002 period. This variance is mainly due to
higher investment income resulting from the change in capital allocation
methodology, as well as increases in income from corporate joint ventures,
equity-linked notes and securities lending.

Total expenses decreased by $374 million, or 51%, to $355 million for the
year ended December 31, 2003 from $729 million for the comparable 2002 period.
The 2003 period includes a $144 million reduction of a previously established
liability related to the Company's race-conscious underwriting settlement. The
2002 period includes a $266 million charge to increase the Company's
asbestos-related liability and expenses to cover costs associated with the
resolution of federal government investigations of General American's former
Medicare business.

METLIFE CAPITAL TRUST I

In connection with MetLife, Inc.'s, initial public offering in April 2000,
the Holding Company and MetLife Capital Trust I (the "Trust") issued equity
security units (the "units"). Each unit originally consisted of (i) a contract
to purchase, for $50, shares of the Holding Company's common stock (the
"purchase contracts") on May 15, 2003; and (ii) a capital security of the Trust,
with a stated liquidation amount of $50.

In accordance with the terms of the units, the Trust was dissolved on
February 5, 2003, and $1,006 million aggregate principal amount of 8.00%
debentures of the Holding Company (the "MetLife debentures"), the sole assets of
the Trust, were distributed to the owners of the Trust's capital securities in
65

exchange for their capital securities. The MetLife debentures were remarketed on
behalf of the debenture owners on February 12, 2003 and the interest rate on the
MetLife debentures was reset as of February 15, 2003 to 3.911% per annum for a
yield to maturity of 2.876%. As a result of the remarketing, the debenture
owners received $21 million ($0.03 per diluted common share) in excess of the
carrying value of the capital securities. This excess was recorded by the
Company as a charge to additional paid-in capital and, for the purpose of
calculating earnings per share, is subtracted from net income to arrive at net
income available to common shareholders.

On May 15, 2003, the purchase contracts associated with the units were
settled. In exchange for $1,006 million, the Company issued 2.97 shares of
MetLife, Inc. common stock per purchase contract, or 59.8 million shares of
treasury stock. The excess of the Company's cost of the treasury stock ($1,662
million) over the contract price of the stock issued to the purchase contract
holders ($1,006 million) was $656 million, which was recorded as a direct
reduction to retained earnings.

Due to the dissolution of the Trust in 2003, there was no interest expense
on capital securities for the year ended December 31, 2004. Interest expense on
the capital securities is included in other expenses and was $10 million and $81
million for the years ended December 31, 2003 and 2002, respectively.

SUBSEQUENT EVENTS

On January 31, 2005, the Holding Company entered into an agreement to
acquire all of the outstanding shares of capital stock of certain indirect
subsidiaries of Citigroup Inc., including the majority of The Travelers
Insurance Company ("Travelers"), and substantially all of Citigroup Inc.'s
international insurance businesses for a purchase price of $11.5 billion,
subject to adjustment as described in the acquisition agreement. As a condition
to closing, Citigroup Inc. and the Holding Company will enter into ten-year
agreements under which the Company will expand its distribution by making
products available through certain Citigroup distribution channels, subject to
appropriate suitability and other standards. The transaction is expected to
close in the summer of 2005. Approximately $1 billion to $3 billion of the
purchase price will be paid in MetLife stock with the remainder paid in cash
which will be financed through a combination of cash on hand, debt, mandatorily
convertible securities and selected asset sales depending on market conditions,
timing, valuation considerations and the relative attractiveness of funding
alternatives.

The Company has entered into brokerage agreements relating to the possible
sale of two of its real estate investments, 200 Park Avenue and One Madison
Avenue in New York City. The Company is also contemplating other asset sales,
including selling some or all of its beneficially owned shares in RGA.

On January 31, 2005, the Holding Company completed the sale of SSRM to a
third party for $328 million of cash and stock. As a result of the sale of SSRM,
the Company recognized income from discontinued operations of approximately $150
million, net of income taxes, comprised of a realized gain of $166 million, net
of income taxes, and an operating expense related to a lease abandonment of $16
million, net of income taxes. Under the terms of the agreement, MetLife will
have an opportunity to receive, prior to the end of 2006, additional payments
aggregating up to approximately 25% of the base purchase price, based on, among
other things, certain revenue retention and growth measures. The purchase price
is also subject to reduction over five years, depending on retention of certain
MetLife-related business. The Company has reclassified the assets, liabilities
and operations of SSRM into discontinued operations for all periods presented in
the consolidated financial statements. Additionally, the sale of SSRM resulted
in the elimination of the Company's Asset Management segment. The remaining
asset management business, which is insignificant, has been reclassified into
Corporate & Other. The Company's discontinued operations for the year ended
December 31, 2004 also includes expenses of approximately $20 million, net of
income taxes, related to the sale of SSRM.

LIQUIDITY AND CAPITAL RESOURCES

For purposes of this discussion, the terms "MetLife" or the "Company" refer
to MetLife, Inc., a Delaware corporation (the "Holding Company"), and its
subsidiaries, including Metropolitan Life Insurance Company ("Metropolitan
Life").
66

THE COMPANY

CAPITAL

RBC. Section 1322 of the New York Insurance Law requires that New York
domestic life insurers report their RBC based on a formula calculated by
applying factors to various asset, premium and statutory reserve items. Similar
rules apply to each of the Company's domestic insurance subsidiaries. The
formula takes into account the risk characteristics of the insurer, including
asset risk, insurance risk, interest rate risk and business risk. Section 1322
gives the New York Superintendent of Insurance (the "Superintendent") explicit
regulatory authority to require various actions by, or to take various actions
against, insurers whose total adjusted capital does not exceed certain RBC
levels. At December 31, 2004, Metropolitan Life's and each of the Holding
Company's domestic insurance subsidiaries' total adjusted capital was in excess
of each of the RBC levels required by each state of domicile.

The NAIC adopted the Codification of Statutory Accounting Principles
("Codification") in 2001. Codification was intended to standardize regulatory
accounting and reporting to state insurance departments. However, statutory
accounting principles continue to be established by individual state laws and
permitted practices. The New York State Department of Insurance (the
"Department") has adopted Codification with certain modifications for the
preparation of statutory financial statements of insurance companies domiciled
in New York. Modifications by the various state insurance departments may impact
the effect of Codification on the statutory capital and surplus of Metropolitan
Life and the Holding Company's other insurance subsidiaries.

ASSET/LIABILITY MANAGEMENT

The Company actively manages its assets using an approach that balances
quality, diversification, asset/liability matching, liquidity and investment
return. The goals of the investment process are to optimize, net of income
taxes, risk-adjusted investment income and risk-adjusted total return while
ensuring that the assets and liabilities are managed on a cash flow and duration
basis. The asset/liability management process is the shared responsibility of
the Portfolio Management Unit, the Business Finance Asset/Liability Management
Unit, and the operating business segments under the supervision of the various
product line specific Asset/Liability Management Committees ("A/LM Committees").
The A/LM Committees' duties include reviewing and approving target portfolios on
a periodic basis, establishing investment guidelines and limits and providing
oversight of the asset/liability management process. The portfolio managers and
asset sector specialists, who have responsibility on a day-to-day basis for risk
management of their respective investing activities, implement the goals and
objectives established by the A/LM Committees.

The Company establishes target asset portfolios for each major insurance
product, which represent the investment strategies used to profitably fund its
liabilities within acceptable levels of risk. These strategies include
objectives for effective duration, yield curve sensitivity, convexity,
liquidity, asset sector concentration and credit quality. In executing these
asset/liability-matching strategies, management regularly re-evaluates the
estimates used in determining the approximate amounts and timing of payments to
or on behalf of policyholders for insurance liabilities. Many of these estimates
are inherently subjective and could impact the Company's ability to achieve its
asset/liability management goals and objectives.

LIQUIDITY

Liquidity refers to a company's ability to generate adequate amounts of
cash to meet its needs. The Company's liquidity position (cash and cash
equivalents and short-term investments, excluding securities lending) was $5.5
billion and $4.5 billion at December 31, 2004 and 2003, respectively. Liquidity
needs are determined from a rolling 12-month forecast by portfolio and are
monitored daily. Asset mix and maturities are adjusted based on forecast. Cash
flow testing and stress testing provide additional perspectives on liquidity.
The Company believes that it has sufficient liquidity to fund its cash needs
under various scenarios that include the potential risk of early contractholder
and policyholder withdrawal. The Company includes provisions limiting withdrawal
rights on many of its products, including general account institutional pension
products (generally group annuities, including guaranteed investment contracts
("GICs"), and certain deposit
67

funds liabilities) 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 unanticipated cash requirements beyond normal
liquidity, the Company has multiple liquidity alternatives available based on
market conditions and the amount and timing of the liquidity need. These options
include cash flow from operations (insurance premiums, annuity considerations
and deposit funds), borrowings under committed credit facilities, secured
borrowings, the ability to issue commercial paper, long-term debt, capital
securities, common equity and, if necessary, the sale of liquid long-term
assets.

The Company's ability to sell investment assets could be limited by
accounting rules including rules relating to the intent and ability to hold
impaired securities until the market value of those securities recovers.

In extreme circumstances, all general account assets within a statutory
legal entity are available to fund any obligation of the general account within
that legal entity.

LIQUIDITY SOURCES

Cash Flow from Operations. The Company's principal cash inflows from its
insurance activities come from insurance premiums, annuity considerations and
deposit funds. A primary liquidity concern with respect to these cash inflows is
the risk of early contractholder and policyholder withdrawal. The Company
includes provisions limiting withdrawal rights on many of its products,
including general account institutional pension products (generally group
annuities, including GICs and certain deposit fund liabilities) sold to employee
benefit plan sponsors.

The Company's principal cash inflows from its investment activities come
from repayments of principal, proceeds from maturities and sales of invested
assets and investment income. The primary liquidity concerns with respect to
these cash inflows are the risk of default by debtors and market volatilities.
The Company closely monitors and manages these risks through its credit risk
management process.

Liquid Assets. An integral part of the Company's liquidity management is
the amount of liquid assets it holds. Liquid assets include cash, cash
equivalents, short-term investments, marketable fixed maturity and equity
securities. Liquid assets exclude assets relating to securities lending and
dollar roll activities. At December 31, 2004 and 2003, the Company had $136
billion and $125 billion in liquid assets, respectively.

Global Funding Sources. Liquidity is also provided by a variety of both
short- and long-term instruments, including repurchase agreements, commercial
paper, medium- and long-term debt, capital securities and stockholders' equity.
The diversification of the Company's funding sources enhances funding
flexibility, limits dependence on any one source of funds and generally lowers
the cost of funds.

At December 31, 2004 and 2003, the Company had $1.4 billion and $3.6
billion in short-term debt outstanding, and $7.4 billion and $5.7 billion in
long-term debt outstanding, respectively.

MetLife Funding, Inc. ("MetLife Funding"), a subsidiary of Metropolitan
Life, serves as a centralized finance unit for the Company. Pursuant to a
support agreement, the Company has agreed to cause MetLife Funding to have a
tangible net worth of at least one dollar. At December 31, 2004 and 2003,
MetLife Funding had a tangible net worth of $10.9 million and $10.8 million,
respectively. MetLife Funding raises funds from various funding sources and uses
the proceeds to extend loans, through MetLife Credit Corp., another subsidiary
of Metropolitan Life, to the Holding Company, Metropolitan Life and other
affiliates. MetLife Funding manages its funding sources to enhance the financial
flexibility and liquidity of Metropolitan Life and other affiliated companies.
At December 31, 2004 and 2003, MetLife Funding had total outstanding
liabilities, including accrued interest payable, of $1,448 million and $1,042
million, respectively, consisting primarily of commercial paper.

Credit Facilities. The Company maintains committed and unsecured credit
facilities aggregating $2.8 billion ($1.1 billion expiring in 2005, $175 million
expiring in 2006 and $1.5 billion expiring in 2009). If
68

these facilities were drawn upon, they would bear interest at varying rates in
accordance with the respective agreements. The facilities can be used for
general corporate purposes and $2.5 billion of the facilities also serve as
back-up lines of credit for the Company's commercial paper programs. At December
31, 2004, the Company had drawn approximately $56 million under the facilities
expiring in 2005 at interest rates ranging from 5.44% to 6.38% and approximately
$50 million under a facility expiring in 2006 at an interest rate of 2.99%.

LIQUIDITY USES

Insurance Liabilities. The Company's principal cash outflows primarily
relate to the liabilities associated with its various life insurance, property
and casualty, annuity and group pension products, operating expenses and income
taxes, as well as principal and interest on its outstanding debt obligations.
Liabilities arising from its insurance activities primarily relate to benefit
payments under the aforementioned products, as well as payments for policy
surrenders, withdrawals and loans.

Investment and Other. Additional cash outflows include those related to
obligations of securities lending and dollar roll activities, investments in
real estate, limited partnerships and joint ventures, as well as
litigation-related liabilities.

The following table summarizes the Company's major contractual obligations
as of December 31, 2004:

- ---------------

(1) Other long-term liabilities include various investment-type products with
contractually scheduled maturities, including guaranteed interest contracts,
structured settlements, pension closeouts, certain annuity policies and
certain indemnities.

(2) Other long-term liabilities include benefit and claim liabilities for which
the Company believes the amount and timing of the payment is essentially
fixed and determinable. Such amounts generally relate to (i) policies or
contracts where the Company is currently making payments and will continue
to do so until the occurrence of a specific event, such as death and (ii)
life insurance and property and casualty incurred and reported claims.
Liabilities for future policy benefits of approximately $71.5 billion and
policyholder account balances of approximately $77.8 billion at December 31,
2004, have been excluded from this table. Amounts excluded from the table
are generally comprised of policies or contracts where (i) the Company is
not currently making payments and will not make payments in the future until
the occurrence of an insurable event, such as death or disability or (ii)
the occurrence of a payment triggering event, such as a surrender of a
policy or contract, is outside of the control of the Company. The
determination of these liability amounts and the timing of payment are not
reasonably fixed and determinable since the insurable event or payment
triggering event has not yet occurred. Such excluded liabilities primarily
represent future policy benefits of approximately $60.3 billion relating to
traditional life, health and disability insurance products and policyholder
account balances of approximately

69

$29.3 billion relating to deferred annuities, approximately $21.8 billion
for group and universal life products and approximately $13.8 billion for
funding agreements without fixed maturity dates. Significant uncertainties
relating to these liabilities include mortality, morbidity, expenses,
persistency, investment returns, inflation and the timing of payments. See
"--The Company -- Asset/Liability Management."

Amounts included in other long-term liabilities reflect estimated cash
payments to be made to policyholders. Such cash outflows reflect adjustments
for the estimated timing of mortality, retirement, and other appropriate
factors, but are undiscounted with respect to interest. The amount shown in
the more than five years column represents the sum of cash flows, also
adjusted for the estimated timing of mortality, retirement and other
appropriate factors and undiscounted with respect to interest, extending for
more than 100 years from the present date. As a result, the sum of the cash
outflows shown for all years in the table of $80.2 billion exceeds the
corresponding liability amounts of $36.2 billion included in the
consolidated financial statements at December 31, 2004. The liability amount
in the consolidated financial statements reflects the discounting for
interest, as well as adjustments for the timing of other factors as
described above.

(3) Amounts differ from the balances presented on the consolidated balance
sheets. The amounts above do not include related premiums and discounts or
capital leases which are presented separately.

(4) The Company anticipates that these amounts could be invested in these
partnerships any time over the next five years, but are presented in the
current period, as the timing of the fulfillment of the obligation cannot be
predicted.

(5) Excluded from operating leases in the above contractual obligations table is
$117 million, $26 million, $38 million, and $53 million for total, less than
three years, three to five years, and more than five years, respectively,
related to discontinued operations pertaining to SSRM.

As of December 31, 2004, and relative to its liquidity program, the Company
had no material (individually or in the aggregate) purchase obligations or
material (individually or in the aggregate) unfunded pension or other
postretirement benefit obligations due within one year.

On April 11, 2003, an affiliate of the Company elected not to make future
payments required by the terms of a non-recourse loan obligation. The book value
of this loan was approximately $17 million at December 31, 2004. The Company's
exposure under the terms of the applicable loan agreement is limited solely to
its investment in certain securities held by an affiliate. Subsequent to
December 31, 2004, in connection with the sale of the related equity investment,
the loan was forgiven and the affiliate was discharged and released from its
obligations thereunder.

Letters of Credit. At December 31, 2004 and 2003, the Company had
outstanding $961 million and $828 million, respectively, in letters of credit
from various banks, all of which expire within one year. Since commitments
associated with letters of credit and financing arrangements may expire unused,
these amounts do not necessarily reflect the actual future cash funding
requirements.

Support Agreements. Metropolitan Life entered into a net worth maintenance
agreement with New England Life Insurance Company ("NELICO") at the time
Metropolitan Life merged with New England Mutual Life Insurance Company. Under
the agreement, Metropolitan Life agreed, without limitation as to the amount, to
cause NELICO to have a minimum capital and surplus of $10 million, total
adjusted capital at a level not less than the company action level RBC, as
defined by state insurance statutes, and liquidity necessary to enable it to
meet its current obligations on a timely basis. At December 31, 2004, the
capital and surplus of NELICO was in excess of the minimum capital and surplus
amount referenced above, and its total adjusted capital was in excess of the
most recent referenced RBC-based amount calculated at December 31, 2004.

In connection with the Company's acquisition of GenAmerica Financial
Corporation ("GenAmerica"), Metropolitan Life entered into a net worth
maintenance agreement with General American. Under the agreement, Metropolitan
Life agreed, without limitation as to amount, to cause General American to have
a minimum capital and surplus of $10 million, total adjusted capital at a level
not less than 180% of the company action level RBC, as defined by state
insurance statutes, and liquidity necessary to enable it to meet
70

its current obligations on a timely basis. The agreement was subsequently
amended to provide that, for the five year period from 2003 through 2007, total
adjusted capital must be maintained at a level not less than 200% of the company
action level RBC, as defined by state insurance statutes. At December 31, 2004,
the capital and surplus of General American was in excess of the minimum capital
and surplus amount referenced above, and its total adjusted capital was in
excess of the most recent referenced RBC-based amount calculated at December 31,
2004.

Metropolitan Life has also entered into arrangements for the benefit of
some of its other subsidiaries and affiliates to assist such subsidiaries and
affiliates in meeting various jurisdictions' regulatory requirements regarding
capital and surplus and security deposits. In addition, Metropolitan Life has
entered into a support arrangement with respect to a subsidiary under which
Metropolitan Life may become responsible, in the event that the subsidiary
becomes the subject of insolvency proceedings, for the payment of certain
reinsurance recoverables due from the subsidiary to one or more of its cedents
in accordance with the terms and conditions of the applicable reinsurance
agreements.

General American has agreed to guarantee the contractual obligations of its
subsidiary, Paragon Life Insurance Company, and certain contractual obligations
of its former subsidiaries, MetLife Investors Insurance Company ("MetLife
Investors"), First MetLife Investors Insurance Company and MetLife Investors
Insurance Company of California. In addition, General American has entered into
a contingent reinsurance agreement with MetLife Investors. Under this agreement,
in the event that MetLife Investors' statutory capital and surplus is less than
$10 million or total adjusted capital falls below 150% of the company action
level RBC, as defined by state insurance statutes, General American would assume
as assumption reinsurance, subject to regulatory approvals and required
consents, all of MetLife Investors' life insurance policies and annuity contract
liabilities. At December 31, 2004, the capital and surplus of MetLife Investors
was in excess of the minimum capital and surplus amount referenced above, and
its total adjusted capital was in excess of the most recent referenced RBC-based
amount calculated at December 31, 2004.

Management does not anticipate that these arrangements will place any
significant demands upon the Company's liquidity resources.

Litigation. Various litigation, claims and assessments against the Company
in addition to those discussed elsewhere herein and those otherwise provided for
in the Company's consolidated financial statements, have arisen in the course of
the Company's business, including, but not limited to, in connection with its
activities as an insurer, employer, investor, investment advisor and taxpayer.
Further, state insurance regulatory authorities and other federal and state
authorities regularly make inquiries and conduct investigations concerning the
Company's compliance with applicable insurance and other laws and regulations.

It is not feasible to predict or determine the ultimate outcome of all
pending investigations and legal proceedings or provide reasonable ranges of
potential losses except as noted elsewhere herein in connection with specific
matters. In some of the matters referred to herein, very large and/or
indeterminate amounts, including punitive and treble damages, are sought.
Although in light of these considerations, it is possible that an adverse
outcome in certain cases could have a material adverse effect upon the Company's
consolidated financial position, based on information currently known by the
Company's management, in its opinion, the outcomes of such pending
investigations and legal proceedings are not likely to have such an effect.
However, given the large and/or indeterminate amounts sought in certain of these
matters and the inherent unpredictability of litigation, it is possible that an
adverse outcome in certain matters could, from time to time, have a material
adverse effect on the Company's consolidated net income or cash flows in
particular quarterly or annual periods.

Other. Based on management's analysis of its expected cash inflows from
operating activities, the dividends it receives from subsidiaries, including
Metropolitan Life, that are permitted to be paid without prior insurance
regulatory approval and its portfolio of liquid assets and other anticipated
cash flows, management believes there will be sufficient liquidity to enable the
Company to make payments on debt, make cash dividend payments on its common
stock, pay all operating expenses, and meet its cash needs. The nature of

71

the Company's diverse product portfolio and customer base lessens the likelihood
that normal operations will result in any significant strain on liquidity.

Subsequent Events. See "--The Holding Company -- Liquidity
Uses -- Subsequent Events."

Consolidated cash flows. Net cash provided by operating activities was
$8,066 million and $7,030 million for the years ended December 31, 2004 and
2003, respectively. The $1,036 million increase in operating cash flows in 2004
over the comparable 2003 period is primarily attributable to continued growth in
the group life, long-term care, dental and disability businesses, as well as an
increase in retirement & savings' structured settlements due to a large
multi-contract sale in 2004. Also, the late 2003 acquisition of John Hancock's
group life business and the acquisition of TIAA-CREF's long-term care business
contributed to growth in the 2004 period. In addition, an increase in MetLife
Bank's customer deposits, particularly in the personal and business savings
accounts, contributed to the increase in operating cash flows.

Net cash provided by operating activities was $7,030 million and $4,180
million for the years ended December 31, 2003 and 2002, respectively. The $2,850
million increase in operating cash flow in 2003 over the comparable 2002 period
is primarily attributable to sales growth in the group life, dental, disability
and long-term care businesses, as well as higher sales in retirement & savings'
structured settlement products. The acquisition of John Hancock's group business
also contributed to sales growth in the 2003 period. In addition, growth in
MetLife Bank's customer deposits, accelerated prepayments of mortgage-backed
securities that have been previously purchased at a premium, and an increase in
funds withheld related to reinsurance activity contributed to the increase in
operating cash flows. These items were partially offset by the Company's
contribution to its qualified defined benefit plans in December 2003.

Net cash used in investing activities was $13,015 million and $17,688
million for the years ended December 31, 2004 and 2003, respectively. The $4,673
million decrease in net cash used in investing activities in 2004 over the
comparable 2003 period is primarily due to less cash provided by financing
activities, partially offset by an increase in cash generated from operations.
This decrease in available cash resulted in reduced investments in fixed
maturities for the current year versus the prior year. Additionally, there was a
decrease in securities lending cash collateral invested in 2004 as compared to
2003. These items are partially offset by an increase in mortgage and other loan
origination as the Company continues to take advantage of favorable market
conditions in this sector as well as an increase in cash used for equity
securities and short-term investments for the comparable periods.

Net cash used in investing activities was $17,688 million and $16,213
million for the years ended December 31, 2003 and 2002, respectively. The $1,475
million increase in net cash used in investing activities in 2003 over the
comparable 2002 period is primarily attributable to an increase in the purchase
of fixed maturities and commercial mortgage loan origination, as well as an
increase in the amount of securities lending cash collateral invested, which
resulted from an expansion of the program. In addition, the Company invested
income generated from operations and cash raised through the issuance of GICs.
These items were partially offset by lower income resulting from lower market
rates and the June 2002 acquisition of Hidalgo. In addition, the 2003 period had
less proceeds from sales of equity securities and real estate to use in
investing activities. The 2002 period included proceeds from a significant sale
of equity securities and cash generated by the Company's real estate sales
program.

Net cash provided by financing activities was $5,322 million and $12,068
million for the years ended December 31, 2004 and 2003, respectively. The $6,746
million decrease in net cash provided by financing activities in 2004 over the
comparable 2003 period is primarily due to repayments of short-term debt
associated with dollar roll activity, and an increase in cash used in the
Company's stock repurchase program. In addition, net cash provided by
policyholder account balances decreased for the comparable 2003 period mainly as
a result of a decrease in GICs sold in 2004 as compared to 2003. The 2003 period
included payments of $1,006 million received on the settlement of common stock
purchase contracts (see "-- The Holding Company -- Liquidity Sources -- Global
Funding Sources"), and $317 million net cash proceeds associated with RGA's
issuance of common stock. The Company also doubled its annual dividend per share
in

72

2004. These items were partially offset by additional proceeds from the issuance
of senior notes by the Holding Company and a decrease in repayments of long-term
debt for the comparable periods.

Net cash provided by financing activities was $12,068 million and $6,883
million for the years ended December 31, 2003 and 2002, respectively. The $5,185
million increase in net cash provided by financing activities in 2003 over the
comparable 2002 period is due to an increase in policyholder account balances
primarily from sales of annuity products, as well as additional short-term debt
issued related to dollar roll activity. In 2003, the Company received $1,006
million on the settlement of common stock purchase contracts (see "-- The
Holding Company -- Liquidity Sources -- Global Funding Sources"), issued $700
million of senior notes and had a decrease in cash used in the stock repurchase
program as compared to 2002. The 2003 period also includes $317 million net cash
proceeds associated with RGA's issuance of common stock. These cash flows were
partially offset by additional repayments of long-term debt and a 10% increase
in cash dividends per share in 2003 as compared to 2002.

THE HOLDING COMPANY

CAPITAL

Restrictions and Limitations on Bank Holding Companies and Financial
Holding Companies -- Capital. MetLife, Inc. and its insured depository
institution subsidiary, MetLife Bank, are subject to risk-based and leverage
capital guidelines issued by the federal banking regulatory agencies for banks
and financial holding companies. The federal banking regulatory agencies are
required by law to take specific prompt corrective actions with respect to
institutions that do not meet minimum capital standards. At December 31, 2004,
MetLife, Inc. and MetLife Bank were in compliance with the aforementioned
guidelines.

The following table contains the RBC ratios as of December 31, 2004 and
2003 and the regulatory requirements for MetLife Inc., as a bank holding
company, and MetLife Bank:

METLIFE, INC.
RBC RATIOS -- BANK HOLDING COMPANY

METLIFE BANK
RBC RATIOS -- BANK

LIQUIDITY

Liquidity is managed to preserve stable, reliable and cost-effective
sources of cash to meet all current and future financial obligations and is
provided by a variety of sources, including a portfolio of liquid assets, a
diversified mix of short- and long-term funding sources from the wholesale
financial markets and the ability to borrow through committed credit facilities.
The Holding Company is an active participant in the global

73

financial markets through which it obtains a significant amount of funding.
These markets, which serve as cost-effective sources of funds, are critical
components of the Holding Company's liquidity management. Decisions to access
these markets are based upon relative costs, prospective views of balance sheet
growth and a targeted liquidity profile. A disruption in the financial markets
could limit the Holding Company's access to liquidity.

The Holding Company's ability to maintain regular access to competitively
priced wholesale funds is fostered by its current credit ratings from the major
credit rating agencies. Management views its capital ratios, credit quality,
stable and diverse earnings streams, diversity of liquidity sources and its
liquidity monitoring procedures as critical to retaining high credit ratings.

Liquidity is monitored through the use of internal liquidity risk metrics,
including the composition and level of the liquid asset portfolio, timing
differences in short-term cash flow obligations, access to the financial markets
for capital and debt transactions and exposure to contingent draws on the
Holding Company's liquidity.

LIQUIDITY SOURCES

Dividends. The primary source of the Holding Company's liquidity is
dividends it receives from Metropolitan Life. Under New York State Insurance
Law, Metropolitan Life is permitted, without prior insurance regulatory
clearance, to pay a dividend to the Holding Company as long as the aggregate
amount of all such dividends in any calendar year does not exceed the lesser of
(i) 10% of its surplus to policyholders as of the immediately preceding calendar
year; and (ii) its statutory net gain from operations for the immediately
preceding calendar year (excluding realized capital gains). Metropolitan Life
will be permitted to pay a dividend to the Holding Company in excess of the
lesser of such two amounts only if it files notice of its intention to declare
such a dividend and the amount thereof with the Superintendent and the
Superintendent does not disapprove the distribution. Under New York State
Insurance Law, the Superintendent has broad discretion in determining whether
the financial condition of a stock life insurance company would support the
payment of such dividends to its stockholders. The New York State Department of
Insurance has established informal guidelines for such determinations. The
guidelines, among other things, focus on the insurer's overall financial
condition and profitability under statutory accounting practices. Management of
the Holding Company cannot provide assurance that Metropolitan Life will have
statutory earnings to support payment of dividends to the Holding Company in an
amount sufficient to fund its cash requirements and pay cash dividends or that
the Superintendent will not disapprove any dividends that Metropolitan Life must
submit for the Superintendent's consideration.

In addition, the Holding Company receives dividends from its other
subsidiaries. The Holding Company's other insurance subsidiaries are also
subject to similar restrictions on the payment of dividends to their respective
parent companies. The dividend limitation is based on statutory financial
results. Statutory accounting practices, as prescribed by insurance regulators
of various states in which the Company conducts business, differ in certain
respects from accounting principles used in financial statements prepared in
conformity with GAAP. The significant differences relate to the treatment of
DAC, certain deferred income taxes, required investment reserves, reserve
calculation assumptions, goodwill and surplus notes.

As of December 31, 2004, the maximum amount of the dividend which may be
paid to the Holding Company by Metropolitan Life, Metropolitan Property and
Casualty Insurance Company and Metropolitan Tower Life Insurance Company in
2005, without prior regulatory approval, is $880 million, $187 million and $119
million, respectively.

Liquid Assets. An integral part of the Holding Company's liquidity
management is the amount of liquid assets that it holds. Liquid assets include
cash, cash equivalents, short-term investments, marketable fixed maturity and
equity securities. Liquid assets exclude assets relating to securities lending
and dollar roll activities. At December 31, 2004 and 2003, the Holding Company
had $2,090 million and $1,302 million in liquid assets, respectively.

74

Global Funding Sources. Liquidity is also provided by a variety of both
short and long-term instruments, including repurchase agreements, commercial
paper, medium and long-term debt, capital securities and stockholders' equity.
The diversification of the Holding Company's funding sources enhances funding
flexibility and limits dependence on any one source of funds, and generally
lowers the cost of funds.

At December 31, 2004, the Holding Company had no short-term debt
outstanding as compared to $106 million at December 31, 2003. At December 31,
2004 and 2003, the Holding Company had $5.7 billion and $4.0 billion in
long-term debt outstanding, respectively.

As of December 31, 2004, the Holding Company has issued an aggregate
principal amount of senior debt of $1.2 billion under the $5.0 billion shelf
registration statement filed with the SEC during the first quarter of 2004. The
shelf registration will permit the registration and issuance of a wide range of
debt and equity securities. Approximately $44 million of registered but unissued
securities remaining from the Company's 2001 $4.0 billion shelf registration
statement was carried over to this shelf registration. The Holding Company
issued senior debt in the aggregate principal amount of $2.95 billion under the
2001 $4.0 billion shelf registration statement from November 2001 through
November 2003. In addition, under this shelf registration statement, in February
2003, the Holding Company remarketed debentures in the aggregate principal
amount of $1.01 billion in accordance with the terms of the then-outstanding
equity security units.

On December 9, 2004, the Holding Company issued 350 million pounds sterling
aggregate principal amount of 5.375% senior notes due December 9, 2024. The
senior notes were initially offered and sold outside the United States in
reliance upon Regulation S under the Securities Act of 1933, as amended. Up to
35 million pounds sterling, or $66.8 million (translated from pounds sterling to
U.S. dollars using the noon buying rate for pound sterling on November 30, 2004
as announced by the U.S. Federal Reserve Bank of New York) of the senior notes
initially offered and sold outside the United States may be resold in the United
States pursuant to the Company's shelf registration statement.

The following table summarizes the Holding Company's senior debt issuances:

- ---------------

(1) This amount represents the translation of 350 million pounds sterling into
U.S. Dollars using the noon buying rate on December 31, 2004 of 1.916 as
announced by the U.S. Federal Reserve Bank of New York.

(2) On July 23, 2004, the Holding Company reopened its June 3, 2004 senior notes
offering and increased the principal outstanding on the 5.50% notes due June
2014, from $200 million to $350 million and on the 6.38% notes due June
2034, from $400 million to $750 million.

(3) This table excludes the remarketed debentures of $1.01 billion and any
premium or discount on the senior debt issuances.

Other sources of the Holding Company's liquidity include programs for
short- and long-term borrowing, as needed, arranged through Metropolitan Life.

75

Credit Facilities. The Holding Company maintains committed and unsecured
credit facilities aggregating $2.5 billion ($1 billion expiring in 2005 and $1.5
billion expiring in 2009) which it shares with Metropolitan Life and MetLife
Funding. Borrowings under these facilities bear interest at varying rates stated
in the agreements. These facilities are primarily used for general corporate
purposes and as back-up lines of credit for the borrowers' commercial paper
programs. At December 31, 2004, none of the Holding Company, Metropolitan Life
or MetLife Funding had borrowed against these credit facilities.

LIQUIDITY USES

The primary uses of liquidity of the Holding Company include service on
debt, cash dividends on common stock, capital contributions to subsidiaries,
payment of general operating expenses and the repurchase of the Holding
Company's common stock.

Dividends. On September 28, 2004, the Holding Company's Board of Directors
approved an annual dividend for 2004 of $0.46 per share payable on December 13,
2004 to shareholders of record on November 5, 2004. The 2004 dividend represents
a 100% increase from the 2003 annual dividend of $0.23 per share. Future
dividend decisions will be determined by the Holding Company's Board of
Directors after taking into consideration factors such as the Holding Company's
current earnings, expected medium- and long-term earnings, financial condition,
regulatory capital position, and applicable governmental regulations and
policies.

Capital Contributions to Subsidiaries. During the years ended December 31,
2004 and 2003, the Holding Company contributed an aggregate of $761 million and
$239 million to various subsidiaries, respectively.

Share Repurchase. On October 26, 2004, the Holding Company's Board of
Directors authorized a $1 billion common stock repurchase program. This program
began after the completion of the February 19, 2002 and March 28, 2001
repurchase programs, each of which authorized the repurchase of $1 billion of
common stock. Under these authorizations, the Holding Company may purchase its
common stock from the MetLife Policyholder Trust, in the open market and in
privately negotiated transactions.

On December 16, 2004, the Holding Company repurchased 7,281,553 shares of
its outstanding common stock at an aggregate cost of approximately $300 million
under an accelerated share repurchase agreement with a major bank. The bank
borrowed the stock sold to the Holding Company from third parties and is
purchasing the shares in the open market over the next few months to return to
the lenders. The Holding Company will either pay or receive an amount based on
the actual amount paid by the bank to purchase the shares. The final purchase
price is expected to be determined in April 2005 and will be settled in either
cash or Holding Company stock at the Holding Company's option. The Holding
Company recorded the initial repurchase of shares as treasury stock and will
record any amount paid or received as an adjustment to the cost of the treasury
stock.

The following table summarizes the 2004, 2003 and 2002 repurchase activity,
which includes the accelerated share repurchase activity in the fourth quarter
of 2004:

At December 31, 2004, the Holding Company had approximately $710 million
remaining on its existing share repurchase program. As a result of the Holding
Company's agreement to acquire Travelers from Citigroup, the Holding Company has
suspended its share repurchase activity.

In the fourth quarter of 2003, RGA offered to the public 12,075,000 shares
of its common stock at $36.65 per share. MetLife and its affiliates purchased
3,000,000 shares of the common stock offered by RGA. As a result of this
offering, MetLife's ownership percentage of outstanding shares of RGA common
stock was reduced from approximately 59% at December 31, 2002 to approximately
52% at December 31, 2003.

76

MetLife's ownership percentage of the outstanding shares of RGA common stock
remains approximately 52% at December 31, 2004.

Letters of Credit. At December 31, 2004 and 2003, the Holding Company had
outstanding $369 million and $206 million, respectively, in the letters of
credit from various banks, all of which expire within one year. Since
commitments associated with letters of credit and financing arrangements may
expire unused, these amounts do not necessarily reflect the actual future cash
funding requirements.

Support Agreements. In 2002, the Holding Company entered into a net worth
maintenance agreement with three of its insurance subsidiaries, MetLife
Investors Insurance Company, First MetLife Investors Insurance Company and
MetLife Investors Insurance Company of California. Under the agreements, as
subsequently amended, the Holding Company agreed, without limitation as to the
amount, to cause each of these subsidiaries to have a minimum capital and
surplus of $10 million, total adjusted capital at a level not less than 150% of
the company action level RBC, as defined by state insurance statutes, and
liquidity necessary to enable it to meet its current obligations on a timely
basis. At December 31, 2004, the capital and surplus of each of these
subsidiaries is in excess of the minimum capital and surplus amounts referenced
above, and their total adjusted capital was in excess of the most recent
referenced RBC-based amount calculated at December 31, 2004.

Based on management's analysis and comparison of its current and future
cash inflows from the dividends it receives from subsidiaries, including
Metropolitan Life, that are permitted to be paid without prior insurance
regulatory approval and its portfolio of liquid assets and other anticipated
cash flows, management believes there will be sufficient liquidity to enable the
Holding Company to make payments on debt, make cash dividend payments on its
common stock, contribute capital to its subsidiaries, pay all operating
expenses, and meet its cash needs.

Subsequent Events. On January 31, 2005, the Holding Company entered into
an agreement to acquire all of the outstanding shares of capital stock of
certain indirect subsidiaries of Citigroup Inc., including the majority of
Travelers, and substantially all of Citigroup Inc.'s international insurance
businesses for a purchase price of $11.5 billion, subject to adjustment as
described in the acquisition agreement. As a condition to closing, Citigroup
Inc. and the Holding Company will enter into ten-year agreements under which the
Company will expand its distribution by making products available through
certain Citigroup distribution channels, subject to appropriate suitability and
other standards. The transaction is expected to close in the summer of 2005.
Approximately $1 billion to $3 billion of the purchase price will be paid in
MetLife stock with the remainder paid in cash which will be financed through a
combination of cash on hand, debt, mandatorily convertible securities and
selected asset sales depending on market conditions, timing, valuation
considerations and the relative attractiveness of funding alternatives.

The Company has entered into brokerage agreements relating to the possible
sale of two of its real estate investments, 200 Park Avenue and One Madison
Avenue in New York City. The Company is also contemplating other asset sales,
including selling some or all of its beneficially owned shares in RGA.

INSOLVENCY ASSESSMENTS

Most of the jurisdictions in which the Company is admitted to transact
business require life insurers doing business within the jurisdiction to
participate in guaranty associations, which are organized to pay contractual
benefits owed pursuant to insurance policies issued by impaired, insolvent or
failed life insurers. These associations levy assessments, up to prescribed
limits, on all member insurers in a particular state on the basis of the
proportionate share of the premiums written by member insurers in the lines of
business in which the impaired, insolvent or failed insurer engaged. Some states
permit member insurers to recover assessments paid through full or partial
premium tax offsets. Assessments levied against the Company from January 1, 2001
through December 31, 2004 aggregated $20 million. The Company maintained a
liability of $73 million at December 31, 2004 for future assessments in respect
of currently impaired, insolvent or failed insurers.

77

In the past five years, none of the aggregate assessments levied against
MetLife's insurance subsidiaries has been material. The Company has established
liabilities for guaranty fund assessments that it considers adequate for
assessments with respect to insurers that are currently subject to insolvency
proceedings.

EFFECTS OF INFLATION

The Company does not believe that inflation has had a material effect on
its consolidated results of operations, except insofar as inflation may affect
interest rates.

APPLICATION OF RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Staff Position Paper ("FSP") 109-2, Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the American Jobs Creation Act of
2004 ("AJCA"). The AJCA introduced a one-time dividend received deduction on the
repatriation of certain earnings to a U.S. taxpayer. FSP 109-2 provides
companies additional time beyond the financial reporting period of enactment to
evaluate the effects of the AJCA on their plans to repatriate foreign earnings
for purposes of applying SFAS 109, Accounting for Income Taxes. The Company is
currently evaluating the repatriation provision of the AJCA. If the repatriation
provision is implemented by the Company, the impact on the Company's income tax
expense and deferred income tax assets and liabilities would be immaterial.

In December 2004, the FASB issued SFAS No. 153 Exchange of Nonmonetary
Assets, an amendment of Accounting Principles Board ("APB") Opinion No. 29
("SFAS 153"). SFAS 153 amends prior guidance to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. The provisions of SFAS 153 are effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005 and shall be
applied prospectively. SFAS 153 is not expected to have a material impact on the
Company's consolidated financial statements at the date of adoption.

In December 2004, FASB revised SFAS No. 123 Accounting for Stock-Based
Compensation ("SFAS 123") to Share-Based Payment ("SFAS 123(r)"). SFAS 123(r)
provides additional guidance on determining whether certain financial
instruments awarded in share-based payment transactions are liabilities. SFAS
123(r) also requires that the cost of all share-based transactions be recorded
in the financial statements. The revised pronouncement must be adopted by the
Company by July 1, 2005. As all stock options currently accounted for under APB
Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") will vest
prior to the effective date, implementation of SFAS 123(r) will not have a
significant impact on the Company's consolidated financial statements.

Effective January 1, 2003, the Company adopted SFAS No. 148, Accounting for
Stock-Based Compensation -- Transition and Disclosure ("SFAS 148"), which
provides guidance on how to apply the fair value method of accounting for
share-based payments. As permitted under SFAS 148, the Company elected to use
the prospective method of accounting for stock options granted subsequent to
December 31, 2002. Options granted prior to January 1, 2003 will continue to be
accounted for under the intrinsic value method until the adoption of SFAS
123(r), and the pro forma impact of accounting for these options at fair value
will continue to be disclosed in the consolidated financial statements until the
last of those options vest in 2005.

In March 2004, the Emerging Issues Task Force ("EITF") reached further
consensus on Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and
Its Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides
accounting guidance regarding the determination of when an impairment of debt
and marketable equity securities and investments accounted for under the cost
method should be considered other-than-temporary and recognized in income. An
EITF 03-1 consensus reached in November 2003 also requires certain quantitative
and qualitative disclosures for debt and marketable equity securities classified
as available-for-sale or held-to-maturity under SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, that are impaired at the
balance sheet date but for which an other-than-
78

temporary impairment has not been recognized. The Company has complied with the
disclosure requirements of EITF 03-1 which were effective December 31, 2003. The
accounting guidance of EITF 03-1 relating to the recognition of investment
impairment which was to be effective in the third quarter of 2004 has been
delayed pending the development of additional guidance. The Company is actively
monitoring the deliberations relating to this issue at the FASB and currently is
unable to determine the ultimate impact EITF 03-1 will have on its consolidated
financial statements.

In March 2004, the EITF reached consensus on Issue No. 03-6, Participating
Securities and the Two -- Class Method under FASB Statement No. 128 ("EITF
03-6"). EITF 03-6 provides guidance in determining whether a security should be
considered a participating security for purposes of computing earnings per share
and how earnings should be allocated to the participating security. EITF 03-6
did not have an impact on the Company's earnings per share calculations or
amounts.

In March 2004, the EITF reached consensus on Issue No. 03-16, Accounting
for Investments in Limited Liability Companies ("EITF 03-16"). EITF 03-16
provides guidance regarding whether a limited liability company should be viewed
as similar to a corporation or similar to a partnership for purposes of
determining whether a noncontrolling investment should be accounted for using
the cost method or the equity method of accounting. EITF 03-16 did not have a
material impact on the Company's consolidated financial statements.

Effective January 1, 2004, the Company adopted SOP 03-1, as interpreted by
Technical Practices Aids issued by the American Institute of Certified Public
Accountants. SOP 03-1 provides guidance on (i) the classification and valuation
of long-duration contract liabilities; (ii) the accounting for sales
inducements; and (iii) separate account presentation and valuation. In June
2004, the FASB released FSP No. 97-1, Situations in Which Paragraphs 17(b) and
20 of FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises
for Certain Long-Duration Contracts and for Realized Gains and Losses from the
Sale of Investments, Permit or Require Accrual of an Unearned Revenue Liability
("FSP 97-1") which included clarification that unearned revenue liabilities
should be considered in determining the necessary insurance benefit liability
required under SOP 03-1. Since the Company had considered unearned revenue in
determining its SOP 03-1 benefit liabilities, FSP 97-1 did not impact its
consolidated financial statements. As a result of the adoption of SOP 03-1,
effective January 1, 2004, the Company decreased the liability for future
policyholder benefits for changes in the methodology relating to various
guaranteed death and annuitization benefits and for determining liabilities for
certain universal life insurance contracts by $4 million, which has been
reported as a cumulative effect of a change in accounting. This amount is net of
corresponding changes in DAC, including VOBA and unearned revenue liability
("offsets") under certain variable annuity and life contracts and income taxes.
Certain other contracts sold by the Company provide for a return through
periodic crediting rates, surrender adjustments or termination adjustments based
on the total return of a contractually referenced pool of assets owned by the
Company. To the extent that such contracts are not accounted for as derivatives
under the provisions of SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities ("SFAS 133") and not already credited to the contract account
balance, under SOP 03-1 the change relating to the fair value of the referenced
pool of assets is recorded as a liability with the change in the liability
recorded as policyholder benefits and claims. Prior to the adoption of SOP 03-1,
the Company recorded the change in such liability as other comprehensive income.
At adoption, this change decreased net income and increased other comprehensive
income by $63 million, net of income taxes, which were recorded as cumulative
effects of changes in accounting. Effective with the adoption of SOP 03-1, costs
associated with enhanced or bonus crediting rates to contractholders must be
deferred and amortized over the life of the related contract using assumptions
consistent with the amortization of DAC. Since the Company followed a similar
approach prior to adoption of SOP 03-1, the provisions of SOP 03-1 relating to
sales inducements had no significant impact on the Company's consolidated
financial statements. At adoption, the Company reclassified $155 million of
ownership in its own separate accounts from other assets to fixed maturities,
equity securities and cash and cash equivalents. This reclassification had no
significant impact on net income or other comprehensive income at adoption. In
accordance with SOP 03-1's guidance for the reporting of certain separate
accounts, at adoption, the Company also reclassified $1.7 billion of separate
account assets to general account investments and $1.7 billion of separate
account liabilities to future policy benefits and policyholder account balances.
This reclassification decreased net income and increased other comprehensive
income by

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$27 million, net of income taxes, which were reported as cumulative effects of
changes in accounting. The application of SOP 03-1 decreased the Company's 2004
net income by $67 million, including the cumulative effect of adoption of a
decrease in net income of $86 million as described above.

In December 2003, FASB revised SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits -- an Amendment of FASB Statements
No. 87, 88 and 106 ("SFAS 132(r)"). SFAS 132(r) retains most of the disclosure
requirements of SFAS 132 and requires additional disclosure about assets,
obligations, cash flows and net periodic benefit cost of defined benefit pension
plans and other postretirement plans. SFAS 132(r) was primarily effective for
fiscal years ending after December 15, 2003; however, certain disclosures about
foreign plans and estimated future benefit payments were effective for fiscal
years ending after June 15, 2004. The Company's adoption of SFAS 132(r) on
December 31, 2003 did not have a significant impact on its consolidated
financial statements since it only revised disclosure requirements.

In May 2004, the FASB issued FASB Staff Position ("FSP") No. 106-2,
Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 ("FSP 106-2"), which provides
accounting guidance to a sponsor of a postretirement health care plan that
provides prescription drug benefits. The Company expects to receive subsidies on
prescription drug benefits beginning in 2006 under the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 based on the Company's
determination that the prescription drug benefits offered under certain
postretirement plans are actuarially equivalent to the benefits offered under
Medicare Part D. FSP 106-2 was effective for interim periods beginning after
June 15, 2004 and provides for either retroactive application to the date of
enactment of the legislation or prospective application from the date of
adoption of FSP 106-2. Effective July 1, 2004, the Company adopted FSP 106-2
prospectively and the postretirement benefit plan assets and accumulated benefit
obligation were remeasured to determine the effect of the expected subsidies on
net periodic postretirement benefit cost. As a result, the accumulated
postretirement benefit obligation and net periodic postretirement benefit cost
was reduced by $213 million and $17 million, for 2004, respectively.

Effective October 1, 2003, the Company adopted Statement 133 Implementation
Issue No. B36, Embedded Derivatives: Modified Coinsurance Arrangements and Debt
Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only
Partially Related to the Creditworthiness of the Obligor under Those Instruments
("Issue B36"). Issue B36 concluded that (i) a company's funds withheld payable
and/or receivable under certain reinsurance arrangements, and (ii) a debt
instrument that incorporates credit risk exposures that are unrelated or only
partially related to the creditworthiness of the obligor include an embedded
derivative feature that is not clearly and closely related to the host contract.
Therefore, the embedded derivative feature is measured at fair value on the
balance sheet and changes in fair value are reported in income. The Company's
application of Issue B36 increased (decreased) net income by $4 million and
($12) million, net of amortization of DAC and income taxes, for 2004 and 2003,
respectively. The 2003 impact includes a decrease in net income of $26 million
relating to the cumulative effect of a change in accounting from the adoption of
the new guidance.

Effective July 1, 2003, the Company adopted SFAS No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities ("SFAS 149").
SFAS 149 amended and clarified the accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. Except for certain previously issued and
effective guidance, SFAS 149 was effective for contracts entered into or
modified after June 30, 2003. The Company's adoption of SFAS 149 did not have a
significant impact on its consolidated financial statements.

During 2003, the Company adopted FASB ("FIN") Interpretation No. 46,
Consolidation of Variable Interest Entities -- An Interpretation of ARB No. 51
("FIN 46"), and its December 2003 revision ("FIN 46(r)"). Certain of the
Company's investments in real estate joint ventures and other limited
partnership interests meet the definition of a variable interest entity ("VIE")
and have been consolidated, in accordance with the transition rules and
effective dates, because the Company is deemed to be the primary beneficiary. A
VIE is defined as (i) any entity in which the equity investments at risk in such
entity do not have the characteristics of a controlling financial interest, or
(ii) any entity that does not have sufficient equity at risk to finance its
activities without additional subordinated support from other parties. Effective
February 1,

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2003, the Company adopted FIN 46 for VIEs created or acquired on or after
February 1, 2003 and, effective December 31, 2003, the Company adopted FIN 46(r)
with respect to interests in entities formerly considered special purpose
entities ("SPEs"), including interests in asset-backed securities and
collateralized debt obligations. The adoption of FIN 46 as of February 1, 2003
did not have a significant impact on the Company's consolidated financial
statements. The adoption of the provisions of FIN 46(r) at December 31, 2003 did
not require the Company to consolidate any additional VIEs that were not
previously consolidated. In accordance with the provisions of FIN 46(r), the
Company elected to defer until March 31, 2004 the consolidation of interests in
VIEs for non-SPEs acquired prior to February 1, 2003 for which it is the primary
beneficiary. As of March 31, 2004, the Company consolidated assets and
liabilities relating to real estate joint ventures of $78 million and $11
million, respectively, and assets and liabilities relating to other limited
partnerships of $29 million and less than $1 million, respectively, for VIEs for
which the Company was deemed to be the primary beneficiary. There was no impact
to net income from the adoption of FIN 46.

Effective January 1, 2003, the Company adopted FIN No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others ("FIN 45"). FIN 45 requires entities to
establish liabilities for certain types of guarantees and expands financial
statement disclosures for others. The initial recognition and initial
measurement provisions of FIN 45 were applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The adoption of FIN 45
did not have a significant impact on the Company's consolidated financial
statements.

Effective January 1, 2003, the Company adopted SFAS No. 146, Accounting for
Costs Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146
requires that a liability for a cost associated with an exit or disposal
activity be recorded and measured initially at fair value only when the
liability is incurred rather than at the date of an entity's commitment to an
exit plan as required by EITF Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity Including
Certain Costs Incurred in a Restructuring ("EITF 94-3"). The Company's
activities subject to this guidance in 2004 and 2003 were not significant.

Effective January 1, 2003, the Company adopted SFAS No. 145, Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections ("SFAS 145"). In addition to amending or rescinding other
existing authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed conditions, SFAS
145 generally precludes companies from recording gains and losses from the
extinguishment of debt as an extraordinary item. SFAS 145 also requires
sale-leaseback treatment for certain modifications of a capital lease that
result in the lease being classified as an operating lease. The adoption of SFAS
145 did not have a significant impact on the Company's consolidated financial
statements.

Effective January 1, 2002, the Company adopted SFAS No. 144. SFAS 144
provides a single model for accounting for long-lived assets to be disposed of
by superseding SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of ("SFAS 121"), and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB
30"). Under SFAS 144, discontinued operations are measured at the lower of
carrying value or fair value less costs to sell, rather than on a net realizable
value basis. Future operating losses relating to discontinued operations also
are no longer recognized before they occur. SFAS 144: (i) broadens the
definition of a discontinued operation to include a component of an entity
(rather than a segment of a business); (ii) requires long-lived assets to be
disposed of other than by sale to be considered held and used until disposed;
and (iii) retains the basic provisions of (a) APB 30 regarding the presentation
of discontinued operations in the statements of income, (b) SFAS 121 relating to
recognition and measurement of impaired long-lived assets (other than goodwill),
and (c) SFAS 121 relating to the measurement of long-lived assets classified as
held-for-sale. Adoption of SFAS 144 did not have a material impact on the
Company's consolidated financial statements other than the presentation as
discontinued operations of net investment income and net investment gains
related to operations of real estate on which the Company initiated disposition
activities subsequent to January 1, 2002 and the classification of such real
estate as held-for-sale on the consolidated balance sheets.
81

Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and
Other Intangible Assets, ("SFAS 142"). SFAS 142 eliminates the systematic
amortization and establishes criteria for measuring the impairment of goodwill
and certain other intangible assets by reporting unit. There was no impairment
of identified intangibles or significant reclassifications between goodwill and
other intangible assets at January 1, 2002. Amortization of other intangible
assets was not material for the years ended December 31, 2004, 2003 and 2002.

INVESTMENTS

The Company's primary investment objective is to optimize, net of income
taxes, risk-adjusted investment income and risk-adjusted total return while
ensuring that assets and liabilities are managed on a cash flow and duration
basis. The Company is exposed to three primary sources of investment risk:

- Credit risk, relating to the uncertainty associated with the continued
ability of a given obligor to make timely payments of principal and
interest;

- Interest rate risk, relating to the market price and cash flow
variability associated with changes in market interest rates; and

- Market valuation risk.

The Company manages risk through in-house fundamental analysis of the
underlying obligors, issuers, transaction structures and real estate properties.
The Company also manages credit risk and market valuation risk through industry
and issuer diversification and asset allocation. For real estate and
agricultural assets, the Company manages credit risk and valuation risk through
geographic, property type and product type diversification and asset allocation.
The Company manages interest rate risk as part of its asset and liability
management strategies, product design, such as the use of market value
adjustment features and surrender charges, and proactive monitoring and
management of certain non-guaranteed elements of its products, such as the
resetting of credited interest and dividend rates for policies that permit such
adjustments.

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COMPOSITION OF PORTFOLIO AND INVESTMENT RESULTS

The following table illustrates the net investment income and annualized
yields on average assets for each of the components of the Company's investment
portfolio for the years ended December 31, 2004, 2003 and 2002. The decline in
annualized yields is due primarily to the decline in interest rates during these
periods.

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(1) Included in ending assets, investment income and investment gains (losses)
is $2,139 million, $86 million and $25 million, respectively, related to
the consolidation of separate accounts under SOP 03-1 for the year ended
December 31, 2004.

(2) Yields are based on quarterly average asset carrying values, excluding
recognized and unrealized investment gains (losses), and for yield
calculation purposes, average assets exclude collateral associated with the
Company's securities lending program.

(3) Investment income from mortgage and other loans includes prepayment fees.

(4) Real estate and real estate joint venture income includes amounts
classified as discontinued operations of $54 million, $93 million and $180
million for the years ended December 31, 2004, 2003 and 2002, respectively.
Net investment gains (losses) include $139 million, $420 million and $582
million of gains classified as discontinued operations for the years ended
December 31, 2004, 2003 and 2002, respectively.

(5) Included in investment income from real estate and real estate joint
ventures, equity securities and other limited partnership interests, cash
and short-term investments, other invested assets, and investment expenses
and fees is a total of $65 million, $56 million and $59 million for the
years ended December 31, 2004, 2003 and 2002, respectively, related to
discontinued operations pertaining to SSRM.

(6) Included in ending assets for real estate and real estate joint ventures,
equity securities and other limited partnership interests, cash and
short-term investments and other invested assets is a total of $96 million,
$49 million, $88 million and $20 million, respectively, pertaining to SSRM
at December 31, 2004. Included in ending assets for real estate and real
estate joint ventures, equity securities and other limited partnership
interests, cash and short-term investments, and other invested assets is a
total of $3 million, $14 million, $67 million and $8 million, respectively,
pertaining to SSRM at December 31, 2003. Included in ending assets for real
estate and real estate joint ventures, equity securities and other limited
partnership interests, cash and short-term investments, and other invested
assets is a total of $19 million, $7 million, $54 million and $5 million,
respectively, pertaining to SSRM at December 31, 2002.

(7) Investment income from other invested assets includes scheduled periodic
settlement payments on derivative instruments that do not qualify for hedge
accounting under SFAS 133 of $51 million, $84 million and $32 million for
the years ended December 31, 2004, 2003 and 2002, respectively. These
amounts are excluded from net investment gains (losses).

(8) Included in net investment gains (losses) from other invested assets is $0
million, $10 million and $(4) million for the years ended December 31,
2004, 2003 and 2002, respectively, related to discontinued operations
pertaining to SSRM.

(9) Included in net investment gains (losses) from other invested assets for
the year ended December 31, 2004, is a charge of $26 million related to a
funds withheld reinsurance treaty that was converted to a coinsurance
agreement. This amount is classified in net investment income in the
consolidated statements of income.

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FIXED MATURITIES AND EQUITY SECURITIES

Fixed maturities consist principally of publicly traded and privately
placed debt securities, and represented 73.9% and 75.7% of total cash and
invested assets at December 31, 2004 and 2003, respectively. Based on estimated
fair value, public fixed maturities represented $154,456 million, or 87.4%, and
$147,489 million, or 87.9%, of total fixed maturities at December 31, 2004 and
2003, respectively. Based on estimated fair value, private fixed maturities
represented $22,307 million, or 12.6%, and $20,263 million, or 12.1%, of total
fixed maturities at December 31, 2004 and 2003, respectively.

In cases where quoted market prices are not available, fair values are
estimated using present value or valuation techniques. The fair value estimates
are made at a specific point in time, based on available market information and
judgments about the financial instruments, including estimates of the timing and
amounts of expected future cash flows and the credit standing of the issuer or
counterparty. Factors considered in estimating fair value include: coupon rate,
maturity, estimated duration, call provisions, sinking fund requirements, credit
rating, industry sector of the issuer and quoted market prices of comparable
securities.

The Securities Valuation Office of the NAIC evaluates the fixed maturity
investments of insurers for regulatory reporting purposes and assigns securities
to one of six investment categories called "NAIC designations." The NAIC ratings
are similar to the rating agency designations of the Nationally Recognized
Statistical Rating Organizations for marketable bonds. NAIC ratings 1 and 2
include bonds generally considered investment grade (rated "Baa3" or higher by
Moody's Investors Services ("Moody's"), or rated "BBB--" or higher by Standard &
Poor's ("S&P") by such rating organizations. NAIC ratings 3 through 6 include
bonds generally considered below investment grade (rated "Ba1" or lower by
Moody's, or rated "BB+" or lower by S&P).

The following table presents the Company's total fixed maturities by
Nationally Recognized Statistical Rating Organizations designation and the
equivalent ratings of the NAIC, as well as the percentage, based on estimated
fair value, that each designation is comprised of at:

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(1) Amounts presented are based on rating agency designations. Comparisons
between NAIC ratings and rating agency designations are published by the
NAIC. The rating agency designations are based on availability and the lower
of the applicable ratings between Moody's and S&P. The current period
ratings are presented so that the consolidated rating is equal to the
Moody's or S&P rating, whichever is more conservative. If no rating is
available from a rating agency, then the MetLife rating will be used.

85

The following table shows the amortized cost and estimated fair value of
fixed maturities, by contractual maturity dates (excluding scheduled sinking
funds) at:

Bonds not due at a single maturity date have been included in the above
table in the year of final contractual maturity. Actual maturities may differ
from contractual maturities due to the exercise of prepayment options.

The following tables set forth the cost or amortized cost, gross unrealized
gain and loss, and estimated fair value of the Company's fixed maturities by
sector and equity securities, as well as the percentage of the total fixed
maturities holdings that each sector represents and the percentage of the total
equity securities at:

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(1) Equity securities primarily consist of investments in common and preferred
stocks and mutual fund interests. Such securities include private equity
securities with an estimated fair value of $332 million and $432 million at
December 31, 2004 and 2003, respectively.

Fixed Maturity and Equity Security Impairment. The Company classifies all
of its fixed maturities and equity securities as available-for-sale and marks
them to market through other comprehensive income, except for non-marketable
private equities, which are generally carried at cost. All securities with gross
unrealized losses at the consolidated balance sheet date are subjected to the
Company's process for identifying other-than-temporary impairments. The Company
writes down to fair value securities that it deems to be other-than-temporarily
impaired in the period the securities are deemed to be so impaired. The
assessment of whether such impairment has occurred is based on management's
case-by-case evaluation of the underlying reasons for the decline in fair value.
Management considers a wide range of factors, as described in "Summary of
Critical Accounting Estimates -- Investments," about the security issuer and
uses its 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. Inherent in management's evaluation of the security are assumptions
and estimates about the operations of the issuer and its future earnings
potential.

The Company's review of its fixed maturities and equity securities for
impairments includes an analysis of the total gross unrealized losses by three
categories of securities: (i) securities where the estimated fair value had
declined and remained below cost or amortized cost by less than 20%; (ii)
securities where the estimated fair value had declined and remained below cost
or amortized cost by 20% or more for less than six months; and (iii) securities
where the estimated fair value had declined and remained below cost or amortized
cost by 20% or more for six months or greater. While all of these securities are
monitored for potential impairment, the Company's experience indicates that the
first two categories do not present as great a risk of impairment, and often,
fair values recover over time as the factors that caused the declines improve.

The Company records impairments as investment losses and adjusts the cost
basis of the fixed maturities and equity securities accordingly. The Company
does not change the revised cost basis for subsequent recoveries in value.
Impairments of fixed maturities and equity securities were $102 million, $355
million and $1,375 million for the years ended December 31, 2004, 2003 and 2002,
respectively. The Company's three

87

largest impairments totaled $53 million, $125 million and $352 million for the
years ended December 31, 2004, 2003 and 2002, respectively. The circumstances
that gave rise to these impairments were either financial restructurings or
bankruptcy filings. During the years ended December 31, 2004, 2003 and 2002, the
Company sold or disposed of fixed maturities and equity securities at a loss
that had a fair value of $29,939 million, $21,984 million and $10,128 million,
respectively. Gross losses excluding impairments for fixed maturities and equity
securities were $516 million, $500 million and $979 million for the years ended
December 31, 2004, 2003 and 2002, respectively.

The following table presents the cost or amortized cost, gross unrealized
losses and number of securities for fixed maturities and equity securities where
the estimated fair value had declined and remained below cost or amortized cost
by less than 20%, or 20% or more for:

The gross unrealized loss related to the Company's fixed maturities and
equity securities at December 31, 2004 was $509 million. These securities are
concentrated by sector in United States corporates (34%); foreign corporates
(17%); and residential mortgage-backed (13%); and are concentrated by industry
in mortgage-backed (20%); finance (10%); and services (10%) (calculated as a
percentage of gross unrealized loss). Non-investment grade securities represent
4% of the $39,665 million fair value and 12% of the $509 million gross
unrealized loss.

The Company did not hold any single fixed maturity or equity security with
a gross unrealized loss at December 31, 2004 greater than $10 million.

Corporate Fixed Maturities. The table below shows the major industry types
that comprise the corporate fixed maturity holdings at:

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(1) Includes U.S. dollar-denominated debt obligations of foreign obligors, and
other foreign investments.

The Company maintains a diversified corporate fixed maturity portfolio
across industries and issuers. The portfolio does not have exposure to any
single issuer in excess of 1% of the total invested assets of the portfolio. At
December 31, 2004 and 2003, the Company's combined holdings in the ten issuers
to which it had the

88

greatest exposure totaled $4,967 million and $4,683 million, respectively, both
of which was less than 3% of the Company's total invested assets at such date.
The exposure to the largest single issuer of corporate fixed maturities held at
December 31, 2004 and 2003 was $631 million and $618 million, respectively.

The Company has hedged all of its material exposure to foreign currency
risk in its invested assets. In the Company's international insurance
operations, both its assets and liabilities are generally denominated in local
currencies.

Structured Securities. The following table shows the types of structured
securities the Company held at:

The majority of the residential mortgage-backed securities are guaranteed
or otherwise supported by the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation or the Government National Mortgage Association.
At December 31, 2004 and 2003, $31,768 million and $31,210 million,
respectively, or 98.6% and 99.2%, respectively, of the residential
mortgage-backed securities were rated Aaa/ AAA by Moody's or S&P.

At December 31, 2004 and 2003, $8,750 million and $6,992 million,
respectively, or 70.0% and 63.4%, respectively, of the commercial
mortgage-backed securities were rated Aaa/AAA by Moody's or S&P.

The Company's asset-backed securities are diversified both by sector and by
issuer. Credit card and home equity loan securitizations, accounting for about
26% and 32% of the total holdings, respectively, constitute the largest
exposures in the Company's asset-backed securities portfolio. Approximately
$6,775 million and $7,528 million, or 62.3% and 63.5%, of total asset-backed
securities were rated Aaa/AAA by Moody's or S&P at December 31, 2004 and 2003,
respectively.

Structured Investment Transactions. The Company participates in structured
investment transactions, primarily asset securitizations and structured notes.
These transactions enhance the Company's total return of the investment
portfolio principally by generating management fee income on asset
securitizations and by providing equity-based returns on debt securities through
structured notes and similar instruments.

The Company sponsors financial asset securitizations of high yield debt
securities, investment grade bonds and structured finance securities and also is
the collateral manager and a beneficial interest holder in such transactions. As
the collateral manager, the Company earns management fees on the outstanding
securitized asset balance, which are recorded in income as earned. When the
Company transfers assets to a bankruptcy-remote SPE and surrenders control over
the transferred assets, the transaction is accounted for as a sale. Gains or
losses on securitizations are determined with reference to the carrying amount
of the financial assets transferred, which is allocated to the assets sold and
the beneficial interests retained based on relative fair values at the date of
transfer. Beneficial interests in securitizations are carried at fair value in
fixed maturities. Income on these beneficial interests is recognized using the
prospective method. The SPEs used to securitize assets are not consolidated by
the Company because the Company has determined that it is not the primary
beneficiary of these entities. Prior to the adoption of FIN 46(r), such SPEs
were not consolidated because they did not meet the criteria for consolidation
under previous accounting guidance.

89

The Company purchases or receives beneficial interests in SPEs, which
generally acquire financial assets, including corporate equities, debt
securities and purchased options. The Company has not guaranteed the
performance, liquidity or obligations of the SPEs and the Company's exposure to
loss is limited to its carrying value of the beneficial interests in the SPEs.
The Company uses the beneficial interests as part of its risk management
strategy, including asset-liability management. These SPEs are not consolidated
by the Company because the Company has determined that it is not the primary
beneficiary of these entities based on the framework provided in FIN 46(r).
Prior to the adoption of FIN 46(r), such SPEs were not consolidated because they
did not meet the criteria for consolidation under previous accounting guidance.
These beneficial interests are generally structured notes, which are included in
fixed maturities, and their income is recognized using the retrospective
interest method or the level yield method, as appropriate. Impairments of these
beneficial interests are included in net investment gains (losses).

The Company has sponsored four securitizations with a total of
approximately $1,341 million and $1,431 million in financial assets as of
December 31, 2004 and 2003, respectively. The Company's beneficial interests in
these SPEs as of December 31, 2004 and 2003 and the related investment income
for the years ended December 31, 2004, 2003 and 2002 were insignificant.

The Company invests in structured notes and similar type instruments, which
generally provide equity-based returns on debt securities. The carrying value of
such investments was approximately $666 million and $880 million at December 31,
2004 and 2003, respectively. The related net investment income recognized was
$45 million, $78 million and $1 million for the years ended December 31, 2004,
2003 and 2002, respectively.

MORTGAGE AND OTHER LOANS

The Company's mortgage and other loans are principally collateralized by
commercial, agricultural and residential properties, as well as automobiles.
Mortgage and other loans comprised 13.6% and 11.8% of the Company's total cash
and invested assets at December 31, 2004 and 2003, respectively. The carrying
value of mortgage and other loans is stated at original cost net of repayments,
amortization of premiums, accretion of discounts and valuation allowances. The
following table shows the carrying value of the Company's mortgage and other
loans by type at:

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Commercial Mortgage Loans. The Company diversifies its commercial mortgage
loans by both geographic region and property type. The following table presents
the distribution across geographic regions and property types for commercial
mortgage loans at:

The following table presents the scheduled maturities for the Company's
commercial mortgage loans at:

Restructured, Potentially Delinquent, Delinquent or Under Foreclosure. The
Company monitors its mortgage loan investments on an ongoing basis, including
reviewing loans that are restructured, potentially delinquent, delinquent or
under foreclosure. These loan classifications are consistent with those used in
industry practice.

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The Company defines restructured mortgage loans as loans in which the
Company, for economic or legal reasons related to the debtor's financial
difficulties, grants a concession to the debtor that it would not otherwise
consider. The Company defines potentially delinquent loans as loans that, in
management's opinion, have a high probability of becoming delinquent. The
Company defines delinquent mortgage loans, consistent with industry practice, as
loans in which two or more interest or principal payments are past due. The
Company defines mortgage loans under foreclosure as loans in which foreclosure
proceedings have formally commenced.

The Company reviews all mortgage loans 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 and tenant
creditworthiness.

The Company records valuation allowances for loans that it deems impaired.
The Company's valuation allowances are established both on a loan specific basis
for those loans where a property or market specific risk has been identified
that could likely result in a future default, as well as for pools of loans with
similar high risk characteristics where a property specific or market risk has
not been identified. Such valuation allowances are established for the excess
carrying value of the mortgage loan over the present value of expected future
cash flows discounted at the loan's original effective interest rate, the value
of the loan's collateral or the loan's market value if the loan is being sold.
The Company records valuation allowances as investment losses. The Company
records subsequent adjustments to allowances as investment gains (losses).

The following table presents the amortized cost and valuation allowance for
commercial mortgage loans distributed by loan classification at:

- ---------------

(1) Amortized cost is equal to carrying value before valuation allowances.

The following table presents the changes in valuation allowances for
commercial mortgage loans for the:

Agricultural Mortgage Loans. The Company diversifies its agricultural
mortgage loans by both geographic region and product type.

Approximately 69% of the $5,907 million of agricultural mortgage loans
outstanding at December 31, 2004 were subject to rate resets prior to maturity.
A substantial portion of these loans generally is successfully renegotiated and
remain outstanding to maturity. The process and policies for monitoring the
agricultural mortgage loans and classifying them by performance status are
generally the same as those for the commercial loans.

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The following table presents the amortized cost and valuation allowances
for agricultural mortgage loans distributed by loan classification at:

- ---------------

(1) Amortized cost is equal to carrying value before valuation allowances.

The following table presents the changes in valuation allowances for
agricultural mortgage loans for the:

Other Loans. Other loans consist of residential mortgages and auto loans.

REAL ESTATE AND REAL ESTATE JOINT VENTURES

The Company's real estate and real estate joint venture investments consist
of commercial properties located primarily throughout the United States. At
December 31, 2004 and 2003, the carrying value of the Company's real estate,
real estate joint ventures and real estate held-for-sale was $4,233 million and
$4,677 million, respectively, or 1.8%, and 2.1% of total cash and invested
assets, respectively. The carrying value of real estate is stated at depreciated
cost net of impairments and valuation allowances. The carrying value of real
estate joint ventures is stated at the Company's equity in the real estate joint
ventures net of impairments and valuation allowances. The following table
presents the carrying value of the Company's real estate, real estate joint
ventures, real estate held-for-sale and real estate acquired upon foreclosure
at:

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The Company's carrying value of real estate held-for-sale, including real
estate acquired upon foreclosure of commercial and agricultural mortgage loans,
in the amounts of $252 million and $1,170 million at December 31, 2004 and 2003,
respectively, are net of valuation allowances of $4 million and $12 million,
respectively, and net of prior year impairments of $6 million and $151 million
at December 31, 2004 and 2003, respectively.

The Company records real estate acquired upon foreclosure of commercial and
agricultural mortgage loans at the lower of estimated fair value or the carrying
value of the mortgage loan at the date of foreclosure.

Certain of the Company's investments in real estate joint ventures meet the
definition of a VIE under FIN 46(r). See "-- Investments -- Variable Interest
Entities."

OTHER LIMITED PARTNERSHIP INTERESTS

The carrying value of other limited partnership interests (which primarily
represent ownership interests in pooled investment funds that make private
equity investments in companies in the United States and overseas) was $2,907
million and $2,600 million at December 31, 2004 and 2003, respectively. The
Company uses the equity method of accounting for investments in limited
partnership interests in which it has more than a minor interest, has influence
over the partnership's operating and financial policies and does not have a
controlling interest. The Company uses the cost method for minor interest
investments and when it has virtually no influence over the partnership's
operating and financial policies. The Company's investments in other limited
partnerships represented 1.2% of cash and invested assets at both December 31,
2004 and 2003.

Some of the Company's investments in other limited partnership interests
meet the definition of a VIE under FIN 46(r). See "-- Investments -- Variable
Interest Entities."

OTHER INVESTED ASSETS

The Company's other invested assets consist principally of leveraged leases
and funds withheld at interest of $3.9 billion at both December 31, 2004 and
2003. The leveraged leases are recorded net of non-recourse debt. The Company
participates in lease transactions, which are diversified by industry, asset
type and geographic area. The Company regularly reviews residual values and
writes down residuals to expected values as needed. Funds withheld represent
amounts contractually withheld by ceding companies in accordance with
reinsurance agreements. For agreements written on a modified coinsurance basis
and certain agreements written on a coinsurance basis, assets supporting the
reinsured policies equal to the net statutory reserves are withheld and continue
to be legally owned by the ceding company. Other invested assets also include
the fair value of embedded derivatives related to funds withheld and modified
coinsurance contracts. Interest accrues to these funds withheld at rates defined
by the treaty terms and may be contractually specified or directly related to
the investment portfolio. The Company's other invested assets represented 2.1%
of cash and invested assets at both December 31, 2004 and 2003.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses a variety of derivatives, including swaps, forwards,
future and option contracts, to manage its various risks. Additionally, the
Company enters into income generation and replication derivative transactions as
permitted by its insurance subsidiaries' Derivatives Use Plans approved by the
applicable state insurance departments.

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The table below provides a summary of the notional amount and current
market or fair value of derivative financial instruments held at:

VARIABLE INTEREST ENTITIES

The Company has adopted the provisions of FIN 46 and FIN 46(r). See
"-- Application of Recent Accounting Pronouncements." The adoption of FIN 46(r)
required the Company to consolidate certain VIEs for which it is the primary
beneficiary. The following table presents the total assets of and maximum
exposure to loss relating to VIEs for which the Company has concluded that (i)
it is the primary beneficiary and which are consolidated in the Company's
consolidated financial statements at December 31, 2004, and (ii) it holds
significant variable interests but it is not the primary beneficiary and which
have not been consolidated:

- ---------------

(1) The assets of the asset-backed securitizations and collateralized debt
obligations are reflected at fair value at December 31, 2004. The assets of
the real estate joint ventures, other limited partnerships and other
structured investments are reflected at the carrying amounts at which such
assets would have been reflected on the Company's balance sheet had the
Company consolidated the VIE from the date of its initial investment in the
entity.

(2) The maximum exposure to loss of the asset-backed securitizations and
collateralized debt obligations is equal to the carrying amounts of retained
interests. In addition, the Company provides collateral management services
for certain of these structures for which it collects a management fee. The
maximum exposure to loss relating to real estate joint ventures, other
limited partnerships and other

95

structured investments is equal to the carrying amounts plus any unfunded
commitments, reduced by amounts guaranteed by other partners.

(3) Real estate joint ventures include partnerships and other ventures, which
engage in the acquisition, development, management and disposal of real
estate investments.

(4) Other limited partnerships include partnerships established for the purpose
of investing in real estate funds, public and private debt and equity
securities, as well as limited partnerships established for the purpose of
investing in low-income housing that qualifies for federal tax credits.

(5) Other structured investments include an offering of a collateralized fund of
funds based on the securitization of a pool of private equity funds.

SECURITIES LENDING

The Company participates in a securities lending program whereby blocks of
securities, which are included in investments, are loaned to third parties,
primarily major brokerage firms. The Company requires a minimum of 102% of the
fair value of the loaned securities to be separately maintained as collateral
for the loans. Securities with a cost or amortized cost of $26,564 million and
$25,121 million and an estimated fair value of $27,974 million and $26,387
million were on loan under the program at December 31, 2004 and 2003,
respectively. The Company was liable for cash collateral under its control of
$28,678 million and $27,083 million at December 31, 2004 and 2003, respectively.
Security collateral on deposit from customers may not be sold or repledged and
is not reflected in the consolidated financial statements.

SEPARATE ACCOUNTS

The Company had $86.8 billion and $75.8 billion held in its separate
accounts, for which the Company generally does not bear investment risk, as of
December 31, 2004 and 2003, respectively. The Company manages each separate
account's assets in accordance with the prescribed investment policy that
applies to that specific separate account. The Company establishes separate
accounts on a single client and multi-client commingled basis in compliance with
insurance laws. Effective with the adoption of SOP 03-1, on January 1, 2004, the
Company reports separately, as assets and liabilities, investments held in
separate accounts and liabilities of the separate accounts if (i) such separate
accounts are legally recognized; (ii) assets supporting the contract liabilities
are legally insulated from the Company's general account liabilities; (iii)
investments are directed by the contractholder; and (iv) all investment
performance, net of contract fees and assessments, is passed through to the
contractholder. The Company reports separate account assets meeting such
criteria at their fair value. Investment performance (including investment
income, net investment gains (losses) and changes in unrealized gains (losses))
and the corresponding amounts credited to contractholders of such separate
accounts are offset within the same line in the consolidated statements of
income. In connection with the adoption of SOP 03-1, separate account assets
with a fair value of $1.7 billion were reclassified to general account
investments with a corresponding transfer of separate account liabilities to
future policy benefits and policyholder account balances. See "-- Application of
Recent Accounting Pronouncements."

The Company's revenues reflect fees charged to the separate accounts,
including mortality charges, risk charges, policy administration fees,
investment management fees and surrender charges. Separate accounts not meeting
the above criteria are combined on a line-by-line basis with the Company's
general account assets, liabilities, revenues and expenses.

OFF-BALANCE SHEET ARRANGEMENTS

COMMITMENTS TO FUND PARTNERSHIP INVESTMENTS

The Company makes commitments to fund partnership investments in the normal
course of business. The amounts of these unfunded commitments were approximately
$1,324 million and $1,380 million at December 31, 2004 and 2003, respectively.
The Company anticipates that these amounts will be invested in the partnerships
over the next three to five years.

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MORTGAGE LOAN COMMITMENTS

The Company commits to lend funds under mortgage loan commitments. The
amounts of these mortgage loan commitments were $1,189 million and $679 million,
respectively, at December 31, 2004 and 2003.

GUARANTEES

In the course of its business, the Company has provided certain
indemnities, guarantees and commitments to third parties pursuant to which it
may be required to make payments now or in the future.

In the context of acquisition, disposition, investment and other
transactions, the Company has provided indemnities and guarantees, including
those related to tax, environmental and other specific liabilities, and other
indemnities and guarantees that are triggered by, among other things, breaches
of representations, warranties or covenants provided by the Company. In
addition, in the normal course of business, the Company provides
indemnifications to counterparties in contracts with triggers similar to the
foregoing, as well as for certain other liabilities, such as third party
lawsuits. These obligations are often subject to time limitations that vary in
duration, including contractual limitations and those that arise by operation of
law, such as applicable statutes of limitation. In some cases, the maximum
potential obligation under the indemnities and guarantees is subject to a
contractual limitation ranging from less than $1 million to $800 million, while
in other cases such limitations are not specified or applicable. Since certain
of these obligations are not subject to limitations, the Company does not
believe that it is possible to determine the maximum potential amount due under
these guarantees in the future.

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

During the year ended December 31, 2004, the Company recorded liabilities
of $10 million with respect to indemnities provided in certain dispositions. The
approximate term for these liabilities ranges from 12 to 18 months. The maximum
potential amount of future payments that MetLife could be required to pay is $73
million. Due to the uncertainty in assessing changes to the liabilities over the
term, the liability on the balance sheet will remain until either expiration or
settlement of the guarantee unless evidence clearly indicates that the estimates
should be revised. The fair value of the remaining indemnities, guarantees and
commitments entered into during 2004 was insignificant and thus, no liabilities
were recorded. The Company's recorded liability at December 31, 2004 and 2003
for indemnities, guarantees and commitments, excluding amounts recorded during
2004 as described in the preceding sentences, is insignificant.

ACCELERATED SHARE REPURCHASE

On December 16, 2004, the Holding Company repurchased 7,281,553 shares of
its outstanding common stock at an aggregate cost of approximately $300 million
under an accelerated share repurchase agreement with a major bank. The bank
borrowed the stock sold to the Holding Company from third parties and is
purchasing the shares in the open market over the next few months to return to
the lenders. The Holding Company will either pay or receive an amount based on
the actual amount paid by the bank to purchase the shares. The final purchase
price is expected to be determined in April 2005, and will be settled in either
cash or Holding Company stock at the Holding Company's option. The Holding
Company recorded the initial repurchase of shares as treasury stock and will
record any amount paid or received as an adjustment to the cost of the treasury
stock.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company must effectively manage, measure and monitor the market risk
associated with its invested assets and interest rate sensitive insurance
contracts. It has developed an integrated process for managing risk, which it
conducts through its Corporate Risk Management Department, Asset/Liability
Management Committees ("A/LM Committees") and additional specialists at the
business segment level. The Company has established and implemented
comprehensive policies and procedures at both the corporate and business segment
level to minimize the effects of potential market volatility.

MARKET RISK EXPOSURES

The Company has exposure to market risk through its insurance operations
and investment activities. For purposes of this disclosure, "market risk" is
defined as the risk of loss resulting from changes in interest rates, equity
prices and foreign currency exchange rates.

Interest rates. The Company's exposure to interest rate changes results
from its significant holdings of fixed maturities, as well as its interest rate
sensitive liabilities. The fixed maturities include U.S. and foreign government
bonds, securities issued by government agencies, corporate bonds and
mortgage-backed securities, all of which are mainly exposed to changes in
medium- and long-term treasury rates. The interest rate sensitive liabilities
for purposes of this disclosure include guaranteed interest contracts and fixed
annuities, which have the same type of interest rate exposure (medium- and
long-term treasury rates) as the fixed maturities. The Company employs product
design, pricing and asset/liability management strategies to reduce the adverse
effects of interest rate volatility. Product design and pricing strategies
include the use of surrender charges or restrictions on withdrawals in some
products. Asset/liability management strategies include the use of derivatives,
the purchase of securities structured to protect against prepayments, prepayment
restrictions and related fees on mortgage loans and consistent monitoring of the
pricing of the Company's products in order to better match the duration of the
assets and the liabilities they support.

Equity prices. The Company's investments in equity securities expose it to
changes in equity prices, as do certain liabilities which involve long term
guarantees on equity performance. It manages this risk on an integrated basis
with other risks through its asset/liability management strategies. The Company
also manages equity price risk through industry and issuer diversification,
asset allocation techniques and the use of derivatives.

Foreign currency exchange rates. The Company's exposure to fluctuations in
foreign currency exchange rates against the U.S. dollar results from its
holdings in non-U.S. dollar denominated fixed maturity securities, equity
securities and liabilities, as well as through its investments in foreign
subsidiaries. The principal currencies which create foreign currency exchange
rate risk in the Company's investment portfolios are the Euro, Canadian dollars
and British pounds. The Company mitigates the majority of its fixed maturities'
foreign currency exchange rate risk through the utilization of foreign currency
swaps and forward contracts. Through its investments in foreign subsidiaries,
the Company is primarily exposed to the Mexican peso, South Korean won, Chilean
peso and Taiwanese dollar. The Company has matched substantially all of its
foreign currency liabilities in its foreign subsidiaries with their respective
foreign currency assets, thereby reducing its risk to currency exchange rate
fluctuation. In some countries, local surplus is held entirely or in part in
U.S. dollar assets which further minimizes exposure to exchange rate fluctuation
risk. Selectively, the Company uses U.S. dollar assets to support certain long
duration foreign currency liabilities.

RISK MANAGEMENT

Corporate risk management. MetLife has established several financial and
non-financial senior management committees as part of its risk management
process. These committees manage capital and risk positions, approve
asset/liability management strategies and establish appropriate corporate
business standards.

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MetLife also has a separate Corporate Risk Management Department, which is
responsible for risk throughout MetLife and reports to MetLife's Chief Financial
Officer. The Corporate Risk Management Department's primary responsibilities
consist of:

- implementing a board of directors-approved corporate risk framework,
which outlines the Company's approach for managing risk on an
enterprise-wide basis;

- developing policies and procedures for managing, measuring and monitoring
those risks identified in the corporate risk framework;

- establishing appropriate corporate risk tolerance levels;

- deploying capital on an economic capital basis; and

- reporting on a periodic basis to the Governance Committee of the Holding
Company's Board of Directors and various financial and non-financial
senior management committees.

Asset/liability management. The Company actively manages its assets using
an approach that balances quality, diversification, asset/liability matching,
liquidity and investment return. The goals of the investment process are to
optimize, net of income taxes, risk-adjusted investment income and risk-adjusted
total return while ensuring that the assets and liabilities are managed on a
cash flow and duration basis. The asset/liability management process is the
shared responsibility of the Portfolio Management Unit, the Business Finance
Asset/Liability Management Unit, and the operating business segments under the
supervision of the various product line specific A/LM Committees. The A/LM
Committees' duties include reviewing and approving target portfolios on a
periodic basis, establishing investment guidelines and limits and providing
oversight of the asset/liability management process. The portfolio managers and
asset sector specialists, who have responsibility on a day-to-day basis for risk
management of their respective investing activities, implement the goals and
objectives established by the A/LM Committees.

Each of MetLife's business segments has an asset/liability officer who
works with portfolio managers in the investment department to monitor
investment, product pricing, hedge strategy and liability management issues.
MetLife establishes target asset portfolios for each major insurance product,
which represent the investment strategies used to profitably fund its
liabilities within acceptable levels of risk. These strategies include
objectives for effective duration, yield curve sensitivity, convexity,
liquidity, asset sector concentration and credit quality.

To manage interest rate risk, the Company performs periodic projections of
asset and liability cash flows to evaluate the potential sensitivity of its
securities investments and liabilities to interest rate movements. These
projections involve evaluating the potential gain or loss on most of the
Company's in-force business under various increasing and decreasing interest
rate environments. New York State Department of Insurance regulations require
that MetLife perform some of these analyses annually as part of MetLife's review
of the sufficiency of its regulatory reserves. For several of its legal
entities, the Company maintains segmented operating and surplus asset portfolios
for the purpose of asset/liability management and the allocation of investment
income to product lines. For each segment, invested assets greater than or equal
to the GAAP liabilities less the DAC asset and any non-invested assets allocated
to the segment are maintained, with any excess swept to the surplus segment. The
operating segments may reflect differences in legal entity, statutory line of
business and any product market characteristic which may drive a distinct
investment strategy with respect to duration, liquidity or credit quality of the
invested assets. Certain smaller entities make use of unsegmented general
accounts for which the investment strategy reflects the aggregate
characteristics of liabilities in those entities. The Company measures relative
sensitivities of the value of its assets and liabilities to changes in key
assumptions utilizing Company models. These models reflect specific product
characteristics and include assumptions based on current and anticipated
experience regarding lapse, mortality and interest crediting rates. In addition,
these models include asset cash flow projections reflecting interest payments,
sinking fund payments, principal payments, bond calls, mortgage prepayments and
defaults.

Common industry metrics, such as duration and convexity, are also used to
measure the relative sensitivity of assets and liability values to changes in
interest rates. In computing the duration of liabilities,

99

consideration is given to all policyholder guarantees and to how the Company
intends to set indeterminate policy elements such as interest credits or
dividends. Each operating asset segment has a duration constraint based on the
liability duration and the investment objectives of that portfolio. Where a
liability cash flow may exceed the maturity of available assets, as is the case
with certain retirement and non-medical health products, the Company may support
such liabilities with equity investments or curve mismatch strategies.

Hedging activities. MetLife's risk management strategies incorporate the
use of various interest rate derivatives to adjust the overall duration and cash
flow profile of its invested asset portfolios to better match the duration and
cash flow profile of its liabilities to reduce interest rate risk. Such
instruments include financial futures, financial forwards, interest rate and
credit default swaps, caps, floors and options. MetLife also uses foreign
currency swaps and foreign currency forwards to hedge its foreign currency
denominated fixed income investments. In 2004, MetLife initiated a hedging
strategy for certain equity price risks within its liabilities using equity
futures and options.

Economic Capital. Beginning in 2003, the Company changed its methodology
of allocating capital to its business segments from Risk-Based Capital ("RBC")
to Economic Capital. Prior to 2003, the Company's business segments' allocated
equity was primarily based on RBC, an internally developed formula based on
applying a multiple to the NAIC Statutory Risk-Based Capital and included
certain adjustments in accordance with GAAP. Economic Capital is an internally
developed risk capital model, the purpose of which is to measure the risk in the
business and to provide a basis upon which capital is deployed. The Economic
Capital model accounts for the unique and specific nature of the risks inherent
in MetLife's businesses. This is in contrast to the standardized regulatory RBC
formula, which is not as refined in its risk calculations with respect to the
nuances of the Company's businesses.

This change in methodology is being applied prospectively. This change has
and will continue to impact the level of net investment income and net income of
each of the Company's business segments. A portion of net investment income is
credited to the segments based on the level of allocated equity. This change in
methodology of allocating equity does not impact the Company's consolidated net
investment income or net income.

RISK MEASUREMENT; SENSITIVITY ANALYSIS

The Company measures market risk related to its holdings of invested assets
and other financial instruments, including certain market risk sensitive
insurance contracts, based on changes in interest rates, equity prices and
currency exchange rates, utilizing a sensitivity analysis. This analysis
estimates the potential changes in fair value, cash flows and earnings based on
a hypothetical 10% change (increase or decrease) in interest rates, equity
prices and currency exchange rates. The Company believes that a 10% change
(increase or decrease) in these market rates and prices is reasonably possible
in the near-term. In performing this analysis, the Company used market rates at
December 31, 2004 to re-price its invested assets and other financial
instruments. The sensitivity analysis separately calculated each of MetLife's
market risk exposures (interest rate, equity price and foreign currency exchange
rate) related to its non-trading invested assets and other financial
instruments. The Company does not maintain a trading portfolio.

The sensitivity analysis performed included the market risk sensitive
holdings described above. The Company modeled the impact of changes in market
rates and prices on the fair values of its invested assets, earnings and cash
flows as follows:

Fair values. The Company bases its potential change in fair values on an
immediate change (increase or decrease) in:

- the net present values of its interest rate sensitive exposures resulting
from a 10% change (increase or decrease) in interest rates;

- the U.S. dollar equivalent balances of the Company's currency exposures
due to a 10% change (increase or decrease) in currency exchange rates;
and

- the market value of its equity positions due to a 10% change (increase or
decrease) in equity prices.

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Earnings and cash flows. MetLife calculates the potential change in
earnings and cash flows on the change in its earnings and cash flows over a
one-year period based on an immediate 10% change (increase or decrease) in
market rates and equity prices. The following factors were incorporated into the
earnings and cash flows sensitivity analyses:

- the reinvestment of fixed maturity securities;

- the reinvestment of payments and prepayments of principal related to
mortgage-backed securities;

- the re-estimation of prepayment rates on mortgage-backed securities for
each 10% change (increase or decrease) in the interest rates; and

- the expected turnover (sales) of fixed maturities and equity securities,
including the reinvestment of the resulting proceeds.

The sensitivity analysis is an estimate and should not be viewed as
predictive of the Company's future financial performance. The Company cannot
assure that its actual losses in any particular year will not exceed the amounts
indicated in the table below. Limitations related to this sensitivity analysis
include:

- the market risk information is limited by the assumptions and parameters
established in creating the related sensitivity analysis, including the
impact of prepayment rates on mortgages;

- for derivatives which qualify as hedges, the impact on reported earnings
may be materially different from the change in market values;

- the analysis excludes other significant real estate holdings and
liabilities pursuant to insurance contracts; and

- the model assumes that the composition of assets and liabilities remains
unchanged throughout the year.

Accordingly, the Company uses such models as tools and not substitutes for
the experience and judgment of its corporate risk and asset/liability management
personnel.

Based on its analysis of the impact of a 10% change (increase or decrease)
in market rates and prices, MetLife has determined that such a change could have
a material adverse effect on the fair value of its interest rate sensitive
invested assets. The equity and foreign currency portfolios do not expose the
Company to material market risk.

The table below illustrates the potential loss in fair value of the
Company's interest rate sensitive financial instruments at December 31, 2004. In
addition, the potential loss with respect to the fair value of currency exchange
rates and the Company's equity price sensitive positions at December 31, 2004 is
set forth in the table below.

The potential loss in fair value for each market risk exposure of the
Company's portfolio, all of which is non-trading, as of the period indicated
was:

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The table below provides additional detail regarding the potential loss in
fair value of the Company's interest sensitive financial instruments at December
31, 2004 by type of asset or liability.

In addition to the analysis discussed above, the Company also performs an
analysis of the sensitivity of its insurance and interest sensitive liabilities
to changes in interest rates as a part of its asset liability management
program. As of December 31, 2004, a hypothetical instantaneous 10% decrease in
interest rates applied to the Company's insurance and interest sensitive
liabilities and their associated operating asset portfolios would reduce the
fair value of equity by $227 million. Management does not expect that this
sensitivity would produce a liquidity strain on the Company.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of
MetLife, Inc.
New York, New York:

We have audited management's assessment, included in management's annual
report on internal control over financial reporting, as included in Item 9A.
Controls and Procedures, that MetLife, Inc. and subsidiaries (the "Company")
maintained effective internal control over financial reporting as of December
31, 2004, based on criteria established in Internal Control -- Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company's management is responsible for maintaining effective
internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting. Our responsibility
is to express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit.

We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal
control over financial reporting, evaluating management's assessment, testing
and evaluating the design and operating effectiveness of internal control, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis. Also, projections of any evaluation of
the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, management's assessment that the Company maintained
effective internal control over financial reporting as of December 31, 2004, is
fairly stated, in all material respects, based on the criteria established in
Internal Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal
Control -- Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the consolidated financial
statements and consolidated financial statement schedules as of and for the year
ended December 31, 2004 of the Company and our report dated March 4, 2005

F-1

expressed an unqualified opinion on those financial statements and financial
statement schedules and included an explanatory paragraph regarding the
Company's change of its accounting method for certain non-traditional long
duration contracts and separate accounts as required by new accounting guidance
which became effective on January 1, 2004.

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

New York, New York
March 4, 2005

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of
MetLife, Inc.
New York, New York:

We have audited the accompanying consolidated balance sheets of MetLife,
Inc. and subsidiaries (the "Company") as of December 31, 2004 and 2003, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 2004. Our audits
also included the consolidated financial statement schedules listed in the Index
to Consolidated Financial Statements and Schedules. These financial statements
and financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statements schedules based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of MetLife, Inc. and subsidiaries
as of December 31, 2004 and 2003, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2004 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such consolidated financial statement schedules,
when considered in relation to the basic consolidated financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.

As discussed in Note 1, the Company changed its method of accounting for
certain non-traditional long duration contracts and separate accounts, and for
embedded derivatives in certain insurance products as required by new accounting
guidance which became effective on January 1, 2004 and October 1, 2003,
respectively, and recorded the impact as cumulative effects of changes in
accounting principles.

We have also audited, in accordance with the standards of the Public
Company Accounting Oversight Board (United States), the effectiveness of the
Company's internal control over financial reporting as of December 31, 2004,
based on the criteria established in Internal Control -- Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated March 4, 2005 expressed an unqualified opinion on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

New York, New York
March 4, 2005

F-3

METLIFE, INC.

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003

(DOLLARS IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)

See accompanying notes to consolidated financial statements.
F-4

METLIFE, INC.

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

See accompanying notes to consolidated financial statements.
F-5

METLIFE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(DOLLARS IN MILLIONS)

See accompanying notes to consolidated financial statements.
F-6

METLIFE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(DOLLARS IN MILLIONS)

F-7

METLIFE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

(DOLLARS IN MILLIONS)

See accompanying notes to consolidated financial statements.
F-8

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF ACCOUNTING POLICIES

BUSINESS

"MetLife" or the "Company" refers to MetLife, Inc., a Delaware corporation
incorporated in 1999 (the "Holding Company"), and its subsidiaries, including
Metropolitan Life Insurance Company ("Metropolitan Life"). MetLife is a leading
provider of insurance and other financial services to individual and
institutional customers. The Company offers life insurance, annuities,
automobile and homeowner's insurance and retail banking services to individuals,
as well as group insurance, reinsurance and retirement & savings products and
services to corporations and other institutions.

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts of
(i) the Holding Company and its subsidiaries; (ii) partnerships and joint
ventures in which the Company has control; and (iii) variable interest entities
("VIEs") for which the Company is deemed to be the primary beneficiary. Closed
block assets, liabilities, revenues and expenses are combined on a line-by-line
basis with the assets, liabilities, revenues and expenses outside the closed
block based on the nature of the particular item (see Note 6). Assets,
liabilities, revenues and expenses of the general account for 2004 include
amounts related to certain separate accounts previously reported in separate
account assets and liabilities. See "-- Application of Recent Accounting
Pronouncements." Intercompany accounts and transactions have been eliminated.

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

Minority interest related to consolidated entities included in other
liabilities was $1,145 million and $950 million at December 31, 2004 and 2003,
respectively.

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform with the 2004 presentation.

SUMMARY OF CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America ("GAAP") requires
management to adopt accounting policies and make estimates and assumptions that
affect amounts reported in the consolidated financial statements. The most
critical estimates include those used in determining: (i) investment
impairments; (ii) the fair value of investments in the absence of quoted market
values; (iii) application of the consolidation rules to certain investments;
(iv) the fair value of and accounting for derivatives; (v) the capitalization
and amortization of deferred policy acquisition costs ("DAC"), including value
of business acquired ("VOBA"); (vi) the liability for future policyholder
benefits; (vii) the liability for litigation and regulatory matters; and (viii)
accounting for reinsurance transactions and employee benefit plans. In applying
these policies, management makes subjective and complex judgments that
frequently require estimates about matters that are inherently uncertain. Many
of these policies, estimates and related judgments are common in the insurance
and financial services industries; others are specific to the Company's
businesses and operations. Actual results could differ from those estimates.

F-9

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Investments

The Company's principal investments are in fixed maturities, mortgage and
other loans and real estate, all of which are exposed to three primary sources
of investment risk: credit, interest rate and market valuation. The financial
statement risks are those associated with the recognition of impairments and
income, as well as the determination of fair values. The assessment of whether
impairments have occurred is based on management's case-by-case evaluation of
the underlying reasons for the decline in fair value. Management considers a
wide range of factors about the security issuer and uses its 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. Inherent in management's
evaluation of the security are assumptions and estimates about the operations of
the issuer and its future earnings potential. Considerations used by the Company
in the impairment evaluation process include, but are not limited to: (i) the
length of time and the extent to which the market value has been below cost or
amortized cost; (ii) the potential for impairments of securities when the issuer
is experiencing significant financial difficulties; (iii) the potential for
impairments in an entire industry sector or sub-sector; (iv) the potential for
impairments in certain economically depressed geographic locations; (v) the
potential for impairments of securities where the issuer, series of issuers or
industry has suffered a catastrophic type of loss or has exhausted natural
resources; (vi) the Company's ability and intent to hold the security for a
period of time sufficient to allow for the recovery of its value to an amount
equal to or greater than cost or amortized cost; (vii) unfavorable changes in
forecasted cash flows on asset-backed securities; and (viii) other subjective
factors, including concentrations and information obtained from regulators and
rating agencies. In addition, the earnings on certain investments are dependent
upon market conditions, which could result in prepayments and changes in amounts
to be earned due to changing interest rates or equity markets. The determination
of fair values in the absence of quoted market values is based on: (i) valuation
methodologies; (ii) securities the Company deems to be comparable; and (iii)
assumptions deemed appropriate given the circumstances. The use of different
methodologies and assumptions may have a material effect on the estimated fair
value amounts. In addition, the Company enters into certain structured
investment transactions, real estate joint ventures and limited partnerships for
which the Company may be deemed to be the primary beneficiary and, therefore,
may be required to consolidate such investments. The accounting rules for the
determination of the primary beneficiary are complex and require evaluation of
the contractual rights and obligations associated with each party involved in
the entity, an estimate of the entity's expected losses and expected residual
returns and the allocation of such estimates to each party.

Derivatives

The Company enters into freestanding derivative transactions primarily to
manage the risk associated with variability in cash flows or changes in fair
values related to the Company's financial assets and liabilities. The Company
also uses derivative instruments to hedge its currency exposure associated with
net investments in certain foreign operations. The Company also purchases
investment securities, issues certain insurance policies and engages in certain
reinsurance contracts that have embedded derivatives. The associated financial
statement risk is the volatility in net income which can result from (i) changes
in fair value of derivatives not qualifying as accounting hedges; (ii)
ineffectiveness of designated hedges; and (iii) counterparty default. In
addition, there is a risk that embedded derivatives requiring bifurcation are
not identified and reported at fair value in the consolidated financial
statements. Accounting for derivatives is complex, as evidenced by significant
authoritative interpretations of the primary accounting standards which continue
to evolve, as well as the significant judgments and estimates involved in
determining fair value in the absence of quoted market values. These estimates
are based on valuation methodologies and assumptions deemed appropriate in the
circumstances. Such assumptions include estimated volatility and interest rates
used in the determination of fair value where quoted market values are not
available. The use of different assumptions may have a material effect on the
estimated fair value amounts.

F-10

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred Policy Acquisition Costs

The Company incurs significant costs in connection with acquiring new and
renewal insurance business. These costs, which vary with and are primarily
related to the production of that business, are deferred. The recovery of such
costs is dependent upon the future profitability of the related business. The
amount of future profit is dependent principally on investment returns in excess
of the amounts credited to policyholders, mortality, morbidity, persistency,
interest crediting rates, expenses to administer the business, creditworthiness
of reinsurance counterparties and certain economic variables, such as inflation.
Of these factors, the Company anticipates that investment returns are most
likely to impact the rate of amortization of such costs. The aforementioned
factors enter into management's estimates of gross margins and profits, which
generally are used to amortize such costs. Revisions to estimates result in
changes to the amounts expensed in the reporting period in which the revisions
are made and could result in the impairment of the asset and a charge to income
if estimated future gross margins and profits are less than amounts deferred. In
addition, the Company utilizes the reversion to the mean assumption, a common
industry practice, in its determination of the amortization of DAC, including
VOBA. This practice assumes that the expectation for long-term appreciation in
equity markets is not changed by minor short-term market fluctuations, but that
it does change when large interim deviations have occurred.

Liability for Future Policy Benefits and Unpaid Claims and Claim Expenses

The Company establishes liabilities for amounts payable under insurance
policies, including traditional life insurance, traditional annuities and
non-medical health insurance. Generally, amounts are payable over an extended
period of time and liabilities are established based on methods and underlying
assumptions in accordance with GAAP and applicable actuarial standards.
Principal assumptions used in the establishment of liabilities for future policy
benefits are mortality, morbidity, expenses, persistency, investment returns and
inflation.

The Company also establishes liabilities for unpaid claims and claim
expenses for property and casualty claim insurance which represent the amount
estimated for claims that have been reported but not settled and claims incurred
but not reported. Liabilities for unpaid claims are estimated based upon the
Company's historical experience and other actuarial assumptions that consider
the effects of current developments, anticipated trends and risk management
programs, reduced for anticipated salvage and subrogation.

Differences between actual experience and the assumptions used in pricing
these policies and in the establishment of liabilities result in variances in
profit and could result in losses. The effects of changes in such estimated
reserves are included in the results of operations in the period in which the
changes occur.

Reinsurance

The Company enters into reinsurance transactions as both a provider and a
purchaser of reinsurance. Accounting for reinsurance requires extensive use of
assumptions and estimates, particularly related to the future performance of the
underlying business and the potential impact of counterparty credit risks. The
Company periodically reviews actual and anticipated experience compared to the
aforementioned assumptions used to establish assets and liabilities relating to
ceded and assumed reinsurance and evaluates the financial strength of
counterparties to its reinsurance agreements using criteria similar to that
evaluated in the security impairment process discussed previously. Additionally,
for each of its reinsurance contracts, the Company must determine if the
contract provides indemnification against loss or liability relating to
insurance risk, in accordance with applicable accounting standards. The Company
must review all contractual features, particularly 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 the Company determines that a
reinsurance contract does not expose the reinsurer to a reasonable possibility
of a significant loss from insurance risk, the Company records the contract
using the deposit method of accounting.
F-11

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Litigation

The Company is a party to a number of legal actions and regulatory
investigations. Given the inherent unpredictability of these matters, it is
difficult to estimate the impact on the Company's consolidated financial
position. 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 the Company's asbestos-related liability,
are especially difficult to estimate due to the limitation of available data and
uncertainty regarding numerous variables used to determine amounts recorded. The
data and variables that impact the assumptions used to estimate the Company's
asbestos-related liability include the number of future claims, the cost to
resolve claims, the disease mix and severity of disease, the jurisdiction of
claims filed, tort reform efforts and the impact of any possible future adverse
verdicts and their amounts. On a quarterly and annual basis the Company reviews
relevant information with respect to liabilities for litigation, regulatory
investigations and litigation-related contingencies to be reflected in the
Company's consolidated financial statements. The review includes senior legal
and financial personnel. It is possible that an adverse outcome in certain of
the Company's 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 the Company's consolidated
net income or cash flows in particular quarterly or annual periods.

Employee Benefit Plans

The Company sponsors pension and other retirement plans in various forms
covering employees who meet specified eligibility requirements. The reported
expense and liability associated with these plans requires an extensive use of
assumptions which include the discount rate, expected return on plan assets and
rate of future compensation increases as determined by the Company. Management
determines these assumptions based upon currently available market and industry
data, historical performance of the plan and its assets, and consultation with
an independent consulting actuarial firm. These assumptions used by the Company
may differ materially from actual results due to changing market and economic
conditions, higher or lower withdrawal rates or longer or shorter life spans of
the participants. These differences may have a significant effect on the
Company's consolidated financial statements and liquidity.

SIGNIFICANT ACCOUNTING POLICIES

Investments

The Company's fixed maturity and equity securities are classified as
available-for-sale and are reported at their estimated fair value. Unrealized
investment gains and losses on securities are recorded as a separate component
of other comprehensive income or loss, net of policyholder related amounts and
deferred income taxes. The cost of fixed maturity and equity securities is
adjusted for impairments in value deemed to be other-than-temporary in the
period that determination is made. These adjustments are recorded as investment
losses. The assessment of whether such impairment has occurred is based on
management's case-by-case evaluation of the underlying reasons for the decline
in fair value. Management considers a wide range of factors, as described in
"Summary of Critical Accounting Estimates-Investments," about the security
issuer and uses its 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. Inherent in management's evaluation of the security are
assumptions and estimates about the operations of the issuer and its future
earnings potential.

The Company's review of its fixed maturities and equity securities for
impairments also includes an analysis of the total gross unrealized losses by
three categories of securities: (i) securities where the estimated fair value
had declined and remained below cost or amortized cost by less than 20%; (ii)
securities where the estimated fair value had declined and remained below cost
or amortized cost by 20% or more for less than six months; and (iii) securities
where the estimated fair value had declined and remained below cost or amortized
cost by 20% or more for six months or greater.
F-12

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Investment gains and losses on sales of securities are determined on a
specific identification basis. All security transactions are recorded on a trade
date basis. Amortization of premium and accretion of discount on fixed maturity
securities is recorded using the effective interest method.

Mortgage loans on real estate are stated at amortized cost, net of
valuation allowances. Valuation allowances are recorded when it is probable
that, based upon current information and events, the Company will be unable to
collect all amounts due under the contractual terms of the loan agreement. Such
valuation allowances are established for the excess carrying value of the
mortgage loan over the present value of expected future cash flows discounted at
the loan's original effective interest rate, the value of the loan's collateral
or the loan's market value if the loan is being sold. The Company also
establishes allowances for loan loss when a loss contingency exists for pools of
loans with similar characteristics based on property types and loan to value
risk factors. A loss contingency exists when the likelihood that a future event
will occur is probable based on past events. Changes in valuation allowances are
included in net investment gains and losses. Interest income earned on impaired
loans is accrued on the principal amount of the loan based on the loan's
contractual interest rate. However, interest ceases to be accrued for loans on
which interest is generally more than 60 days past due and/or where the
collection of interest is not considered probable. Cash receipts on impaired
loans are recorded as a reduction of the recorded investment.

Real estate held-for-investment, including related improvements, is stated
at cost less accumulated depreciation. Depreciation is provided on a
straight-line basis over the estimated useful life of the asset (typically 20 to
55 years). Once the Company identifies a property that is expected to be sold
within one year and commences a firm plan for marketing the property, the
Company, if applicable, classifies the property as held-for-sale and reports the
related net investment income and any resulting investment gains and losses as
discontinued operations. Real estate held-for-sale is stated at the lower of
depreciated cost or fair value less expected disposition costs. Real estate is
not depreciated while it is classified as held-for-sale. Cost of real estate
held-for-investment is adjusted for impairment whenever events or changes in
circumstances indicate the carrying amount of the asset may not be recoverable.
Impaired real estate is written down to estimated fair value with the impairment
loss being included in net investment gains and losses. Impairment losses are
based upon the estimated fair value of real estate, which is generally computed
using the present value of expected future cash flows from the real estate
discounted at a rate commensurate with the underlying risks. Real estate
acquired upon foreclosure of commercial and agricultural mortgage loans is
recorded at the lower of estimated fair value or the carrying value of the
mortgage loan at the date of foreclosure.

Policy loans are stated at unpaid principal balances.

Short-term investments are stated at amortized cost, which approximates
fair value.

Other invested assets consist principally of leveraged leases and funds
withheld at interest. The leveraged leases are recorded net of non-recourse
debt. The Company participates in lease transactions which are diversified by
industry, asset type and geographic area. The Company regularly reviews residual
values and impairs residuals to expected values as needed. Funds withheld
represent amounts contractually withheld by ceding companies in accordance with
reinsurance agreements. For agreements written on a modified coinsurance basis
and certain agreements written on a coinsurance basis, assets supporting the
reinsured policies and equal to the net statutory reserves are withheld and
continue to be legally owned by the ceding companies. Other invested assets also
includes the fair value of embedded derivatives related to funds withheld and
modified coinsurance contracts. The Company recognizes interest on funds
withheld in accordance with the treaty terms as investment income is earned on
the assets supporting the reinsured policies.

The Company participates in structured investment transactions, primarily
asset securitizations and structured notes. These transactions enhance the
Company's total return of the investment portfolio principally by generating
management fee income on asset securitizations and by providing equity-based
returns on debt securities through structured notes and similar instruments.

F-13

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company sponsors financial asset securitizations of high yield debt
securities, investment grade bonds and structured finance securities and also is
the collateral manager and a beneficial interest holder in such transactions. As
the collateral manager, the Company earns management fees on the outstanding
securitized asset balance, which are recorded in income as earned. When the
Company transfers assets to a bankruptcy-remote special purpose entity ("SPE")
and surrenders control over the transferred assets, the transaction is accounted
for as a sale. Gains or losses on securitizations are determined with reference
to the carrying amount of the financial assets transferred, which is allocated
to the assets sold and the beneficial interests retained based on relative fair
values at the date of transfer. Beneficial interests in securitizations are
carried at fair value in fixed maturities. Income on these beneficial interests
is recognized using the prospective method. The SPEs used to securitize assets
are not consolidated by the Company because the Company has determined that it
is not the primary beneficiary of these entities. Prior to the adoption of FIN
46(r), such SPEs were not consolidated because they did not meet the criteria
for consolidation under previous accounting guidance.

The Company purchases or receives beneficial interests in SPEs, which
generally acquire financial assets, including corporate equities, debt
securities and purchased options. The Company has not guaranteed the
performance, liquidity or obligations of the SPEs and the Company's exposure to
loss is limited to its carrying value of the beneficial interests in the SPEs.
The Company uses the beneficial interests as part of its risk management
strategy, including asset-liability management. These SPEs are not consolidated
by the Company because the Company has determined that it is not the primary
beneficiary of these entities based on the framework provided in FIN 46(r).
Prior to the adoption of FIN 46(r), such SPEs were not consolidated because they
did not meet the criteria for consolidation under previous accounting guidance.
These beneficial interests are generally structured notes, which are included in
fixed maturities, and their income is recognized using the retrospective
interest method or the level yield method, as appropriate. Impairments of these
beneficial interests are included in net investment gains (losses).

Derivative Financial Instruments

Derivatives are financial instruments whose values are derived from
interest rates, foreign exchange rates, or other financial indices. Derivatives
may be exchange traded or contracted in the over-the-counter market. The Company
uses a variety of derivatives, including swaps, forwards, futures and option
contracts, to manage its various risks. Additionally, the Company enters into
income generation and replication derivatives as permitted by its insurance
subsidiaries' Derivatives Use Plans approved by the applicable state insurance
departments. Freestanding derivatives are carried on the Company's consolidated
balance sheet either as assets within Other invested assets or as liabilities
within Other liabilities at fair value as determined by quoted market prices or
through the use of pricing models. Values can be affected by changes in interest
rates, foreign exchange rates, financial indices, credit spreads, market
volatility, and liquidity. Values can also be affected by changes in estimates
and assumptions used in pricing models. If a derivative does not qualify for
hedge accounting pursuant to Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities
("SFAS 133"), as amended, changes in the fair value of the derivative are
reported in Net investment gains (losses), or in Interest credited to
policyholder account balances for hedges of liabilities embedded in certain
variable annuity products offered by the Company.

To qualify for hedge accounting, at the inception of the hedging
relationship, the Company formally documents its risk management objective and
strategy for undertaking the hedging transaction, as well as its designation of
the hedge as either (i) a hedge of the fair value of a recognized asset or
liability or an unrecognized firm commitment ("fair value hedge"); (ii) a hedge
of a forecasted transaction or of the variability of cash flows to be received
or paid related to a recognized asset or liability ("cash flow hedge"); or (iii)
a hedge of a net investment in a foreign operation. In this documentation, the
Company sets forth how the hedging instrument is expected to hedge the risks
related to the hedged item and sets forth the method that will be used to
retrospectively and prospectively assess the hedging instrument's effectiveness
and the
F-14

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

method which will be used to measure ineffectiveness. A derivative designated as
a hedging instrument must be highly effective in offsetting the designated risk
of the hedged item. Hedge effectiveness is formally assessed at inception and
throughout the life of the hedging relationship. The ineffective portion of the
changes in fair value of the hedging instrument is recorded in Net investment
gains (losses).

Under a fair value hedge, changes in the fair value of the derivative,
along with changes in the fair value of the hedged item related to the risk
being hedged, are reported in Net investment gains (losses).

In a cash flow hedge, changes in the fair value of the derivative are
recorded in Other comprehensive income (loss), a separate component of
shareholders' equity, and the deferred gains or losses on the derivative are
reclassified into the income statement when the Company's earnings are affected
by the variability in cash flows of the hedged item.

In a hedge of a net investment in a foreign operation, changes in the fair
value of the derivative are recorded in Other comprehensive income (loss).

The Company discontinues hedge accounting prospectively when: (i) it is
determined that the derivative is no longer highly effective in offsetting
changes in the fair value or cash flows of a hedged item; (ii) the derivative
expires or is sold, terminated, or exercised; (iii) it is no longer probable
that the forecasted transaction will occur; (iv) a hedged firm commitment no
longer meets the definition of a firm commitment; or (v) the derivative is
de-designated as a hedging instrument.

When hedge accounting is discontinued because it is determined that the
derivative is not highly effective in offsetting changes in the fair value or
cash flows of a hedged item, the derivative continues to be carried on the
consolidated balance sheet at its fair value, with changes in fair value
recognized currently in Net investment gains (losses). The carrying value of the
hedged recognized asset or liability under a fair value hedge is no longer
adjusted for changes in its fair value due to hedged risk, and the cumulative
adjustment to its carrying value is amortized into income over the remaining
life of the hedged item. The changes in fair value of derivatives recorded in
Other comprehensive income (loss) related to discontinued cash flow hedges are
amortized into income over the remaining life of the hedging instruments.

When hedge accounting is discontinued because it is probable that the
forecasted transactions will not occur by the end of the specified time period
or the hedged item no longer meets the definition of a firm commitment, the
derivative continues to be carried on the consolidated balance sheet at its fair
value, with changes in fair value recognized currently in Net investment gains
(losses). Any asset or liability associated with a recognized firm commitment is
derecognized from the consolidated balance sheet, and recorded currently in Net
investment gains (losses). Deferred gains and losses of a derivative recorded in
Other comprehensive income (loss) pursuant to the cash flow hedge of a
forecasted transaction are recognized immediately in Net investment gains
(losses).

In all other situations in which hedge accounting is discontinued, the
derivative is carried at its fair value on the consolidated balance sheet, with
changes in its fair value recognized in the current period as Net investment
gains (losses).

The Company is also a party to financial instruments in which a derivative
is "embedded." For each financial instrument in which a derivative is embedded,
the Company assesses whether the economic characteristics of the embedded
derivative are clearly and closely related to those of the host contract, and
determines whether a separate instrument with the same terms as the embedded
instrument would meet the definition of a derivative, as defined in SFAS 133. If
it is determined that the embedded derivative possesses economic characteristics
that are not clearly and closely related to the economic characteristics of the
host contract, and that a separate instrument with the same terms would qualify
as a derivative instrument, the embedded derivative is separated from the host
contract and accounted for as a freestanding derivative. Such embedded
derivatives are carried on the consolidated balance sheet at fair value with the
host contract and

F-15

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

changes in their fair value are reported currently in Net investment gains
(losses). If the Company is unable to properly identify and measure an embedded
derivative for separation from its host contract, the entire contract is carried
on the balance sheet at fair value, with changes in fair value recognized in the
current period in Net investment gains (losses).

Cash and Cash Equivalents

The Company considers all investments purchased with an original maturity
of three months or less to be cash equivalents.

Property, Equipment, Leasehold Improvements and Computer Software

Property, equipment and leasehold improvements, which are included in other
assets, are stated at cost, less accumulated depreciation and amortization.
Depreciation is determined using either the straight-line or
sum-of-the-years-digits method over the estimated useful lives of the assets.
The estimated life for company occupied real estate property is generally 40
years. Estimated lives generally range from five to ten years for leasehold
improvements and three to five years for all other property and equipment.
Accumulated depreciation and amortization of property, equipment and leasehold
improvements was $566 million and $530 million at December 31, 2004 and 2003,
respectively. Related depreciation and amortization expense was $112 million,
$117 million and $81 million for the years ended December 31, 2004, 2003 and
2002, respectively.

Computer software, which is included in other assets, is stated at cost,
less accumulated amortization. Purchased software costs, as well as internal and
external costs incurred to develop internal-use computer software during the
application development stage, are capitalized. Such costs are amortized
generally over a four-year period using the straight-line method. Accumulated
amortization of capitalized software was $552 million and $434 million at
December 31, 2004 and 2003, respectively. Related amortization expense was $139
million, $154 million and $154 million for the years ended December 31, 2004,
2003 and 2002, respectively.

Deferred Policy Acquisition Costs

The costs of acquiring new and renewal insurance business that vary with,
and are primarily related to, the production of that business are deferred. Such
costs, which consist principally of commissions, agency and policy issue
expenses, are amortized with interest over the expected life of the contract for
participating traditional life, universal life and investment-type products.
Generally, DAC is amortized in proportion to the present value of estimated
gross margins or profits from investment, mortality, expense margins and
surrender charges. Interest rates used to compute the present value of estimated
gross margins and profits are based on rates in effect at the inception or
acquisition of the contracts.

Actual gross margins or profits can vary from management's estimates
resulting in increases or decreases in the rate of amortization. Management
utilizes the reversion to the mean assumption, a common industry practice, in
its determination of the amortization of DAC. This practice assumes that the
expectation for long-term equity investment appreciation is not changed by minor
short-term market fluctuations, but that it does change when large interim
deviations have occurred. Management periodically updates these estimates and
evaluates the recoverability of DAC. When appropriate, management revises its
assumptions of the estimated gross margins or profits of these contracts, and
the cumulative amortization is re-estimated and adjusted by a cumulative charge
or credit to current operations.

DAC for non-participating traditional life, non-medical health and annuity
policies with life contingencies is amortized in proportion to anticipated
premiums. Assumptions as to anticipated premiums are made at the date of policy
issuance or acquisition and are consistently applied during the lives of the
contracts.

F-16

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deviations from estimated experience are included in operations when they occur.
For these contracts, the amortization period is typically the estimated life of
the policy.

Policy acquisition costs related to internally replaced contracts are
expensed at the date of replacement.

DAC for property and casualty insurance contracts, which is primarily
comprised of commissions and certain underwriting expenses, are deferred and
amortized on a pro rata basis over the applicable contract term or reinsurance
treaty.

VOBA, included as part of DAC, represents the present value of estimated
future profits to be generated from existing insurance contracts in-force at the
date of acquisition and is amortized over the expected policy or contract
duration in relation to the estimated gross profits or premiums from such
policies and contracts.

Sales Inducements

The Company has two different types of sales inducements: (i) the
policyholder receives a bonus whereby the policyholder's initial account balance
is increased by an amount equal to a specified percentage of the customer's
deposit and (ii) the policyholder receives a higher interest rate using a dollar
cost averaging method than would have been received based on the normal general
account interest rate credited. The Company defers sales inducements and
amortizes them over the life of the policy using the same methodology and
assumptions used to amortize DAC.

Goodwill

The excess of cost over the fair value of net assets acquired ("goodwill")
is included in other assets. On January 1, 2002, the Company adopted the
provisions of SFAS No. 142, Goodwill and Other Intangible Assets, ("SFAS 142").
In accordance with SFAS 142, goodwill is not amortized but is tested for
impairment at least annually to determine whether a writedown of the cost of the
asset is required. Impairments are recognized in operating results when the
carrying amount of goodwill exceeds its implied fair value. Prior to the
adoption of SFAS 142, goodwill was amortized on a straight-line basis over a
period ranging from 10 to 30 years and impairments were recognized in operating
results when permanent diminution in value was deemed to have occurred.

Changes in net goodwill were as follows:

Liability for Future Policy Benefits and Policyholder Account Balances

Future policy benefit liabilities for participating traditional life
insurance policies are equal to the aggregate of (i) net level premium reserves
for death and endowment policy benefits (calculated based upon the
non-forfeiture interest rate, ranging from 3% to 11%, and mortality rates
guaranteed in calculating the cash surrender values described in such
contracts), (ii) the liability for terminal dividends, and (iii) premium
deficiency reserves, which are established when the liabilities for future
policy benefits plus the present value of expected future gross premiums are
insufficient to provide for expected future policy benefits and expenses

F-17

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

after DAC is written off. Future policy benefits for non-participating
traditional life insurance policies are equal to the aggregate of (i) the
present value of future benefit payments and related expenses less the present
value of future net premiums and (ii) premium deficiency reserves. Assumptions
as to mortality and persistency are based upon the Company's experience when the
basis of the liability is established. Interest rates for the aggregate future
policy benefit liabilities range from 5.0% to 6.5%.

Participating business represented approximately 14% and 14% of the
Company's life insurance in-force, and 56% and 57% of the number of life
insurance policies in-force, at December 31, 2004 and 2003, respectively.
Participating policies represented approximately 35% and 34%, 38% and 38%, and
39% and 41% of gross and net life insurance premiums for the years ended
December 31, 2004, 2003 and 2002, respectively. The percentages indicated are
calculated excluding the business of the Reinsurance segment.

Future policy benefit liabilities for individual and group traditional
fixed annuities after annuitization are equal to the present value of expected
future payments and premium deficiency reserves. Interest rates used in
establishing such liabilities range from 2% to 11%.

Future policy benefit liabilities for non-medical health insurance are
calculated using the net level premium method and assumptions as to future
morbidity, withdrawals and interest, which provide a margin for adverse
deviation. Interest rates used in establishing such liabilities range from 2% to
11%.

Future policy benefit liabilities for disabled lives are estimated using
the present value of benefits method and experience assumptions as to claim
terminations, expenses and interest. Interest rates used in establishing such
liabilities range from 3% to 11%.

Liabilities for unpaid claims and claim expenses for property and casualty
insurance are included in future policyholder benefits and are estimated based
upon the Company's historical experience and other actuarial assumptions that
consider the effects of current developments, anticipated trends and risk
management programs, reduced for anticipated salvage and subrogation. The
effects of changes in such estimated liabilities are included in the results of
operations in the period in which the changes occur.

Policyholder account balances relate to investment-type contracts and
universal life-type policies. Investment-type contracts principally include
traditional individual fixed annuities in the accumulation phase and
non-variable group annuity contracts. Policyholder account balances are equal to
the policy account values, which consist of an accumulation of gross premium
payments plus credited interest, ranging from 1% to 13%, less expenses,
mortality charges, and withdrawals.

The Company issues fixed and floating rate obligations under its guaranteed
investment contract ("GIC") program. During the years ended December 31, 2004,
2003 and 2002, the Company issued $3,941 million, $4,341 million and $500
million, respectively, in such obligations. There have been no repayments of any
of the contracts. Accordingly, the GICs outstanding, which are included in
policyholder account balances in the accompanying consolidated balance sheets,
were $8,978 and $4,862, respectively, at December 31, 2004 and 2003. Interest
credited on the contracts for the years ended December 31, 2004, 2003 and 2002
was $139 million, $56 million and $12 million, respectively.

The Company establishes liabilities for minimum death and income benefit
guarantees relating to certain annuity contracts and secondary and paid up
guarantees relating to certain life policies. Annuity guaranteed death benefit
liabilities are determined by estimating the expected value of death benefits in
excess of the projected account balance and recognizing the excess ratably over
the accumulation period based on total expected assessments. The Company
regularly evaluates estimates used and adjusts the additional liability balance,
with a related charge or credit to benefit expense, if actual experience or
other evidence suggests that earlier assumptions should be revised. The
assumptions used in estimating the liabilities are consistent with those used
for amortizing DAC, including the mean reversion assumption. The assumptions of
investment performance and volatility are consistent with the historical
experience of the Standard & Poor's 500

F-18

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Index ("S&P"). The benefits used in calculating the liabilities are based on the
average benefits payable over a range of scenarios.

Guaranteed annuitization benefit liabilities are determined by estimating
the expected value of the annuitization benefits in excess of the projected
account balance at the date of annuitization and recognizing the excess ratably
over the accumulation period based on total expected assessments. The Company
regularly evaluates estimates used and adjusts the additional liability balance,
with a related charge or credit to benefit expense, if actual experience or
other evidence suggests that earlier assumptions should be revised. The
assumptions used for calculating such guaranteed annuitization benefit
liabilities are consistent with those used for calculating the guaranteed death
benefit liabilities. In addition, the calculation of guaranteed annuitization
benefit liabilities incorporates a percentage of the potential annuitizations
that may be elected by the contractholder.

Liabilities for universal and variable life secondary guarantees and
paid-up guarantees 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 Company regularly evaluates estimates used and adjusts
the additional liability balances, with a related charge or credit to benefit
expense, if actual experience or other evidence suggests that earlier
assumptions should be revised. The assumptions used in estimating the secondary
and paid up guarantee liabilities are consistent with those used for amortizing
DAC. The assumptions of investment performance and volatility for variable
products are consistent with historical S&P experience. The benefits used in
calculating the liabilities are based on the average benefits payable over a
range of scenarios.

Recognition of Insurance Revenue and Related Benefits

Premiums related to traditional life and annuity policies with life
contingencies are recognized as revenues when due. Benefits and expenses are
provided against such revenues to recognize profits over the estimated lives of
the policies. When premiums are due over a significantly shorter period than the
period over which benefits are provided, any excess profit is deferred and
recognized into operations in a constant relationship to insurance in-force or,
for annuities, the amount of expected future policy benefit payments.

Premiums related to non-medical health and disability contracts are
recognized on a pro rata basis over the applicable contract term.

Deposits related to universal life-type and investment-type products are
credited to policyholder account balances. Revenues from such contracts consist
of amounts assessed against policyholder account balances for mortality, policy
administration and surrender charges and are recognized in the period in which
services are provided. Amounts that are charged to operations include interest
credited and benefit claims incurred in excess of related policyholder account
balances.

Premiums related to property and casualty contracts are recognized as
revenue on a pro rata basis over the applicable contract term. Unearned premiums
are included in other liabilities.

Other Revenues

Other revenues include advisory fees, broker/dealer commissions and fees,
and administrative service fees. Such fees and commissions are recognized in the
period in which services are performed. Other revenues also include changes in
account value relating to corporate-owned life insurance ("COLI"). Under certain
COLI contracts, if the Company reports certain unlikely adverse results in its
consolidated financial statements, withdrawals would not be immediately
available and would be subject to market value adjustment, which could result in
a reduction of the account value.

F-19

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Policyholder Dividends

Policyholder dividends are approved annually by the insurance subsidiaries'
boards of directors. The aggregate amount of policyholder dividends is related
to actual interest, mortality, morbidity and expense experience for the year, as
well as management's judgment as to the appropriate level of statutory surplus
to be retained by the insurance subsidiaries.

Income Taxes

The Holding Company and its includable life insurance and non-life
insurance subsidiaries file a consolidated U.S. federal income tax return in
accordance with the provisions of the Internal Revenue Code of 1986, as amended
(the "Code"). Non-includable subsidiaries file either separate tax returns or
separate consolidated tax returns. The future tax consequences of temporary
differences between financial reporting and tax bases of assets and liabilities
are measured at the balance sheet dates and are recorded as deferred income tax
assets and liabilities. Valuation allowances are established when management
assesses, based on available information, that it is more likely than not that
deferred income tax assets will not be realized.

Reinsurance

The Company has reinsured certain of its life insurance and property and
casualty insurance contracts with other insurance companies under various
agreements. Reinsurance premiums, commissions, expense reimbursements, benefits
and reserves related to reinsured long-duration contracts are accounted for over
the life of the underlying reinsured contracts using assumptions consistent with
those used to account for the underlying contracts. The cost of reinsurance
related to short-duration contracts is accounted for over the reinsurance
contract period. Amounts due from reinsurers, for both short- and long-duration
arrangements, are estimated based upon assumptions consistent with those used in
establishing the liabilities related to the underlying reinsured contracts.
Policy and contract liabilities are reported gross of reinsurance credits. DAC
is reduced by amounts recovered under reinsurance contracts. Amounts received
from reinsurers for policy administration are reported in other revenues.

The Company assumes and retrocedes financial reinsurance contracts, which
represent low mortality risk reinsurance treaties. These contracts are reported
as deposits and are included in other assets. The amount of revenue reported on
these contracts represents fees and the cost of insurance under the terms of the
reinsurance agreement and is reported in other revenues.

Separate Accounts

Separate accounts are established in conformity with insurance laws and are
generally not chargeable with liabilities that arise from any other business of
the Company. Separate account assets are subject to general account claims only
to the extent the value of such assets exceeds the separate account liabilities.
Effective with the adoption of Statement of Position 03-1, Accounting and
Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts ("SOP 03-1"), on January 1, 2004, the
Company reports separately, as assets and liabilities, investments held in
separate accounts and liabilities of the separate accounts if (i) such separate
accounts are legally recognized; (ii) assets supporting the contract liabilities
are legally insulated from the Company's general account liabilities; (iii)
investments are directed by the contractholder; and (iv) all investment
performance, net of contact fees and assessments, is passed through to the
contractholder. The Company reports separate account assets meeting such
criteria at their fair value. Investment performance (including investment
income, net investment gains (losses) and changes in unrealized gains (losses))
and the corresponding amounts credited to contractholders of such separate
accounts are offset within the same line in the consolidated statements of
income. In connection with the adoption of SOP 03-1, separate account assets
with a fair value of $1.7 billion were reclassified to general account
investments with a corresponding

F-20

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

transfer of separate account liabilities to future policy benefits and
policyholder account balances. See "--Application of Recent Accounting
Pronouncements."

The Company's revenues reflect fees charged to the separate accounts,
including mortality charges, risk charges, policy administration fees,
investment management fees and surrender charges. Separate accounts not meeting
the above criteria are combined on a line-by-line basis with the Company's
general account assets, liabilities, revenues and expenses.

Stock-Based Compensation

Effective January 1, 2003, the Company accounts for stock-based
compensation plans using the prospective fair value accounting method prescribed
by SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), as
amended by SFAS No. 148, Accounting for Stock-Based Compensation -- Transition
and Disclosure ("SFAS 148"). The fair value method requires compensation cost to
be measured based on the fair value of the equity instrument at the grant or
award date.

Stock-based compensation grants prior to January 1, 2003 are accounted for
using the intrinsic value method prescribed by Accounting Principles Board
Opinion ("APB") No. 25, Accounting for Stock Issued to Employees ("APB 25").
Note 12 includes the pro forma disclosures required by SFAS No. 123, as amended.
The intrinsic value method represents the quoted market price or fair value of
the equity award at the measurement date less the amount, if any, the employee
is required to pay.

Stock-based compensation is accrued over the vesting period of the grant or
award.

Foreign Currency

Balance sheet accounts of foreign operations are translated at the exchange
rates in effect at each year-end and income and expense accounts are translated
at the average rates of exchange prevailing during the year. The local
currencies of foreign operations are the functional currencies unless the local
economy is highly inflationary. Translation adjustments are charged or credited
directly to other comprehensive income or loss. Gains and losses from foreign
currency transactions are reported in earnings in the respective financial
statement lines to which they relate.

Discontinued Operations

The results of operations of a component of the Company that either has
been disposed of or is classified as held-for-sale are reported in discontinued
operations if the operations and cash flows of the component have been or will
be eliminated from the ongoing operations of the Company as a result of the
disposal transaction and the Company will not have any significant continuing
involvement in the operations of the component after the disposal transaction.

Earnings Per Share

Basic earnings per share is computed based on the weighted average number
of shares outstanding during the period. Diluted earnings per share includes the
dilutive effect of the assumed: (i) conversion of forward purchase contracts;
(ii) exercise of stock options, and (iii) issuance under deferred stock
compensation using the treasury stock method. Under the treasury stock method,
conversion of forward purchase contracts, exercise of the stock options and
issuance under deferred stock compensation is assumed with the proceeds used to
purchase common stock at the average market price for the period. The difference
between the number of shares assumed issued and number of shares assumed
purchased represents the dilutive shares.

F-21

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

APPLICATION OF RECENT ACCOUNTING PRONOUNCEMENTS

In December 2004, the Financial Accounting Standards Board ("FASB") issued
Staff Position Paper ("FSP") 109-2, Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the American Jobs Creation Act of
2004 ("AJCA"). The AJCA introduced a one-time dividend received deduction on the
repatriation of certain earnings to a U.S. taxpayer. FSP 109-2 provides
companies additional time beyond the financial reporting period of enactment to
evaluate the effects of the AJCA on their plans to repatriate foreign earnings
for purposes of applying SFAS 109, Accounting for Income Taxes. The Company is
currently evaluating the repatriation provision of the AJCA. If the repatriation
provision is implemented by the Company, the impact on the Company's income tax
expense and deferred income tax assets and liabilities would be immaterial.

In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary
Assets, an amendment of APB Opinion No. 29 ("SFAS 153"). SFAS 153 amends prior
guidance to eliminate the exception for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. The provisions of SFAS 153 are
effective for nonmonetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005 and shall be applied prospectively. SFAS 153 is not expected
to have a material impact on the Company's consolidated financial statements at
the date of adoption.

In December 2004, FASB revised SFAS 123 to Share-Based Payment ("SFAS
123(r)"). SFAS 123(r) provides additional guidance on determining whether
certain financial instruments awarded in share-based payment transactions are
liabilities. SFAS 123(r) also requires that the cost of all share-based
transactions be recorded in the financial statements. The revised pronouncement
must be adopted by the Company by July 1, 2005. As all stock options currently
accounted for under APB 25 will vest prior to the effective date, implementation
of SFAS 123(r) will not have a significant impact on the Company's consolidated
financial statements.

Effective January 1, 2003, the Company adopted SFAS 148, which provides
guidance on how to apply the fair value method of accounting for share-based
payments. As permitted under SFAS 148, the Company elected to use the
prospective method of accounting for stock options granted subsequent to
December 31, 2002. Options granted prior to January 1, 2003 will continue to be
accounted for under the intrinsic value method until the adoption of SFAS
123(r), and the pro forma impact of accounting for these options at fair value
will continue to be disclosed in the consolidated financial statements until the
last of those options vest in 2005. See Note 12.

In March 2004, the Emerging Issues Task Force ("EITF") reached further
consensus on Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and
Its Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides
accounting guidance regarding the determination of when an impairment of debt
and marketable equity securities and investments accounted for under the cost
method should be considered other-than-temporary and recognized in income. An
EITF 03-1 consensus reached in November 2003 also requires certain quantitative
and qualitative disclosures for debt and marketable equity securities classified
as available-for-sale or held-to-maturity under SFAS No. 115, Accounting for
Certain Investments in Debt and Equity Securities, that are impaired at the
balance sheet date but for which an other-than-temporary impairment has not been
recognized. The Company has complied with the disclosure requirements of EITF
03-1, which were effective December 31, 2003. The accounting guidance of EITF
03-1 relating to the recognition of investment impairment which was to be
effective in the third quarter of 2004 has been delayed pending the development
of additional guidance. The Company is actively monitoring the deliberations
relating to this issue at the FASB and currently is unable to determine the
ultimate impact EITF 03-1 will have on its consolidated financial statements.

F-22

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In March 2004, the EITF reached consensus on Issue No. 03-6, Participating
Securities and the Two-Class Method under FASB Statement No. 128 ("EITF 03-6").
EITF 03-6 provides guidance in determining whether a security should be
considered a participating security for purposes of computing earnings per share
and how earnings should be allocated to the participating security. EITF 03-6
did not have an impact on the Company's earnings per share calculations or
amounts.

In March 2004, the EITF reached consensus on Issue No. 03-16, Accounting
for Investments in Limited Liability Companies ("EITF 03-16"). EITF 03-16
provides guidance regarding whether a limited liability company should be viewed
as similar to a corporation or similar to a partnership for purposes of
determining whether a noncontrolling investment should be accounted for using
the cost method or the equity method of accounting. EITF 03-16 did not have a
material impact on the Company's consolidated financial statements.

Effective January 1, 2004, the Company adopted SOP 03-1, as interpreted by
Technical Practices Aids issued by the American Institute of Certified Public
Accountants. SOP 03-1 provides guidance on (i) the classification and valuation
of long-duration contract liabilities; (ii) the accounting for sales
inducements; and (iii) separate account presentation and valuation. In June
2004, the FASB released FSP No. 97-1, Situations in Which Paragraphs 17(b) and
20 of FASB Statement No. 97, Accounting and Reporting by Insurance Enterprises
for Certain Long-Duration Contracts and for Realized Gains and Losses from the
Sale of Investments, Permit or Require Accrual of an Unearned Revenue Liability
("FSP 97-1") which included clarification that unearned revenue liabilities
should be considered in determining the necessary insurance benefit liability
required under SOP 03-1. Since the Company had considered unearned revenue in
determining its SOP 03-1 benefit liabilities, FSP 97-1 did not impact its
consolidated financial statements. As a result of the adoption of SOP 03-1,
effective January 1, 2004, the Company decreased the liability for future
policyholder benefits for changes in the methodology relating to various
guaranteed death and annuitization benefits and for determining liabilities for
certain universal life insurance contracts by $4 million, which has been
reported as a cumulative effect of a change in accounting. This amount is net of
corresponding changes in DAC, including VOBA and unearned revenue liability
("offsets") under certain variable annuity and life contracts and income taxes.
Certain other contracts sold by the Company provide for a return through
periodic crediting rates, surrender adjustments or termination adjustments based
on the total return of a contractually referenced pool of assets owned by the
Company. To the extent that such contracts are not accounted for as derivatives
under the provisions of SFAS 133 and not already credited to the contract
account balance, under SOP 03-1 the change relating to the fair value of the
referenced pool of assets is recorded as a liability with the change in the
liability recorded as policyholder benefits and claims. Prior to the adoption of
SOP 03-1, the Company recorded the change in such liability as other
comprehensive income. At adoption, this change decreased net income and
increased other comprehensive income by $63 million, net of income taxes, which
were recorded as cumulative effects of changes in accounting. Effective with the
adoption of SOP 03-1, costs associated with enhanced or bonus crediting rates to
contractholders must be deferred and amortized over the life of the related
contract using assumptions consistent with the amortization of DAC. Since the
Company followed a similar approach prior to adoption of SOP 03-1, the
provisions of SOP 03-1 relating to sales inducements had no significant impact
on the Company's consolidated financial statements. At adoption, the Company
reclassified $155 million of ownership in its own separate accounts from other
assets to fixed maturities, equity securities and cash and cash equivalents.
This reclassification had no significant impact on net income or other
comprehensive income at adoption. In accordance with SOP 03-1's guidance for the
reporting of certain separate accounts, at adoption, the Company also
reclassified $1.7 billion of separate account assets to general account
investments and $1.7 billion of separate account liabilities to future policy
benefits and policyholder account balances. This reclassification decreased net
income and increased other comprehensive income by $27 million, net of income
taxes, which were reported as cumulative effects of changes in accounting. The
application of SOP 03-1 decreased the Company's 2004 net income by $67 million,
including the cumulative effect of adoption of a decrease in net income of $86
million as described above.

F-23

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In December 2003, FASB revised SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits -- an Amendment of FASB Statements
No. 87, 88 and 106 ("SFAS 132(r)"). SFAS 132(r) retains most of the disclosure
requirements of SFAS 132 and requires additional disclosure about assets,
obligations, cash flows and net periodic benefit cost of defined benefit pension
plans and other postretirement plans. SFAS 132(r) was primarily effective for
fiscal years ending after December 15, 2003; however, certain disclosures about
foreign plans and estimated future benefit payments were effective for fiscal
years ending after June 15, 2004. The Company's adoption of SFAS 132(r) on
December 31, 2003 did not have a significant impact on its consolidated
financial statements since it only revised disclosure requirements.

In May 2004, the FASB issued FASB Staff Position ("FSP") No. 106-2,
Accounting and Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 ("FSP 106-2"), which provides
accounting guidance to a sponsor of a postretirement health care plan that
provides prescription drug benefits. The Company expects to receive subsidies on
prescription drug benefits beginning in 2006 under the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 based on the Company's
determination that the prescription drug benefits offered under certain
postretirement plans are actuarially equivalent to the benefits offered under
Medicare Part D. FSP 106-2 was effective for interim periods beginning after
June 15, 2004 and provides for either retroactive application to the date of
enactment of the legislation or prospective application from the date of
adoption of FSP 106-2. Effective July 1, 2004, the Company adopted FSP 106-2
prospectively and the postretirement benefit plan assets and accumulated benefit
obligation were remeasured to determine the effect of the expected subsidies on
net periodic postretirement benefit cost. As a result, the accumulated
postretirement benefit obligation and net periodic postretirement benefit cost
was reduced by $213 million and $17 million, for 2004, respectively.

Effective October 1, 2003, the Company adopted Statement 133 Implementation
Issue No. B36, Embedded Derivatives: Modified Coinsurance Arrangements and Debt
Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only
Partially Related to the Creditworthiness of the Obligor under Those Instruments
("Issue B36"). Issue B36 concluded that (i) a company's funds withheld payable
and/or receivable under certain reinsurance arrangements, and (ii) a debt
instrument that incorporates credit risk exposures that are unrelated or only
partially related to the creditworthiness of the obligor include an embedded
derivative feature that is not clearly and closely related to the host contract.
Therefore, the embedded derivative feature is measured at fair value on the
balance sheet and changes in fair value are reported in income. The Company's
application of Issue B36 increased (decreased) net income by $4 million and
($12) million, net of amortization of DAC and income taxes, for 2004 and 2003,
respectively. The 2003 impact includes a decrease in net income of $26 million
relating to the cumulative effect of a change in accounting from the adoption of
the new guidance.

Effective July 1, 2003, the Company adopted SFAS No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities ("SFAS 149").
SFAS 149 amended and clarified the accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. Except for certain previously issued and
effective guidance, SFAS 149 was effective for contracts entered into or
modified after June 30, 2003. The Company's adoption of SFAS 149 did not have a
significant impact on its consolidated financial statements.

During 2003, the Company adopted FASB Interpretation ("FIN") No. 46,
Consolidation of Variable Interest Entities -- An Interpretation of ARB No. 51
("FIN 46"), and its December 2003 revision ("FIN 46(r)"). Certain of the
Company's investments in real estate joint ventures and other limited
partnership interests meet the definition of a VIE and have been consolidated,
in accordance with the transition rules and effective dates, because the Company
is deemed to be the primary beneficiary. A VIE is defined as (i) any entity in
which the equity investments at risk in such entity do not have the
characteristics of a controlling financial interest, or (ii) any entity that
does not have sufficient equity at risk to finance its activities without
additional subordinated support from other parties. Effective February 1, 2003,
the

F-24

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company adopted FIN 46 for VIEs created or acquired on or after February 1, 2003
and, effective December 31, 2003, the Company adopted FIN 46(r) with respect to
interests in entities formerly considered special purpose entities ("SPEs"),
including interests in asset-backed securities and collateralized debt
obligations. The adoption of FIN 46 as of February 1, 2003 did not have a
significant impact on the Company's consolidated financial statements. The
adoption of the provisions of FIN 46(r) at December 31, 2003 did not require the
Company to consolidate any additional VIEs that were not previously
consolidated. In accordance with the provisions of FIN 46(r), the Company
elected to defer until March 31, 2004 the consolidation of interests in VIEs for
non-SPEs acquired prior to February 1, 2003 for which it is the primary
beneficiary. As of March 31, 2004, the Company consolidated assets and
liabilities relating to real estate joint ventures of $78 million and $11
million, respectively, and assets and liabilities relating to other limited
partnerships of $29 million and less than $1 million, respectively, for VIEs for
which the Company was deemed to be the primary beneficiary. There was no impact
to net income from the adoption of FIN 46.

Effective January 1, 2003, the Company adopted FIN No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others ("FIN 45"). FIN 45 requires entities to
establish liabilities for certain types of guarantees and expands financial
statement disclosures for others. The initial recognition and initial
measurement provisions of FIN 45 were applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The adoption of FIN 45
did not have a significant impact on the Company's consolidated financial
statements. See Note 10.

Effective January 1, 2003, the Company adopted SFAS No. 146, Accounting for
Costs Associated with Exit or Disposal Activities ("SFAS 146"). SFAS 146
requires that a liability for a cost associated with an exit or disposal
activity be recorded and measured initially at fair value only when the
liability is incurred rather than at the date of an entity's commitment to an
exit plan as required by EITF Issue No. 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity Including
Certain Costs Incurred in a Restructuring ("EITF 94-3"). The Company's
activities subject to this guidance in 2004 and 2003 were not significant.

Effective January 1, 2003, the Company adopted SFAS No. 145, Rescission of
FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and
Technical Corrections ("SFAS 145"). In addition to amending or rescinding other
existing authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed conditions, SFAS
145 generally precludes companies from recording gains and losses from the
extinguishment of debt as an extraordinary item. SFAS 145 also requires
sale-leaseback treatment for certain modifications of a capital lease that
result in the lease being classified as an operating lease. The adoption of SFAS
145 did not have a significant impact on the Company's consolidated financial
statements.

Effective January 1, 2002, the Company adopted SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets ("SFAS 144"). SFAS 144 provides
a single model for accounting for long-lived assets to be disposed of by
superseding SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of ("SFAS 121"), and the accounting and
reporting provisions of APB Opinion No. 30, Reporting the Results of
Operations -- Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("APB
30"). Under SFAS 144, discontinued operations are measured at the lower of
carrying value or fair value less costs to sell, rather than on a net realizable
value basis. Future operating losses relating to discontinued operations also
are no longer recognized before they occur. SFAS 144: (i) broadens the
definition of a discontinued operation to include a component of an entity
(rather than a segment of a business); (ii) requires long-lived assets to be
disposed of other than by sale to be considered held and used until disposed;
and (iii) retains the basic provisions of (a) APB 30 regarding the presentation
of discontinued operations in the statements of income, (b) SFAS 121 relating to
recognition and measurement of impaired long-lived assets (other than goodwill),
and (c) SFAS 121 relating to the measurement of long-lived assets

F-25

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

classified as held-for-sale. Adoption of SFAS 144 did not have a material impact
on the Company's consolidated financial statements other than the presentation
as discontinued operations of net investment income and net investment gains
related to operations of real estate on which the Company initiated disposition
activities subsequent to January 1, 2002 and the classification of such real
estate as held-for-sale on the consolidated balance sheets.

Effective January 1, 2002, the Company adopted SFAS No. 142. SFAS 142
eliminates the systematic amortization and establishes criteria for measuring
the impairment of goodwill and certain other intangible assets by reporting
unit. There was no impairment of identified intangibles or significant
reclassifications between goodwill and other intangible assets at January 1,
2002. Amortization of other intangible assets was not material for the years
ended December 31, 2004, 2003 and 2002.

2. INVESTMENTS

FIXED MATURITIES AND EQUITY SECURITIES

Fixed maturities and equity securities at December 31, 2004 were as
follows:

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Fixed maturities and equity securities at December 31, 2003 were as
follows:

The Company held foreign currency derivatives with notional amounts of
$4,720 million and $3,502 million to hedge the exchange rate risk associated
with foreign bonds and loans at December 31, 2004 and 2003, respectively.

Excluding investments in U.S. Treasury securities and obligations of U.S.
government corporations and agencies, the Company is not exposed to any
significant concentration of credit risk in its fixed maturities portfolio.

The Company held fixed maturities at estimated fair values that were below
investment grade or not rated by an independent rating agency that totaled
$12,370 million and $12,825 million at December 31, 2004 and 2003, respectively.
These securities had a net unrealized gain of $936 million and $888 million at
December 31, 2004 and 2003, respectively. Non-income producing fixed maturities
were $90 million and $371 million at December 31, 2004 and 2003, respectively.

F-27

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The cost or amortized cost and estimated fair value of bonds at December
31, 2004, by contractual maturity date (excluding scheduled sinking funds), are
shown below:

Bonds not due at a single maturity date have been included in the above
table in the year of final contractual maturity. Actual maturities may differ
from contractual maturities due to the exercise of prepayment options.

Sales or disposals of fixed maturities and equity securities classified as
available-for-sale were as follows:

Gross investment losses above exclude writedowns recorded during 2004, 2003
and 2002 for other-than-temporarily impaired available-for-sale fixed maturities
and equity securities of $102 million, $355 million and $1,375 million,
respectively.

The Company periodically disposes of fixed maturity and equity securities
at a loss. Generally, such losses are insignificant in amount or in relation to
the cost basis of the investment or are attributable to declines in fair value
occurring in the period of disposition.

F-28

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table shows the estimated fair values and gross unrealized
losses of the Company's fixed maturities (aggregated by sector) and equity
securities in an unrealized loss position, aggregated by length of time that the
securities have been in a continuous unrealized loss position at December 31,
2004 and 2003:

F-29

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SECURITIES LENDING PROGRAM

The Company participates in a securities lending program whereby blocks of
securities, which are included in investments, are loaned to third parties,
primarily major brokerage firms. The Company requires a minimum of 102% of the
fair value of the loaned securities to be separately maintained as collateral
for the loans. Securities with a cost or amortized cost of $26,564 million and
$25,121 million and an estimated fair value of $27,974 million and $26,387
million were on loan under the program at December 31, 2004 and 2003,
respectively. The Company was liable for cash collateral under its control of
$28,678 million and $27,083 million at December 31, 2004 and 2003, respectively.
Security collateral on deposit from customers may not be sold or repledged and
is not reflected in the consolidated financial statements.

ASSETS ON DEPOSIT AND HELD IN TRUST

The Company had investment assets on deposit with regulatory agencies with
a fair market value of $1,391 million and $1,353 million at December 31, 2004
and 2003, respectively. Company securities held in trust to satisfy collateral
requirements had an amortized cost of $2,473 million and $2,276 million at
December 31, 2004 and 2003, respectively.

F-30

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MORTGAGE AND OTHER LOANS

Mortgage and other loans were categorized as follows:

Mortgage loans are collateralized by properties primarily located
throughout the United States. At December 31, 2004, approximately 21%, 11% and
7% of the properties were located in California, New York and Florida,
respectively. Generally, the Company (as the lender) requires that a minimum of
one-fourth of the purchase price of the underlying real estate be paid by the
borrower.

Certain of the Company's real estate joint ventures have mortgage loans
with the Company. The carrying values of such mortgages were $641 million and
$639 million at December 31, 2004 and 2003, respectively.

Changes in loan valuation allowances for mortgage and other loans were as
follows:

A portion of the Company's mortgage and other loans was impaired and
consisted of the following:

The average investment in impaired loans was $404 million, $652 million and
$1,088 million for the years ended December 31, 2004, 2003 and 2002,
respectively. Interest income on impaired loans was $29 million, $58 million and
$91 million for the years ended December 31, 2004, 2003 and 2002, respectively.

The investment in restructured loans was $125 million and $191 million at
December 31, 2004 and 2003, respectively. Interest income of $9 million, $19
million and $44 million was recognized on restructured loans

F-31

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

for the years ended December 31, 2004, 2003 and 2002, respectively. Gross
interest income that would have been recorded in accordance with the original
terms of such loans amounted to $12 million, $24 million and $41 million for the
years ended December 31, 2004, 2003 and 2002, respectively.

Mortgage and other loans with scheduled payments of 60 days (90 days for
agricultural mortgages) or more past due or in foreclosure had an amortized cost
of $58 million and $51 million at December 31, 2004 and 2003, respectively.

REAL ESTATE AND REAL ESTATE JOINT VENTURES

Real estate and real estate joint ventures consisted of the following:

Accumulated depreciation on real estate was $2,005 million and $1,955
million at December 31, 2004 and 2003, respectively. Related depreciation
expense was $179 million, $183 million and $227 million for the years ended
December 31, 2004, 2003 and 2002, respectively. These amounts include $17
million, $39 million and $83 million of depreciation expense related to
discontinued operations for the years ended December 31, 2004, 2003 and 2002,
respectively.

Real estate and real estate joint ventures were categorized as follows:

The Company's real estate holdings are primarily located throughout the
United States. At December 31, 2004, approximately 31%, 21% and 19% of the
Company's real estate holdings were located in New York, California and Texas,
respectively.

F-32

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Changes in real estate and real estate joint ventures held-for-sale
valuation allowance were as follows:

Investment income related to impaired real estate and real estate joint
ventures held-for-investment was $15 million, $34 million and $49 million for
the years ended December 31, 2004, 2003 and 2002, respectively. Investment
(expense) income related to impaired real estate and real estate joint ventures
held-for-sale was ($1) million, $1 million, and $2 million for the years ended
December 31, 2004, 2003 and 2002, respectively. The carrying value of non-income
producing real estate and real estate joint ventures was $41 million and $77
million at December 31, 2004 and 2003, respectively.

The Company owned real estate acquired in satisfaction of debt of $4
million and $3 million at December 31, 2004 and 2003, respectively.

LEVERAGED LEASES

Leveraged leases, included in other invested assets, consisted of the
following:

The investment amounts set forth above are generally due in monthly
installments. The payment periods generally range from one to 15 years, but in
certain circumstances are as long as 30 years. These receivables are generally
collateralized by the related property. The Company's deferred income tax
liability related to leveraged leases was $757 million and $870 million at
December 31, 2004 and 2003, respectively.

FUNDS WITHHELD AT INTEREST

Included in other invested assets at December 31, 2004 and 2003, were funds
withheld at interest of $2,801 million and $2,939 million, respectively.

F-33

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NET INVESTMENT INCOME

The components of net investment income were as follows:

NET INVESTMENT GAINS (LOSSES)

Net investment gains (losses) were as follows:

F-34

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NET UNREALIZED INVESTMENT GAINS

The components of net unrealized investment gains, included in accumulated
other comprehensive income, were as follows:

The changes in net unrealized investment gains were as follows:

STRUCTURED INVESTMENT TRANSACTIONS

The Company securitizes high yield debt securities, investment grade bonds
and structured finance securities. The Company has sponsored four
securitizations with a total of approximately $1,341 million and $1,431 million
in financial assets as of December 31, 2004 and 2003, respectively. The
Company's beneficial interests in these SPEs as of December 31, 2004 and 2003
and the related investment income for the years ended December 31, 2004, 2003
and 2002 were insignificant.
F-35

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company invests in structured notes and similar type instruments, which
generally provide equity-based returns on debt securities. The carrying value of
such investments was approximately $666 million and $880 million at December 31,
2004 and 2003, respectively. The related net investment income recognized was
$45 million, $78 million and $1 million for the years ended December 31, 2004,
2003 and 2002, respectively.

VARIABLE INTEREST ENTITIES

As discussed in Note 1, the Company has adopted the provisions of FIN 46
and FIN 46(r). The adoption of FIN 46(r) required the Company to consolidate
certain VIEs for which it is the primary beneficiary. The following table
presents the total assets of and maximum exposure to loss relating to VIEs for
which the Company has concluded that (i) it is the primary beneficiary and which
are consolidated in the Company's consolidated financial statements at December
31, 2004, and (ii) it holds significant variable interests but it is not the
primary beneficiary and which have not been consolidated:

The following table provides a summary of the notional amounts of
derivative financial instruments by maturity at December 31, 2004:

Interest rate swaps are used by the Company primarily to reduce market
risks from changes in interest rates and to alter interest rate exposure arising
from mismatches between assets and liabilities (duration

F-37

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

mismatches). In an interest rate swap, the Company agrees with another party to
exchange, at specified intervals, the difference between fixed rate and floating
rate interest amounts as calculated by reference to an agreed notional principal
amount. These transactions are entered into pursuant to master agreements that
provide for a single net payment to be made by the counterparty at each due
date.

Interest rate caps and floors are used by the Company primarily to protect
its floating rate liabilities against rises in interest rates above a specified
level, and to protect its minimum rate guarantee liabilities against declines in
interest rates below a specified level, respectively.

In exchange-traded Treasury and equity futures transactions, the Company
agrees to purchase or sell a specified number of contracts, the value of which
is determined by the different classes of Treasury and equity securities, and to
post variation margin on a daily basis in an amount equal to the difference in
the daily market values of those contracts. The Company enters into
exchange-traded futures with regulated futures commission merchants that are
members of the exchanges.

Exchange-traded Treasury futures are used primarily to hedge mismatches
between the duration of assets in a portfolio and the duration of liabilities
supported by those assets, to hedge against changes in value of securities the
Company owns or anticipates acquiring, and to hedge against changes in interest
rates on anticipated liability issuances by replicating Treasury performance.
The value of Treasury futures is substantially impacted by changes in interest
rates and they can be used to modify or hedge existing interest rate risk.

Exchange-traded equity futures are used primarily to hedge liabilities
embedded in certain variable annuity products offered by the Company.

Foreign currency derivatives, including foreign currency swaps and foreign
currency forwards, are used by the Company to reduce the risk from fluctuations
in foreign currency exchange rates associated with its assets and liabilities
denominated in foreign currencies. The Company also uses foreign currency
forwards to hedge the foreign currency risk associated with certain of its net
investments in foreign operations.

In a foreign currency forward transaction, the Company agrees with another
party to deliver a specified amount of an identified currency at a specified
future date. The price is agreed upon at the time of the contract and payment
for such a contract is made in a different currency at the specified future
date.

In a foreign currency swap transaction, the Company agrees with another
party to exchange, at specified intervals, the difference between one currency
and another at a forward exchange rate calculated by reference to an agreed upon
principal amount. The principal amount of each currency is exchanged at the
inception and termination of the currency swap by each party.

Swaptions are used by the Company primarily to sell, or monetize, embedded
call options in its fixed rate liabilities. A swaption is an option to enter
into a swap with an effective date equal to the exercise date of the embedded
call and a maturity date equal to the maturity date of the underlying liability.
The Company receives a premium for entering into the swaption.

Equity options are used by the Company primarily to hedge liabilities
embedded in certain variable annuity products offered by the Company.

The Company enters into financial forwards, primarily "to-be-announced"
("TBA") securities, to gain exposure to the investment risk and return of
securities not yet available. The price is agreed upon at the time of the
contract and payment for such a contract is made at a specified future date.

Certain credit default swaps are used by the Company to hedge against
credit-related changes in the value of its investments. In a credit default swap
transaction, the Company agrees with another party, at specified intervals, to
pay a premium to insure credit risk. If a credit event, as defined by the
contract, occurs, generally the contract will require the swap to be settled
gross by the delivery of par quantities of the
F-38

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

referenced investment equal to the specified swap notional in exchange for the
payment of cash amounts by the counterparty equal to the par value of the
investment surrendered.

Credit default swaps are also used in replication synthetic asset
transactions ("RSATs") to synthetically create investments that are either more
expensive to acquire or otherwise unavailable in the cash markets. RSATs are a
combination of a derivative and usually a U.S. Treasury or Agency security.
RSATs that involve the use of credit default swaps are included in such
classification in the preceding table.

Total rate of return swaps ("TRRs") are swaps whereby the Company agrees
with another party to exchange, at specified intervals, the difference between
the economic risk and reward of an asset or a market index and LIBOR, calculated
by reference to an agreed notional principal amount. No cash is exchanged at the
outset of the contract. Cash is paid and received over the life of the contract
based on the terms of the swap. These transactions are entered into pursuant to
master agreements that provide for a single net payment to be made by the
counterparty at each due date. TRRs can be used as hedges or RSATs and are
included in the other classification in the preceding table.

A synthetic guaranteed investment contract ("GIC") is a contract that
simulates the performance of a traditional GIC through the use of financial
instruments. Under a synthetic GIC, the policyholder owns the underlying assets.
The Company guarantees a rate return on those assets for a premium.

HEDGING

The table below provides a summary of the notional amount and fair value of
derivatives by type of hedge designation at:

The following table provides the settlement payments recorded in income for
the:

FAIR VALUE HEDGES

The Company designates and accounts for the following as fair value hedges
when they have met the requirements of SFAS 133: (i) interest rate swaps to
convert fixed rate investments to floating rate

F-39

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

investments; (ii) foreign currency swaps to hedge the foreign currency fair
value exposure of foreign currency denominated investments and liabilities; and
(iii) treasury futures to hedge against changes in value of fixed rate
securities.

The Company recognized Net investment gains (losses) representing the
ineffective portion of all fair value hedges as follows:

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

CASH FLOW HEDGES

The Company designates and accounts for the following as cash flow hedges,
when they have met the requirements of SFAS 133: (i) interest rate swaps to
convert floating rate investments to fixed rate investments; (ii) interest rate
swaps to convert floating rate liabilities into fixed rate liabilities; (iii)
foreign currency swaps to hedge the foreign currency cash flow exposure of
foreign currency denominated investments and liabilities; (iv) treasury futures
to hedge against changes in value of securities to be acquired; (v) treasury
futures to hedge against changes in interest rates on liabilities to be issued;
and (vi) financial forwards to gain exposure to the investment risk and return
of securities not yet available.

For the years ended December 31, 2004, 2003 and 2002, the Company
recognized Net investment gains (losses) of ($19) million, ($69) million, and
($3) million, respectively, which represented the ineffective portion of all
cash flow hedges. All components of each derivative's gains or loss were
included in the assessment of hedge ineffectiveness. There were no instances in
which the Company discontinued cash flow hedge accounting because the forecasted
transactions did not occur on the anticipated date or in the additional time
period permitted by SFAS 133. There were no hedged forecasted transactions,
other than the receipt or payment of variable interest payments.

Presented below is a roll forward of the components of Other comprehensive
income (loss), before income taxes, related to cash flow hedges:

At December 31, 2004, approximately $34 million of the deferred net gains
on derivatives accumulated in Other comprehensive income (loss) are expected to
be reclassified to earnings during the year ending December 31, 2005.

F-40

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS

The Company uses forward exchange contracts to hedge portions of its net
investment in foreign operations against adverse movements in exchange rates.
The Company measures ineffectiveness based upon the change in forward rates.
There was no ineffectiveness recorded in 2004, 2003 or 2002.

For the years ended December 31, 2004 and 2003, the Company recorded net
unrealized foreign currency losses of $47 million and $10 million, respectively,
in Other comprehensive income (loss) related to hedges of its net investments in
foreign operations. For the year ended December 31, 2004, the Company recorded a
foreign currency translation loss of $10 million, in Other comprehensive income
(loss) related to the disposal of certain hedges of net investments in foreign
operations. There were no disposals of such hedges for the year ended December
31, 2003.

NON-QUALIFYING DERIVATIVES AND DERIVATIVES FOR PURPOSES OTHER THAN HEDGING

The Company enters into the following derivatives that do not qualify for
hedge accounting under SFAS 133 or for purposes other than hedging: (i) interest
rate swaps, purchased caps and floors, and Treasury futures to minimize its
exposure to interest rate volatility; (ii) foreign currency forwards and swaps
to minimize its exposure to adverse movements in exchange rates; (iii) swaptions
to sell embedded call options in fixed rate liabilities; (iv) credit default
swaps to minimize its exposure to adverse movements in credit; (v) equity
futures and equity options to economically hedge liabilities embedded in certain
variable annuity products; (vi) synthetic GICs to synthetically create
traditional GICs; and (vii) RSATs and TRRs to synthetically create investments.

For the years ended December 31, 2004, 2003 and 2002, the Company
recognized as Net investment gains (losses) changes in fair value of ($177)
million, ($114) million and ($172) million, respectively, related to derivatives
that do not qualify for hedge accounting.

EMBEDDED DERIVATIVES

The Company has certain embedded derivatives which are required to be
separated from their host contracts and accounted for as derivatives. These host
contracts include guaranteed rate of return contracts, guaranteed minimum
withdrawal benefit contracts and modified coinsurance contracts. The fair value
of the Company's embedded derivative assets was $46 million and $43 million at
December 31, 2004 and 2003, respectively. The fair value of the Company's
embedded derivative liabilities was $26 million and $33 million at December 31,
2004 and 2003, respectively. The amounts recorded to Net investment gains
(losses) during the years ended December 31, 2004 and 2003 were gains of $37
million and $19 million, respectively. There were no amounts recorded to Net
investment gains (losses) during the year ended December 31, 2002 related to
embedded derivatives.

CREDIT RISK

The Company may be exposed to credit related losses in the event of
nonperformance by counterparties to derivative financial instruments. Generally,
the current credit exposure of the Company's derivative contracts is limited to
the fair value at the reporting date. The credit exposure of the Company's
derivative transactions is represented by the fair value of contracts with a net
positive fair value at the reporting date. Because exchange traded futures and
options are effected through regulated exchanges, and positions are marked to
market on a daily basis, the Company has minimal exposure to credit related
losses in the event of nonperformance by counterparties to such derivative
financial instruments.

The Company manages its credit risk by entering into derivative
transactions with creditworthy counterparties. In addition, the Company enters
into over-the-counter derivatives pursuant to master agreements that provide for
a single net payment to be made by one counterparty to another at each due date

F-41

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and upon termination. Likewise, the Company effects exchange traded futures and
options through regulated exchanges and these positions are marked to market and
margined on a daily basis.

4. INSURANCE

DEFERRED POLICY ACQUISITION COSTS

Information regarding VOBA and DAC for the years ended December 31, 2002,
2003 and 2004 is as follows:

F-42

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The estimated future amortization expense allocated to other expenses for
VOBA is $137 million in 2005, $130 million in 2006, $124 million in 2007, $119
million in 2008 and $117 million in 2009.

Amortization of VOBA and DAC is related to (i) investment gains and losses
and the impact of such gains and losses on the amount of the amortization, (ii)
unrealized investment gains and losses to provide information regarding the
amount that would have been amortized if such gains and losses had been
recognized, and (iii) other expenses to provide amounts related to the gross
margins or profits originating from transactions other than investment gains and
losses.

SALES INDUCEMENTS

Changes in deferred sales inducements are as follows:

LIABILITIES FOR UNPAID CLAIMS AND CLAIM EXPENSES

The following table provides an analysis of the activity in the liability
for unpaid claims and claim expenses relating to property and casualty, group
accident and non-medical health policies and contracts:

GUARANTEES

The Company issues annuity contracts which may include contractual
guarantees to the contractholder for: (i) return of no less than total deposits
made to the contract less any partial withdrawals ("return of net

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

deposits") and (ii) the highest contract value on a specified anniversary date
minus any withdrawals following the contract anniversary, or total deposits made
to the contract less any partial withdrawals plus a minimum return ("anniversary
contract value" or "minimum return"). The Company also issues annuity contracts
that apply a lower rate of funds deposited if the contractholder elects to
surrender the contract for cash and a higher rate if the contractholder elects
to annuitize ("two tier annuities"). These guarantees include benefits that are
payable in the event of death or at annuitization.

The Company also issues universal and variable life contracts where the
Company contractually guarantees to the contractholder a secondary guarantee or
a guaranteed paid up benefit.

The Company had the following types of guarantees relating to annuity and
universal and variable life contracts at:

ANNUITY CONTRACTS

UNIVERSAL AND VARIABLE LIFE CONTRACTS

- ---------------

(1) The net amount at risk for guarantees of amounts in the event of death is
defined as the current guaranteed minimum death benefit in excess of the
current account balance at the balance sheet date.

(2) The net amount at risk for guarantees of amounts at annuitization is defined
as the present value of the minimum guaranteed annuity payments available to
the contractholder determined in accordance with the terms of the contract
in excess of the current account balance.

(3) The net amount at risk for two tier annuities is based on the excess of the
upper tier, adjusted for a profit margin, less the lower tier.

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The net amount at risk is based on the direct amount at risk (excluding
reinsurance).

The Company's annuity and life contracts with guarantees may offer more
than one type of guarantee in each contract. Therefore, the amounts listed above
may not be mutually exclusive.

Liabilities for guarantees (excluding base policy liabilities) relating to
annuity and universal and variable life contracts are as follows:

Account balances of contracts with insurance guarantees are invested in
separate account asset classes as follows at:

SEPARATE ACCOUNTS

Separate account assets and liabilities include two categories of account
types: pass-through separate accounts totaling $71,623 million and $59,278
million at December 31, 2004 and 2003, respectively, for which the policyholder
assumes all investment risk, and separate accounts with a minimum return or
account value for which the Company contractually guarantees either a minimum
return or account value to the policyholder which totaled $15,146 million and
$16,478 million at December 31, 2004 and 2003, respectively. The latter category
consisted primarily of Met Managed Guaranteed Interest Contracts and
participating close-out contracts. The average interest rates credited on these
contracts were 4.7% and 4.5% at December 31, 2004 and 2003, respectively.

Fees charged to the separate accounts by the Company (including mortality
charges, policy administration fees and surrender charges) are reflected in the
Company's revenues as universal life and investment-type product policy fees and
totaled $843 million, $626 million and $542 million for the years ended December
31, 2004, 2003 and 2002, respectively.

At December 31, 2004, fixed maturities, equity securities, and cash and
cash equivalents reported on the consolidated balance sheet include $47 million,
$20 million and $2 million, respectively, of the Company's proportional interest
in separate accounts.

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For the year ended December 31, 2004, there were no investment gains
(losses) on transfers of assets from the general account to the separate
accounts.

5. REINSURANCE

The Company's life insurance operations participate in reinsurance
activities in order to limit losses, minimize exposure to large risks, and to
provide additional capacity for future growth. The Company currently reinsures
up to 90% of the mortality risk for all new individual life insurance policies
that it writes through its various franchises. This practice was initiated by
different franchises for different products starting at various points in time
between 1992 and 2000. The Company retains up to $25 million on single life
policies and $30 million on survivorship policies and reinsures 100% of amounts
in excess of the Company's retention limits. The Company reinsures a portion of
the mortality risk on its universal life policies. The Company reinsures its
business through a diversified group of reinsurers. Placement of reinsurance is
done primarily on an automatic basis and also on a facultative basis for risks
of specific characteristics. The Company is contingently liable with respect to
ceded reinsurance should any reinsurer be unable to meet its obligations under
these agreements.

In addition to reinsuring mortality risk, the Company reinsures other risks
and specific coverages. The Company routinely reinsures certain classes of risks
in order to limit its exposure to particular travel, avocation and lifestyle
hazards. The Company has exposure to catastrophes, which are an inherent risk of
the property and casualty business and could contribute to significant
fluctuations in the Company's results of operations. The Company uses excess of
loss and quota share reinsurance arrangements to limit its maximum loss, provide
greater diversification of risk and minimize exposure to larger risks.

The Company has also protected itself through the purchase of combination
risk coverage. This reinsurance coverage pools risks from several lines of
business and includes individual and group life claims in excess of $2 million
per policy, as well as excess property and casualty losses, among others.

In the Reinsurance Segment, Reinsurance Group of America, Incorporated
("RGA"), retains a maximum of $6 million of coverage per individual life with
respect to its assumed reinsurance business.

See Note 10 for information regarding certain excess of loss reinsurance
agreements providing coverage for risks associated primarily with sales
practices claims.

The amounts in the consolidated statements of income are presented net of
reinsurance ceded. The effects of reinsurance were as follows:

Reinsurance recoverables, included in premiums and other receivables, were
$3,965 million and $4,014 million at December 31, 2004 and 2003, respectively,
including $1,302 million and $1,341 million, respectively, relating to
reinsurance of long-term guaranteed interest contracts and structured settlement
lump sum contracts accounted for as a financing transaction. Reinsurance and
ceded commissions payables, included in other liabilities, were $78 million and
$106 million at December 31, 2004 and 2003, respectively.

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. CLOSED BLOCK

On April 7, 2000 (the "date of demutualization"), Metropolitan Life
established a closed block for the benefit of holders of certain individual life
insurance policies of Metropolitan Life. Assets have been allocated to the
closed block in an amount that has been determined to produce cash flows which,
together with anticipated revenues from the policies included in the closed
block, are reasonably expected to be sufficient to support obligations and
liabilities relating to these policies, including, but not limited to,
provisions for the payment of claims and certain expenses and taxes, and to
provide for the continuation of policyholder dividend scales in effect for 1999,
if the experience underlying such dividend scales continues, and for appropriate
adjustments in such scales if the experience changes. At least annually, the
Company compares actual and projected experience against the experience assumed
in the then-current dividend scales. Dividend scales are adjusted periodically
to give effect to changes in experience.

The closed block assets, the cash flows generated by the closed block
assets and the anticipated revenues from the policies in the closed block will
benefit only the holders of the policies in the closed block. To the extent
that, over time, cash flows from the assets allocated to the closed block and
claims and other experience related to the closed block are, in the aggregate,
more or less favorable than what was assumed when the closed block was
established, total dividends paid to closed block policyholders in the future
may be greater than or less than the total dividends that would have been paid
to these policyholders if the policyholder dividend scales in effect for 1999
had been continued. Any cash flows in excess of amounts assumed will be
available for distribution over time to closed block policyholders and will not
be available to stockholders. If the closed block has insufficient funds to make
guaranteed policy benefit payments, such payments will be made from assets
outside of the closed block. The closed block will continue in effect as long as
any policy in the closed block remains in-force. The expected life of the closed
block is over 100 years.

The Company uses the same accounting principles to account for the
participating policies included in the closed block as it used prior to the date
of demutualization. However, the Company establishes a policyholder dividend
obligation for earnings that will be paid to policyholders as additional
dividends as described below. The excess of closed block liabilities over closed
block assets at the effective date of the demutualization (adjusted to eliminate
the impact of related amounts in accumulated other comprehensive income)
represents the estimated maximum future earnings from the closed block expected
to result from operations attributed to the closed block after income taxes.
Earnings of the closed block are recognized in income over the period the
policies and contracts in the closed block remain in-force. Management believes
that over time the actual cumulative earnings of the closed block will
approximately equal the expected cumulative earnings due to the effect of
dividend changes. If, over the period the closed block remains in existence, the
actual cumulative earnings of the closed block is greater than the expected
cumulative earnings of the closed block, the Company will pay the excess of the
actual cumulative earnings of the closed block over the expected cumulative
earnings to closed block policyholders as additional policyholder dividends
unless offset by future unfavorable experience of the closed block and,
accordingly, will recognize only the expected cumulative earnings in income with
the excess recorded as a policyholder dividend obligation. If over such period,
the actual cumulative earnings of the closed block is less than the expected
cumulative earnings of the closed block, the Company will recognize only the
actual earnings in income. However, the Company may change policyholder dividend
scales in the future, which would be intended to increase future actual earnings
until the actual cumulative earnings equal the expected cumulative earnings.

F-47

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Closed block liabilities and assets designated to the closed block are as
follows:

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Information regarding the policyholder dividend obligation is as follows:

Closed block revenues and expenses were as follows:

The change in maximum future earnings of the closed block is as follows:

During the year ended December 31, 2002, the allocation of assets to the
closed block was revised to appropriately classify assets in accordance with the
plan of demutualization. The reallocation of assets had no impact on
consolidated assets or liabilities.

Metropolitan Life charges the closed block with federal income taxes, state
and local premium taxes, and other additive state or local taxes, as well as
investment management expenses relating to the closed block as

F-49

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

provided in the plan of demutualization. Metropolitan Life also charges the
closed block for expenses of maintaining the policies included in the closed
block.

7. DEBT

Debt consisted of the following:

The Company maintains committed and unsecured credit facilities aggregating
$2.8 billion ($1.1 billion expiring in 2005, $175 million expiring in 2006 and
$1.5 billion expiring in 2009). If these facilities were drawn upon, they would
bear interest at varying rates in accordance with the respective agreements. The
facilities can be used for general corporate purposes and $2.5 billion of the
facilities also serve as back-up lines of credit for the Company's commercial
paper programs. At December 31, 2004, the Company had drawn approximately $56
million under the facilities expiring in 2005 at interest rates ranging from
5.44% to 6.38% and approximately another $50 million under the facility expiring
in 2006 at an interest rate of 2.99%. In April 2003, the Company replaced an
expiring $1 billion five-year credit facility with a $1 billion 364-day credit
facility and the Holding Company was added as a borrower. In May 2003, the
Company replaced an expiring $140 million three-year credit facility with a $175
million three-year credit facility, which expires in 2006. In April 2004, the
Company replaced the $2.25 billion credit facilities expiring in 2004 and 2005,
with a $1.0 billion 364-day credit facility expiring in 2005 and a $1.5 billion
five-year credit facility expiring in 2009. In July 2004, the Company renewed a
$50 million 364-day credit facility.

At December 31, 2004, the Company had $961 million in outstanding letters
of credit from various banks.

Payments of interest and principal on the surplus notes, subordinated to
all other indebtedness, may be made only with the prior approval of the
insurance department of the state of domicile.

The aggregate maturities of long-term debt for the Company are $1,468
million in 2005, $662 million in 2006, $36 million in 2007, $44 million in 2008,
$58 million in 2009 and $5,144 million thereafter.

Short-term debt of the Company consisted of commercial paper with a
weighted average interest rate of 2.3% and a weighted average maturity of 27
days at December 31, 2004. Short-term debt of the Company included commercial
paper with a weighted average interest rate of 1.1% and a weighted average
maturity of 31 days at December 31, 2003. The Company has no other
collateralized borrowings at December 31, 2004. The Company had other
collateralized borrowings with a weighted average coupon rate of 5.07% and a
weighted average maturity of 30 days at December 31, 2003.

F-50

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Interest expense related to the Company's indebtedness included in other
expenses was $428 million, $420 million and $288 million for the years ended
December 31, 2004, 2003 and 2002, respectively.

8. SHARES SUBJECT TO MANDATORY REDEMPTION AND COMPANY-OBLIGATED MANDATORILY
REDEEMABLE SECURITIES OF SUBSIDIARY TRUSTS

MetLife Capital Trust I. In connection with MetLife, Inc.'s, initial
public offering in April 2000, the Holding Company and MetLife Capital Trust I
(the "Trust") issued equity security units (the "units"). Each unit originally
consisted of (i) a contract to purchase, for $50, shares of the Holding
Company's common stock (the "purchase contracts") on May 15, 2003; and (ii) a
capital security of the Trust, with a stated liquidation amount of $50.

In accordance with the terms of the units, the Trust was dissolved on
February 5, 2003, and $1,006 million aggregate principal amount of 8.00%
debentures of the Holding Company (the "MetLife debentures"), the sole assets of
the Trust, were distributed to the owners of the Trust's capital securities in
exchange for their capital securities. The MetLife debentures were remarketed on
behalf of the debenture owners on February 12, 2003 and the interest rate on the
MetLife debentures was reset as of February 15, 2003 to 3.911% per annum for a
yield to maturity of 2.876%. As a result of the remarketing, the debenture
owners received $21 million ($0.03 per diluted common share) in excess of the
carrying value of the capital securities. This excess was recorded by the
Company as a charge to additional paid-in capital and, for the purpose of
calculating earnings per share, is subtracted from net income to arrive at net
income available to common shareholders.

On May 15, 2003, the purchase contracts associated with the units were
settled. In exchange for $1,006 million, the Company issued 2.97 shares of
MetLife, Inc. common stock per purchase contract, or 59.8 million shares of
treasury stock. The excess of the Company's cost of the treasury stock ($1,662
million) over the contract price of the stock issued to the purchase contract
holders ($1,006 million) was $656 million, which was recorded as a direct
reduction to retained earnings.

Due to the dissolution of the Trust in 2003, there was no interest expense
on capital securities for the year ended December 31, 2004. Interest expense on
the capital securities is included in other expenses and was $10 million and $81
million for the years ended December 31, 2003 and 2002, respectively.

GenAmerica Capital I. In June 1997, GenAmerica Corporation ("GenAmerica")
issued $125 million of 8.525% capital securities through a wholly-owned
subsidiary trust, GenAmerica Capital I. GenAmerica has fully and unconditionally
guaranteed, on a subordinated basis, the obligation of the trust under the
capital securities and is obligated to mandatorily redeem the securities on June
30, 2027. GenAmerica may prepay the securities any time after June 30, 2007.
Capital securities outstanding were $119 million, net of unamortized discounts
of $6 million, at both December 31, 2004 and 2003. Interest expense on these
instruments is included in other expenses and was $11 million for each of the
years ended December 31, 2004, 2003 and 2002.

RGA Capital Trust I. In December 2001, RGA, through its wholly-owned
trust, RGA Capital Trust I (the "Trust"), issued 4,500,000 Preferred Income
Equity Redeemable Securities ("PIERS") Units. Each PIERS unit consists of (i) a
preferred security issued by the Trust, having a stated liquidation amount of
$50 per unit, representing an undivided beneficial ownership interest in the
assets of the Trust, which consist solely of junior subordinated debentures
issued by RGA which have a principal amount at maturity of $50 and a stated
maturity of March 18, 2051, and (ii) a warrant to purchase, at any time prior to
December 15, 2050, 1.2508 shares of RGA stock at an exercise price of $50. The
fair market value of the warrant on the issuance date was $14.87 and is
detachable from the preferred security. RGA fully and unconditionally
guarantees, on a subordinated basis, the obligations of the Trust under the
preferred securities. The preferred securities and subordinated debentures were
issued at a discount (original issue discount) to the face or liquidation value
of

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$14.87 per security. The securities will accrete to their $50 face/liquidation
value over the life of the security on a level yield basis. The weighted average
effective interest rate on the preferred securities and the subordinated
debentures is 8.25% per annum. Capital securities outstanding were $159 million
and $158 million for the years ended December 31, 2004 and 2003, respectively,
net of unamortized discount of $67 million, at both December 31, 2004 and 2003.

9. INCOME TAXES

The provision for income taxes for continuing operations was as follows:

Reconciliations of the income tax provision at the U.S. statutory rate to
the provision for income taxes as reported for continuing operations were as
follows:

The Company is under continuous examination by the Internal Revenue Service
("IRS") and other tax authorities in jurisdictions in which the Company has
significant business operations. The income tax years under examination vary by
jurisdiction. In 2004 the Company recorded an adjustment of $91 million for the
settlement of all federal income tax issues relating to the IRS's audit of the
Company's tax returns for the years 1997-1999. Such settlement is reflected in
the current year tax expense as an adjustment to prior year taxes. The Company
also received $22 million in interest on such settlement and incurred an $8
million tax expense on such settlement for a total impact to net income of $105
million. The current IRS examination

F-52

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

covers the years 2000-2002. The Company regularly assesses the likelihood of
additional assessments in each taxing jurisdiction resulting from current and
subsequent years' examinations. Liabilities for income taxes have been
established for future income tax assessments when it is probable there will be
future assessments and the amount thereof can be reasonably estimated. Once
established, liabilities for uncertain tax positions are adjusted only when
there is more information available or when an event occurs necessitating a
change to the liabilities. The Company believes that the resolution of income
tax matters for open years will not have a material effect on its consolidated
financial statements although the resolution of income tax matters could impact
the Company's effective tax rate for a particular future period.

Deferred income taxes represent the tax effect of the differences between
the book and tax bases of assets and liabilities. Net deferred income tax assets
and liabilities consisted of the following:

Domestic net operating loss carryforwards amount to $985 million at
December 31, 2004 and will expire beginning in 2014. Domestic capital loss
carryforwards amount to $278 million at December 31, 2004 and will expire
beginning in 2005. Foreign net operating loss carryforwards amount to $304
million at December 31, 2004 and were generated in various foreign countries
with expiration periods of five years to infinity.

The Company has recorded a valuation allowance related to tax benefits of
certain foreign net operating loss carryforwards. The valuation allowance
reflects management's assessment, based on available information, that it is
more likely than not that the deferred income tax asset for certain foreign net
operating loss carryforwards will not be realized. The tax benefit will be
recognized when management believes that it is more likely than not that these
deferred income tax assets are realizable. In 2004, the Company recorded a tax
benefit of $9 million for the reduction of the deferred income tax valuation
allowance related to certain foreign net operating loss carryforwards.

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. COMMITMENTS, CONTINGENCIES AND GUARANTEES

LITIGATION

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

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

On a quarterly and yearly basis, the Company reviews relevant information
with respect to liabilities for litigation and contingencies to be reflected in
the Company's consolidated financial statements. The review includes senior
legal and financial personnel. Unless stated below, estimates of possible
additional losses or ranges of loss for particular matters cannot in the
ordinary course be made with a reasonable degree of certainty. Liabilities are
established when it is probable that a loss has been incurred and the amount of
the loss can be reasonably estimated. It is possible that some of the matters
could require the Company to pay damages or make other expenditures or establish
accruals in amounts that could not be estimated as of December 31, 2004.

Sales Practices Claims

Over the past several years, Metropolitan Life, New England Mutual Life
Insurance Company ("New England Mutual") and General American Life Insurance
Company ("General American") have faced numerous claims, including class action
lawsuits, alleging improper marketing and sales of individual life insurance
policies or annuities. These lawsuits are generally referred to as "sales
practices claims."

In December 1999, a federal court approved a settlement resolving sales
practices claims on behalf of a class of owners of permanent life insurance
policies and annuity contracts or certificates issued pursuant to individual
sales in the United States by Metropolitan Life, Metropolitan Insurance and
Annuity Company or Metropolitan Tower Life Insurance Company between January 1,
1982 and December 31, 1997. The class includes owners of approximately six
million in-force or terminated insurance policies and approximately one million
in-force or terminated annuity contracts or certificates.

Similar sales practices class actions against New England Mutual, with
which Metropolitan Life merged in 1996, and General American, which was acquired
in 2000, have been settled. In October 2000, a federal court approved a
settlement resolving sales practices claims on behalf of a class of owners of
permanent life insurance policies issued by New England Mutual between January
1, 1983 through August 31, 1996. The class includes owners of approximately
600,000 in-force or terminated policies. A federal court has approved a
settlement resolving sales practices claims on behalf of a class of owners of
permanent life insurance policies
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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

issued by General American between January 1, 1982 through December 31, 1996. An
appellate court has affirmed the order approving the settlement. The class
includes owners of approximately 250,000 in-force or terminated policies.

Certain class members have opted out of the class action settlements noted
above and have brought or continued non-class action sales practices lawsuits.
In addition, other sales practices lawsuits have been brought. As of December
31, 2004, there are approximately 328 sales practices lawsuits pending against
Metropolitan Life; approximately 49 sales practices lawsuits pending against New
England Mutual, New England Life Insurance Company, and New England Securities
Corporation (collectively, "New England"); and approximately 54 sales practices
lawsuits pending against General American. Metropolitan Life, New England and
General American continue to defend themselves vigorously against these
lawsuits. Some individual sales practices claims have been resolved through
settlement, won by dispositive motions, or, in a few instances, have gone to
trial. Most of the current cases seek substantial damages, including in some
cases punitive and treble damages and attorneys' fees. Additional litigation
relating to the Company's marketing and sales of individual life insurance may
be commenced in the future.

The Metropolitan Life class action settlement did not resolve two putative
class actions involving sales practices claims filed against Metropolitan Life
in Canada, and these actions remain pending.

The Company believes adequate provision has been made in its consolidated
financial statements for all probable and reasonably estimable losses for sales
practices claims against Metropolitan Life, New England and General American.

Regulatory authorities in a small number of states have had investigations
or inquiries relating to Metropolitan Life's, New England's, or General
American's sales of individual life insurance policies or annuities. Over the
past several years, these and a number of investigations by other regulatory
authorities were resolved for monetary payments and certain other relief. The
Company may continue to resolve investigations in a similar manner.

Asbestos-Related Claims

Metropolitan Life is also a defendant in thousands of lawsuits seeking
compensatory and punitive damages for personal injuries allegedly caused by
exposure to asbestos or asbestos-containing products. Metropolitan Life has
never engaged in the business of manufacturing, producing, distributing or
selling asbestos or asbestos-containing products nor has Metropolitan Life
issued liability or workers' compensation insurance to companies in the business
of manufacturing, producing, distributing or selling asbestos or
asbestos-containing products. Rather, these lawsuits principally have been based
upon allegations relating to certain research, publication and other activities
of one or more of Metropolitan Life's employees during the period from the
1920's through approximately the 1950's and have alleged that Metropolitan Life
learned or should have learned of certain health risks posed by asbestos and,
among other things, improperly publicized or failed to disclose those health
risks. Metropolitan Life believes that it should not have legal liability in
such cases.

Legal theories asserted against Metropolitan Life have included negligence,
intentional tort claims and conspiracy claims concerning the health risks
associated with asbestos. Although Metropolitan Life believes it has meritorious
defenses to these claims, and has not suffered any adverse monetary judgments in
respect of these claims, due to the risks and expenses of litigation, almost all
past cases have been resolved by settlements. Metropolitan Life's defenses
(beyond denial of certain factual allegations) to plaintiffs' claims include
that: (i) Metropolitan Life owed no duty to the plaintiffs -- it had no special
relationship with the plaintiffs and did not manufacture, produce, distribute or
sell the asbestos products that allegedly injured plaintiffs; (ii) plaintiffs
cannot demonstrate justifiable detrimental reliance; and (iii) plaintiffs cannot
demonstrate proximate causation. In defending asbestos cases, Metropolitan Life
selects various strategies

F-55

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

depending upon the jurisdictions in which such cases are brought and other
factors which, in Metropolitan Life's judgment, best protect Metropolitan Life's
interests. Strategies include seeking to settle or compromise claims, motions
challenging the legal or factual basis for such claims or defending on the
merits at trial. In 2002, 2003 or 2004, trial courts in California, Utah,
Georgia, New York, Texas, and Ohio granted motions dismissing claims against
Metropolitan Life on some or all of the above grounds. Other courts have denied
motions brought by Metropolitan Life to dismiss cases without the necessity of
trial. There can be no assurance that Metropolitan Life will receive favorable
decisions on motions in the future. Metropolitan Life intends to continue to
exercise its best judgment regarding settlement or defense of such cases,
including when trials of these cases are appropriate.

Metropolitan Life continues to study its claims experience, review external
literature regarding asbestos claims experience in the United States and
consider numerous variables that can affect its asbestos liability exposure,
including bankruptcies of other companies involved in asbestos litigation and
legislative and judicial developments, to identify trends and to assess their
impact on the recorded asbestos liability.

Bankruptcies of other companies involved in asbestos litigation, as well as
advertising by plaintiffs' asbestos lawyers, may be resulting in an increase in
the cost of resolving claims and could result in an increase in the number of
trials and possible adverse verdicts Metropolitan Life may experience.
Plaintiffs are seeking additional funds from defendants, including Metropolitan
Life, in light of such bankruptcies by certain other defendants. In addition,
publicity regarding legislative reform efforts may result in an increase or
decrease in the number of claims.

The total number of asbestos personal injury claims pending against
Metropolitan Life as of the dates indicated, the number of new claims during the
years ended on those dates and the total settlement payments made to resolve
asbestos personal injury claims during those years are set forth in the
following table:

- ---------------

(1) Settlement payments represent payments made by Metropolitan Life during the
year in connection with settlements made in that year and in prior years.
Amounts do not include Metropolitan Life's attorneys' fees and expenses and
do not reflect amounts received from insurance carriers.

The Company believes adequate provision has been made in its consolidated
financial statements for all probable and reasonably estimable losses for
asbestos-related claims. The ability of Metropolitan Life to estimate its
ultimate asbestos exposure is subject to considerable uncertainty due to
numerous factors. The availability of data is limited and it is difficult to
predict with any certainty numerous variables that can affect liability
estimates, including the number of future claims, the cost to resolve claims,
the disease mix and severity of disease, the jurisdiction of claims filed, tort
reform efforts and the impact of any possible future adverse verdicts and their
amounts.

The number of asbestos cases that may be brought or the aggregate amount of
any liability that Metropolitan Life may ultimately incur is uncertain.
Accordingly, it is reasonably possible that the Company's total exposure to
asbestos claims may be greater than the liability recorded by the Company in its
consolidated financial statements and that future charges to income may be
necessary. While the potential future charges could be material in particular
quarterly or annual periods in which they are recorded, based on information
currently known by management, it does not believe any such charges are likely
to have a material adverse effect on the Company's consolidated financial
position.

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Metropolitan Life increased its recorded liability for asbestos-related
claims by $402 million from approximately $820 million to $1,225 million at
December 31, 2002. This total recorded asbestos-related liability (after the
self-insured retention) was within the coverage of the excess insurance policies
discussed below. Metropolitan Life regularly reevaluates its exposure from
asbestos litigation and has updated its liability analysis for asbestos-related
claims through December 31, 2004.

During 1998, Metropolitan Life paid $878 million in premiums for excess
insurance policies for asbestos-related claims. The excess insurance policies
for asbestos-related claims provide for recovery of losses up to $1,500 million,
which is in excess of a $400 million self-insured retention. The
asbestos-related policies are also subject to annual and per-claim sublimits.
Amounts are recoverable under the policies annually with respect to claims paid
during the prior calendar year. Although amounts paid by Metropolitan Life in
any given year that may be recoverable in the next calendar year under the
policies will be reflected as a reduction in the Company's operating cash flows
for the year in which they are paid, management believes that the payments will
not have a material adverse effect on the Company's liquidity.

Each asbestos-related policy contains an experience fund and a reference
fund that provides for payments to Metropolitan Life at the commutation date if
the reference fund is greater than zero at commutation or pro rata reductions
from time to time in the loss reimbursements to Metropolitan Life if the
cumulative return on the reference fund is less than the return specified in the
experience fund. The return in the reference fund is tied to performance of the
Standard & Poor's 500 Index and the Lehman Brothers Aggregate Bond Index. A
claim was made under the excess insurance policies in 2003 and 2004 for the
amounts paid with respect to asbestos litigation in excess of the retention. As
the performance of the indices impacts the return in the reference fund, it is
possible that loss reimbursements to the Company and the recoverable with
respect to later periods may be less than the amount of the recorded losses.
Such foregone loss reimbursements may be recovered upon commutation depending
upon future performance of the reference fund. If at some point in the future,
the Company believes the liability for probable and reasonably estimable losses
for asbestos-related claims should be increased, an expense would be recorded
and the insurance recoverable would be adjusted subject to the terms, conditions
and limits of the excess insurance policies. Portions of the change in the
insurance recoverable would be recorded as a deferred gain and amortized into
income over the estimated remaining settlement period of the insurance policies.
The foregone loss reimbursements were approximately $8.3 million with respect to
2002 claims, $15.5 million with respect to 2003 claims and are estimated to be
$10.2 million with respect to 2004 claims and estimated to be approximately $54
million in the aggregate including future years.

Property and Casualty Actions

A purported class action has been filed against Metropolitan Property and
Casualty Insurance Company's subsidiary, Metropolitan Casualty Insurance
Company, in Florida alleging breach of contract and unfair trade practices with
respect to allowing the use of parts not made by the original manufacturer to
repair damaged automobiles. Discovery is ongoing and a motion for class
certification is pending. Two purported nationwide class actions have been filed
against Metropolitan Property and Casualty Insurance Company in Illinois. One
suit claims breach of contract and fraud due to the alleged underpayment of
medical claims arising from the use of a purportedly biased provider fee pricing
system. A motion for class certification has been filed and discovery is
ongoing. The second suit claims breach of contract and fraud arising from the
alleged use of preferred provider organizations to reduce medical provider fees
covered by the medical claims portion of the insurance policy. A motion to
dismiss has been filed.

A purported class action has been filed against Metropolitan Property and
Casualty Insurance Company in Montana. This suit alleges breach of contract and
bad faith for not aggregating medical payment and uninsured coverages provided
in connection with the several vehicles identified in insureds' motor vehicle
policies. A recent decision by the Montana Supreme Court in a suit involving
another insurer determined that

F-57

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

aggregation is required. Metropolitan Property and Casualty Insurance Company
has posted adequate reserves to resolve the claims underlying this matter. The
amount to be paid will not be material to Metropolitan Property and Casualty
Insurance Company. Certain plaintiffs' lawyers in another action have alleged
that the use of certain automated databases to provide total loss vehicle
valuation methods was improper. Metropolitan Property and Casualty Insurance
Company, along with a number of other insurers, has tentatively agreed in
January 2004 to resolve this issue in a class action format. The amount to be
paid in resolution of this matter will not be material to Metropolitan Property
and Casualty Insurance Company.

Demutualization Actions

Several lawsuits were brought in 2000 challenging the fairness of
Metropolitan Life's plan of reorganization, as amended (the "plan") and the
adequacy and accuracy of Metropolitan Life's disclosure to policyholders
regarding the plan. These actions named as defendants some or all of
Metropolitan Life, MetLife, Inc. (the "Holding Company"), the individual
directors, the New York Superintendent of Insurance (the "Superintendent") and
the underwriters for MetLife, Inc.'s initial public offering, Goldman Sachs &
Company and Credit Suisse First Boston. On February 21, 2003, a trial court
within the commercial part of the New York State court granted the defendants'
motions to dismiss two purported class actions. On April 27, 2004, the appellate
court modified the trial court's order by reinstating certain claims against
Metropolitan Life, the Holding Company and the individual directors. Plaintiffs
in these actions have filed a consolidated amended complaint. Defendants' motion
to dismiss part of the consolidated amended complaint, and plaintiffs' motion to
certify a litigation class are pending. Another purported class action filed in
New York State court in Kings County has been consolidated with this action. The
plaintiffs in the state court class actions seek compensatory relief and
punitive damages. Five persons have brought a proceeding under Article 78 of New
York's Civil Practice Law and Rules challenging the Opinion and Decision of the
Superintendent who approved the plan. In this proceeding, petitioners seek to
vacate the Superintendent's Opinion and Decision and enjoin him from granting
final approval of the plan. Respondents have moved to dismiss the proceeding. In
a purported class action against Metropolitan Life and the Holding Company
pending in the United States District Court for the Eastern District of New
York, plaintiffs served a second consolidated amended complaint on April 2,
2004. In this action, plaintiffs assert violations of the Securities Act of 1933
and the Securities Exchange Act of 1934 in connection with the plan, claiming
that the Policyholder Information Booklets failed to disclose certain material
facts. They seek rescission and compensatory damages. On June 22, 2004, the
court denied the defendants' motion to dismiss the claim of violation of the
Securities Exchange Act of 1934. The court had previously denied defendants'
motion to dismiss the claim for violation of the Securities Act of 1933. On
December 10, 2004, the court reaffirmed its earlier decision denying defendants'
motion for summary judgment as premature. Metropolitan Life, the Holding Company
and the individual defendants believe they have meritorious defenses to the
plaintiffs' claims and are contesting vigorously all of the plaintiffs' claims
in these actions.

In 2001, a lawsuit was filed in the Superior Court of Justice, Ontario,
Canada on behalf of a proposed class of certain former Canadian policyholders
against the Holding Company, Metropolitan Life, and Metropolitan Life Insurance
Company of Canada. Plaintiffs' allegations concern the way that their policies
were treated in connection with the demutualization of Metropolitan Life; they
seek damages, declarations, and other non-pecuniary relief. The defendants
believe they have meritorious defenses to the plaintiffs' claims and will
contest vigorously all of plaintiffs' claims in this matter.

On April 30, 2004, a lawsuit was filed in New York state court in New York
County against the Holding Company and Metropolitan Life on behalf of a proposed
class comprised of the settlement class in the Metropolitan Life sales practices
class action settlement approved in December 1999 by the United States District
Court for the Western District of Pennsylvania. In July 2004, the plaintiffs
served an amended complaint. The amended complaint challenges the treatment of
the cost of the sales practices settlement in the demutualization of
Metropolitan Life and asserts claims of breach of fiduciary duty, common law
fraud,
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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and unjust enrichment. Plaintiffs seek compensatory and punitive damages, as
well as attorneys' fees and costs. The Holding Company and Metropolitan Life
have moved to dismiss the amended complaint. In October 2003, the United States
District Court for the Western District of Pennsylvania dismissed plaintiffs'
similar complaint alleging that the demutualization breached the terms of the
1999 settlement agreement and unjustly enriched the Holding Company and
Metropolitan Life. The Holding Company and Metropolitan Life intend to contest
this matter vigorously.

Race-Conscious Underwriting Claims

Insurance departments in a number of states initiated inquiries in 2000
about possible race-conscious underwriting of life insurance. These inquiries
generally have been directed to all life insurers licensed in their respective
states, including Metropolitan Life and certain of its affiliates. The New York
Insurance Department concluded its examination of Metropolitan Life concerning
possible past race-conscious underwriting practices. On April 28, 2003, the
United States District Court for the Southern District of New York approved a
class action settlement of a consolidated action against Metropolitan Life
alleging racial discrimination in the marketing, sale, and administration of
life insurance policies. Metropolitan Life also entered into settlement
agreements to resolve the regulatory examination.

Twenty lawsuits involving approximately 140 plaintiffs were filed in
federal and state court in Alabama, Mississippi and Tennessee alleging federal
and/or state law claims of racial discrimination in connection with the sale,
formation, administration or servicing of life insurance policies. Metropolitan
Life resolved the claims of some of these plaintiffs through settlement, and
some additional plaintiffs have voluntarily dismissed their claims. Metropolitan
Life resolved claims of some additional persons who opted out of the settlement
class referenced in the preceding paragraph but who had not filed suit. The
actions filed in Alabama and Tennessee have been dismissed; one action filed in
Mississippi remains pending. In the pending action, Metropolitan Life is
contesting plaintiffs' claims vigorously.

The Company believes that adequate provision has been made to cover the
costs associated with the resolution of these matters.

Other

A putative class action lawsuit is pending in the United States District
Court for the District of Columbia, in which plaintiffs allege that they were
denied certain ad hoc pension increases awarded to retirees under the
Metropolitan Life retirement plan. The ad hoc pension increases were awarded
only to retirees (i.e., individuals who were entitled to an immediate retirement
benefit upon their termination of employment) and not available to individuals
like these plaintiffs whose employment, or whose spouses' employment, had
terminated before they became eligible for an immediate retirement benefit. The
plaintiffs seek to represent a class consisting of former Metropolitan Life
employees, or their surviving spouses, who are receiving deferred vested annuity
payments under the retirement plan and who were allegedly eligible to receive
the ad hoc pension increases awarded in 1977, 1980, 1989, 1992, 1996 and 2001,
as well as increases awarded in earlier years. Metropolitan Life is vigorously
defending itself against these allegations.

As previously reported, the SEC is conducting a formal investigation of New
England Securities Corporation ("NES"), a subsidiary of New England Life
Insurance Company ("NELICO"), in response to NES informing the SEC that certain
systems and controls relating to one NES advisory program were not operating
effectively. NES is cooperating fully with the SEC.

Prior to filing the Company's June 30, 2003 Form 10-Q, MetLife announced a
$31 million charge, net of income taxes, resulting from certain improperly
deferred expenses at an affiliate, New England Financial. MetLife notified the
SEC about the nature of this charge prior to its announcement. The SEC is
pursuing a formal investigation of the matter and, in December 2004, NELICO
received a so-called "Wells Notice" in

F-59

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

connection with the SEC investigation. The Wells Notice provides notice that the
SEC staff is considering recommending that the SEC bring a civil action alleging
violations of the U.S. securities laws. Under the SEC's procedures, a recipient
can respond to the SEC staff before the staff makes a formal recommendation
regarding whether any action alleging violations of the U.S. securities laws
should be considered. MetLife continues to cooperate fully with the SEC in its
investigation.

The American Dental Association and two individual providers have sued
MetLife, Mutual of Omaha and Cigna in a purported class action lawsuit brought
in a Florida federal district court. The plaintiffs purport to represent a
nationwide class of in-network providers who allege that their claims are being
wrongfully reduced by downcoding, bundling, and the improper use and programming
of software. The complaint alleges federal racketeering and various state law
theories of liability. MetLife is vigorously defending the case and a motion to
dismiss has been filed and argued.

On November 16, 2004, a New York state court granted plaintiffs' motion to
certify a litigation class of owners of certain participating life insurance
policies and a sub-class of New York owners of such policies in an action
asserting that Metropolitan Life breached their policies and violated New York's
General Business Law in the manner in which it allocated investment income
across lines of business during a period ending with the 2000 demutualization.
Metropolitan has filed a notice of appeal from the order granting this motion.
In August 2003, an appellate court affirmed the dismissal of fraud claims in
this action. Plaintiffs seek compensatory damages. Metropolitan Life is
vigorously defending the case.

Regulatory bodies have contacted the Company and have requested information
relating to market timing and late trading of mutual funds and variable
insurance products and, generally, the marketing of products. The Company
believes that many of these inquiries are similar to those made to many
financial services companies as part of industry-wide investigations by various
regulatory agencies. The SEC has commenced an investigation with respect to
market timing and late trading in a limited number of privately-placed variable
insurance contracts that were sold through General American. As previously
reported, in May 2004, General American received a so called "Wells Notice"
stating that the SEC staff is considering recommending that the SEC bring a
civil action alleging violations of the U.S. securities laws against General
American. Under the SEC procedures, General American can avail itself of the
opportunity to respond to the SEC staff before it makes a formal recommendation
regarding whether any action alleging violations of the U.S. securities laws
should be considered. General American has responded to the Wells Notice. The
Company is fully cooperating with regard to these information requests and
investigations. The Company at the present time is not aware of any systemic
problems with respect to such matters that may have a material adverse effect on
the Company's consolidated financial position.

In October 2004, the SEC informed MetLife that it anticipates issuing a
formal order of investigation related to certain sales by a former MetLife sales
representative to the Sheriff's Department of Fulton County, Georgia. The
Company is fully cooperating with respect to inquiries from the SEC.

The Company has received a number of subpoenas and other requests from the
Office of the Attorney General of the State of New York seeking, among other
things, information regarding and relating to compensation agreements between
insurance brokers and the Company, whether MetLife has provided or is aware of
the provision of "fictitious" or "inflated" quotes and information regarding
tying arrangements with respect to reinsurance. Based upon an internal review,
the Company advised the Attorney General for the State of New York that MetLife
was not aware of any instance in which MetLife had provided a "fictitious" or
"inflated" quote. MetLife also has received a subpoena, including a set of
interrogatories, from the Office of the Attorney General of the State of
Connecticut seeking information and documents concerning contingent commission
payments to brokers and MetLife's awareness of any "sham" bids for business.
MetLife also has received a Civil Investigative Demand from the Office of the
Attorney General for the State of Massachusetts seeking information and
documents concerning bids and quotes that the Company submitted to potential
customers in Massachusetts, the identity of agents, brokers, and producers to
whom the Company submitted
F-60

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

such bids or quotes, and communications with a certain broker. MetLife is
continuing to conduct an internal review of its commission payment practices.
The Company continues to fully cooperate with these inquiries and is responding
to the subpoenas and other requests.

Approximately twelve broker related lawsuits have been received. Two class
action lawsuits were filed in the United States District Court for the Southern
District of New York on behalf of proposed classes of all persons who purchased
the securities of MetLife, Inc. between April 5, 2000 and October 19, 2004
against MetLife, Inc. and certain officers of MetLife, Inc. In the context of
contingent commissions, the complaints allege that defendants violated the
federal securities laws by issuing materially false and misleading statements
and failing to disclose material facts regarding MetLife, Inc.'s financial
performance throughout the class period that had the effect of artificially
inflating the market price of MetLife Inc.'s securities. Three class action
lawsuits were filed in the United States District Court for the Southern
District of New York on behalf of proposed classes of participants in and
beneficiaries of Metropolitan Life Insurance Company's Savings and Investment
Plan against MetLife, Inc., the MetLife, Inc. Employee Benefits Committee,
certain officers of Metropolitan Life Insurance Company, and members of MetLife,
Inc.'s board of directors. In the context of contingent commissions, the
complaints allege that defendants violated their fiduciary obligations under
ERISA by failing to disclose to plan participants who had the option of
allocating funds in the plan to the MetLife Company Stock Fund material facts
regarding MetLife, Inc.'s financial performance. The plaintiffs in these actions
seek compensatory and other relief. Two cases have been brought in California
state court against MetLife, Inc., other companies, and an insurance broker. One
of these cases alleges that the insurers and the broker violated Section 17200
of the California Business and Professions Code by engaging in unfair trade
practices concerning contingent commissions and fees paid to the broker; the
other case has been brought by the California Insurance Commissioner and alleges
that the defendants violated certain provisions of the California Insurance
Code. Additionally, two civil RICO or antitrust related class action lawsuits
have been brought against MetLife, Inc., and other companies in California
federal court with respect to issues concerning contingent commissions and fees
paid to one or more brokers. Three class action lawsuits have been brought in
Illinois federal court against MetLife, Inc. and other companies alleging that
insurers and brokers violated antitrust laws or engaged in civil RICO
violations. The Company intends to vigorously defend these cases.

In addition to those discussed above, regulators and others have made a
number of inquiries of the insurance industry regarding industry brokerage
practices and related matters and others may begin. It is reasonably possible
that MetLife will receive additional subpoenas, interrogatories, requests and
lawsuits. MetLife will fully cooperate with all regulatory inquiries and intends
to vigorously defend all lawsuits.

Metropolitan Life also has been named as a defendant in a number of
silicosis, welding and mixed dust cases in various states. The Company intends
to defend itself vigorously against these cases.

Various litigation, claims and assessments against the Company, in addition
to those discussed above and those otherwise provided for in the Company's
consolidated financial statements, have arisen in the course of the Company's
business, including, but not limited to, in connection with its activities as an
insurer, employer, investor, investment advisor and taxpayer. Further, state
insurance regulatory authorities and other federal and state authorities
regularly make inquiries and conduct investigations concerning the Company's
compliance with applicable insurance and other laws and regulations.

Summary

It is not feasible to predict or determine the ultimate outcome of all
pending investigations and legal proceedings or provide reasonable ranges of
potential losses, except as noted above in connection with specific matters. In
some of the matters referred to above, very large and/or indeterminate amounts,
including punitive and treble damages, are sought. Although in light of these
considerations it is possible that an adverse outcome in certain cases could
have a material adverse effect upon the Company's consolidated financial
position,
F-61

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

based on information currently known by the Company's management, in its
opinion, the outcomes of such pending investigations and legal proceedings are
not likely to have such an effect. However, given the large and/or indeterminate
amounts sought in certain of these matters and the inherent unpredictability of
litigation, it is possible that an adverse outcome in certain matters could,
from time to time, have a material adverse effect on the Company's consolidated
net income or cash flows in particular quarterly or annual periods.

LEASES

In accordance with industry practice, certain of the Company's income from
lease agreements with retail tenants is contingent upon the level of the
tenants' sales revenues. Additionally, the Company, as lessee, has entered into
various lease and sublease agreements for office space, data processing and
other equipment. Future minimum rental and sublease income, and minimum gross
rental payments relating to these lease agreements were as follows:

COMMITMENTS TO FUND PARTNERSHIP INVESTMENTS

The Company makes commitments to fund partnership investments in the normal
course of business. The amounts of these unfunded commitments were approximately
$1,324 million and $1,380 million at December 31, 2004 and 2003, respectively.
The Company anticipates that these amounts will be invested in the partnerships
over the next three to five years.

GUARANTEES

In the course of its business, the Company has provided certain
indemnities, guarantees and commitments to third parties pursuant to which it
may be required to make payments now or in the future.

In the context of acquisition, disposition, investment and other
transactions, the Company has provided indemnities and guarantees, including
those related to tax, environmental and other specific liabilities, and other
indemnities and guarantees that are triggered by, among other things, breaches
of representations, warranties or covenants provided by the Company. In
addition, in the normal course of business, the Company provides
indemnifications to counterparties in contracts with triggers similar to the
foregoing, as well as for certain other liabilities, such as third party
lawsuits. These obligations are often subject to time limitations that vary in
duration, including contractual limitations and those that arise by operation of
law, such as applicable statutes of limitation. In some cases, the maximum
potential obligation under the indemnities and guarantees is subject to a
contractual limitation ranging from less than $1 million to $800 million, while
in other cases such limitations are not specified or applicable. Since certain
of these obligations are not subject to limitations, the Company does not
believe that it is possible to determine the maximum potential amount due under
these guarantees in the future.

F-62

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

During the year ended December 31, 2004, the Company recorded liabilities
of $10 million with respect to indemnities provided in certain dispositions. The
approximate term for these liabilities ranges from 12 to 18 months. The maximum
potential amount of future payments that MetLife could be required to pay is $73
million. Due to the uncertainty in assessing changes to the liabilities over the
term, the liability on the balance sheet will remain until either expiration or
settlement of the guarantee unless evidence clearly indicates that the estimates
should be revised. The fair value of the remaining indemnities, guarantees and
commitments entered into during 2004 was insignificant and thus, no liabilities
were recorded. The Company's recorded liability at December 31, 2004 and 2003
for indemnities, guarantees and commitments, excluding amounts recorded during
2004 as described in the preceding sentences, is insignificant.

In conjunction with replication synthetic asset transactions, as described
in Note 3, the Company writes credit default swap obligations requiring payment
of principal due in exchange for the reference credit obligation, depending on
the nature or occurrence of specified credit events for the referenced entities.
In the event of a specified credit event, the Company's maximum amount at risk,
assuming the value of the referenced credits become worthless, is $1.1 billion
at December 31, 2004. The credit default swaps expire at various times during
the next seven years.

11. EMPLOYEE BENEFIT PLANS

PENSION BENEFIT AND OTHER BENEFIT PLANS

The Company is both the sponsor and administrator of defined benefit
pension plans covering eligible employees and sales representatives of the
Company. Retirement benefits are based upon years of credited service and final
average or career average earnings history.

The Company also provides certain postemployment benefits and certain
postretirement health care and life insurance benefits for retired employees
through insurance contracts. Substantially all of the Company's employees may,
in accordance with the plans applicable to the postretirement benefits, become
eligible for these benefits if they attain retirement age, with sufficient
service, while working for the Company.

The Company uses a December 31 measurement date for all of its pension and
postretirement benefit plans.

F-63

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OBLIGATIONS, FUNDED STATUS AND NET PERIODIC BENEFIT COSTS

The aggregate projected benefit obligation and aggregate contract value of
plan assets for the pension plans were as follows:

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The accumulated benefit obligation for all defined benefit pension plans
was $5,149 million and $4,899 million at December 31, 2004 and 2003,
respectively.

Information for pension plans with an accumulated benefit obligation in
excess of plan assets:

Information for pension and postretirement plans with a projected benefit
obligation in excess of plan assets:

As a result of additional pension contributions and favorable investment
returns during the year ended December 31, 2004, a significant plan that was
included in the pension benefits section of the above table as of December 31,
2003 was no longer included as of December 31, 2004. This plan had a fair value
of plan assets of $5,316 with a projected benefit obligation of $4,933 and a
fair value of plan assets of $4,659 with a projected benefit obligation of
$4,673 as of December 31, 2004 and 2003, respectively.

The components of net periodic benefit cost were as follows:

The Company expects to receive subsidies on prescription drug benefits
beginning in 2006 under the Medicare Prescription Drug, Improvement and
Modernization Act of 2003. The postretirement benefit plan assets and
accumulated benefit obligation were remeasured effective July 1, 2004 in order
to determine the effect of the expected subsidies on net periodic postretirement
benefit cost. As a result, the accumulated postretirement benefit obligation was
reduced $213 million which will be recognized as adjustments of future benefit
costs through the amortization of actuarial losses (gains) in accordance with
FASB staff position 106-2 on a prospective basis and net periodic postretirement
benefit cost for the year ended 2004 was reduced $17 million. The reduction of
net periodic benefit cost is due to reductions in service cost of $3 million,
interest cost of $6 million, and amortization of prior actuarial loss of $8
million.

F-65

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ASSUMPTIONS

Assumptions used in determining benefit obligations were as follows:

Assumptions used in determining net periodic benefit cost were as follows:

The discount rate is based on the yield of a hypothetical portfolio of
high-quality debt instruments available on the valuation date, which would
provide the necessary future cash flows to pay the aggregate projected benefit
obligation when due. The expected rate of return on plan assets is based on
anticipated performance of the various asset sectors in which the plan invests,
weighted by target allocation percentages. Anticipated future performance is
based on long-term historical returns of the plan assets by sector, adjusted for
the Company's long-term expectations on the performance of the markets. While
the precise expected return derived using this approach will fluctuate from year
to year, the Company's policy is to hold this long-term assumption constant as
long as it remains within reasonable tolerance from the derived rate. The
weighted expected return on plan assets for use in that plan's valuation in 2005
is currently anticipated to be 8.50% for pension benefits and other
postretirement medical benefits and 6.25% for postretirement life benefits.

The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation were as follows:

Assumed health care cost trend rates may have a significant effect on the
amounts reported for health care plans. A one-percentage point change in assumed
health care cost trend rates would have the following effects:

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PLAN ASSETS

The weighted average allocation of pension plan and other benefit plan
assets is as follows:

The weighted average target allocation of pension plan and other benefit
plan assets for 2005 is as follows:

Target allocations of assets are determined with the objective of
maximizing returns and minimizing volatility of net assets through adequate
asset diversification. Adjustments are made to target allocations based on an
assessment of the impact of economic factors and market conditions.

CASH FLOWS

The Company expects to contribute $32 million to its pension plans and $93
million to its other benefit plans during 2005.

Gross benefit payments for the next ten years, which reflect expected
future service as appropriate, are expected to be as follows:

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METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Gross subsidy payments expected to be received for the next ten years under
the Medicare Prescription Drug, Improvement and Modernization Act of 2003 are as
follows:

SAVINGS AND INVESTMENT PLANS

The Company sponsors savings and investment plans for substantially all
employees under which the Company matches a portion of employee contributions.
The Company contributed $64 million, $59 million and $58 million for the years
ended December 31, 2004, 2003 and 2002, respectively.

12. EQUITY

PREFERRED STOCK

On September 29, 1999, the Holding Company adopted a stockholder rights
plan (the "rights plan") under which each outstanding share of common stock
issued between April 4, 2000 and the distribution date (as defined in the rights
plan) will be coupled with a stockholder right. Each right will entitle the
holder to purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock. Each one one-hundredth of a share of Series A Junior
Participating Preferred Stock will have economic and voting terms equivalent to
one share of common stock. Until it is exercised, the right itself will not
entitle the holder thereof to any rights as a stockholder, including the right
to receive dividends or to vote at stockholder meetings.

Stockholder rights are not exercisable until the distribution date, and
will expire at the close of business on April 4, 2010, unless earlier redeemed
or exchanged by the Holding Company. The rights plan is designed to protect
stockholders in the event of unsolicited offers to acquire the Holding Company
and other coercive takeover tactics.

COMMON STOCK

On October 26, 2004, the Holding Company's Board of Directors authorized a
$1 billion common stock repurchase program. This program began after the
completion of the February 19, 2002 and March 28, 2001 repurchase programs, each
of which authorized the repurchase of $1 billion of common stock. Under these
authorizations, the Holding Company may purchase common stock from the MetLife
Policyholder Trust, in the open market and in privately negotiated transactions.
As of January 31, 2005, the Holding Company has suspended its share repurchases
during 2005 and repurchases after 2005 will be dependent upon several factors,
including the Company's capital position, its financial strength and credit
ratings, general market conditions and the price of the Company's common stock.

On December 16, 2004, the Holding Company repurchased 7,281,553 shares of
its outstanding common stock at an aggregate cost of approximately $300 million
under an accelerated share repurchase agreement with a major bank. The Holding
Company will either pay or receive an amount based on the actual amount paid by
the bank to purchase the shares. The final purchase price will be settled in
either cash or Holding Company stock at the

F-68

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Holding Company's option. The Holding Company recorded the initial repurchase of
shares as treasury stock and will record any amount paid or received as an
adjustment to the cost of the treasury stock.

The Company acquired 26,373,952, 2,997,200 and 15,244,492 shares of the
Holding Company's common stock for $1,000 million, $97 million and $471 million
during the years ended December 31, 2004, 2003 and 2002, respectively. During
the year ended 2004, 1,675,814 shares of common stock were issued from treasury
stock for $50 million. During the year ended 2003, 59,904,925 shares of treasury
common stock with a cost of $1,667 million were issued of which 59,771,221
shares were issued in connection with the settlement of common stock purchase
contracts (see Note 8) for $1,006 million cash and 133,704 shares were issued in
connection with activities such as share-based compensation for $5 million in
cash. During the year ended 2002, 16,379 shares of common stock were issued from
treasury stock for $438 thousand. At December 31, 2004, the Company had $710
million remaining on its existing share repurchase authorization.

DIVIDEND RESTRICTIONS

Under New York State Insurance Law, Metropolitan Life is permitted, without
prior insurance regulatory clearance, to pay a dividend to the Holding Company
as long as the aggregate amount of all such dividends in any calendar year does
not exceed the lesser of (i) 10% of its surplus to policyholders as of the
immediately preceding calendar year, and (ii) its statutory net gain from
operations for the immediately preceding calendar year (excluding realized
capital gains). Metropolitan Life will be permitted to pay a dividend to the
Holding Company in excess of the lesser of such two amounts only if it files
notice of its intention to declare such a dividend and the amount thereof with
the New York Superintendent of Insurance ( the "Superintendent") and the
Superintendent does not disapprove the distribution. Under New York State
Insurance Law, the Superintendent has broad discretion in determining whether
the financial condition of a stock life insurance company would support the
payment of such dividends to its stockholders. The New York State Department of
Insurance has established informal guidelines for such determinations. The
guidelines, among other things, focus on the insurer's overall financial
condition and profitability under statutory accounting practices. For the years
ended December 31, 2004, 2003 and 2002, Metropolitan Life paid to MetLife, Inc.
$797 million, $698 million and $535 million, respectively, in dividends for
which prior insurance regulatory clearance was not required and $0 million, $750
million and $369 million, respectively, in special dividends, as approved by the
Superintendent. At December 31, 2004, the maximum amount of the dividend which
may be paid to the Holding Company from Metropolitan Life in 2005, without prior
regulatory approval is $880 million.

Under Delaware Insurance Law, Metropolitan Tower Life Insurance Company
("MTL") is permitted, without prior insurance regulatory clearance, to pay a
dividend to the Holding Company as long as the aggregate amount of all such
dividends in any calendar year does not exceed the greater of (i) 10% of its
surplus to policyholders as of the next preceding calendar year, and (ii) its
statutory net gain from operations for the next preceding calendar year
(excluding realized capital gains). MTL will be permitted to pay a cash dividend
to the Holding Company in excess of the greater of such two amounts only if it
files notice of its intention to declare such a dividend and the amount thereof
with the Delaware Commissioner of Insurance (the "Delaware Commissioner") and
the Delaware Commissioner does not disapprove the distribution. Under Delaware
Insurance Law, the Delaware Commissioner has broad discretion in determining
whether the financial condition of a stock life insurance company would support
the payment of such dividends to its stockholders. The Delaware Insurance
Department has established informal guidelines for such determinations. The
guidelines, among other things, focus on the insurer's overall financial
condition and profitability under statutory accounting practices. On October 8,
2004, Metropolitan Insurance and Annuity Company ("MIAC") was merged into MTL.
Prior to the merger, MIAC paid to MetLife, Inc. $65 million in dividends for
which prior insurance regulatory clearance was not required and no special
dividends for the year ended December 31, 2004. For the year ended December 31,
2003, MIAC paid to MetLife, Inc, $104 million in dividends for which prior
insurance regulatory clearance was not required and $94 million in special
dividends.
F-69

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For the year ended December 31, 2002, MIAC paid to MetLife, Inc. $25 million in
dividends for which prior insurance regulatory clearance was not required and
paid no special dividends. MTL, exclusive of MIAC, paid no dividends during the
years ended December 31, 2004, 2003 and 2002, respectively. As of December 31,
2004, the maximum amount of the dividend which may be paid to the Holding
Company from MTL in 2005, without prior regulatory approval, is $119 million.

Under Rhode Island Insurance Law, Metropolitan Property and Casualty
Insurance Company is permitted without prior insurance regulatory clearance to
pay a dividend to the Holding Company as long as the aggregate amount of all
such dividends in any calendar year does not exceed the lesser of (i) 10% of its
surplus to policyholders as of the immediately preceding calendar year, and (ii)
the next preceding two year earnings reduced by capital gains and dividends paid
to stockholders. Metropolitan Property and Casualty Insurance Company will be
permitted to pay a stockholder dividend to the Holding Company in excess of the
lesser of such two amounts (an "extraordinary dividend") only if it files notice
of its intention to declare such a dividend and the amount thereof with the
Rhode Island Commissioner of Insurance ("Rhode Island Commissioner") and the
Rhode Island Commissioner does not disapprove the distribution. Under Rhode
Island Insurance Law, the Rhode Island Commissioner has broad discretion in
determining whether the financial condition of stock property and casualty
insurance company would support the payment of such dividends to its
stockholders. For the year ended December 31, 2004, Metropolitan Property and
Casualty Insurance Company paid to MetLife, Inc. $300 million in extraordinary
dividends. Insurance regulatory approval of the extraordinary dividend was
received on October 15, 2004 and the extraordinary dividend was paid on October
25, 2004. For the year ended December 31, 2003, Metropolitan Property and
Casualty Insurance Company paid to MetLife, Inc. $75 million in dividends for
which prior insurance regulatory clearance was not required. As of December 31,
2004, the maximum amount of the dividend which may be paid to the Holding
Company from Metropolitan Property and Casualty Insurance Company in 2005,
without prior regulatory approval, is $187 million for dividends with a
scheduled date of payment subsequent to November 16, 2005. Any dividend payment
prior to November 16, 2005 will be considered extraordinary requiring prior
insurance regulatory clearance.

STOCK COMPENSATION PLANS

Under the MetLife, Inc. 2000 Stock Incentive Plan, as amended, (the "Stock
Incentive Plan"), awards granted may be in the form of non-qualified or
incentive stock options qualifying under Section 422A of the Internal Revenue
Code. Under the MetLife, Inc. 2000 Directors Stock Plan, as amended (the
"Directors Stock Plan"), awards granted may be in the form of stock awards,
non-qualified stock options, or a combination of the foregoing to outside
Directors of the Company. The aggregate number of options to purchase shares of
stock that may be awarded under the Stock Incentive Plan and the Directors Stock
Plan is subject to a maximum limit of 37,823,333, of which no more than 378,233
may be awarded under the Directors Stock Plan. The Directors Stock Plan has a
maximum limit of 500,000 stock awards.

All options granted have an exercise price equal to the fair market value
price of the Company's common stock on the date of grant, and an option's
maximum term is ten years. Certain options under the Stock Incentive Plan become
exercisable over a three year period commencing with the date of grant, while
other options become exercisable three years after the date of grant. Options
issued under the Directors Stock Plan are exercisable immediately.

F-70

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes options-pricing model with the following weighted
average assumptions used for grants for the:

A summary of the status of options included in the Company's Stock
Incentive Plan and Directors Stock Plan is presented below:

The following table summarizes information about stock options outstanding
at December 31, 2004:

F-71

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Effective January 1, 2003, the Company elected to prospectively apply the
fair value method of accounting for stock options granted by the Holding Company
subsequent to December 31, 2002. As permitted under SFAS 148, options granted
prior to January 1, 2003 will continue to be accounted for under APB 25. Had
compensation expense for grants awarded prior to January 1, 2003 been determined
based on fair value at the date of grant in accordance with SFAS 123, the
Company's earnings and earnings per share amounts would have been reduced to the
following pro forma amounts:

- ---------------

(1) See Note 8 for a discussion of this charge included in the calculation of
net income available to common shareholders.

(2) The pro forma earnings disclosures are not necessarily representative of the
effects on net income and earnings per share in future years.

The Company also awards stock-based compensation to certain levels of
management under the Company's Long Term Performance Compensation Plan
("LTPCP"). LTPCP awards vest in their entirety at the end of the three year
performance period. Each participant is assigned a target compensation amount at
the inception of the performance period with the final compensation amount
determined by the performance of the Holding Company's stock over the three-year
vesting period, subject to management's discretion. Final awards may be paid in
whole or in part with shares of the Holding Company's stock. Compensation
expense related to the LTPCP was $49 million, $45 million, and $23 million for
the years ended December 31, 2004, 2003 and 2002, respectively.

For the years ended December 31, 2004, 2003 and 2002, stock-based
compensation expense related to the Company's Stock Incentive Plan, Directors
Stock Plan and LTPCP was $89 million, $63 million and $25 million, respectively,
including stock-based compensation for non-employees of $468 thousand, $550
thousand and $2 million, respectively.

F-72

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

STATUTORY EQUITY AND INCOME

The National Association of Insurance Commissioners ("NAIC") adopted the
Codification of Statutory Accounting Principles ("Codification") in 2001.
Codification was intended to standardize regulatory accounting and reporting to
state insurance departments. However, statutory accounting principles continue
to be established by individual state laws and permitted practices. The New York
State Department of Insurance has adopted Codification with certain
modifications for the preparation of statutory financial statements of insurance
companies domiciled in New York. Modifications by the various state insurance
departments may impact the effect of Codification on the statutory capital and
surplus of Metropolitan Life and the Holding Company's other insurance
subsidiaries.

Statutory accounting practices differ from GAAP primarily by charging
policy acquisition costs to expense as incurred, establishing future policy
benefit liabilities using different actuarial assumptions, reporting surplus
notes as surplus instead of debt and valuing securities on a different basis.

Statutory net income of Metropolitan Life, a New York domiciled insurer,
was $2,648 million, $2,169 million and $1,455 million for the years ended
December 31, 2004 2003 and 2002, respectively. Statutory capital and surplus, as
filed with the New York State Department of Insurance, was $8,804 million and
$7,967 million at December 31, 2004 and 2003, respectively.

MIAC was merged into another Delaware incorporated entity, MTL, on October
8, 2004. Statutory net income of MTL (including MIAC), as filed with the
Delaware Insurance Department, was $144 million for the year ended December 31,
2004. Statutory net income of MIAC, as filed with the Delaware Insurance
Department, was $341 million and $34 million for the years ended December 31,
2003 and 2002, respectively. Statutory capital and surplus of MTL, as filed, was
$1,195 million as of December 31, 2004. Statutory capital and surplus of MIAC,
as filed, was $1,051 million at December 31, 2003.

Statutory net income of Metropolitan Property and Casualty Insurance
Company, which is domiciled in Rhode Island, as filed with the Insurance
Department of Rhode Island, was $356 million, $214 million and $173 million for
the years ended December 31, 2004, 2003 and 2002, respectively. Statutory
capital and surplus, as filed, was $1,875 million and $1,996 million at December
31, 2004 and 2003, respectively.

F-73

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER COMPREHENSIVE INCOME

The following table sets forth the reclassification adjustments required
for the years ended December 31, 2004, 2003 and 2002 in other comprehensive
income (loss) that are included as part of net income for the current year that
have been reported as a part of other comprehensive income (loss) in the current
or prior year:

13. OTHER EXPENSES

Other expenses were comprised of the following:

F-74

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. EARNINGS PER SHARE

The following presents the weighted average shares used in calculating
basic earnings per share and those used in calculating diluted earnings per
share for each income category presented below:

- ---------------

(1) See Note 8 for a discussion of this charge included in the calculation of
net income available to common shareholders.

F-75

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The unaudited quarterly results of operations for the years ended December
31, 2004 and 2003 are summarized in the table below:

F-76

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. BUSINESS SEGMENT INFORMATION

The Company provides insurance and financial services to customers in the
United States, Canada, Central America, South America, Asia and various other
international markets. The Company's business is divided into five operating
segments: Institutional, Individual, Auto & Home, International and Reinsurance,
as well as Corporate & Other. These segments are managed separately because they
either provide different products and services, require different strategies or
have different technology requirements.

Institutional offers a broad range of group insurance and retirement &
savings products and services, including group life insurance, non-medical
health insurance, such as short and long-term disability, long-term care, and
dental insurance, and other insurance products and services. Individual offers a
wide variety of protection and asset accumulation products, including life
insurance, annuities and mutual funds. Auto & Home provides personal lines
property and casualty insurance, including private passenger automobile,
homeowner's and personal excess liability insurance. International provides life
insurance, accident and health insurance, annuities and retirement & savings
products to both individuals and groups. Reinsurance provides primarily
reinsurance of life and annuity policies in North America and various
international markets. Additionally, reinsurance of critical illness policies is
provided in select international markets.

Corporate & Other contains the excess capital not allocated to the business
segments, various start-up entities, including MetLife Bank, N.A. ("MetLife
Bank"), a national bank, and run-off entities, as well as interest expense
related to the majority of the Company's outstanding debt and expenses
associated with certain legal proceedings and income tax audit issues. Corporate
& Other also includes the elimination of all intersegment amounts, which
generally relate to intersegment loans, which bear interest rates commensurate
with related borrowings, as well as intersegment transactions. Additionally, the
Company's asset management business, including amounts reported as discontinued
operations, is included in the results of operations for Corporate & Other. See
Note 18 for disclosures regarding discontinued operations, including real
estate.

F-77

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Set forth in the tables below is certain financial information with respect
to the Company's operating segments for the years ended December 31, 2004, 2003
and 2002. The accounting policies of the segments are the same as those of the
Company, except for the method of capital allocation and the accounting for
gains (losses) from intercompany sales, which are eliminated in consolidation.
The Company allocates capital to each segment based upon an internal capital
allocation system that allows the Company to more effectively manage its
capital. The Company evaluates the performance of each operating segment based
upon net income excluding certain net investment gains (losses), net of income
taxes, and the impact from the cumulative effect of changes in accounting, net
of income taxes. Scheduled periodic settlement payments on derivative
instruments not qualifying for hedge accounting are included in net investment
gains (losses). The Company allocates certain non-recurring items, such as
expenses associated with certain legal proceedings, to Corporate & Other.

F-78

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

F-79

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

Beginning in 2003, the Company changed its methodology of allocating
capital to its business segments from Risk-Based Capital ("RBC") to Economic
Capital. Prior to 2003, the Company's business segments' allocated equity was
primarily based on RBC, an internally developed formula based on applying a
multiple to the NAIC Statutory Risk-Based Capital and included certain
adjustments in accordance with GAAP. Economic Capital is an internally developed
risk capital model, the purpose of which is to measure the risk in the business
and to provide a basis upon which capital is deployed. The Economic Capital
model accounts for the unique and specific nature of the risks inherent in
MetLife's businesses. This is in contrast to the standardized regulatory RBC
formula, which is not as refined in its risk calculations with respect to the
nuances of the Company's businesses.

The change in methodology is being applied prospectively. This change has
and will continue to impact the level of net investment income and net income of
each of the Company's business segments. A portion of net investment income is
credited to the segments based on the level of allocated equity. This change in
methodology of allocating equity does not impact the Company's consolidated net
investment income or net income.

The following table presents actual and pro forma net investment income
with respect to the Company's segments for the year ended December 31, 2002. The
amounts shown as pro forma reflect net investment income that would have been
reported in 2002 had the Company allocated capital based on Economic Capital
rather than on the basis of RBC.

Revenues derived from any customer did not exceed 10% of consolidated
revenues. Revenues from U.S. operations were $35,058 million, $31,844 million
and $29,878 million for the years ended December 31, 2004, 2003 and 2002,
respectively, which represented 90%, 90% and 91%, respectively, of consolidated
revenues.

17. ACQUISITIONS AND DISPOSITIONS

On January 31, 2005, the Holding Company completed the sale of SSRM
Holdings, Inc. ("SSRM") to a third party for $328 million of cash and stock. As
a result of the sale of SSRM, the Company recognized income from discontinued
operations of approximately $150 million, net of income taxes, comprised of a
realized gain of $166 million, net of income taxes, and an operating expense
related to a lease abandonment of $16 million, net of income taxes. Under the
terms of the agreement, MetLife will have an opportunity to receive, prior to
the end of

F-80

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

2006, additional payments aggregating up to approximately 25% of the base
purchase price, based on, among other things, certain revenue retention and
growth measures. The purchase price is also subject to reduction over five
years, depending on retention of certain MetLife-related business. The Company
has reclassified the assets, liabilities and operations of SSRM into
discontinued operations for all periods presented in the consolidated financial
statements. Additionally, the sale of SSRM resulted in the elimination of the
Company's Asset Management segment. The remaining asset management business,
which is insignificant, has been reclassified into Corporate & Other. The
Company's discontinued operations for the year ended December 31, 2004 also
includes expenses of approximately $20 million, net of income taxes, related to
the sale of SSRM. See also Note 18.

In 2003, RGA entered into a coinsurance agreement under which it assumed
the traditional U.S. life reinsurance business of Allianz Life Insurance Company
of North America. The transaction added approximately $278 billion of life
reinsurance in-force, $246 million of premium and $11 million of income before
income tax expense, excluding minority interest expense, in 2003. The effects of
such transaction are included within the Reinsurance segment.

In 2002, the Company acquired Aseguradora Hidalgo S.A. ("Hidalgo"), an
insurance company based in Mexico with approximately $2.5 billion in assets as
of the date of acquisition (June 20, 2002). During the second quarter of 2003,
as a part of its acquisition and integration strategy, the International segment
completed the legal merger of Hidalgo into its original Mexican subsidiary,
Seguro Genesis, S.A., forming MetLife Mexico, S.A. As a result of the merger of
these companies, the Company recorded $62 million of earnings, net of income
taxes, from the merger and a reduction in policyholder liabilities resulting
from a change in reserve methodology. Such benefit was recorded in the second
quarter of 2003 in the International segment.

See also Note 20 for Subsequent Events.

18. DISCONTINUED OPERATIONS

REAL ESTATE

The Company actively manages its real estate portfolio with the objective
to maximize earnings through selective acquisitions and dispositions. Income
related to real estate classified as held-for-sale or sold is presented as
discontinued operations. These assets are carried at the lower of depreciated
cost or fair value less expected disposition costs.

The following table presents the components of income from discontinued
real estate operations:

The carrying value of real estate related to discontinued operations was
$252 million and $1,170 million at December 31, 2004 and 2003, respectively.

F-81

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table shows the real estate discontinued operations by
segment:

In April of 2004, MetLife sold one of its real estate investments, Sears
Tower. The sale resulted in a gain of $85 million, net of income taxes.

OPERATIONS

During the third quarter of 2004, the Company entered into an agreement to
sell its wholly-owned subsidiary, SSRM, to a third party, which was sold on
January 31, 2005. Accordingly, the assets, liabilities and operations of SSRM
have been reclassified into discontinued operations for all periods presented.
The operations of SSRM include affiliated revenues of $59 million, $54 million
and $56 million, for the years ended December 31, 2004, 2003 and 2002,
respectively, related to asset management services provided by SSRM to the
Company that have not been eliminated from discontinued operations as these
transactions will continue after the sale of SSRM. The following tables present
the amounts related to operations of SSRM that have been combined with the
discontinued real estate operations in the consolidated income statements:

F-82

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

See Note 17 for further discussion of the disposition of SSRM.

19. FAIR VALUE INFORMATION

The estimated fair values of financial instruments have been determined by
using available market information and the valuation methodologies described
below. Considerable judgment is often required in interpreting market data to
develop estimates of fair value. Accordingly, the estimates presented herein may
not necessarily be indicative of amounts that could be realized in a current
market exchange. The use of different assumptions or valuation methodologies may
have a material effect on the estimated fair value amounts.

F-83

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Amounts related to the Company's financial instruments were as follows:

F-84

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The methods and assumptions used to estimate the fair values of financial
instruments are summarized as follows:

FIXED MATURITIES AND EQUITY SECURITIES

The fair value of fixed maturities and equity securities are based upon
quotations published by applicable stock exchanges or received from other
reliable sources. For securities for which the market values were not readily
available, fair values were estimated using quoted market prices of comparable
investments.

MORTGAGE AND OTHER LOANS, MORTGAGE LOAN COMMITMENTS AND COMMITMENTS TO FUND
PARTNERSHIP INVESTMENTS

Fair values for mortgage and other loans are estimated by discounting
expected future cash flows, using current interest rates for similar loans with
similar credit risk. For mortgage loan commitments, the estimated fair value is
the net premium or discount of the commitments. Commitments to fund partnership
investments have no stated interest rate and are assumed to have a fair value of
zero.

POLICY LOANS

The carrying values for policy loans approximate fair value.

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The carrying values for cash and cash equivalents and short-term
investments approximated fair values due to the short-term maturities of these
instruments.

POLICYHOLDER ACCOUNT BALANCES

The fair value of policyholder account balances is estimated by discounting
expected future cash flows based upon interest rates currently being offered for
similar contracts with maturities consistent with those remaining for the
agreements being valued.

SHORT-TERM AND LONG-TERM DEBT, PAYABLES UNDER SECURITIES LOANED TRANSACTIONS
AND SHARES SUBJECT TO MANDATORY REDEMPTION

The fair values of short-term and long-term debt, payables under securities
loaned transactions and shares subject to mandatory redemption are determined by
discounting expected future cash flows using risk rates currently available for
debt with similar terms and remaining maturities.

DERIVATIVE FINANCIAL INSTRUMENTS

The fair value of derivative instruments, including financial futures,
financial forwards, interest rate, credit default and foreign currency swaps,
foreign currency forwards, caps, floors, and options are based upon quotations
obtained from dealers or other reliable sources. See Note 3 for derivative fair
value disclosures.

20. SUBSEQUENT EVENTS

On January 31, 2005, the Holding Company entered into an agreement to
acquire all of the outstanding shares of capital stock of certain indirect
subsidiaries of Citigroup Inc., including the majority of The Travelers
Insurance Company ("Travelers"), and substantially all of Citigroup Inc.'s
international insurance businesses for a purchase price of $11.5 billion,
subject to adjustment as described in the acquisition agreement. As a condition
to closing, Citigroup Inc. and the Holding Company will enter into ten-year
agreements under which the Company will expand its distribution by making
products available through certain Citigroup distribution

F-85

METLIFE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

channels, subject to appropriate suitability and other standards. The
transaction is expected to close in the summer of 2005. Approximately $1 billion
to $3 billion of the purchase price will be paid in MetLife stock with the
remainder paid in cash which will be financed through a combination of cash on
hand, debt, mandatorily convertible securities and selected asset sales
depending on market conditions, timing, valuation considerations and the
relative attractiveness of funding alternatives.

The Company has entered into brokerage agreements relating to the possible
sale of two of its real estate investments, 200 Park Avenue and One Madison
Avenue in New York City. The Company is also contemplating other asset sales,
including selling some or all of its beneficially owned shares in RGA. The
Company's reinsurance segment consists primarily of the operations of RGA.

See also Note 17 for subsequent event related to the disposition of SSRM.

F-86

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

The Holding Company's management, with the participation of the Holding
Company's Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the design and operation of the Holding Company's disclosure
controls and procedures as defined in Exchange Act Rule 13a-15(e) as of the end
of the period covered by this report. Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures are effective. There were no changes in the
Holding Company's internal control over financial reporting as defined in
Exchange Act Rule 13a-15(f) during the quarter ended December 31, 2004 that have
materially affected, or are reasonably likely to materially affect, the Holding
Company's internal control over financial reporting.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of MetLife, Inc. and subsidiaries is responsible for
establishing and maintaining adequate internal control over financial reporting.
In fulfilling this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of control
procedures. The objectives of internal control include providing management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions are executed in
accordance with management's authorization and recorded properly to permit the
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America.

Financial management has documented and evaluated the effectiveness of the
internal control of the Company as of December 31, 2004 pertaining to financial
reporting in accordance with the criteria established in "Internal
Control -- Integrated Framework" issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

In the opinion of management, MetLife, Inc. maintained effective internal
control over financial reporting as of December 31, 2004.

Deloitte & Touche LLP, an independent registered public accounting firm,
has audited the consolidated financial statements and consolidated financial
statement schedules included in the Annual Report on Form 10-K for the year
ended December 31, 2004. The Report of the Independent Registered Public
Accounting Firm on their audit of management's assessment of the Company's
internal control over financial reporting and their audit on the effectiveness
of the Company's internal control over financial reporting is included at page
F-1. The Report of the Independent Registered Public Accounting Firm on their
audit of the consolidated financial statements and consolidated financial
statement schedules is included at page F-3.

ITEM 9B. OTHER INFORMATION

None.

104

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information called for by this Item pertaining to Directors is
incorporated herein by reference to the sections entitled "Proposal
One -- Election of Directors," "Corporate Governance -- Information about
MetLife's Board of Directors, "and "Stock Ownership of Directors and Executive
Officers -- Section 16(a) Beneficial Ownership Reporting Compliance" in
MetLife, Inc.'s definitive proxy statement for the Annual Meeting of
Shareholders to be held on April 26, 2005, to be filed by MetLife, Inc. with the
Securities and Exchange Commission pursuant to Regulation 14A within 120 days
after the year ended December 31, 2004 (the "2005 Proxy Statement").

The information called for by this Item pertaining to Executive Officers
appears in "Part I -- Item 1. Business -- Executive Officers of the Registrant."

The Company has adopted the MetLife Financial Management Code of
Professional Conduct (the "Code"), a code of ethics as defined under Regulation
S-K, that applies to the Company's chief executive offer, chief financial
officer, chief accounting officer, corporate controller and all professionals in
finance and finance-related departments. This Code is available on the Company's
website at www.metlife.com on the corporate governance portion of the site. The
Company intends to satisfy its disclosure obligations under Item 10 of Form 8-K
by posting information about amendments to, or waivers from, a provision of the
Code that apply to the Company's chief executive officer, chief financial
officer, chief accounting officer, and corporate controller on the Company's
website at the address above.

ITEM 11. EXECUTIVE COMPENSATION

The information called for by this Item is incorporated herein by reference
to the section entitled "Executive Compensation" in the 2005 Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The information called for by this Item pertaining to ownership of the
Holding Company's common stock is incorporated herein by reference to the
sections entitled "Stock Ownership of Directors and Executive Officers" and
"Ownership of MetLife Common Stock" in the 2005 Proxy Statement.

The following table provides information, as of December 31, 2004,
regarding the securities authorized for issuance under the Holding Company's
equity compensation plans:

- ---------------

(1) The MetLife, Inc. 2000 Stock Incentive Plan (the "2000 Stock Plan") and the
MetLife, Inc. 2000 Directors Stock Plan (the "2000 Directors Stock Plan")
were each approved by Metropolitan Life Insurance Company, the sole
shareholder of the Holding Company at the time of approval. The
policyholders of Metropolitan Life Insurance Company entitled to vote on its
plan of reorganization (the "plan of reorganization") approved that plan of
reorganization, which included both the 2000 Stock Plan and the

105

2000 Directors Stock Plan. The policyholders entitled to so vote received a
summary description of each plan, including the applicable limits on the
number of shares available for issuance under each plan.

(2) Under the plan of reorganization, the Holding Company is authorized to issue
a maximum of 38,323,333 shares of common stock under certain compensation
plans through April 7, 2005. Of the 38,323,333 shares:

- 37,823,333 shares, representing five percent of the total number of
shares of Holding Company common stock outstanding immediately after the
effective date of the plan of reorganization, may be utilized (i) for
issuances pursuant to options granted under the 2000 Stock Plan and the
2000 Directors Stock Plan, (ii) for issuances under the Long Term
Performance Compensation Plan, (iii) for investment tracking valuation
under the Metropolitan Life Auxiliary Savings and Investment Plan (a
non-qualified savings and investment plan under which distributions are
made in cash), and (iv) for investment tracking valuation and deferral of
issuance under the MetLife Deferred Compensation Plan for Officers (a
non-qualified deferred compensation plan). As of December 31, 2004, a
total of 1,410,707 shares had been utilized with respect to the plans
described in (ii), (iii) and (iv) above; and

- 500,000 shares are available for issuance as share awards under the 2000
Directors Stock Plan. As of December 31, 2004, a total of 87,898 shares
had been utilized with respect to share awards under this plan.

Under the plan of reorganization, (i) the total number of shares of Holding
Company common stock available for issuance under each of the above
authorizations will be appropriately adjusted in the event of a common
stock, dividend or split, recapitalization, merger, spin-off or similar
change, and (ii) shares subject to options that are canceled, terminated or
otherwise settled without the issuance of Holding Company common stock are
again available for issuance under the plans.

(3) Under the 2000 Directors Stock Plan, the number of shares issuable pursuant
to options may not exceed 378,233.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information called for by this Item is incorporated herein by reference
to the section entitled "Corporate Governance -- Certain Relationships and
Related Transactions" in the 2005 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information called for by this item is incorporated herein by reference
to the section entitled "Proposal Two -- Ratification of Appointment of the
Independent Auditor" in the 2005 Proxy Statement.

106

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:

1. Financial Statements

The financial statements are listed in the Index to Consolidated
Financial Statements and Schedules on page 103.

2. Financial Statement Schedules

The financial statement schedules are listed in the Index to
Consolidated Financial Statements and Schedules on page 103.

3. Exhibits

The exhibits are listed in the Exhibit Index which begins on page
E-1.

107

METLIFE, INC.

SCHEDULE I

CONSOLIDATED SUMMARY OF INVESTMENTS -- OTHER THAN
INVESTMENTS IN AFFILIATES
DECEMBER 31, 2004
(DOLLARS IN MILLIONS)

- ---------------

(1) Cost for fixed maturities and mortgage loans on real estate represents
original cost reduced by repayments, net valuation allowances and writedowns
from other-than-temporary declines in value and adjusted for amortization of
premiums or accretion of discount; for equity securities, cost represents
original cost reduced by writedowns from other-than-temporary declines in
value; for real estate, cost represents original cost reduced by writedowns
and adjusted for valuation allowances and depreciation; cost for real estate
joint ventures and limited partnership interests represents original cost
reduced for other-than-temporary impairments or original cost adjusted for
equity in earnings and distributions.

108

METLIFE, INC.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF METLIFE, INC. (REGISTRANT)
(DOLLARS IN MILLIONS)

109

METLIFE, INC.

SCHEDULE II -- (CONTINUED)

CONDENSED FINANCIAL INFORMATION OF METLIFE, INC. (REGISTRANT)
(DOLLARS IN MILLIONS)

110

METLIFE, INC.

SCHEDULE II -- (CONTINUED)

CONDENSED FINANCIAL INFORMATION OF METLIFE, INC. (REGISTRANT)
(DOLLARS IN MILLIONS)

Debt consisted of the following:

The Holding Company maintains committed and unsecured credit facilities
aggregating $2.5 billion ($1 billion expiring in 2005 and $1.5 billion expiring
in 2009) which it shares with Metropolitan Life and MetLife Funding ("the
Borrowers"). Borrowings under these facilities bear interest at varying rates
stated in the agreements. These facilities are primarily used for general
corporate purposes and as back-up lines of credit for the Borrowers' commercial
paper programs. At December 31, 2004, none of the Borrowers' had borrowed
against these credit facilities.

At December 31, 2004, the Holding Company had $369 million in outstanding
letters of credit from various banks.

The aggregate maturities of long-term debt for the Holding Company are
$1,010 million in 2005, $499 million in 2006, and $4,208 million thereafter.
There are no maturities of long-term debt for the years 2007 through 2009.

The Holding Company had no short-term debt at December 31, 2004. Short-term
debt of the Holding Company of $106 million at December 31, 2003 consisted of
commercial paper with a weighted average interest rate of 1.1% and a weighted
average maturity of 12 days. The Company had no other collateralized borrowings
at December 31, 2004 and 2003.

Interest expense related to the Company's indebtedness included in other
expenses was $245 million, $193 million and $162 million for the years ended
December 31, 2004, 2003 and 2002, respectively.

111

METLIFE, INC.

SCHEDULE III

CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION
AT AND FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(DOLLARS IN MILLIONS)

- ---------------

(1) Amounts are included in Future Policy Benefits, Other Policyholder Funds and
Policyholder Dividend Obligation.

(2) Includes amounts related to SSRM, which are reported in discontinued
operations.

112

METLIFE, INC.

SCHEDULE III -- (CONTINUED)

CONSOLIDATED SUPPLEMENTARY INSURANCE INFORMATION
AT AND FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(DOLLARS IN MILLIONS)

- ---------------

(1) Includes amounts related to SSRM, which are reported in discontinued
operations.

113

METLIFE, INC.

SCHEDULE IV

CONSOLIDATED REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
(DOLLARS IN MILLIONS)

114

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

March 7, 2005

METLIFE, INC.

By: /s/ ROBERT H. BENMOSCHE
------------------------------------
Name: Robert H. Benmosche
Title: Chairman of the Board
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

115

116

EXHIBIT INDEX

E-1

E-2

E-3

E-4

E-5

E-6

E-7

- ---------------

* Indicates management contracts or compensatory plans or arrangements.

** Indicates document to be filed as an exhibit to a Current Report on Form 8-K
or Quarterly Report on Form 10-Q pursuant to Item 601 of Regulation S-K and
incorporated herein by reference.

E-8