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e10vq

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

Form 10-Q


(Mark One)
þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		FOR THE TRANSITION PERIOD FROM TO

Commission file number: 33-03094

MetLife Insurance Company of Connecticut

(Exact name of registrant as specified in its charter)


Connecticut (State or other jurisdiction of incorporation or organization)		06-0566090 (I.R.S. Employer Identification No.)

1300 Hall Boulevard, Bloomfield, Connecticut (Address of principal executive offices)		06002 (Zip Code)

(860) 656-3000

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o
Non-accelerated filer þ (Do not check if a smaller reporting company)		Smaller reporting company o

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

At November 12, 2010, 34,595,317 shares of the registrant’s common stock, $2.50 par value per share, were outstanding, of which 30,000,000 shares were owned directly by MetLife, Inc. and the remaining 4,595,317 shares were owned by MetLife Investors Group, Inc., a wholly-owned subsidiary of MetLife, Inc.

REDUCED DISCLOSURE FORMAT

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

Table of Contents


	Page

Part I — Financial Information
Item 1. Financial Statements (at September 30, 2010 (Unaudited) and December 31, 2009 and for the Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited))		5
Interim Condensed Consolidated Balance Sheets		5
Interim Condensed Consolidated Statements of Operations		6
Interim Condensed Consolidated Statements of Stockholders’ Equity		7
Interim Condensed Consolidated Statements of Cash Flows		9
Notes to the Interim Condensed Consolidated Financial Statements		10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		96
Item 4. Controls and Procedures		103
Part II — Other Information		104
Item 1. Legal Proceedings		104
Item 1A. Risk Factors		105
Item 6. Exhibits		109
Signatures		110
Exhibit Index		E-1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

As used in this Form 10-Q, “MICC,” the “Company,” “we,” “our” and “us” refer to MetLife Insurance Company of Connecticut, a Connecticut corporation incorporated in 1863, and its subsidiaries, including MetLife Investors USA Insurance Company (“MLI-USA”). MetLife Insurance Company of Connecticut is a wholly-owned subsidiary of MetLife, Inc. (“MetLife”).

Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations, may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining MICC’s actual future results. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified in MetLife Insurance Company of Connecticut’s filings with the U.S. Securities and Exchange Commission (the “SEC”). These factors include: (1) difficult conditions in the global capital markets; (2) increased volatility and disruption of the capital and credit markets, which may affect the Company’s ability to seek financing or access MetLife’s credit facilities; (3) uncertainty about the effectiveness of the U.S. government’s programs to stabilize the financial system, the imposition of fees relating thereto, or the promulgation of additional regulations; (4) impact of comprehensive financial services regulation reform on the Company; (5) exposure to financial and capital market risk; (6) changes in general economic conditions, including the performance of financial markets and interest rates, which may affect the Company’s ability to raise capital, generate fee income and market-related revenue and finance statutory reserve requirements and may require the Company to pledge collateral or make payments related to declines in value of specified assets; (7) potential liquidity and other risks resulting from MICC’s participation in a securities lending program and other transactions; (8) investment losses and defaults, and changes to investment valuations; (9) impairments of goodwill and realized losses or market value impairments to illiquid assets; (10) defaults on the Company’s mortgage loans; (11) the impairment of other financial institutions; (12) MICC’s ability to address unforeseen liabilities, asset impairments or rating actions arising from any future acquisitions or dispositions, and to successfully integrate acquired businesses with minimal disruption; (13) economic, political, currency and other risks relating to the Company’s international operations; (14) downgrades in MetLife Insurance Company of Connecticut’s and its affiliates’ claims paying ability, financial strength or credit ratings; (15) ineffectiveness of risk management policies and procedures; (16) availability and effectiveness of reinsurance or indemnification arrangements, as well as default or failure of counterparties to perform; (17) 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; (18) catastrophe losses; (19) heightened competition, including with respect to pricing, entry of new competitors, consolidation of distributors, the development of new products by new and existing competitors, distribution of amounts available under U.S. government programs, and for personnel; (20) unanticipated changes in industry trends; (21) changes in accounting standards, practices and/or policies; (22) changes in assumptions related to deferred policy acquisition costs (“DAC”), deferred sales inducements (“DSI”), value of business acquired (“VOBA”) or goodwill; (23) exposure to losses related to variable annuity guarantee benefits, including from significant and sustained downturns or extreme volatility in equity markets, reduced interest rates, unanticipated policyholder behavior, mortality or longevity, and the adjustment for nonperformance risk; (24) adverse results or other consequences from litigation, arbitration or regulatory investigations;

(25) discrepancies between actual experience and assumptions used in establishing liabilities related to other contingencies or obligations; (26) regulatory, legislative or tax changes that may affect the cost of, or demand for, the Company’s products or services, impair the ability of MetLife and its affiliates to attract and retain talented and experienced management and other employees, or increase the cost or administrative burdens of providing benefits to the employees who conduct our business; (27) the effects of business disruption or economic contraction due to terrorism, other hostilities, or natural catastrophes; (28) the effectiveness of the Company’s programs and practices in avoiding giving its associates incentives to take excessive risks; and (29) other risks and uncertainties described from time to time in MetLife Insurance Company of Connecticut’s filings with the SEC.

MetLife Insurance Company of Connecticut does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife Insurance Company of Connecticut later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife Insurance Company of Connecticut makes on related subjects in reports to the SEC.

Note Regarding Reliance on Statements in Our Contracts

In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife Insurance Company of Connecticut, its subsidiaries or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:


	•	should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

	•	have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

	•	may apply standards of materiality in a way that is different from what may be viewed as material to investors; and

	•	were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about MetLife Insurance Company of Connecticut and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife Insurance Company of Connecticut’s other public filings, which are available without charge through the SEC website at www.sec.gov.

Part I — Financial Information


Item 1.	*Financial Statements*

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

Interim Condensed Consolidated Balance Sheets
September 30, 2010 (Unaudited) and December 31, 2009

(In millions, except share and per share data)


	September 30, 2010		December 31, 2009

Assets
Investments:
Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $44,205 and $42,435, respectively)	$	46,415	$	41,275
Equity securities available-for-sale, at estimated fair value (cost: $440 and $494, respectively)		425		459
Trading securities, at estimated fair value (cost: $1,805 and $868, respectively)		1,859		938
Mortgage loans (net of valuation allowances of $87 and $77, respectively; includes $7,093 and $0, respectively, at estimated fair value relating to variable interest entities)		12,607		4,748
Policy loans		1,190		1,189
Real estate and real estate joint ventures		500		445
Other limited partnership interests		1,440		1,236
Short-term investments		1,472		1,775
Other invested assets		1,960		1,498

Total investments		67,868		53,563
Cash and cash equivalents		2,997		2,574
Accrued investment income (includes $33 and $0, respectively, relating to variable interest entities)		590		516
Premiums, reinsurance and other receivables		16,754		13,444
Deferred policy acquisition costs and value of business acquired		4,676		5,244
Deferred income tax assets		—		1,147
Goodwill		953		953
Other assets		819		799
Separate account assets		55,783		49,449

Total assets	$	150,440	$	127,689

Liabilities and Stockholders’ Equity
Liabilities
Future policy benefits	$	22,632	$	21,621
Policyholder account balances		39,936		37,442
Other policyholder funds		2,537		2,297
Payables for collateral under securities loaned and other transactions		8,084		7,169
Long-term debt (includes $7,034 and $0, respectively, at estimated fair value relating to variable interest entities)		7,984		950
Current income tax payable		10		23
Deferred income tax liability		10		—
Other liabilities (includes $32 and $0, respectively, relating to variable interest entities)		4,539		2,177
Separate account liabilities		55,783		49,449

Total liabilities		141,515		121,128

Contingencies, Commitments and Guarantees (Note 5)
Stockholders’ Equity
Common stock, par value $2.50 per share; 40,000,000 shares authorized; 34,595,317 shares issued and outstanding at September 30, 2010 and December 31, 2009		86		86
Additional paid-in capital		6,719		6,719
Retained earnings		1,026		541
Accumulated other comprehensive income (loss)		1,094		(785	)

Total stockholders’ equity		8,925		6,561

Total liabilities and stockholders’ equity	$	150,440	$	127,689

See accompanying notes to the interim condensed consolidated financial statements.

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

Interim Condensed Consolidated Statements of Operations
For the Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited)

(In millions)


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009

Revenues
Premiums	$	175		$	302		$	886		$	986
Universal life and investment-type product policy fees		402			326			1,178			909
Net investment income		823			640			2,338			1,701
Other revenues		113			118			326			493
Net investment gains (losses):
Other-than-temporary impairments on fixed maturity securities		(24	)		(162	)		(77	)		(478	)
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss)		13			45			36			122
Other net investment gains (losses)		20			(63	)		137			(393	)

Total net investment gains (losses)		9			(180	)		96			(749	)
Net derivatives gains (losses)		37			(6	)		292			(765	)

Total revenues		1,559			1,200			5,116			2,575

Expenses
Policyholder benefits and claims		384			490			1,582			1,591
Interest credited to policyholder account balances		340			372			913			982
Other expenses		599			378			1,857			814

Total expenses		1,323			1,240			4,352			3,387

Income (loss) before provision for income tax		236			(40	)		764			(812	)
Provision for income tax expense (benefit)		91			(53	)		245			(347	)

Net income (loss)	$	145		$	13		$	519		$	(465	)

See accompanying notes to the interim condensed consolidated financial statements.

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

Interim Condensed Consolidated Statements of Stockholders’ Equity
For the Nine Months Ended September 30, 2010 (Unaudited)

(In millions)


								Accumulated Other
								Comprehensive Income (Loss)
								Net						Foreign
			Additional					Unrealized			Other-Than-			Currency
	Common		Paid-in		Retained			Investment			Temporary			Translation			Total
	Stock		Capital		Earnings			Gains (Losses)			Impairments			Adjustments			Equity

Balance at December 31, 2009	$	86	$	6,719	$	541		$	(593	)	$	(83	)	$	(109	)	$	6,561
Cumulative effect of change in accounting principle, net of income tax (Note 1)		—		—		(34	)		23			11			—			—

Balance at January 1, 2010		86		6,719		507			(570	)		(72	)		(109	)		6,561
Comprehensive income (loss):
Net income						519												519
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax									33									33
Unrealized investment gains (losses), net of related offsets and income tax									1,790			46						1,836
Foreign currency translation adjustments, net of income tax															(24	)		(24	)

Other comprehensive income (loss)																		1,845

Comprehensive income (loss)																		2,364

Balance at September 30, 2010	$	86	$	6,719	$	1,026		$	1,253		$	(26	)	$	(133	)	$	8,925

See accompanying notes to the interim condensed consolidated financial statements.

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

Interim Condensed Consolidated Statements of Stockholders’ Equity — (Continued)
For the Nine Months Ended September 30, 2009 (Unaudited)

(In millions)


								Accumulated Other
								Comprehensive Income (Loss)
								Net						Foreign
			Additional					Unrealized			Other-Than-			Currency
	Common		Paid-in		Retained			Investment			Temporary			Translation			Total
	Stock		Capital		Earnings			Gains (Losses)			Impairments			Adjustments			Equity

Balance at December 31, 2008	$	86	$	6,719	$	965		$	(2,682	)	$	—		$	(154	)	$	4,934
Cumulative effect of change in accounting principle, net of income tax						22						(22	)					—
Comprehensive income (loss):
Net loss						(465	)											(465	)
Other comprehensive income (loss):
Unrealized gains (losses) on derivative instruments, net of income tax									(1	)								(1	)
Unrealized investment gains (losses), net of related offsets and income tax									2,228			(57	)					2,171
Foreign currency translation adjustments, net of income tax															38			38

Other comprehensive income (loss)																		2,208

Comprehensive income (loss)																		1,743

Balance at September 30, 2009	$	86	$	6,719	$	522		$	(455	)	$	(79	)	$	(116	)	$	6,677

See accompanying notes to the interim condensed consolidated financial statements.

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

Interim Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2010 and 2009 (Unaudited)

(In millions)


	Nine Months
	Ended
	September 30,
	2010			2009

Net cash provided by (used in) operating activities	$	401		$	(687	)

Cash flows from investing activities
Sales, maturities and repayments of:
Fixed maturity securities		12,047			9,538
Equity securities		114			67
Mortgage loans		611			314
Real estate and real estate joint ventures		18			1
Other limited partnership interests		68			112
Purchases of:
Fixed maturity securities		(13,399	)		(11,211	)
Equity securities		(39	)		(36	)
Mortgage loans		(979	)		(209	)
Real estate and real estate joint ventures		(77	)		(26	)
Other limited partnership interests		(257	)		(137	)
Cash received in connection with freestanding derivatives		76			258
Cash paid in connection with freestanding derivatives		(146	)		(365	)
Net change in policy loans		(1	)		5
Net change in short-term investments		312			1,932
Net change in other invested assets		(60	)		(77	)

Net cash (used in) provided by investing activities		(1,712	)		166

Cash flows from financing activities
Policyholder account balances:
Deposits		20,528			15,355
Withdrawals		(19,239	)		(15,693	)
Net change in payables for collateral under securities loaned and other transactions		915			(1,298	)
Net change in short-term debt		—			(300	)
Long-term debt repaid		(439	)		—
Financing element on certain derivative instruments		(19	)		(28	)

Net cash provided by (used in) financing activities		1,746			(1,964	)

Effect of change in foreign currency exchange rates on cash balances		(12	)		34

Change in cash and cash equivalents		423			(2,451	)
Cash and cash equivalents, beginning of period		2,574			5,656

Cash and cash equivalents, end of period	$	2,997		$	3,205

Supplemental disclosures of cash flow information:
Net cash paid (received) during the period for:
Interest	$	348		$	40

Income tax	$	89		$	(52	)

See accompanying notes to the interim condensed consolidated financial statements.

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

Notes to the Interim Condensed Consolidated Financial Statements (Unaudited)


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

Business

“MICC” or the “Company” refers to MetLife Insurance Company of Connecticut, a Connecticut corporation incorporated in 1863, and its subsidiaries, including MetLife Investors USA Insurance Company (“MLI-USA”). MetLife Insurance Company of Connecticut is a subsidiary of MetLife, Inc. (“MetLife”). The Company offers individual annuities, individual life insurance, and institutional protection and asset accumulation products.

Basis of Presentation

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the interim condensed consolidated financial statements.

In applying the Company’s accounting 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 these estimates.

The accompanying interim condensed consolidated financial statements include the accounts of MetLife Insurance Company of Connecticut and its subsidiaries, as well as partnerships and joint ventures in which the Company has control, and variable interest entities (“VIEs”) for which the Company is the primary beneficiary. See “— Adoption of New 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 a significant influence or more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture’s or 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 investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture’s or the partnership’s operations.

Certain amounts in the prior year periods’ interim condensed consolidated financial statements have been reclassified to conform with the 2010 presentation. Such reclassifications include ($6) million and ($765) million reclassified from other net investment gains (losses) to net derivatives gains (losses) in the interim condensed consolidated statements of operations for the three months and nine months ended September 30, 2009, respectively. In addition, $258 million and ($365) million were reclassified from net change in other invested assets to cash received in connection with freestanding derivatives and cash paid in connection with freestanding derivatives, respectively, within cash flows from investing activities in the interim condensed consolidated statement of cash flows for the nine months ended September 30, 2009.

Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity.

The accompanying interim condensed consolidated financial statements reflect all adjustments (including normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company at September 30, 2010, its consolidated results of operations for the three months and nine months ended September 30, 2010 and 2009, its consolidated cash flows for the nine months ended September 30, 2010 and 2009, and its consolidated statements of stockholders’ equity for the nine months ended September 30, 2010 and 2009, in conformity with GAAP. Interim results are not necessarily indicative of full year performance. The December 31, 2009 consolidated balance sheet data was derived from audited consolidated financial statements

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

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

included in MetLife Insurance Company of Connecticut’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Annual Report”) filed with the U.S. Securities and Exchange Commission, which includes all disclosures required by GAAP. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company included in the 2009 Annual Report.

Adoption of New Accounting Pronouncements

Financial Instruments

Effective July 1, 2010, the Company adopted new guidance regarding accounting for embedded credit derivatives within structured securities. This guidance clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, embedded credit derivatives resulting only from subordination of one financial instrument to another continue to qualify for the scope exception. Embedded credit derivative features other than subordination must be analyzed to determine if they require bifurcation and separate accounting. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2010, the Company adopted new guidance related to financial instrument transfers and consolidation of VIEs. The financial instrument transfer guidance eliminates the concept of a qualified special purpose entity (“QSPE”), eliminates the guaranteed mortgage securitization exception, changes the criteria for achieving sale accounting when transferring a financial asset and changes the initial recognition of retained beneficial interests. The new consolidation guidance changes the definition of the primary beneficiary, as well as the method of determining whether an entity is a primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the entity that has both the ability to direct the most significant activities of the VIE and the obligation to absorb losses or receive benefits that could be significant to the VIE is considered to be the primary beneficiary of the VIE. The guidance requires a quarterly reassessment, as well as enhanced disclosures, including the effects of a company’s involvement with VIEs on its financial statements.

As a result of the adoption of this guidance, the Company consolidated certain former QSPEs that were previously accounted for as fixed maturity commercial mortgage-backed securities. The Company also elected the fair value option for all of the consolidated assets and liabilities of these entities. Upon consolidation, the Company recorded $6,769 million of commercial mortgage loans and $6,717 million of long-term debt based on estimated fair values at January 1, 2010 and de-recognized $52 million in fixed maturity securities. The consolidation also resulted in a decrease in retained earnings of $34 million, net of income tax, and an increase in accumulated other comprehensive income (loss) of $34 million, net of income tax, at January 1, 2010. For the three months and nine months ended September 30, 2010, the Company recorded $102 million and $312 million, respectively, of net investment income on the consolidated assets, $101 million and $305 million, respectively, of interest expense in other expenses on the related long-term debt, and $6 million and $12 million, respectively, in net investment gains (losses) to remeasure the assets and liabilities at their estimated fair values at September 30, 2010.

Also effective January 1, 2010, the Company adopted new guidance that indefinitely defers the above changes relating to the Company’s interests in entities that have all the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting that are consistent with those applied by an investment company. As a result of the deferral, the above guidance did not apply to certain real estate joint ventures and other limited partnership interests held by the Company.

Fair Value

Effective January 1, 2010, the Company adopted new guidance that requires new disclosures about significant transfers into and/or out of Levels 1 and 2 of the fair value hierarchy and activity in Level 3. In addition, this guidance provides clarification of existing disclosure requirements about level of disaggregation and inputs and

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

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

valuation techniques. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

Future Adoption of New Accounting Pronouncements

In October 2010, the Financial Accounting Standards Board (“FASB”) issued new guidance regarding accounting for deferred acquisition costs (Accounting Standards Update (“ASU”) 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts) effective for the first quarter of 2012. This guidance clarifies the costs that should be deferred by insurance entities when issuing and renewing insurance contracts. The guidance also specifies that only costs related directly to successful acquisition of new or renewal contracts can be capitalized. All other acquisition-related costs should be expensed as incurred. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In July 2010, the FASB issued new guidance regarding disclosures about the credit quality of financing receivables and the allowance for credit losses (ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses). This guidance requires additional disclosures about the credit quality of financing receivables, such as aging information and credit quality indicators. In addition, disclosures must be disaggregated by portfolio segment or class based on how a company develops its allowance for credit losses and how it manages its credit exposure. Most of the requirements are effective for the fourth quarter of 2010 with certain additional disclosures required for the first quarter of 2011. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

In April 2010, the FASB issued new guidance regarding accounting for investment funds determined to be VIEs (ASU 2010-15, How Investments Held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments). Under this guidance, an insurance entity would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts. In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer’s evaluation of its economics in a VIE, unless the separate account contract holder is a related party. The guidance is effective for the first quarter of 2011. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements.

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

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


2.	Investments

Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized gain and loss, estimated fair value of the Company’s fixed maturity and equity securities and the percentage that each sector represents by the respective total holdings for the periods shown. The unrealized loss amounts presented below include the noncredit loss component of other-than-temporary impairment (“OTTI”) loss:


	September 30, 2010
	Cost or		Gross Unrealized						Estimated
	Amortized				Temporary		OTTI		Fair		% of
	Cost		Gain		Loss		Loss		Value		Total
	(In millions)

Fixed Maturity Securities:
U.S. corporate securities	$	15,520	$	1,220	$	241	$	—	$	16,499		35.5	%
Foreign corporate securities		7,934		669		109		—		8,494		18.3
U.S. Treasury and agency securities		7,201		521		13		—		7,709		16.6
Residential mortgage-backed securities (“RMBS”)		6,956		259		233		44		6,938		15.0
Commercial mortgage-backed securities (“CMBS”)		2,352		138		44		—		2,446		5.3
Asset-backed securities (“ABS”)		1,932		59		130		4		1,857		4.0
State and political subdivision securities		1,552		90		56		—		1,586		3.4
Foreign government securities		758		129		1		—		886		1.9

Total fixed maturity securities (1), (2)	$	44,205	$	3,085	$	827	$	48	$	46,415		100.0	%

Equity Securities:
Non-redeemable preferred stock (1)	$	307	$	11	$	43	$	—	$	275		64.7	%
Common stock		133		19		2		—		150		35.3

Total equity securities (3)	$	440	$	30	$	45	$	—	$	425		100.0	%

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

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


	December 31, 2009
	Cost or		Gross Unrealized						Estimated
	Amortized				Temporary		OTTI		Fair		% of
	Cost		Gain		Loss		Loss		Value		Total
	(In millions)

Fixed Maturity Securities:
U.S. corporate securities	$	15,598	$	441	$	639	$	2	$	15,398		37.3	%
Foreign corporate securities		7,292		307		255		6		7,338		17.8
U.S. Treasury and agency securities		6,503		35		281		—		6,257		15.2
RMBS		6,183		153		402		82		5,852		14.2
CMBS		2,808		43		216		18		2,617		6.3
ABS		2,152		33		163		33		1,989		4.8
State and political subdivision securities		1,291		12		124		—		1,179		2.8
Foreign government securities		608		46		9		—		645		1.6

Total fixed maturity securities (1) ,(2)	$	42,435	$	1,070	$	2,089	$	141	$	41,275		100.0	%

Equity Securities:
Non-redeemable preferred stock (1)	$	351	$	10	$	55	$	—	$	306		66.7	%
Common stock		143		11		1		—		153		33.3

Total equity securities (3)	$	494	$	21	$	56	$	—	$	459		100.0	%


(1)		Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more debt-like characteristics. The Company classifies perpetual securities with an interest rate step-up feature which, when combined with other qualitative factors, indicates that the security has more equity-like characteristics, as equity securities within non-redeemable preferred stock. Many of such securities have been issued by non-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2 capital treatment by their respective regulatory bodies and are commonly referred to as “perpetual hybrid securities.” The following table presents the perpetual hybrid securities held by the Company at:

Classification

September 30, 2010

December 31, 2009

Estimated

Fair

Consolidated Balance Sheets

Sector Table

Primary Issuers

Value

(In millions)

Equity securities

Non-redeemable preferred stock

Non-U.S. financial institutions

219

237

Equity securities

Non-redeemable preferred stock

U.S. financial institutions

Fixed maturity securities

Foreign corporate securities

Non-U.S. financial institutions

600

580

Fixed maturity securities

U.S. corporate securities

U.S. financial institutions


(2)		Redeemable preferred stock with stated maturity dates are included in the U.S. corporate securities sector within fixed maturity securities. These securities, commonly referred to as “capital securities,” are primarily issued by U.S. financial institutions and have cumulative interest deferral features. The Company held $558 million and $513 million at estimated fair value of such securities at September 30, 2010 and December 31, 2009, respectively.

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

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


(3)		Equity securities primarily consist of investments in common and preferred stocks, including certain perpetual hybrid securities and mutual fund interests. Privately-held equity securities were $102 million and $82 million at estimated fair value at September 30, 2010 and December 31, 2009, respectively.

The below investment grade and non-income producing amounts presented below are based on rating agency designations and equivalent designations of the National Association of Insurance Commissioners (“NAIC”), with the exception of non-agency RMBS held by the Company’s domestic insurance subsidiary. Non-agency RMBS, including RMBS backed by sub-prime mortgage loans reported within ABS, held by the Company’s domestic insurance subsidiary are presented based on final ratings from the revised NAIC rating methodology (i.e., NAIC 1 — 6) which became effective December 31, 2009 (which may not correspond to rating agency designations). All NAIC designation amounts and percentages presented herein are based on the revised NAIC methodology described above. All rating agency designation (i.e., Aaa/AAA) amounts and percentages presented herein are based on rating agency designations without adjustment for the revised NAIC methodology described above. Rating agency designations are based on availability of applicable ratings from rating agencies on the NAIC acceptable rating organization list, including Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”) and Fitch Ratings (“Fitch”).

The following table presents selected information about certain fixed maturity securities held by the Company at:


	September 30, 2010			December 31, 2009
	(In millions)

Below investment grade or non-rated fixed maturity securities:
Estimated fair value	$	3,979		$	3,866
Net unrealized loss	$	102		$	467
Non-income producing fixed maturity securities:
Estimated fair value	$	33		$	67
Net unrealized gain (loss)	$	(2	)	$	2
Fixed maturity securities credit enhanced by financial guarantor insurers — by sector — at estimated fair value:
State and political subdivision securities	$	537		$	493
U.S. corporate securities		511			458
ABS		94			107
RMBS		9			7
CMBS		—			3

Total fixed maturity securities credit enhanced by financial guarantor insurers	$	1,151		$	1,068

Ratings of the financial guarantor insurers providing the credit enhancement:
Portion rated Aa/AA		27	%		25	%

Portion rated Baa/BBB		39	%		39	%

Concentrations of Credit Risk (Fixed Maturity Securities) — Summary. The following section contains a summary of the concentrations of credit risk related to fixed maturity securities holdings.

The Company was not exposed to any concentrations of credit risk of any single issuer greater than 10% of the Company’s stockholders’ equity, other than securities of the U.S. government and certain U.S. government

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

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

agencies. The Company’s holdings in U.S. Treasury and agency fixed maturity securities at estimated fair value were $7.7 billion and $6.3 billion at September 30, 2010 and December 31, 2009, respectively.

Concentrations of Credit Risk (Fixed Maturity Securities) — U.S. and Foreign Corporate Securities. The Company maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. This portfolio does not have exposure to any single issuer in excess of 1% of total investments. The tables below present the major industry types that comprise the corporate fixed maturity securities holdings, the largest exposure to a single issuer and the combined holdings in the ten issuers to which it had the largest exposure at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

Corporate fixed maturity securities — by industry type:
Foreign (1)	$	8,494		34.0	%	$	7,338		32.3	%
Consumer		4,129		16.5			3,507		15.4
Utility		3,580		14.3			3,328		14.6
Industrial		3,560		14.3			3,047		13.4
Finance		2,909		11.6			3,145		13.8
Communications		1,473		5.9			1,669		7.4
Other		848		3.4			702		3.1

Total	$	24,993		100.0	%	$	22,736		100.0	%


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


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of Total			Fair		% of Total
	Value		Investments			Value		Investments
	(In millions)

Concentrations within corporate fixed maturity securities:
Largest exposure to a single issuer	$	220		0.3	%	$	204		0.4	%
Holdings in ten issuers with the largest exposures	$	1,655		2.4	%	$	1,695		3.2	%

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

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

Concentrations of Credit Risk (Fixed Maturity Securities) — RMBS. The table below presents the Company’s RMBS holdings and portion rated Aaa/AAA and portion rated NAIC 1 at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

By security type:
Pass-through securities	$	3,555		51.2	%	$	2,206		37.7	%
Collateralized mortgage obligations		3,383		48.8			3,646		62.3

Total RMBS	$	6,938		100.0	%	$	5,852		100.0	%

By risk profile:
Agency	$	5,267		75.9	%	$	4,095		70.0	%
Prime		1,067		15.4			1,118		19.1
Alternative residential mortgage loans		604		8.7			639		10.9

Total RMBS	$	6,938		100.0	%	$	5,852		100.0	%

Portion rated Aaa/AAA	$	5,450		78.6	%	$	4,347		74.3	%

Portion rated NAIC 1	$	5,993		86.4	%	$	4,835		82.6	%

Collateralized mortgage obligations are a type of mortgage-backed security structured by dividing the cash flows of mortgages into separate pools or tranches of risk that create multiple classes of bonds with varying maturities and priority of payments. Pass-through mortgage-backed securities are a type of asset-backed security that is secured by a mortgage or collection of mortgages. The monthly mortgage payments from homeowners pass from the originating bank through an intermediary, such as a government agency or investment bank, which collects the payments, and for a fee, remits or passes these payments through to the holders of the pass-through securities.

Prime residential mortgage lending includes the origination of residential mortgage loans to the most creditworthy borrowers with high quality credit profiles. Alternative residential mortgage loans (“Alt-A”) are a classification of mortgage loans where the risk profile of the borrower falls between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles.

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

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

The following tables present the Company’s investment in Alt-A RMBS by vintage year (vintage year refers to the year of origination and not to the year of purchase) and certain other selected data:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

Vintage Year:
2004 & Prior	$	10		1.7	%	$	15		2.3	%
2005		308		51.0			336		52.6
2006		81		13.4			83		13.0
2007		205		33.9			205		32.1
2008 to 2010		—		—			—		—

Total	$	604		100.0	%	$	639		100.0	%


	September 30, 2010					December 31, 2009
			% of					% of
	Amount		Total			Amount		Total
	(In millions)

Net unrealized loss	$	164				$	235
Rated Aa/AA or better				1.6	%				2.3	%
Rated NAIC 1				14.3	%				16.6	%
By collateral type:
Fixed rate mortgage loans collateral				95.8	%				95.6	%
Hybrid adjustable rate mortgage loans collateral				4.2					4.4

Total Alt-A RMBS				100.0	%				100.0	%

Concentrations of Credit Risk (Fixed Maturity Securities) — CMBS. The Company’s holdings in CMBS were $2.4 billion and $2.6 billion at estimated fair value at September 30, 2010 and December 31, 2009, respectively. The Company had no exposure to CMBS index securities at September 30, 2010 and December 31, 2009. The Company held commercial real estate collateralized debt obligations securities of $79 million and $70 million at estimated fair value at September 30, 2010 and December 31, 2009, respectively.

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

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

The following tables present the Company’s holdings of CMBS by rating agency designation and by vintage year at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

2003 & Prior	$	1,098		44.9	%	$	1,202		45.9	%
2004		453		18.5			512		19.6
2005		436		17.8			472		18.0
2006		444		18.2			407		15.6
2007		15		0.6			24		0.9
2008 to 2010		—		—			—		—

Total	$	2,446		100.0	%	$	2,617		100.0	%


	September 30, 2010					December 31, 2009
			% of						% of
	Amount		Total			Amount			Total
	(In millions)

Net unrealized gain (loss)	$	94				$	(191	)
Rated Aaa/AAA				91	%					83	%

The September 30, 2010 table reflects ratings assigned by nationally recognized rating agencies including Moody’s, S&P, Fitch and Realpoint, LLC. The December 31, 2009 table reflects ratings assigned by nationally recognized rating agencies including Moody’s, S&P and Fitch.

Concentrations of Credit Risk (Fixed Maturity Securities) — ABS. The Company’s holdings in ABS were $1.9 billion and $2.0 billion at estimated fair value at September 30, 2010 and December 31, 2009, respectively. The Company’s ABS are diversified both by collateral type and by issuer.

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

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

The following table presents the collateral type and certain other information about ABS held by the Company at:


	September 30, 2010					December 31, 2009
	Estimated					Estimated
	Fair		% of			Fair		% of
	Value		Total			Value		Total
	(In millions)

By collateral type:
Credit card loans	$	733		39.5	%	$	920		46.3	%
RMBS backed by sub-prime mortgage loans		240		12.9			247		12.4
Student loans		182		9.8			158		7.9
Automobile loans		124		6.7			205		10.3
Other loans		578		31.1			459		23.1

Total	$	1,857		100.0	%	$	1,989		100.0	%

Portion rated Aaa/AAA	$	1,237		66.6	%	$	1,292		65.0	%

Portion rated NAIC 1	$	1,703		91.7	%	$	1,767		88.8	%

RMBS backed by sub-prime mortgage loans — portion credit enhanced by financial guarantor insurers				19.8	%				20.6	%
Of the 19.8% and 20.6% credit enhanced, the financial guarantor insurers were rated as follows:
By financial guarantor insurers rated Aa/AA				0.9	%				0.7	%
By financial guarantor insurers rated A				—					0.2	%

Concentrations of Credit Risk (Equity Securities). The Company was not exposed to any concentrations of credit risk in its equity securities holdings of any single issuer greater than 10% of the Company’s stockholders’ equity at September 30, 2010 and December 31, 2009.

Maturities of Fixed Maturity Securities. The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), were as follows at:


	September 30, 2010				December 31, 2009
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In millions)

Due in one year or less	$	1,878	$	1,895	$	1,023	$	1,029
Due after one year through five years		8,986		9,377		9,048		9,202
Due after five years through ten years		8,449		9,221		7,882		7,980
Due after ten years		13,652		14,681		13,339		12,606

Subtotal		32,965		35,174		31,292		30,817
RMBS, CMBS and ABS		11,240		11,241		11,143		10,458

Total fixed maturity securities	$	44,205	$	46,415	$	42,435	$	41,275

Actual maturities may differ from contractual maturities due to the exercise of call or prepayment options. Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. RMBS, CMBS and ABS are shown separately in the table, as they are not due at a single maturity.

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

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

Evaluating Available-for-Sale Securities for Other-Than-Temporary Impairment

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report, the Company performs a regular evaluation, on a security-by-security basis, of its available-for-sale securities holdings in accordance with its impairment policy in order to evaluate whether such investments are other-than-temporarily impaired. As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report, effective April 1, 2009, the Company adopted new OTTI guidance that amends the methodology for determining for fixed maturity securities whether an OTTI exists, and for certain fixed maturity securities, changes how the amount of the OTTI loss that is charged to earnings is determined. There was no change in the OTTI methodology for equity securities.

With respect to fixed maturity securities, the Company considers, among other impairment criteria, whether it has the intent to sell a particular impaired fixed maturity security. The Company’s intent to sell a particular impaired fixed maturity security considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company’s need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security, the security will be deemed other-than-temporarily impaired in the period that the sale decision was made and an OTTI loss will be recorded in earnings. In certain circumstances, the Company may determine that it does not intend to sell a particular security but that it is more likely than not that it will be required to sell that security before recovery of the decline in estimated fair value below amortized cost. In such instances, the fixed maturity security will be deemed other-than-temporarily impaired in the period during which it was determined more likely than not that the security will be required to be sold and an OTTI loss will be recorded in earnings. If the Company does not have the intent to sell (i.e., has not made the decision to sell) and it does not believe that it is more likely than not that it will be required to sell the security before recovery of its amortized cost, an impairment assessment is made, as described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report. Prior to April 1, 2009, the Company’s assessment of OTTI for fixed maturity securities was performed in the same manner as described below for equity securities.

With respect to equity securities, the Company considers in its OTTI analysis its intent and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost. Decisions to sell equity securities are based on current conditions in relation to the same broad portfolio management considerations in a manner consistent with that described above for fixed maturity securities.

With respect to perpetual hybrid securities, some of which are classified as fixed maturity securities and some of which are classified as equity securities, within non-redeemable preferred stock, the Company considers in its OTTI analysis whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of the securities that are in a severe and extended unrealized loss position. The Company also considers whether any perpetual hybrid securities with an unrealized loss, regardless of credit rating, have deferred any dividend payments.

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

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

Net Unrealized Investment Gains (Losses)

The components of net unrealized investment gains (losses), included in accumulated other comprehensive income (loss), were as follows at:


	September 30, 2010			December 31, 2009
	(In millions)

Fixed maturity securities	$	2,258		$	(1,019	)
Fixed maturity securities with noncredit OTTI losses in other comprehensive income (loss)		(48	)		(141	)

Total fixed maturity securities		2,210			(1,160	)

Equity securities		(15	)		(35	)
Derivatives		52			(4	)
Short-term investments		(4	)		(10	)
Other		(4	)		(3	)

Subtotal		2,239			(1,212	)

Amounts allocated from:
Insurance liability loss recognition		(37	)		—
DAC and VOBA related to noncredit OTTI losses recognized in other comprehensive income (loss)		4			12
DAC and VOBA		(343	)		151

Subtotal		(376	)		163
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in other comprehensive income (loss)		18			46
Deferred income tax benefit (expense)		(654	)		327

Net unrealized investment gains (losses)	$	1,227		$	(676	)

Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), as presented above, of ($48) million at September 30, 2010, includes ($141) million recognized prior to January 1, 2010, ($13) million and ($36) million (($12) million and ($32) million, net of DAC) of noncredit losses recognized in the three months and nine months ended September 30, 2010, respectively, $16 million transferred to retained earnings in connection with the adoption of new guidance related to the consolidation of VIEs (see Note 1) for the nine months ended September 30, 2010, $6 million and $25 million related to securities sold during the three months and nine months ended September 30, 2010, respectively, for which a noncredit loss was previously recognized in accumulated other comprehensive income (loss) and $69 million and $88 million of subsequent increases in estimated fair value during the three months and nine months ended September 30, 2010, respectively, on such securities for which a noncredit loss was previously recognized in accumulated other comprehensive income (loss).

Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss), as presented above, of ($141) million at December 31, 2009, includes ($36) million related to the transition adjustment recorded in 2009 upon the adoption of new guidance on the recognition and presentation of OTTI, ($165) million (($148) million, net of DAC) of noncredit losses recognized in the year ended December 31, 2009 (as more fully described in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report), $6 million related to securities sold during the year ended December 31, 2009 for which a noncredit loss was previously recognized in accumulated comprehensive income (loss) and $54 million of subsequent increases in

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

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

estimated fair value during the year ended December 31, 2009 on such securities for which a noncredit loss was previously recognized in accumulated other comprehensive income (loss).

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


	Nine Months
	Ended
	September 30, 2010
	(In millions)

Balance, beginning of period	$	(676	)
Cumulative effect of change in accounting principle, net of income tax		34
Fixed maturity securities on which noncredit OTTI losses have been recognized		77
Unrealized investment gains (losses) during the period		3,322
Unrealized investment gains (losses) relating to:
Insurance liability gain (loss) recognition		(37	)
DAC and VOBA related to noncredit OTTI losses recognized in other comprehensive income (loss)		(8	)
DAC and VOBA		(494	)
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in other comprehensive income (loss)		(23	)
Deferred income tax benefit (expense)		(968	)

Balance, end of period	$	1,227

Change in net unrealized investment gains (losses)	$	1,903

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

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

Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale by Sector

The following tables present the estimated fair value and gross unrealized loss of the Company’s fixed maturity and equity securities in an unrealized loss position, aggregated by sector and by length of time that the securities have been in a continuous unrealized loss position. The unrealized loss amounts presented below include the noncredit component of OTTI loss. Fixed maturity securities on which a noncredit OTTI loss has been recognized in accumulated other comprehensive income (loss) are categorized by length of time as being “less than 12 months” or “equal to or greater than 12 months” in a continuous unrealized loss position based on the point in time that the estimated fair value initially declined to below the amortized cost basis and not the period of time since the unrealized loss was deemed a noncredit OTTI loss.


	September 30, 2010
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

Fixed Maturity Securities:
U.S. corporate securities	$	448	$	16	$	2,067	$	225	$	2,515	$	241
Foreign corporate securities		231		13		861		96		1,092		109
U.S. Treasury and agency securities		508		2		107		11		615		13
RMBS		440		8		1,474		269		1,914		277
CMBS		10		—		255		44		265		44
ABS		127		1		630		133		757		134
State and political subdivision securities		59		3		370		53		429		56
Foreign government securities		13		—		6		1		19		1

Total fixed maturity securities	$	1,836	$	43	$	5,770	$	832	$	7,606	$	875

Equity Securities:
Non-redeemable preferred stock	$	16	$	3	$	195	$	40	$	211	$	43
Common stock		11		2		—		—		11		2

Total equity securities	$	27	$	5	$	195	$	40	$	222	$	45

Total number of securities in an unrealized loss position		351				693

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

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


	December 31, 2009
					Equal to or Greater
	Less than 12 Months				than 12 Months				Total
	Estimated		Gross		Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In millions, except number of securities)

Fixed Maturity Securities:
U.S. corporate securities	$	2,164	$	87	$	4,314	$	554	$	6,478	$	641
Foreign corporate securities		759		27		1,488		234		2,247		261
U.S. Treasury and agency securities		5,265		271		26		10		5,291		281
RMBS		703		12		1,910		472		2,613		484
CMBS		334		3		1,054		231		1,388		234
ABS		125		11		821		185		946		196
State and political subdivision securities		413		16		433		108		846		124
Foreign government securities		132		4		25		5		157		9

Total fixed maturity securities	$	9,895	$	431	$	10,071	$	1,799	$	19,966	$	2,230

Equity Securities:
Non-redeemable preferred stock	$	21	$	9	$	198	$	46	$	219	$	55
Common stock		3		1		3		—		6		1

Total equity securities	$	24	$	10	$	201	$	46	$	225	$	56

Total number of securities in an unrealized loss position		708				1,236

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

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

Aging of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

The following tables present the cost or amortized cost, gross unrealized loss, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss), gross unrealized loss as a percentage of cost or amortized cost and number of securities for fixed maturity and equity securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:


	September 30, 2010
	Cost or				Gross						Number of
	Amortized Cost				Unrealized Loss						Securities
	Less than		20% or		Less than			20% or			Less than		20% or
	20%		more		20%			more			20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	1,628	$	213	$	19		$	53			271		25
Six months or greater but less than nine months		108		47		5			17			24		9
Nine months or greater but less than twelve months		117		100		9			26			32		6
Twelve months or greater		5,242		1,026		427			319			524		121

Total	$	7,095	$	1,386	$	460		$	415

Percentage of amortized cost						6	%		30	%

Equity Securities:
Less than six months	$	21	$	13	$	3		$	4			6		5
Six months or greater but less than nine months		7		7		—			3			4		1
Nine months or greater but less than twelve months		1		—		—			—			3		—
Twelve months or greater		174		44		19			16			14		5

Total	$	203	$	64	$	22		$	23

Percentage of cost						11	%		36	%

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

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


	December 31, 2009
	Cost or				Gross						Number of
	Amortized Cost				Unrealized Loss						Securities
	Less than		20% or		Less than			20% or			Less than		20% or
	20%		more		20%			more			20%		more
	(In millions, except number of securities)

Fixed Maturity Securities:
Less than six months	$	8,310	$	790	$	173		$	199			609		74
Six months or greater but less than nine months		1,084		132		114			37			33		24
Nine months or greater but less than twelve months		694		362		74			102			30		29
Twelve months or greater		8,478		2,346		737			794			867		260

Total	$	18,566	$	3,630	$	1,098		$	1,132

Percentage of amortized cost						6	%		31	%

Equity Securities:
Less than six months	$	3	$	9	$	—		$	3			7		3
Six months or greater but less than nine months		—		—		—			—			—		—
Nine months or greater but less than twelve months		10		20		1			8			2		3
Twelve months or greater		161		78		21			23			17		6

Total	$	174	$	107	$	22		$	34

Percentage of cost						13	%		32	%

Equity securities with a gross unrealized loss of 20% or more for twelve months or greater decreased from $23 million at December 31, 2009 to $16 million at September 30, 2010. As shown in the section “Evaluating Temporarily Impaired Available-for-Sale Securities” below, all $16 million of equity securities with a gross unrealized loss of 20% or more for twelve months or greater at September 30, 2010 were financial services industry investment grade non-redeemable preferred stock, of which 56% were rated A or better.

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

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

Concentration of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale

The Company’s gross unrealized losses related to its fixed maturity and equity securities, including the portion of OTTI loss on fixed maturity securities recognized in accumulated other comprehensive income (loss) of $920 million and $2.3 billion at September 30, 2010 and December 31, 2009, respectively, were concentrated, calculated as a percentage of gross unrealized loss and OTTI loss, by sector and industry as follows:


	September 30, 2010			December 31, 2009

Sector:
RMBS		30	%		21	%
U.S. corporate securities		26			28
ABS		15			9
Foreign corporate securities		12			11
State and political subdivision securities		6			5
CMBS		5			10
U.S. Treasury and agency securities		1			12
Other		5			4

Total		100	%		100	%

Industry:
Mortgage-backed		35	%		31	%
Finance		21			22
Asset-backed		15			9
State and political subdivision securities		6			5
Consumer		6			6
Communications		3			3
Utility		2			4
Industrial		2			2
Transportation		2			1
U.S. Treasury and agency securities		1			12
Other		7			5

Total		100	%		100	%

Evaluating Temporarily Impaired Available-for-Sale Securities

The following table presents the Company’s fixed maturity and equity securities, each with a gross unrealized loss of greater than $10 million, the number of securities, total gross unrealized loss and percentage of total gross unrealized loss at:


	September 30, 2010						December 31, 2009
	Fixed Maturity			Equity			Fixed Maturity			Equity
	Securities			Securities			Securities			Securities
	(In millions, except number of securities)

Number of securities		14			—			33			—
Total gross unrealized loss	$	187		$	—		$	510		$	—
Percentage of total gross unrealized loss		21	%		—	%		23	%		—	%

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

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

Fixed maturity and equity securities, each with a gross unrealized loss greater than $10 million, decreased $323 million during the nine months ended September 30, 2010. The cause of the decline in, or improvement in, gross unrealized losses for the nine months ended September 30, 2010, was primarily attributable to a decrease in interest rates. These securities were included in the Company’s OTTI review process. Based upon the Company’s current evaluation of these securities and other available-for-sale securities in an unrealized loss position in accordance with its impairment policy, and the Company’s current intentions and assessments (as applicable to the type of security) about holding, selling and any requirements to sell these securities, the Company has concluded that these securities are not other-than-temporarily impaired.

In the Company’s impairment review process, the duration and severity of an unrealized loss position for equity securities is given greater weight and consideration than for fixed maturity securities. An extended and severe unrealized loss position on a fixed maturity security may not have any impact on the ability of the issuer to service all scheduled interest and principal payments and the Company’s evaluation of recoverability of all contractual cash flows or the ability to recover an amount at least equal to its amortized cost based on the present value of the expected future cash flows to be collected. In contrast, for an equity security, greater weight and consideration is given by the Company to a decline in market value and the likelihood such market value decline will recover.

The following table presents certain information about the Company’s equity securities available-for-sale with a gross unrealized loss of 20% or more at September 30, 2010:


			Non-Redeemable Preferred Stock
			All Types of
	All Equity		Non-Redeemable					Investment Grade
	Securities		Preferred Stock					All Industries					Financial Services Industry
	Gross		Gross		% of All			Gross		% of All			Gross
	Unrealized		Unrealized		Equity			Unrealized		Non-Redeemable			Unrealized		% of All			% A Rated
	Loss		Loss		Securities			Loss		Preferred Stock			Loss		Industries			or Better
								(In millions)

Less than six months	$	4	$	2		50	%	$	2		100	%	$	2		100	%		50	%
Six months or greater but less than twelve months		3		3		100	%		3		100	%		3		100	%		100	%
Twelve months or greater		16		16		100	%		16		100	%		16		100	%		56	%

All equity securities with a gross unrealized loss of 20% or more	$	23	$	21		91	%	$	21		100	%	$	21		100	%		62	%

In connection with the equity securities impairment review process, the Company evaluated its holdings in non-redeemable preferred stock, particularly those companies in the financial services industry. The Company considered several factors including whether there has been any deterioration in credit of the issuer and the likelihood of recovery in value of non-redeemable preferred stock with a severe or an extended unrealized loss. The Company also considered whether any issuers of non-redeemable preferred stock with an unrealized loss held by the Company, regardless of credit rating, have deferred any dividend payments. No such dividend payments were deferred.

With respect to common stock holdings, the Company considered the duration and severity of the unrealized losses for securities in an unrealized loss position of 20% or more; and the duration of unrealized losses for securities in an unrealized loss position of less than 20% in an extended unrealized loss position (i.e., 12 months or greater).

Future OTTIs will depend primarily on economic fundamentals, issuer performance (including changes in the present value of future cash flows expected to be collected), changes in credit rating, changes in collateral valuation,

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

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

changes in interest rates and changes in credit spreads. If economic fundamentals and any of the above factors deteriorate, additional OTTIs may be incurred in upcoming quarters.

Net Investment Gains (Losses)

As described more fully in Note 1 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report, effective April 1, 2009, the Company adopted new guidance on the recognition and presentation of OTTI that amends the methodology to determine for fixed maturity securities whether an OTTI exists, and for certain fixed maturity securities, changes how OTTI losses that are charged to earnings are measured. There was no change in the methodology for identification and measurement of OTTI losses charged to earnings for impaired equity securities.

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


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Total losses on fixed maturity securities:
Total OTTI losses recognized	$	(24	)	$	(162	)	$	(77	)	$	(478	)
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss)		13			45			36			122

Net OTTI losses on fixed maturity securities recognized in earnings		(11	)		(117	)		(41	)		(356	)
Fixed maturity securities — net gains (losses) on sales and disposals		12			1			74			(59	)

Total losses on fixed maturity securities		1			(116	)		33			(415	)

Other net investment gains (losses):
Equity securities		2			(29	)		21			(107	)
Mortgage loans		(1	)		(9	)		(16	)		(29	)
Real estate and real estate joint ventures		—			(6	)		(19	)		(61	)
Other limited partnership interests		(2	)		(2	)		(12	)		(68	)
Other investment portfolio gains (losses)		3			2			10			—

Subtotal — investment portfolio gains (losses)		3			(160	)		17			(680	)

Consolidated securitization entities:
Commercial mortgage loans — fair value option		114			—			767			—
Long-term debt — related to commercial mortgage loans — fair value option		(108	)		—			(755	)		—
Other gains (losses)		—			(20	)		67			(69	)

Subtotal consolidated securitization entities and other gains (losses)		6			(20	)		79			(69	)

Total net investment gains (losses)	$	9		$	(180	)	$	96		$	(749	)

See “— Variable Interest Entities” for discussion of consolidated securitization entities included in the table above.

See “— Related Party Investment Transactions” for discussion of affiliated net investment gains (losses) related to transfers of invested assets to affiliates.

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

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

See Note 8 for discussion of affiliated net investment gains (losses) included in embedded derivatives in the table above.

Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment gains (losses) were as shown below. Investment gains and losses on sales of securities are determined on a specific identification basis.


	Three Months Ended September 30,
	2010			2009			2010		2009			2010			2009
	Fixed Maturity						Equity
	Securities						Securities					Total
	(In millions)

Proceeds	$	2,633		$	2,346		$	10	$	31		$	2,643		$	2,377

Gross investment gains	$	33		$	41		$	2	$	(3	)	$	35		$	38

Gross investment losses		(21	)		(40	)		—		(18	)		(21	)		(58	)

Total OTTI losses recognized in earnings:
Credit-related		(10	)		(97	)		—		—			(10	)		(97	)
Other (1)		(1	)		(20	)		—		(8	)		(1	)		(28	)

Total OTTI losses recognized in earnings		(11	)		(117	)		—		(8	)		(11	)		(125	)

Net investment gains (losses)	$	1		$	(116	)	$	2	$	(29	)	$	3		$	(145	)


	Nine Months Ended September 30,
	2010			2009			2010			2009			2010			2009
	Fixed Maturity						Equity
	Securities						Securities						Total
	(In millions)

Proceeds	$	7,897		$	7,120		$	89		$	43		$	7,986		$	7,163

Gross investment gains	$	164		$	112		$	22		$	(2	)	$	186		$	110

Gross investment losses		(90	)		(171	)		(1	)		(22	)		(91	)		(193	)

Total OTTI losses recognized in earnings:
Credit-related		(39	)		(319	)		—			—			(39	)		(319	)
Other (1)		(2	)		(37	)		—			(83	)		(2	)		(120	)

Total OTTI losses recognized in earnings		(41	)		(356	)		—			(83	)		(41	)		(439	)

Net investment gains (losses)	$	33		$	(415	)	$	21		$	(107	)	$	54		$	(522	)


(1)		Other OTTI losses recognized in earnings include impairments on equity securities, impairments on perpetual hybrid securities classified within fixed maturity securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and fixed maturity securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the decline in estimated fair value.

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

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

Fixed maturity security OTTI losses recognized in earnings related to the following sectors and industries within the U.S. and foreign corporate securities sector:


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In millions)

Sector:
U.S. and foreign corporate securities — by industry:
Consumer	$	—	$	19	$	9	$	53
Finance		5		48		7		84
Communications		1		16		4		86
Utility		—		—		2		6
Industrial		—		—		—		18

Total U.S. and foreign corporate securities		6		83		22		247
RMBS		3		12		10		15
CMBS		1		20		8		55
ABS		1		2		1		39

Total	$	11	$	117	$	41	$	356

Equity security OTTI losses recognized in earnings related to the following sectors and industries:


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In millions)

Sector:
Non-redeemable preferred stock	$	—	$	8	$	—	$	79
Common stock		—		—		—		4

Total	$	—	$	8	$	—	$	83

Industry:
Financial services industry:
Perpetual hybrid securities	$	—	$	8	$	—	$	59
Common and remaining non-redeemable preferred stock		—		—		—		3

Total financial services industry		—		8		—		62

Other industries		—		—		—		21

Total	$	—	$	8	$	—	$	83

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

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

Credit Loss Rollforward — Rollforward of the Cumulative Credit Loss Component of OTTI Loss Recognized in Earnings on Fixed Maturity Securities Still Held for Which a Portion of the OTTI Loss Was Recognized in Other Comprehensive Income (Loss)

The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still held by the Company at September 30, 2010 for which a portion of the OTTI loss was recognized in other comprehensive income (loss):


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Balance, beginning of period	$	68		$	159		$	213		$	—
Credit loss component of OTTI loss not reclassified to other comprehensive income (loss) in the cumulative effect transition adjustment		—			—			—			92
Additions:
Initial impairments — credit loss OTTI recognized on securities not previously impaired		2			14			5			81
Additional impairments — credit loss OTTI recognized on securities previously impaired		2			32			8			37
Reductions:
Due to sales (maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired		(8	)		(4	)		(60	)		(9	)
Due to securities de-recognized in connection with the adoption of new guidance related to the consolidation of VIEs		—			—			(100	)		—
Due to increases in cash flows — accretion of previous credit loss OTTI		—			—			(2	)		—

Balance, end of period	$	64		$	201		$	64		$	201

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

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

Net Investment Income

The components of net investment income were as follows:


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Fixed maturity securities	$	524		$	530		$	1,578		$	1,566
Equity securities		1			5			10			20
Trading securities		72			75			98			82
Mortgage loans		78			59			218			176
Commercial mortgage loans held by consolidated securitization entities		102			—			312			—
Policy loans		17			19			50			60
Real estate and real estate joint ventures		24			(36	)		(1	)		(94	)
Other limited partnership interests		36			16			138			(35	)
Cash, cash equivalents and short-term investments		5			3			8			14
International joint ventures		(2	)		(1	)		(4	)		(2	)
Other		(8	)		(1	)		3			(2	)

Total investment income		849			669			2,410			1,785
Less: Investment expenses		26			29			72			84

Net investment income	$	823		$	640		$	2,338		$	1,701

See “— Variable Interest Entities” for discussion of consolidated securitization entities included in the table above.

Affiliated investment expenses, included in the table above, were $14 million and $41 million for the three months and nine months ended September 30, 2010, respectively, and $12 million and $35 million for the three months and nine months ended September 30, 2009, respectively. See “ — Related Party Investment Transactions” for discussion of affiliated net investment income related to short-term investments included in the table above.

Securities Lending

The Company participates in securities lending programs whereby blocks of securities, which are included in fixed maturity securities and short-term investments, are loaned to third parties, primarily brokerage firms and commercial banks. These transactions are treated as financing arrangements and the associated liability is recorded at the amount of the cash received. The Company generally obtains collateral in an amount equal to 102% of the estimated fair value of the securities loaned. Securities loaned under such transactions may be sold or repledged by the transferee. The Company is liable to return to its counterparties the cash collateral under its control, the amounts of which by aging category are presented below.

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

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

Elements of the securities lending programs are presented below at:


	September 30, 2010		December 31, 2009
	(In millions)

Securities on loan:
Cost or amortized cost	$	6,382	$	6,173
Estimated fair value	$	6,900	$	6,051
Aging of cash collateral liability:
Open (1)	$	1,229	$	1,325
Less than thirty days		3,148		3,342
Thirty days or greater but less than sixty days		753		1,323
Sixty days or greater but less than ninety days		513		—
Ninety days or greater		1,163		234

Total cash collateral liability	$	6,806	$	6,224

Security collateral on deposit from counterparties	$	244	$	—

Reinvestment portfolio — estimated fair value	$	6,537	$	5,686


(1)		Open — meaning that the related loaned security could be returned to the Company on the next business day requiring the Company to immediately return the cash collateral.

The estimated fair value of the securities on loan related to the cash collateral on open at September 30, 2010 was $1,201 million, of which $1,084 million were U.S. Treasury and agency securities which, if put to the Company, can be immediately sold to satisfy the cash requirements. The remainder of the securities on loan was primarily U.S. Treasury and agency securities, and very liquid RMBS. The reinvestment portfolio acquired with the cash collateral consisted principally of fixed maturity securities (including RMBS, U.S. corporate, U.S. Treasury and agency and ABS).

Security collateral on deposit from counterparties in connection with the securities lending transactions may not be sold or repledged, unless the counterparty is in default, and is not reflected in the consolidated financial statements.

Invested Assets on Deposit and Pledged as Collateral

The invested assets on deposit and invested assets pledged as collateral are presented in the table below. The amounts presented in the table below are at estimated fair value for cash and cash equivalents and fixed maturity securities.


	September 30, 2010		December 31, 2009
	(In millions)

Invested assets on deposit:
Regulatory agencies (1)	$	56	$	21
Invested assets pledged as collateral:
Funding agreements — FHLB of Boston (2)		415		419
Funding agreements — Farmer Mac (3)		231		—
Derivative transactions (4)		39		18

Total invested assets on deposit and pledged as collateral	$	741	$	458


(1)		The Company has investment assets on deposit with regulatory agencies consisting primarily of fixed maturity securities.

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

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


(2)		The Company has pledged fixed maturity securities in support of its funding agreements with the Federal Home Loan Bank of Boston (“FHLB of Boston”). The nature of these Federal Home Loan Bank arrangements is described in Note 7 of the Notes to the Consolidated Financial Statements included in the 2009 Annual Report.

(3)		The Company has pledged certain agricultural real estate mortgage loans in connection with funding agreements issued to certain special purpose entities that have issued securities guaranteed by the Federal Agricultural Mortgage Corporation (“Farmer Mac”).

(4)		Certain of the Company’s invested assets are pledged as collateral for various derivative transactions as described in Note 3.

See also “— Securities Lending” for the amount of the Company’s cash received from and due back to counterparties pursuant to the securities lending program. See “— Variable Interest Entities” for assets of certain consolidated securitization entities that can only be used to settle liabilities of such entities.

Trading Securities

The Company has trading securities portfolios to support investment strategies that involve the active and frequent purchase and sale of securities and asset and liability matching strategies for certain insurance products.

At September 30, 2010 and December 31, 2009, trading securities at estimated fair value were $1,859 million and $938 million, respectively.

Interest and dividends earned on trading securities, in addition to the net realized gains (losses) and changes in estimated fair value subsequent to purchase, recognized on the trading securities included within net investment income (loss) totaled $72 million and $98 million for the three months and nine months ended September 30, 2010, respectively, and $75 million and $82 million for the three months and nine months ended September 30, 2009, respectively. Changes in estimated fair value subsequent to purchase of the trading securities included within net investment income (loss) were $51 million and $54 million for the three months and nine months ended September 30, 2010, respectively, and $38 million and $78 million for the three months and nine months ended September 30, 2009, respectively.

Mortgage Loans

Mortgage loans, net of valuation allowances, are categorized as follows:


	September 30, 2010					December 31, 2009
	Carrying		% of			Carrying		% of
	Value		Total			Value		Total
	(In millions)

Mortgage loans held-for-investment, net:
Commercial mortgage loans	$	4,220		33.5	%	$	3,546		74.7	%
Agricultural mortgage loans		1,294		10.3			1,201		25.3
Consumer loans		—		—			1		—

Subtotal mortgage loans held-for-investment, net		5,514		43.8	%		4,748		100.0	%
Commercial mortgage loans held by consolidated securitization entities — fair value option		7,093		56.2			—		—

Total mortgage loans, net	$	12,607		100.0	%	$	4,748		100.0	%

See “— Variable Interest Entities” for discussion of consolidated securitization entities included in the table above.

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

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

The (provision) release for credit losses on mortgage loans (charged) credited to net investment gains (losses) was ($16) million for the nine months ended September 30, 2010. There was no (provision) release for credit losses on mortgage loans (charged) credited to net investment gains (losses) for the three months ended September 30, 2010. The (provision) release for credit losses on mortgage loans (charged) credited to net investment gains (losses) was ($10) million and ($28) million for the three months and nine months ended September 30, 2009, respectively.

See Note 2 of the Notes to the Consolidated Financial Statements in the 2009 Annual Report for discussion of affiliated mortgage loans included in the table above. Such loans were $199 million and $200 million at September 30, 2010 and December 31, 2009, respectively.

Short-term Investments

The carrying value of short-term investments, which includes investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition was $1.5 billion and $1.8 billion at September 30, 2010 and December 31, 2009, respectively. The Company is exposed to concentrations of credit risk related to securities of the U.S. government and certain U.S. government agencies included within short-term investments, which were $1.2 billion and $1.5 billion at September 30, 2010 and December 31, 2009, respectively.

Cash Equivalents

The carrying value of cash equivalents, which includes investments with an original or remaining maturity of three months or less, at the time of acquisition was $2.8 billion and $2.4 billion at September 30, 2010 and December 31, 2009, respectively. The Company is exposed to concentrations of credit risk related to securities of the U.S. government and certain U.S. government agencies included within cash equivalents, which were $2.1 billion and $1.5 billion at September 30, 2010 and December 31, 2009, respectively.

Variable Interest Entities

The Company holds investments in certain entities that are VIEs. In certain instances, the Company holds both the power to direct the most significant activities of the entity, as well as an economic interest in the entity and, as such, consistent with the new guidance described in Note 1, is deemed to be the primary beneficiary or consolidator of the entity. The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the primary beneficiary and which are consolidated in the Company’s financial statements at September 30, 2010 and December 31, 2009. Creditors or beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company, as the Company’s obligation to the VIEs is limited to the amount of its committed investment.


	September 30, 2010				December 31, 2009
	Total		Total		Total		Total
	Assets		Liabilities		Assets		Liabilities
	(In millions)

Consolidated securitization entities (1)	$	7,126	$	7,066	$	—	$	—


(1)		As discussed in Note 1, upon the adoption of new guidance effective January 1, 2010, the Company consolidated former QSPEs that are structured as CMBS. At September 30, 2010, these entities held total assets of $7,126 million consisting of $7,093 million of commercial mortgage loans and $33 million of accrued investment income. These entities had total liabilities of $7,066 million, consisting of $7,034 million of long-term debt and $32 million of other liabilities. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company or any of its subsidiaries or affiliates liable for any principal or interest shortfalls, should any arise. The Company’s exposure is limited to that of its remaining investment in the former QSPEs of $59 million at estimated fair value at September 30, 2010. The long-term debt referred to above bears interest at primarily fixed rates ranging from 2.25% to 5.57%, payable primarily on

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

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


		a monthly basis and is expected to be repaid over the next 7 years. Interest expense related to these obligations, included in other expenses, was $101 million and $305 million for the three months and nine months ended September 30, 2010, respectively.

The following table presents the carrying amount and maximum exposure to loss relating to VIEs for which the Company holds significant variable interests but is not the primary beneficiary and which have not been consolidated at:


	September 30, 2010				December 31, 2009
			Maximum				Maximum
	Carrying		Exposure		Carrying		Exposure
	Amount		to Loss (1)		Amount		to Loss (1)
	(In millions)

Fixed maturity securities available-for-sale:
RMBS (2)	$	6,938	$	6,938	$	—	$	—
CMBS (2)		2,446		2,446		—		—
ABS (2)		1,857		1,857		—		—
U.S. corporate securities		401		401		247		247
Foreign corporate securities		338		338		304		304
Other limited partnership interests		1,094		1,922		838		1,273
Real estate joint ventures		9		34		32		39

Total	$	13,083	$	13,936	$	1,421	$	1,863


(1)		The maximum exposure to loss relating to the fixed maturity securities available-for-sale is equal to the carrying amounts or carrying amounts of retained interests. The maximum exposure to loss relating to the real estate joint ventures and other limited partnership interests is equal to the carrying amounts plus any unfunded commitments. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee.

(2)		As discussed in Note 1, the Company adopted new guidance effective January 1, 2010 which eliminated the concept of a QSPE. As a result, the Company concluded it held variable interests in RMBS, CMBS and ABS. For these interests, the Company’s involvement is limited to that of a passive investor.

As described in Note 5, the Company makes commitments to fund partnership investments in the normal course of business. Excluding these commitments, the Company did not provide financial or other support to investees designated as VIEs during the nine months ended September 30, 2010.

Related Party Investment Transactions

At September 30, 2010 and December 31, 2009, the Company held $136 million and $285 million, respectively, in the Metropolitan Money Market Pool and the MetLife Intermediate Income Pool, which are affiliated partnerships. These amounts are included in short-term investments. Net investment income from these investments was less than $1 million for both the three months and nine months ended September 30, 2010 and less than $1 million and $2 million for the three months and nine months ended September 30, 2009, respectively.

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

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

In the normal course of business, the Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Assets transferred to and from affiliates, inclusive of amounts related to reinsurance agreements, were as follows:


	Nine Months
	Ended
	September 30,
	2010		2009
	(In millions)

Estimated fair value of assets transferred to affiliates	$	476	$	—
Amortized cost of assets transferred to affiliates	$	436	$	—
Net investment gains (losses) recognized on transfers	$	40	$	—
Estimated fair value of assets transferred from affiliates	$	—	$	143


3.	Derivative Financial Instruments

Accounting for Derivative Financial Instruments

Derivatives are financial instruments whose values are derived from interest rates, foreign currency 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 risks relating to its ongoing business. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment contracts and engages in certain reinsurance contracts that have embedded derivatives.

Freestanding derivatives are carried on the Company’s consolidated balance sheets either as assets within other invested assets or as liabilities within other liabilities at estimated fair value as determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models.

The Company does not offset the fair value amounts recognized for derivatives executed with the same counterparty under the same master netting agreement.

If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the estimated fair value of the derivative are generally reported in net derivatives gains (losses) except for those in net investment income for economic hedges of equity method investments in joint ventures. The fluctuations in estimated fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income.

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 estimated fair value of a recognized asset or liability (“fair value hedge”); or (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”). In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being

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

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

highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. Assessments of hedge effectiveness and measurements of ineffectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income.

The accounting for derivatives is complex and interpretations of the primary accounting guidance continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under such accounting guidance. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate accounting treatment may result in a differing impact in the consolidated financial statements of the Company from that previously reported.

Under a fair value hedge, changes in the estimated fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the estimated fair value of the hedged item related to the designated risk being hedged, are reported within net derivatives gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of operations within interest income or interest expense to match the location of the hedged item. However, accruals that are not scheduled to settle until maturity are included in the estimated fair value of derivatives in the consolidated balance sheets.

Under a cash flow hedge, changes in the estimated fair value of the hedging derivative measured as effective are reported within other comprehensive income (loss), a separate component of stockholders’ equity and the deferred gains or losses on the derivative are reclassified into the consolidated statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item. Changes in the estimated fair value of the hedging instrument measured as ineffectiveness are reported within net derivatives gains (losses). The estimated fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of operations within interest income or interest expense to match the location of the hedged item. However, accruals that are not scheduled to settle until maturity are included in the estimated fair value of derivatives in the consolidated balance sheets.

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

When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the estimated fair value or cash flows of a hedged item, the derivative continues to be carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized currently in net derivatives gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its estimated fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in estimated fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the consolidated statement of operations when the Company’s earnings are affected by the variability in cash flows of the hedged item.

When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur on the anticipated date or within two months of that date, the derivative continues to be carried in the consolidated balance sheets at its estimated fair value, with changes in estimated fair value recognized currently in net derivatives gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income

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

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

(loss) pursuant to the discontinued cash flow hedge of a forecasted transaction that is no longer probable are recognized immediately in net derivatives gains (losses).

In all other situations in which hedge accounting is discontinued, the derivative is carried at its estimated fair value in the consolidated balance sheets, with changes in its estimated fair value recognized in the current period as net derivatives gains (losses).

The Company is also a party to financial instruments that contain terms which are deemed to be embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. If the instrument would not be accounted for in its entirety at estimated fair value and it is determined that the terms of the embedded derivative 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 bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried in the consolidated balance sheets at estimated fair value with the host contract and changes in their estimated fair value are generally reported in net derivatives gains (losses). If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income. Additionally, the Company may elect to carry an entire contract on the balance sheet at estimated fair value, with changes in estimated fair value recognized in the current period in net investment gains (losses) or net investment income if that contract contains an embedded derivative that requires bifurcation. There is a risk that embedded derivatives requiring bifurcation may not be identified and reported at estimated fair value in the consolidated financial statements and that their related changes in estimated fair value could materially affect reported net income.

See Note 4 for information about the fair value hierarchy for derivatives.

Primary Risks Managed by Derivative Financial Instruments and Non-Derivative Financial Instruments

The Company is exposed to various risks relating to its ongoing business operations, including interest rate risk, foreign currency risk, credit risk and equity market risk. The Company uses a variety of strategies to manage these risks, including the use of derivative instruments. The following table presents the gross notional amount,

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

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

estimated fair value and primary underlying risk exposure of the Company’s derivative financial instruments, excluding embedded derivatives held at:


		September 30, 2010						December 31, 2009
				Estimated						Estimated
Primary Underlying		Notional		Fair Value (1)				Notional		Fair Value (1)
Risk Exposure	Instrument Type	Amount		Assets		Liabilities		Amount		Assets		Liabilities
		(In millions)

Interest rate	Interest rate swaps	$	7,131	$	835	$	294	$	5,261	$	534	$	179
	Interest rate floors		7,986		236		107		7,986		78		34
	Interest rate caps		6,658		14		1		4,003		15		—
	Interest rate futures		1,758		2		1		835		2		1
	Interest rate forwards		695		8		6		—		—		—
Foreign currency	Foreign currency swaps		2,626		624		58		2,678		689		93
	Foreign currency forwards		154		2		12		79		3		—
Credit	Credit default swaps		1,344		13		22		966		12		31
	Credit forwards		35		5		—		90		—		3
Equity market	Equity futures		84		—		—		81		1		—
	Equity options		798		122		—		775		112		—
	Variance swaps		1,082		33		3		1,081		24		6

	Total	$	30,351	$	1,894	$	504	$	23,835	$	1,470	$	347


(1)		The estimated fair value of all derivatives in an asset position is reported within other invested assets in the consolidated balance sheets and the estimated fair value of all derivatives in a liability position is reported within other liabilities in the consolidated balance sheets.

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

The Company also enters into basis swaps to better match the cash flows from assets and related liabilities. In a basis swap, both legs of the swap are floating with each based on a different index. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. A single net payment is usually made by one counterparty at each due date. Basis swaps are included in interest rate swaps in the preceding table. The Company utilizes basis swaps in non-qualifying hedging relationships.

Inflation swaps are used as an economic hedge to reduce inflation risk generated from inflation-indexed liabilities. Inflation swaps are included in interest rate swaps in the preceding table. The Company utilizes inflation swaps in non-qualifying hedging relationships.

Implied volatility swaps are used by the Company primarily as economic hedges of interest rate risk associated with the Company’s investments in mortgage-backed securities. In an implied volatility swap, the Company exchanges fixed payments for floating payments that are linked to certain market volatility measures. If implied volatility rises, the floating payments that the Company receives will increase, and if implied volatility falls, the floating payments that the Company receives will decrease. Implied volatility swaps are included in interest rate

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

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

swaps in the preceding table. The Company utilizes implied volatility swaps in non-qualifying hedging relationships.

The Company purchases interest rate caps and floors primarily to protect its floating rate liabilities against rises in interest rates above a specified level, and against interest rate exposure arising from mismatches between assets and liabilities (duration mismatches), as well as to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level, respectively. In certain instances, the Company locks in the economic impact of existing purchased caps and floors by entering into offsetting written caps and floors. The Company utilizes interest rate caps and floors in non-qualifying hedging relationships.

In exchange-traded interest rate (Treasury and swap) 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 interest rate securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) 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 or swap curve performance. The Company utilizes exchange-traded interest rate futures in non-qualifying hedging relationships.

The Company writes covered call options on its portfolio of U.S. Treasuries as an income generation strategy. In a covered call transaction, the Company receives a premium at the inception of the contract in exchange for giving the derivative counterparty the right to purchase the referenced security from the Company at a predetermined price. The call option is “covered” because the Company owns the referenced security over the term of the option. Covered call options are included in interest rate options. The Company utilizes covered call options in non-qualifying hedging relationships.

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

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.

In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the inception and termination of the currency swap by each party. The Company utilizes foreign currency swaps in fair value, cash flow, and non-qualifying hedging relationships.

In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made in a different currency at the specified future date. The Company utilizes foreign currency forwards in non-qualifying hedging relationships.

Swap spreadlocks are used by the Company to hedge invested assets on an economic basis against the risk of changes in credit spreads. Swap spreadlocks are forward transactions between two parties whose underlying reference index is a forward starting interest rate swap where the Company agrees to pay a coupon based on a predetermined reference swap spread in exchange for receiving a coupon based on a floating rate. The Company has the option to cash settle with the counterparty in lieu of maintaining the swap after the effective date. The Company utilizes swap spreadlocks in non-qualifying hedging relationships.

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

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

Certain credit default swaps are used by the Company to hedge against credit-related changes in the value of its investments and to diversify its credit risk exposure in certain portfolios. In a credit default swap transaction, the Company agrees with another party, at specified intervals, to pay a premium to hedge 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 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. The Company utilizes credit default swaps in non-qualifying hedging relationships.

Credit default swaps are also used to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. Treasury or agency security. These credit default swaps are not designated as hedging instruments.

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

In exchange-traded equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded equity futures are used primarily to hedge liabilities embedded in certain variable annuity products offered by the Company. The Company utilizes exchange-traded equity futures in non-qualifying hedging relationships.

Equity index options are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based on differentials in the indices at the time of exercise and the strike price. In certain instances, the Company may enter into a combination of transactions to hedge adverse changes in equity indices within a pre-determined range through the purchase and sale of options. Equity index options are included in equity options. The Company utilizes equity index options in non-qualifying hedging relationships.

Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. Equity variance swaps are included in variance swaps in the preceding table. The Company utilizes equity variance swaps in non-qualifying hedging relationships.

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

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

Hedging

The following table presents the gross notional amount and estimated fair value of derivatives designated as hedging instruments by type of hedge designation at:


	September 30, 2010						December 31, 2009
			Estimated						Estimated
	Notional		Fair Value				Notional		Fair Value
Derivatives Designated as Hedging Instruments	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Fair Value Hedges:
Foreign currency swaps	$	841	$	346	$	17	$	850	$	370	$	15
Interest rate swaps		193		18		4		220		11		2

Subtotal		1,034		364		21		1,070		381		17

Cash Flow Hedges:
Foreign currency swaps		295		16		5		166		15		7
Interest rate swaps		575		32		—		—		—		—
Interest rate forwards		695		8		6		—		—		—
Credit forwards		35		5		—		90		—		3

Subtotal		1,600		61		11		256		15		10

Total Qualifying Hedges	$	2,634	$	425	$	32	$	1,326	$	396	$	27

The following table presents the gross notional amount and estimated fair value of derivatives that were not designated or do not qualify as hedging instruments by derivative type at:


	September 30, 2010						December 31, 2009
			Estimated						Estimated
Derivatives Not Designated or	Notional		Fair Value				Notional		Fair Value
Not Qualifying as Hedging Instruments	Amount		Assets		Liabilities		Amount		Assets		Liabilities
	(In millions)

Interest rate swaps	$	6,363	$	785	$	290	$	5,041	$	523	$	177
Interest rate floors		7,986		236		107		7,986		78		34
Interest rate caps		6,658		14		1		4,003		15		—
Interest rate futures		1,758		2		1		835		2		1
Foreign currency swaps		1,490		262		36		1,662		304		71
Foreign currency forwards		154		2		12		79		3		—
Credit default swaps		1,344		13		22		966		12		31
Equity futures		84		—		—		81		1		—
Equity options		798		122		—		775		112		—
Variance swaps		1,082		33		3		1,081		24		6

Total non-designated or non-qualifying derivatives	$	27,717	$	1,469	$	472	$	22,509	$	1,074	$	320

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

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

Net Derivatives Gains (Losses)

The components of net derivatives gains (losses) were as follows:


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010		2009
	(In millions)

Derivatives and hedging gains (losses) (1)	$	(44	)	$	(94	)	$	90	$	(575	)
Embedded derivatives		81			88			202		(190	)

Total net derivatives gains (losses)	$	37		$	(6	)	$	292	$	(765	)


(1)		Includes foreign currency transaction gains (losses) on hedged items in cash flow and non-qualifying hedge relationships, which are not presented elsewhere in this note.

The following table presents the settlement payments recorded in income for the:


	Three Months					Nine Months
	Ended					Ended
	September 30,					September 30,
	2010		2009			2010		2009
	(In millions)

Qualifying hedges:
Net investment income	$	—	$	—		$	1	$	(1	)
Interest credited to policyholder account balances		11		11			27		28
Non-qualifying hedges:
Net derivatives gains (losses)		7		(7	)		—		(5	)

Total	$	18	$	4		$	28	$	22

Fair Value Hedges

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

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

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

The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net derivatives gains (losses). The following table represents the amount of such net derivatives gains (losses) recognized for the three months and nine months ended September 30, 2010 and 2009:


								Ineffectiveness
		Net Derivatives Gains			Net Derivatives Gains			Recognized in Net
Derivatives in Fair Value	Hedged Items in Fair Value	(Losses) Recognized			(Losses) Recognized			Derivatives Gains
Hedging Relationships	Hedging Relationships	for Derivatives			for Hedged Items			(Losses)
		(In millions)

For the Three Months Ended September 30, 2010:
Interest rate swaps:	Fixed maturity securities	$	—		$	—		$	—
	Policyholder account balances (1)		—			(5	)		(5	)
Foreign currency swaps:	Foreign-denominated policyholder account balances (2)		93			(92	)		1

Total		$	93		$	(97	)	$	(4	)

For the Three Months Ended September 30, 2009:
Interest rate swaps:	Fixed maturity securities	$	—		$	—		$	—
	Policyholder account balances (1)		1			(2	)		(1	)
Foreign currency swaps:	Foreign-denominated policyholder account balances (2)		50			(49	)		1

Total		$	51		$	(51	)	$	—

For the Nine Months Ended September 30, 2010:
Interest rate swaps:	Fixed maturity securities	$	(1	)	$	1		$	—
	Policyholder account balances (1)		5			(10	)		(5	)
Foreign currency swaps:	Foreign-denominated policyholder account balances (2)		(24	)		7			(17	)

Total		$	(20	)	$	(2	)	$	(22	)

For the Nine Months Ended September 30, 2009:
Interest rate swaps:	Fixed maturity securities	$	6		$	(6	)	$	—
	Policyholder account balances (1)		(6	)		4			(2	)
Foreign currency swaps:	Foreign-denominated policyholder account balances (2)		144			(143	)		1

Total		$	144		$	(145	)	$	(1	)


(1)		Fixed rate liabilities

(2)		Fixed rate or floating rate liabilities

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

Cash Flow Hedges

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

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

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

For the three months and nine months ended September 30, 2010, the Company recognized insignificant net derivatives losses which represented the ineffective portion of all cash flow hedges. For the three months and nine months ended September 30, 2009, the Company did not recognize any net derivatives gains (losses) which represented the ineffective portion of all cash flow hedges. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. For the three months and nine months ended September 30, 2010 and 2009, 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 within two months of that date. At September 30, 2010 and December 31, 2009, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed seven years and one year, respectively.

The following table presents the components of other comprehensive income (loss), before income tax, related to cash flow hedges:


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Other comprehensive income (loss), balance at beginning of period	$	23		$	12		$	(1	)	$	20
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges		29			14			49			(32	)
Amounts reclassified to net derivatives gains (losses)		(4	)		(7	)		—			31

Other comprehensive income (loss), balance at end of period	$	48		$	19		$	48		$	19

At September 30, 2010, $2 million of deferred net gains on derivatives in accumulated other comprehensive income (loss) was expected to be reclassified to earnings within the next 12 months.

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

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

The following tables present the effects of derivatives in cash flow hedging relationships on the interim condensed consolidated statements of operations and the interim condensed consolidated statements of stockholders’ equity for the three months and nine months ended September 30, 2010 and 2009:


				Amount and Location of
				Gains (Losses)
	Amount of Gains			Reclassified from
	(Losses) Deferred			Accumulated Other
	in Accumulated			Comprehensive Income
	Other Comprehensive			(Loss) into Income (Loss)
	Income (Loss) on			Net Derivatives
Derivatives in Cash Flow Hedging Relationships	Derivatives			Gains (Losses)
	(In millions)

For the Three Months Ended September 30, 2010:
Interest rate swaps	$	31		$	—
Foreign currency swaps		(9	)		4
Interest rate forwards		1			—
Credit forwards		6			—

Total	$	29		$	4

For the Three Months Ended September 30, 2009:
Foreign currency swaps	$	—		$	1
Interest rate forwards		14			6

Total	$	14		$	7

For the Nine Months Ended September 30, 2010:
Interest rate swaps	$	32		$	—
Foreign currency swaps		1			(2	)
Interest rate forwards		1			2
Credit forwards		15			—

Total	$	49		$	—

For the Nine Months Ended September 30, 2009:
Foreign currency swaps	$	(54	)	$	(37	)
Interest rate forwards		22			6

Total	$	(32	)	$	(31	)

Non-Qualifying Derivatives and Derivatives for Purposes Other Than Hedging

The Company enters into the following derivatives that do not qualify for hedge accounting or for purposes other than hedging: (i) interest rate swaps, implied volatility swaps, caps and floors and interest rate futures to economically hedge its exposure to interest rates; (ii) foreign currency forwards and swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to economically hedge exposure to adverse movements in credit; (iv) equity futures, equity index options, interest rate futures and equity variance swaps to economically hedge liabilities embedded in certain variable annuity products; (v) swap spreadlocks to economically hedge invested assets against the risk of changes in credit spreads; (vi) credit default swaps to synthetically create investments; (vii) interest rate forwards to buy and sell securities to economically hedge its exposure to interest rates; (viii) basis swaps to better match the cash flows of assets and related liabilities; (ix) inflation swaps to reduce risk generated from inflation-indexed liabilities; (x) covered call options for income

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

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

generation; and (xi) equity options to economically hedge certain invested assets against adverse changes in equity indices.

The following tables present the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as hedging instruments:


	Net Derivatives			Net Investment
	Gains (Losses)			Income (1)
	(In millions)

For the Three Months Ended September 30, 2010:
Interest rate swaps	$	36		$	—
Interest rate floors		36			—
Interest rate caps		(4	)		—
Interest rate futures		(8	)		—
Equity futures		(12	)		—
Foreign currency swaps		54			—
Foreign currency forwards		(13	)		—
Equity options		(29	)		(8	)
Interest rate forwards		1			—
Variance swaps		(15	)		—

Total	$	46		$	(8	)

For the Three Months Ended September 30, 2009:
Interest rate swaps	$	38		$	—
Interest rate floors		10			—
Interest rate caps		(10	)		—
Interest rate futures		(8	)		—
Equity futures		(30	)		—
Foreign currency swaps		(23	)		—
Foreign currency forwards		(3	)		—
Equity options		(40	)		—
Interest rate forwards		(1	)		—
Variance swaps		(9	)		—
Credit default swaps		(16	)		—

Total	$	(92	)	$	—

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

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


	Net Derivatives			Net Investment
	Gains (Losses)			Income (1)
	(In millions)

For the Nine Months Ended September 30, 2010:
Interest rate swaps	$	99		$	—
Interest rate floors		83			—
Interest rate caps		(18	)		—
Interest rate futures		(36	)		—
Equity futures		(13	)		—
Foreign currency swaps		(3	)		—
Equity options		14			(4	)
Interest rate options		(3	)		—
Interest rate forwards		1			—
Variance swaps		13			—
Credit default swaps		1			—

Total	$	138		$	(4	)

For the Nine Months Ended September 30, 2009:
Interest rate swaps	$	(96	)	$	—
Interest rate floors		(232	)		—
Interest rate caps		4			—
Interest rate futures		(42	)		—
Equity futures		(65	)		—
Foreign currency swaps		(2	)		—
Foreign currency forwards		(5	)		—
Equity options		(89	)		—
Interest rate forwards		1			—
Variance swaps		(28	)		—
Credit default swaps		(43	)		—

Total	$	(597	)	$	—


(1)		Changes in estimated fair value related to economic hedges of equity method investments in joint ventures.

Credit Derivatives

In connection with synthetically created investment transactions, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit derivatives are included within the non-qualifying derivatives and derivatives for purposes other than hedging table. If a credit event occurs, as defined by the contract, generally the contract will require the Company to pay the counterparty the specified swap notional amount in exchange for the delivery of par quantities of the referenced credit obligation. The Company’s maximum amount at risk, assuming the value of all referenced credit obligations is zero, was $887 million and $477 million at September 30, 2010 and December 31, 2009, respectively. The Company can terminate these contracts at any time through cash settlement with the counterparty at an amount equal to the then current fair value of the credit default swaps. At both September 30, 2010 and December 31, 2009, the Company would have received $8 million to terminate all of these contracts.

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

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

The following table presents the estimated fair value, maximum amount of future payments and weighted average years to maturity of written credit default swaps at September 30, 2010 and December 31, 2009:


	September 30, 2010							December 31, 2009
				Maximum						Maximum
	Estimated			Amount of				Estimated		Amount of
	Fair			Future		Weighted		Fair		Future		Weighted
	Value of			Payments under		Average		Value of		Payments under		Average
Rating Agency Designation of Referenced	Credit Default			Credit Default		Years to		Credit Default		Credit Default		Years to
Credit Obligations (1)	Swaps			Swaps (2)		Maturity (3)		Swaps		Swaps (2)		Maturity (3)
	(In millions)

Aaa/Aa/A
Single name credit default swaps (corporate)	$	1		$	45		3.8	$	1	$	25		4.0
Credit default swaps referencing indices		8			679		4.0		7		437		3.5

Subtotal		9			724		4.0		8		462		3.5

Baa
Single name credit default swaps (corporate)		—			5		3.3		—		5		4.0
Credit default swaps referencing indices		(1	)		158		5.3		—		10		5.0

Subtotal		(1	)		163		5.2		—		15		4.7

Total	$	8		$	887		4.2	$	8	$	477		3.5


(1)		The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

(2)		Assumes the value of the referenced credit obligations is zero.

(3)		The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts.

Credit Risk on Freestanding Derivatives

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 net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received pursuant to credit support annexes.

The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange-traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments. See Note 4 for a description of the impact of credit risk on the valuation of derivative instruments.

The Company enters into various collateral arrangements, which require both the pledging and accepting of collateral in connection with its derivative instruments. At September 30, 2010 and December 31, 2009, the Company was obligated to return cash collateral under its control of $1,278 million and $945 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents or in short-term investments and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets. At September 30, 2010 and December 31, 2009, the Company had also accepted collateral consisting of various securities with a fair market value of $0 and $88 million, respectively, which were held in separate custodial accounts. The Company is permitted by contract to sell or repledge this collateral, but at September 30, 2010, none of the collateral had been sold or repledged.

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

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

The Company’s collateral arrangements for its over-the-counter derivatives generally require the counterparty in a net liability position, after considering the effect of netting agreements, to pledge collateral when the fair value of that counterparty’s derivatives reaches a pre-determined threshold. Certain of these arrangements also include credit-contingent provisions that provide for a reduction of these thresholds (on a sliding scale that converges toward zero) in the event of downgrades in the credit ratings of the Company and/or the counterparty. In addition, certain of the Company’s netting agreements for derivative instruments contain provisions that require the Company to maintain a specific investment grade credit rating from at least one of the major credit rating agencies. If the Company’s credit ratings were to fall below that specific investment grade credit rating, it would be in violation of these provisions, and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments that are in a net liability position after considering the effect of netting agreements.

The following table presents the estimated fair value of the Company’s over-the-counter derivatives that are in a net liability position after considering the effect of netting agreements, together with the estimated fair value and balance sheet location of the collateral pledged. The table also presents the incremental collateral that the Company would be required to provide if there was a one notch downgrade in the Company’s credit rating at the reporting date or if the Company’s credit rating sustained a downgrade to a level that triggered full overnight collateralization or termination of the derivative position at the reporting date. Derivatives that are not subject to collateral agreements are not included in the scope of this table.

Fair Value of Incremental Collateral

Provided Upon:

Downgrade in the

Estimated

One Notch

Company’s Credit Rating

Fair Value of

Downgrade

to a Level that Triggers

Estimated

Collateral

in the

Full Overnight

Fair Value (1) of

Provided

Company’s

Collateralization or

Derivatives in Net

Fixed Maturity

Credit

Termination

Liability Position

Securities (2)

Rating

of the Derivative Position

(In millions)

At September 30, 2010

At December 31, 2009

—


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

(2)		Included in fixed maturity securities in the consolidated balance sheets. The counterparties are permitted by contract to sell or repledge this collateral. At both September 30, 2010 and December 31, 2009, the Company did not provide any cash collateral.

Without considering the effect of netting agreements, the estimated fair value of the Company’s over-the-counter derivatives with credit-contingent provisions that were in a gross liability position at September 30, 2010 was $167 million. At September 30, 2010, the Company provided securities collateral of $19 million in connection with these derivatives. In the unlikely event that both: (i) the Company’s credit rating was downgraded to a level that triggers full overnight collateralization or termination of all derivative positions; and (ii) the Company’s netting agreements were deemed to be legally unenforceable, then the additional collateral that the Company would be required to provide to its counterparties in connection with its derivatives in a gross liability position at September 30, 2010 would be $148 million. This amount does not consider gross derivative assets of $130 million for which the Company has the contractual right of offset.

The Company also has exchange-traded futures, which may require the pledging of collateral. At both September 30, 2010 and December 31, 2009, the Company did not pledge any securities collateral for exchange-traded futures. At September 30, 2010 and December 31, 2009, the Company provided cash collateral for exchange-traded futures of $20 million and $18 million, respectively, which is included in premiums, reinsurance and other receivables.

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

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

Embedded Derivatives

The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts principally include: variable annuities with guaranteed minimum benefits, including guaranteed minimum withdrawal benefits (“GMWBs”), guaranteed minimum accumulation benefits (“GMABs”) and certain guaranteed minimum income benefits (“GMIBs”); affiliated reinsurance contracts of guaranteed minimum benefits related to GMWBs, GMABs and certain GMIBs; and ceded reinsurance written on a funds withheld basis.

The following table presents the estimated fair value of the Company’s embedded derivatives at:


	September 30, 2010		December 31, 2009
	(In millions)

Net embedded derivatives within asset host contracts:
Ceded guaranteed minimum benefits	$	1,896	$	724
Options embedded in debt or equity securities		1		(5	)

Net embedded derivatives within asset host contracts	$	1,897	$	719

Net embedded derivatives within liability host contracts:
Direct guaranteed minimum benefits	$	1,022	$	290
Other		150		(11	)

Net embedded derivatives within liability host contracts	$	1,172	$	279

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


	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2010		2009		2010		2009
	(In millions)

Net derivatives gains (losses) (1), (2)	$	81	$	88	$	202	$	(190	)


(1)		The valuation of direct guaranteed minimum benefits includes an adjustment for nonperformance risk. Included in net derivatives gains (losses), in connection with this adjustment, were gains (losses) of ($86) million and ($32) million, for the three months and nine months ended September 30, 2010, respectively, and gains (losses) of ($154) million and ($464) million, for the three months and nine months ended September 30, 2009, respectively. In addition, the valuation of ceded guaranteed minimum benefits includes an adjustment for nonperformance risk. Included in net derivatives gains (losses), in connection with this adjustment, were gains (losses) of $112 million and $91 million, for the three months and nine months ended September 30, 2010, respectively, and gains (losses) of $273 million and $643 million, for the three months and nine months ended September 30, 2009, respectively. The net derivatives gains (losses) for the nine months ended September 30, 2010 included a gain of $191 million relating to a refinement for estimating nonperformance risk in fair value measurements implemented at June 30, 2010. See Note 4.

(2)		See Note 8 for discussion of affiliated net derivatives gains (losses) included in the table above.


4.	Fair Value

Considerable judgment is often required in interpreting market data to develop estimates of fair value and the use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts.

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

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

Assets and Liabilities Measured at Fair Value

Recurring Fair Value Measurements

The assets and liabilities measured at estimated fair value on a recurring basis, including those items for which the Company has elected the fair value option, were determined as described below. These estimated fair values and their corresponding placement in the fair value hierarchy are summarized as follows:


	September 30, 2010
	Fair Value Measurements at Reporting Date Using
	Quoted Prices in
	Active Markets for				Significant		Total
	Identical Assets		Significant Other		Unobservable		Estimated
	and Liabilities		Observable Inputs		Inputs		Fair
	(Level 1)		(Level 2)		(Level 3)		Value
	(In millions)
Assets
Fixed maturity securities:
U.S. corporate securities	$	—	$	14,969	$	1,530	$	16,499
Foreign corporate securities		—		7,526		968		8,494
U.S. Treasury and agency securities		5,081		2,593		35		7,709
RMBS		—		6,617		321		6,938
CMBS		—		2,340		106		2,446
ABS		—		1,271		586		1,857
State and political subdivision securities		—		1,554		32		1,586
Foreign government securities		—		879		7		886

Total fixed maturity securities		5,081		37,749		3,585		46,415

Equity securities:
Non-redeemable preferred stock		—		58		217		275
Common stock		53		70		27		150

Total equity securities		53		128		244		425

Trading securities		1,852		7		—		1,859
Short-term investments (1)		451		928		53		1,432
Mortgage loans held by consolidated securitization entities		—		7,093		—		7,093
Derivative assets: (2)
Interest rate contracts		2		1,069		24		1,095
Foreign currency contracts		—		626		—		626
Credit contracts		—		6		12		18
Equity market contracts		—		122		33		155

Total derivative assets		2		1,823		69		1,894

Net embedded derivatives within asset host contracts (3)		—		—		1,896		1,896
Separate account assets (4)		69		55,578		136		55,783

Total assets	$	7,508	$	103,306	$	5,983	$	116,797

Liabilities
Derivative liabilities: (2)
Interest rate contracts	$	1	$	400	$	8	$	409
Foreign currency contracts		—		70		—		70
Credit contracts		—		20		2		22
Equity market contracts		—		—		3		3

Total derivative liabilities		1		490		13		504

Net embedded derivatives within liability host contracts (3)		—		—		1,172		1,172
Long-term debt of consolidated securitization entities		—		7,034		—		7,034

Total liabilities	$	1	$	7,524	$	1,185	$	8,710

See “— Variable Interest Entities” in Note 2 for discussion of consolidated securitization entities included in the table above.

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

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


	December 31, 2009
	Fair Value Measurements at Reporting Date Using
	Quoted Prices in
	Active Markets for				Significant		Total
	Identical Assets		Significant Other		Unobservable		Estimated
	and Liabilities		Observable Inputs		Inputs		Fair
	(Level 1)		(Level 2)		(Level 3)		Value
	(In millions)

Assets
Fixed maturity securities:
U.S. corporate securities	$	—	$	13,793	$	1,605	$	15,398
Foreign corporate securities		—		6,344		994		7,338
U.S. Treasury and agency securities		3,972		2,252		33		6,257
RMBS		—		5,827		25		5,852
CMBS		—		2,572		45		2,617
ABS		—		1,452		537		1,989
State and political subdivision securities		—		1,147		32		1,179
Foreign government securities		—		629		16		645

Total fixed maturity securities		3,972		34,016		3,287		41,275

Equity securities:
Non-redeemable preferred stock		—		48		258		306
Common stock		72		70		11		153

Total equity securities		72		118		269		459

Trading securities		931		7		—		938
Short-term investments (1)		1,057		703		8		1,768
Derivative assets (2)		3		1,410		57		1,470
Net embedded derivatives within asset host contracts (3)		—		—		724		724
Separate account assets (4)		69		49,227		153		49,449

Total assets	$	6,104	$	85,481	$	4,498	$	96,083

Liabilities
Derivative liabilities (2)	$	1	$	336	$	10	$	347
Net embedded derivatives within liability host contracts (3)		—		—		279		279

Total liabilities	$	1	$	336	$	289	$	626


(1)		Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value (e.g., time deposits, etc.), and therefore are excluded from the tables presented above.

(2)		Derivative assets are presented within other invested assets in the consolidated balance sheets and derivative liabilities are presented within other liabilities in the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for

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

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


		purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables which follow.

(3)		Net embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables in the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented in the consolidated balance sheets within policyholder account balances and other liabilities. At September 30, 2010, fixed maturity securities and equity securities also included embedded derivatives of $8 million and ($7) million, respectively. At December 31, 2009, fixed maturity securities and equity securities included embedded derivatives of $0 and ($5) million, respectively.

(4)		Separate account assets are measured at estimated fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets.

The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows:

Fixed maturity securities, Equity securities and Trading securities

When available, the estimated fair value of the Company’s fixed maturity, equity and trading securities are based on quoted prices in active markets that are readily and regularly obtainable. Generally, these are the most liquid of the Company’s securities holdings and valuation of these securities does not involve management judgment.

When quoted prices in active markets are not available, the determination of estimated fair value is based on market standard valuation methodologies. The market standard valuation methodologies utilized include: discounted cash flow methodologies, matrix pricing or other similar techniques. The inputs in applying these market standard valuation methodologies include, but are not limited to: interest rates, credit standing of the issuer or counterparty, industry sector of the issuer, coupon rate, call provisions, sinking fund requirements, maturity and management’s assumptions regarding estimated duration, liquidity and estimated future cash flows. Accordingly, the estimated fair values are based on available market information and management’s judgments about financial instruments.

The significant inputs to the market standard valuation methodologies for certain types of securities with reasonable levels of price transparency are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Such observable inputs include benchmarking prices for similar assets in active markets, quoted prices in markets that are not active and observable yields and spreads in the market.

When observable inputs are not available, the market standard valuation methodologies for determining the estimated fair value of certain types of securities that trade infrequently, and therefore have little or no price transparency, rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. These unobservable inputs can be based in large part on management judgment or estimation and cannot be supported by reference to market activity. Even though unobservable, these inputs are assumed to be consistent with what other market participants would use when pricing such securities and are considered appropriate given the circumstances.

The use of different methodologies, assumptions and inputs may have a material effect on the estimated fair values of the Company’s securities holdings.

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

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

Short-term investments

Short-term investments that meet the definition of a security are recognized at estimated fair value in the consolidated balance sheets in the same manner described above for similar instruments that are classified within fixed maturity securities.

Mortgage loans

Mortgage loans presented in the tables above consist of commercial mortgage loans held by consolidated securitization entities for which the Company has elected the fair value option and which are carried at estimated fair value. As discussed in Note 1, the Company adopted new guidance effective January 1, 2010 and consolidated certain securitization entities that hold commercial mortgage loans. See “— Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities” below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments.

Derivatives

The estimated fair value of derivatives is determined through the use of quoted market prices for exchange-traded derivatives or through the use of pricing models for over-the-counter derivatives. The determination of estimated fair value, when quoted market values are not available, is based on market standard valuation methodologies and inputs that are assumed to be consistent with what other market participants would use when pricing the instruments. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, default risk (including the counterparties to the contract), volatility, liquidity and changes in estimates and assumptions used in the pricing models.

The significant inputs to the pricing models for most over-the-counter derivatives are inputs that are observable in the market or can be derived principally from or corroborated by observable market data. Significant inputs that are observable generally include: interest rates, foreign currency exchange rates, interest rate curves, credit curves and volatility. However, certain over-the-counter derivatives may rely on inputs that are significant to the estimated fair value that are not observable in the market or cannot be derived principally from or corroborated by observable market data. Significant inputs that are unobservable generally include: independent broker quotes, credit correlation assumptions, references to emerging market currencies and inputs that are outside the observable portion of the interest rate curve, credit curve, volatility or other relevant market measure. These unobservable inputs may involve significant management judgment or estimation. Even though unobservable, these inputs are based on assumptions deemed appropriate given the circumstances and are assumed to be consistent with what other market participants would use when pricing such instruments.

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

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

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

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

Embedded derivatives within asset and liability host contracts

Embedded derivatives principally include certain direct, assumed and ceded variable annuity guarantees, and embedded derivatives related to funds withheld on ceded reinsurance. Embedded derivatives are recorded in the financial statements at estimated fair value with changes in estimated fair value reported in net income.

The Company issues certain variable annuity products with guaranteed minimum benefit guarantees. GMWBs, GMABs and certain GMIBs are embedded derivatives, which are measured at estimated fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivatives gains (losses). These embedded derivatives are classified within policyholder account balances in the consolidated balance sheets.

The fair value of these guarantees is estimated using the present value of future benefits minus the present value of future fees using actuarial and capital market assumptions related to the projected cash flows over the expected lives of the contracts. A risk neutral valuation methodology is used under which the cash flows from the guarantees are projected under multiple capital market scenarios using observable risk free rates, currency exchange rates and observable and estimated implied volatilities.

The valuation of these guarantee liabilities includes adjustments for nonperformance risk and for a risk margin related to non-capital market inputs. Both of these adjustments are captured as components of the spread which, when combined with the risk free rate, is used to discount the cash flows of the liability for purposes of determining its fair value.

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

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

The Company ceded the risk associated with certain of the GMIB, GMAB and GMWB guarantees described above to an affiliated reinsurance company that are also accounted for as embedded derivatives. In addition to ceding risks associated with guarantees that are accounted for as embedded derivatives, the Company also cedes, to the same affiliated reinsurance company, certain directly written GMIB guarantees that are accounted for as insurance (i.e. not as embedded derivatives) but where the reinsurance contract contains an embedded derivative. These embedded derivatives are included in premiums, reinsurance and other receivables in the consolidated balance sheets with changes in estimated fair value reported in net derivatives gains (losses). The value of the embedded derivatives on these ceded risks is determined using a methodology consistent with that described previously for the guarantees directly written by the Company. Because the direct guarantee is not accounted for at fair value, significant fluctuations in net income may occur as the change in fair value of the embedded derivative on the ceded risk is being recorded in net income without a corresponding and offsetting change in fair value of the direct guarantee.

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

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

As part of its regular review of critical accounting estimates, the Company periodically assesses inputs for estimating nonperformance risk (commonly referred to as “own credit”) in fair value measurements. During the second quarter of 2010, the Company completed a study that aggregated and evaluated data, including historical recovery rates of insurance companies, as well as policyholder behavior observed over the past two years as the recent financial crisis evolved. As a result, at the end of the second quarter of 2010, the Company refined the way in which it incorporates expected recovery rates into the nonperformance risk adjustment for purposes of estimating the fair value of investment-type contracts and embedded derivatives within insurance contracts. The Company recognized a gain of $60 million, net of DAC and income tax, relating to implementing the refinement at June 30, 2010.

The estimated fair value of the embedded derivatives within funds withheld related to certain ceded reinsurance is determined based on the change in estimated fair value of the underlying assets held by the Company in a reference portfolio backing the funds withheld liability. The estimated fair value of the underlying assets is determined as described above in “— Fixed maturity securities, Equity securities and Trading securities” and “— Short-term investments.” The estimated fair value of these embedded derivatives is included, along with their funds withheld hosts, in other liabilities in the consolidated balance sheets with changes in estimated fair value recorded in net derivatives gains (losses). Changes in the credit spreads on the underlying assets, interest rates and market volatility may result in significant fluctuations in the estimated fair value of these embedded derivatives that could materially affect net income.

Separate account assets

Separate account assets are carried at estimated fair value and reported as a summarized total on the consolidated balance sheets. The estimated fair value of separate account assets are based on the estimated fair value of the underlying assets owned by the separate account. Assets within the Company’s separate accounts include: mutual funds, fixed maturity securities, equity securities, other limited partnership interests, short-term investments and cash and cash equivalents. See “— Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities” below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments.

Long-term debt obligations of consolidated securitization entities

The Company has elected the fair value option for the long-term debt of consolidated securitization entities, which are carried at estimated fair value. See “— Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities” below for a discussion of the methods and assumptions used to estimate the fair value of these financial instruments.

Valuation Techniques and Inputs by Level Within the Three-Level Fair Value Hierarchy by Major Classes of Assets and Liabilities

A description of the significant valuation techniques and inputs to the determination of estimated fair value for the more significant asset and liability classes measured at fair value on a recurring basis is as follows:

The Company determines the estimated fair value of its investments using primarily the market approach and the income approach. The use of quoted prices for identical assets and matrix pricing or other similar techniques are examples of market approaches, while the use of discounted cash flow methodologies is an example of the income approach. The Company attempts to maximize the use of observable inputs and minimize the use of unobservable inputs in selecting whether the market or income approach is used.

While certain investments have been classified as Level 1 from the use of unadjusted quoted prices for identical investments supported by high volumes of trading activity and narrow bid/ask spreads, most investments have been classified as Level 2 because the significant inputs used to measure the fair value on a recurring basis of

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

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

the same or similar investment are market observable or can be corroborated using market observable information for the full term of the investment. Level 3 investments include those where estimated fair values are based on significant unobservable inputs that are supported by little or no market activity and may reflect our own assumptions about what factors market participants would use in pricing these investments.

Level 1 Measurements:

Fixed maturity securities, equity securities, trading securities and short-term investments

These securities are comprised of U.S. Treasury securities, exchange-traded U.S. and international common stock, certain securities classified as trading securities and short-term money market securities, including U.S. Treasury bills. Valuation of these securities is based on unadjusted quoted prices in active markets that are readily and regularly available.

Derivative assets and derivative liabilities

These assets and liabilities are comprised of exchange-traded futures. Valuation of these assets and liabilities is based on unadjusted quoted prices in active markets that are readily and regularly available.

Separate account assets

These assets are comprised of securities that are similar in nature to the fixed maturity securities, equity securities and short-term investments referred to above; and certain exchange-traded derivatives, including financial futures. Valuation is based on unadjusted quoted prices in active markets that are readily and regularly available.

Level 2 Measurements:

Fixed maturity securities, equity securities, trading securities and short-term investments

This level includes fixed maturity securities and equity securities priced principally by independent pricing services using observable inputs. Trading securities and short-term investments within this level are of a similar nature and class to the Level 2 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below.

U.S. corporate and foreign corporate securities. These securities are principally valued using the market and income approaches. Valuation is based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques that use standard market observable inputs such as a benchmark yields, spreads off benchmark yields, new issuances, issuer rating, duration, and trades of identical or comparable securities. Investment grade privately placed securities are valued using a discounted cash flow methodologies using standard market observable inputs, and inputs derived from, or corroborated by, market observable data including market yield curve, duration, call provisions, observable prices and spreads for similar publicly traded or privately traded issues that incorporate the credit quality and industry sector of the issuer.

Structured securities comprised of RMBS, CMBS and ABS. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market inputs including spreads for actively traded securities, spreads off benchmark yields, expected prepayment speeds and volumes, current and forecasted loss severity, rating, weighted average coupon, weighted average maturity, average delinquency rates, geographic region, debt-service coverage ratios and issuance-specific information including, but not limited to: collateral type, payment terms of the underlying assets, payment priority within the tranche, structure of the security, deal performance and vintage of loans.

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

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

U.S. Treasury and agency securities. These securities are principally valued using the market approach. Valuation is based primarily on quoted prices in markets that are not active, or using matrix pricing or other similar techniques using standard market observable inputs such as benchmark U.S. Treasury yield curve, the spread off the U.S. Treasury curve for the identical security and comparable securities that are actively traded.

Foreign government and state and political subdivision securities. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques using standard market observable inputs including benchmark U.S. Treasury or other yields, issuer ratings, broker-dealer quotes, issuer spreads and reported trades of similar securities, including those within the same sub-sector or with a similar maturity or credit rating.

Common and non-redeemable preferred stock. These securities are principally valued using the market approach where market quotes are available but are not considered actively traded. Valuation is based principally on observable inputs including quoted prices in markets that are not considered active.

Mortgage loans of consolidated securitization entities

These commercial mortgage loans are principally valued using the market approach. The principal market for these commercial loan portfolios is the securitization market. The Company uses the quoted securitization market price of the obligations of the consolidated securitization entities to determine the estimated fair value of these commercial loan portfolios. These market prices are determined principally by independent pricing services using observable inputs.

Derivative assets and derivative liabilities

This level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded futures included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. These derivatives are principally valued using an income approach.

Interest rate derivatives.

Non-option based — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, London Inter-Bank Offer Rate (“LIBOR”) basis curves, and repurchase rates.

Option based — Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, and interest rate volatility.

Foreign currency derivatives.

Non-option based — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, LIBOR basis curves, currency spot rates, and cross currency basis curves.

Credit derivatives.

Non-option based — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, credit curves, and recovery rates.

Equity market derivatives.

Non-option based — Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve, spot equity index levels, and dividend yield curves.

Option based — Valuations are based on option pricing models, which utilize significant inputs that may include the swap yield curve, spot equity index levels, dividend yield curves, and equity volatility.

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

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

Separate account assets

These assets are comprised of investments that are similar in nature to the fixed maturity securities, equity securities and short-term investments referred to above. Also included are certain mutual funds without readily determinable fair values given prices are not published publicly. Valuation of the mutual funds is based upon quoted prices or reported net asset value (“NAV”) provided by the fund managers.

Long-term debt obligations of consolidated securitization entities

The estimated fair value of the long-term debt obligations of the Company’s consolidated securitization entities are based on their quoted prices when traded as assets in active markets, or if not available, based on market standard valuation methodologies, consistent with the Company’s methods and assumptions used to estimate the fair value of comparable fixed maturity securities.

Level 3 Measurements:

In general, investments classified within Level 3 use many of the same valuation techniques and inputs as described above. However, if key inputs are unobservable, or if the investments are less liquid and there is very limited trading activity, the investments are generally classified as Level 3. The use of independent non-binding broker quotations to value investments generally indicates there is a lack of liquidity or the general lack of transparency in the process to develop the valuation estimates generally causing these investments to be classified in Level 3.

Fixed maturity securities, equity securities and short-term investments

This level includes fixed maturity securities and equity securities priced principally by independent broker quotations or market standard valuation methodologies using inputs that are not market observable or cannot be derived principally from or corroborated by observable market data. Short-term investments within this level are of a similar nature and class to the Level 3 securities described below; accordingly, the valuation techniques and significant market standard observable inputs used in their valuation are also similar to those described below.

U.S. corporate and foreign corporate securities. These securities, including financial services industry hybrid securities classified within fixed maturity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing or other similar techniques that utilize unobservable inputs or cannot be derived principally from, or corroborated by, observable market data, including illiquidity premiums and spread adjustments to reflect industry trends or specific credit-related issues. Valuations may be based on independent non-binding broker quotations. Generally, below investment grade privately placed or distressed securities included in this level are valued using discounted cash flow methodologies which rely upon significant, unobservable inputs and inputs that cannot be derived principally from, or corroborated by, observable market data.

Structured securities comprised of RMBS, CMBS and ABS. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques that utilize inputs that are unobservable or cannot be derived principally from, or corroborated by, observable market data, or are based on independent non-binding broker quotations. Below investment grade securities and ABS supported by sub-prime mortgage loans included in this level are valued based on inputs including quoted prices for identical or similar securities that are less liquid and based on lower levels of trading activity than securities classified in Level 2, and certain of these securities are valued based on independent non-binding broker quotations.

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

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

Foreign government and state and political subdivision securities. These securities are principally valued using the market approach. Valuation is based primarily on matrix pricing or other similar techniques, however these securities are less liquid and certain of the inputs are based on very limited trading activity.

Common and non-redeemable preferred stock. These securities, including privately held securities and financial services industry hybrid securities classified within equity securities, are principally valued using the market and income approaches. Valuations are based primarily on matrix pricing or other similar techniques using inputs such as comparable credit rating and issuance structure. Equity securities valuations determined with discounted cash flow methodologies use inputs such as earnings multiples based on comparable public companies, and industry-specific non-earnings based multiples. Certain of these securities are valued based on independent non-binding broker quotations.

Derivative assets and derivative liabilities

These derivatives are principally valued using an income approach. Valuations of non-option based derivatives utilize present value techniques, whereas valuations of option based derivatives utilize option pricing models. These valuation methodologies generally use the same inputs as described in the corresponding sections above for Level 2 measurements of derivatives. However, these derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data.

Interest rate derivatives.

Non-option based — Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve and LIBOR basis curves.

Option based — Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves, and interest rate volatility.

Foreign currency derivatives.

Non-option based — Significant unobservable inputs may include the extrapolation beyond observable limits of the swap yield curve, LIBOR basis curves and cross currency basis curves. Certain of these derivatives are valued based on independent non-binding broker quotations.

Credit derivatives.

Non-option based — Significant unobservable inputs may include credit correlation, repurchase rates, and the extrapolation beyond observable limits of the swap yield curve and credit curves. Certain of these derivatives are valued based on independent non-binding broker quotations.

Equity market derivatives.

Non-option based — Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves.

Option based — Significant unobservable inputs may include the extrapolation beyond observable limits of dividend yield curves and equity volatility.

Guaranteed minimum benefit guarantees

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

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

significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curve and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, nonperformance risk and cost of capital for purposes of calculating the risk margin.

Reinsurance ceded on certain guaranteed minimum benefit guarantees

These embedded derivatives are principally valued using an income approach. Valuations are based on option pricing techniques, which utilize significant inputs that may include swap yield curve, currency exchange rates and implied volatilities. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the extrapolation beyond observable limits of the swap yield curve and implied volatilities, actuarial assumptions for policyholder behavior and mortality and the potential variability in policyholder behavior and mortality, counterparty credit spreads and cost of capital for purposes of calculating the risk margin.

Embedded derivatives within funds withheld related to certain ceded reinsurance

These derivatives are principally valued using an income approach. Valuations are based on present value techniques, which utilize significant inputs that may include the swap yield curve and the fair value of assets within the reference portfolio. These embedded derivatives result in Level 3 classification because one or more of the significant inputs are not observable in the market or cannot be derived principally from, or corroborated by, observable market data. Significant unobservable inputs generally include: the fair value of certain assets within the reference portfolio which are not observable in the market and cannot be derived principally from, or corroborated by, observable market data.

Separate account assets

These assets are comprised of investments that are similar in nature to the fixed maturity securities and equity securities referred to above. Separate account assets within this level also include other limited partnership interests. The estimated fair value of other limited partnership interests are valued giving consideration to the value of the underlying holdings of the partnerships and by applying a premium or discount, if appropriate, for factors such as liquidity, bid/ask spreads, the performance record of the fund manager or other relevant variables which may impact the exit value of the particular partnership interest.

Transfers between Levels 1 and 2:

During the three months and nine months ended September 30, 2010, transfers between Levels 1 and 2 were not significant.

Transfers into or out of Level 3:

Overall, transfers into and/or out of Level 3 are attributable to a change in the observability of inputs. Assets and liabilities are transferred into Level 3 when a significant input cannot be corroborated with market observable data. This occurs when market activity decreases significantly and underlying inputs cannot be observed, current prices are not available, and/or when there are significant variances in quoted prices, thereby affecting transparency. Assets and liabilities are transferred out of Level 3 when circumstances change such that a significant input can be corroborated with market observable data. This may be due to a significant increase in market activity, a specific event, or one or more significant input(s) becoming observable. Transfers into and/or out of any level are assumed to occur at the beginning of the period. Significant transfers into and/or out of Level 3 assets and liabilities for the three months and nine months ended September 30, 2010 are summarized below.

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

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

During the three months and nine months ended September 30, 2010, fixed maturity securities transfers into Level 3 of $68 million and $300 million, respectively, and separate account assets transfers into Level 3 of $1 million and $0, respectively, resulted primarily from current market conditions characterized by a lack of trading activity, decreased liquidity and credit ratings downgrades (e.g., from investment grade to below investment grade). These current market conditions have resulted in decreased transparency of valuations and an increased use of broker quotations and unobservable inputs to determine estimated fair value principally for certain CMBS and private placements included in U.S. and foreign corporate securities.

During the three months and nine months ended September 30, 2010, fixed maturity securities transfers out of Level 3 of $226 million and $334 million, respectively, and separate account assets transfers out of Level 3 of $0 and $3 million, respectively, resulted primarily from increased transparency of both new issuances that subsequent to issuance and establishment of trading activity, became priced by pricing services and existing issuances that, over time, the Company was able to corroborate pricing received from independent pricing services with observable inputs or increases in market activity and upgraded credit ratings primarily for certain U.S. and foreign corporate securities, ABS and CMBS.

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

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

A rollforward of all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs for the three months ended September 30, 2010 and 2009 is as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
			Total Realized/Unrealized
			Gains (Losses) included in:						Purchases,
	Balance,					Other			Sales,								Balance,
	Beginning of					Comprehensive			Issuances and			Transfer Into		Transfer Out			End of
	Period		Earnings (1), (2)			Income (Loss)			Settlements (3)			Level 3 (4)		of Level 3 (4)			Period
	(In millions)

For the Three Months Ended September 30, 2010:
Fixed maturity securities:
U.S. corporate securities	$	1,609	$	(4	)	$	50		$	(22	)	$	25	$	(128	)	$	1,530
Foreign corporate securities		856		—			70			60			42		(60	)		968
U.S. Treasury and agency securities		34		—			1			—			—		—			35
RMBS		67		—			1			266			1		(14	)		321
CMBS		100		—			6			—			—		—			106
ABS		565		—			16			26			—		(21	)		586
State and political subdivision securities		39		—			(2	)		(2	)		—		(3	)		32
Foreign government securities		7		—			—			—			—		—			7

Total fixed maturity securities	$	3,277	$	(4	)	$	142		$	328		$	68	$	(226	)	$	3,585

Equity securities:
Non-redeemable preferred stock	$	189	$	1		$	14		$	13		$	—	$	—		$	217
Common stock		44		1			1			(19	)		—		—			27

Total equity securities	$	233	$	2		$	15		$	(6	)	$	—	$	—		$	244

Short-term investments	$	13	$	2		$	—		$	38		$	—	$	—		$	53
Net derivatives: (5)
Interest rate contracts	$	9	$	5		$	2		$	—		$	—	$	—		$	16
Foreign currency contracts		8		—			—			—			—		(8	)		—
Credit contracts		10		2			5			(7	)		—		—			10
Equity market contracts		46		(16	)		—			—			—		—			30

Total net derivatives	$	73	$	(9	)	$	7		$	(7	)	$	—	$	(8	)	$	56

Net embedded derivatives (6)	$	612	$	84		$	—		$	28		$	—	$	—		$	724
Separate account assets (7)	$	140	$	(1	)	$	—		$	(4	)	$	1	$	—		$	136

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

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


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
			Total Realized/Unrealized
			Gains (Losses) included in:					Purchases,
	Balance,					Other		Sales,			Transfer Into			Balance,
	Beginning of					Comprehensive		Issuances and			and/or Out			End of
	Period		Earnings (1), (2)			Income (Loss)		Settlements (3)			of Level 3 (4)			Period
	(In millions)

For the Three Months Ended September 30, 2009:
Fixed maturity securities:
U.S. corporate securities	$	1,551	$	(11	)	$	126	$	(98	)	$	4		$	1,572
Foreign corporate securities		923		(25	)		144		(36	)		(29	)		977
U.S. Treasury and agency securities		33		—			2		(1	)		—			34
RMBS		15		—			—		48			15			78
CMBS		105		(22	)		25		10			12			130
ABS		486		(1	)		101		—			6			592
State and political subdivision securities		32		—			1		(1	)		—			32
Foreign government securities		20		—			2		—			(2	)		20

Total fixed maturity securities	$	3,165	$	(59	)	$	401	$	(78	)	$	6		$	3,435

Equity securities:
Non-redeemable preferred stock	$	254	$	(15	)	$	60	$	(23	)	$	—		$	276
Common stock		7		—			—		2			—			9

Total equity securities	$	261	$	(15	)	$	60	$	(21	)	$	—		$	285

Trading securities	$	—	$	—		$	—	$	—		$	—		$	—
Short-term investments	$	2	$	(1	)	$	—	$	15		$	—		$	16
Net derivatives (5)	$	273	$	(34	)	$	—	$	(15	)	$	(7	)	$	217
Net embedded derivatives (6)	$	424	$	87		$	—	$	30		$	—		$	541
Separate account assets (7)	$	147	$	3		$	—	$	2		$	—		$	152

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

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

A rollforward of all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable (Level 3) inputs for the nine months ended September 30, 2010 and 2009 is as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
			Total Realized/Unrealized
			Gains (Losses) included in:					Purchases,
	Balance,					Other		Sales,								Balance,
	Beginning of					Comprehensive		Issuances and			Transfer Into		Transfer Out			End of
	Period		Earnings (1), (2)			Income (Loss)		Settlements (3)			Level 3 (4)		of Level 3 (4)			Period
	(In millions)

For the Nine Months Ended September 30, 2010:
Fixed maturity securities:
U.S. corporate securities	$	1,605	$	1		$	114	$	(153	)	$	97	$	(134	)	$	1,530
Foreign corporate securities		994		(8	)		84		(99	)		100		(103	)		968
U.S. Treasury and agency securities		33		—			3		(1	)		—		—			35
RMBS		25		—			5		267			24		—			321
CMBS		45		—			16		—			72		(27	)		106
ABS		537		(1	)		47		54			7		(58	)		586
State and political subdivision securities		32		—			4		(1	)		—		(3	)		32
Foreign government securities		16		—			—		—			—		(9	)		7

Total fixed maturity securities	$	3,287	$	(8	)	$	273	$	67		$	300	$	(334	)	$	3,585

Equity securities:
Non-redeemable preferred stock	$	258	$	15		$	9	$	(65	)	$	—	$	—		$	217
Common stock		11		4			2		10			—		—			27

Total equity securities	$	269	$	19		$	11	$	(55	)	$	—	$	—		$	244

Short-term investments	$	8	$	2		$	—	$	43		$	—	$	—		$	53
Net derivatives: (5)
Interest rate contracts	$	2	$	13		$	2	$	(1	)	$	—	$	—		$	16
Foreign currency contracts		23		—			—		—			—		(23	)		—
Credit contracts		4		(2	)		14		(6	)		—		—			10
Equity market contracts		18		13			—		(1	)		—		—			30

Total net derivatives	$	47	$	24		$	16	$	(8	)	$	—	$	(23	)	$	56

Net embedded derivatives (6)	$	445	$	207		$	—	$	72		$	—	$	—		$	724
Separate account assets (7)	$	153	$	(4	)	$	—	$	(10	)	$	—	$	(3	)	$	136

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

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


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
			Total Realized/Unrealized
			Gains (Losses) included in:					Purchases,
	Balance,					Other		Sales,			Transfer Into			Balance,
	Beginning of					Comprehensive		Issuances and			and/or Out			End of
	Period		Earnings (1), (2)			Income (Loss)		Settlements (3)			of Level 3 (4)			Period
						(In millions)

For the Nine Months Ended September 30, 2009:
Fixed maturity securities:
U.S. corporate securities	$	1,401	$	(123	)	$	155	$	(112	)	$	251		$	1,572
Foreign corporate securities		926		(96	)		339		(80	)		(112	)		977
U.S. Treasury and agency securities		36		—			—		(2	)		—			34
RMBS		62		(4	)		4		46			(30	)		78
CMBS		116		(42	)		49		(5	)		12			130
ABS		558		(19	)		99		(67	)		21			592
State and political subdivision securities		24		—			6		2			—			32
Foreign government securities		10		—			2		(1	)		9			20

Total fixed maturity securities	$	3,133	$	(284	)	$	654	$	(219	)	$	151		$	3,435

Equity securities:
Non-redeemable preferred stock	$	318	$	(82	)	$	80	$	(40	)	$	—		$	276
Common stock		8		—			—		1			—			9

Total equity securities	$	326	$	(82	)	$	80	$	(39	)	$	—		$	285

Trading securities	$	50	$	—		$	—	$	(50	)	$	—		$	—
Short-term investments	$	—	$	(1	)	$	—	$	17		$	—		$	16
Net derivatives (5)	$	309	$	(103	)	$	—	$	(4	)	$	15		$	217
Net embedded derivatives (6)	$	657	$	(205	)	$	—	$	89		$	—		$	541
Separate account assets (7)	$	159	$	(7	)	$	—	$	(1	)	$	1		$	152


(1)		Amortization of premium/discount is included within net investment income which is reported within the earnings caption of total gains (losses). Impairments charged to earnings are included within net investment gains (losses) which are reported within the earnings caption of total gains (losses). Lapses associated with embedded derivatives are included with the earnings caption of total gains (losses).

(2)		Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward.

(3)		The amount reported within purchases, sales, issuances and settlements is the purchase/issuance price (for purchases and issuances) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased/issued or sold/settled. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. For embedded derivatives, attributed fees are included within this caption along with settlements, if any.

(4)		Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers in and/or out of Level 3 occurred at the beginning of the period. Items transferred in and out in the same period are excluded from the rollforward.

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

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


(5)		Freestanding derivative assets and liabilities are presented net for purposes of the rollforward.

(6)		Embedded derivative assets and liabilities are presented net for purposes of the rollforward.

(7)		Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities.

The tables below summarize both realized and unrealized gains and losses for the three months ended September 30, 2010 and 2009 due to changes in estimated fair value recorded in earnings for Level 3 assets and liabilities:


	Total Gains and Losses
	Classification of Realized/Unrealized
	Gains (Losses) included in Earnings
	Net		Net			Net
	Investment		Investment			Derivatives
	Income		Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Three Months Ended September 30, 2010:
Fixed maturity securities:
U.S. corporate securities	$	1	$	(5	)	$	—		$	(4	)
Foreign corporate securities		—		—			—			—
CMBS		—		—			—			—
ABS		1		(1	)		—			—

Total fixed maturity securities	$	2	$	(6	)	$	—		$	(4	)

Equity securities:
Non-redeemable preferred stock	$	—	$	1		$	—		$	1
Common stock		—		1			—			1

Total equity securities	$	—	$	2		$	—		$	2

Short-term investments	$	2	$	—		$	—		$	2
Net derivatives:
Interest rate contracts	$	—	$	—		$	5		$	5
Foreign currency contracts		—		—			—			—
Credit contracts		—		—			2			2
Equity market contracts		—		—			(16	)		(16	)

Total net derivatives	$	—	$	—		$	(9	)	$	(9	)

Net embedded derivatives	$	—	$	—		$	84		$	84

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

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


	Total Gains and Losses
	Classification of Realized/Unrealized
	Gains (Losses) included in Earnings
	Net			Net			Net
	Investment			Investment			Derivatives
	Income			Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Three Months Ended September 30, 2009:
Fixed maturity securities:
U.S. corporate securities	$	1		$	(12	)	$	—		$	(11	)
Foreign corporate securities		—			(25	)		—			(25	)
CMBS		—			(22	)		—			(22	)
ABS		—			(1	)		—			(1	)

Total fixed maturity securities	$	1		$	(60	)	$	—		$	(59	)

Equity securities:
Non-redeemable preferred stock	$	—		$	(15	)	$	—		$	(15	)
Common stock		—			—			—			—

Total equity securities	$	—		$	(15	)	$	—		$	(15	)

Short-term investments	$	—		$	(1	)	$	—		$	(1	)
Net derivatives	$	(1	)	$	—		$	(33	)	$	(34	)
Net embedded derivatives	$	—		$	—		$	87		$	87

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

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

The tables below summarize both realized and unrealized gains and losses for the nine months ended September 30, 2010 and 2009 due to changes in estimated fair value recorded in earnings for Level 3 assets and liabilities:


	Total Gains and Losses
	Classification of Realized/Unrealized
	Gains (Losses) included in Earnings
	Net			Net			Net
	Investment			Investment			Derivatives
	Income			Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Nine Months Ended September 30, 2010:
Fixed maturity securities:
U.S. corporate securities	$	5		$	(4	)	$	—		$	1
Foreign corporate securities		(1	)		(7	)		—			(8	)
RMBS		—			—			—			—
CMBS		—			—			—			—
ABS		—			(1	)		—			(1	)

Total fixed maturity securities	$	4		$	(12	)	$	—		$	(8	)

Equity securities:
Non-redeemable preferred stock	$	—		$	15		$	—		$	15
Common stock		—			4			—			4

Total equity securities	$	—		$	19		$	—		$	19

Short-term investments	$	2		$	—		$	—		$	2
Net derivatives:
Interest rate contracts	$	—		$	—		$	13		$	13
Foreign currency contracts		—			—			—			—
Credit contracts		—			—			(2	)		(2	)
Equity market contracts		—			—			13			13

Total net derivatives	$	—		$	—		$	24		$	24

Net embedded derivatives	$	—		$	—		$	207		$	207

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

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


	Total Gains and Losses
	Classification of Realized/Unrealized
	Gains (Losses) included in Earnings
	Net			Net			Net
	Investment			Investment			Derivatives
	Income			Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Nine Months Ended September 30, 2009:
Fixed maturity securities:
U.S. corporate securities	$	3		$	(126	)	$	—		$	(123	)
Foreign corporate securities		(1	)		(95	)		—			(96	)
RMBS		—			(4	)		—			(4	)
CMBS		1			(43	)		—			(42	)
ABS		—			(19	)		—			(19	)

Total fixed maturity securities	$	3		$	(287	)	$	—		$	(284	)

Equity securities:
Non-redeemable preferred stock	$	—		$	(82	)	$	—		$	(82	)

Total equity securities	$	—		$	(82	)	$	—		$	(82	)

Short-term investments	$	—		$	(1	)	$	—		$	(1	)
Net derivatives	$	—		$	—		$	(103	)	$	(103	)
Net embedded derivatives	$	—		$	—		$	(205	)	$	(205	)

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

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

The tables below summarize the portion of unrealized gains and losses, due to changes in estimated fair value, recorded in earnings for the three months ended September 30, 2010 and 2009 for Level 3 assets and liabilities that were still held at September 30, 2010 and 2009, respectively.


	Changes in Unrealized Gains (Losses)
	Relating to Assets and Liabilities Held at
	September 30, 2010
	Net		Net			Net
	Investment		Investment			Derivatives
	Income		Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Three Months Ended September 30, 2010:
Fixed maturity securities:
U.S. corporate securities	$	2	$	(5	)	$	—		$	(3	)
Foreign corporate securities		—		—			—			—
CMBS		—		—			—			—
ABS		—		(1	)		—			(1	)

Total fixed maturity securities	$	2	$	(6	)	$	—		$	(4	)

Equity securities:
Non-redeemable preferred stock	$	—	$	—		$	—		$	—

Total equity securities	$	—	$	—		$	—		$	—

Short-term investments	$	2	$	—		$	—		$	2
Net derivatives:
Interest rate contracts	$	—	$	—		$	4		$	4
Foreign currency contracts		—		—			—			—
Credit contracts		—		—			3			3
Equity market contracts		—		—			(15	)		(15	)

Total net derivatives	$	—	$	—		$	(8	)	$	(8	)

Net embedded derivatives	$	—	$	—		$	85		$	85


	Changes in Unrealized Gains (Losses)
	Relating to Assets and Liabilities Held at
	September 30, 2009
	Net		Net			Net
	Investment		Investment			Derivatives
	Income		Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Three Months Ended September 30, 2009:
Fixed maturity securities:
U.S. corporate securities	$	2	$	(15	)	$	—		$	(13	)
Foreign corporate securities		—		(16	)		—			(16	)
CMBS		—		(22	)		—			(22	)
ABS		—		(1	)		—			(1	)

Total fixed maturity securities	$	2	$	(54	)	$	—		$	(52	)

Equity securities:
Non-redeemable preferred stock	$	—	$	(3	)	$	—		$	(3	)

Total equity securities	$	—	$	(3	)	$	—		$	(3	)

Net derivatives	$	—	$	—		$	(31	)	$	(31	)
Net embedded derivatives	$	—	$	—		$	87		$	87

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

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

The tables below summarize the portion of unrealized gains and losses, due to changes in estimated fair value, recorded in earnings for the nine months ended September 30, 2010 and 2009 for Level 3 assets and liabilities that were still held at September 30, 2010 and 2009, respectively.


	Changes in Unrealized Gains (Losses)
	Relating to Assets and Liabilities Held at
	September 30, 2010
	Net			Net			Net
	Investment			Investment			Derivatives
	Income			Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Nine Months Ended September 30, 2010:
Fixed maturity securities:
U.S. corporate securities	$	4		$	(9	)	$	—		$	(5	)
Foreign corporate securities		(1	)		—			—			(1	)
CMBS		—			—			—			—
ABS		1			(1	)		—			—

Total fixed maturity securities	$	4		$	(10	)	$	—		$	(6	)

Equity securities:
Non-redeemable preferred stock	$	—		$	—		$	—		$	—

Total equity securities	$	—		$	—		$	—		$	—

Short-term investments	$	2		$	—		$	—		$	2
Net derivatives:
Interest rate contracts	$	—		$	—		$	13		$	13
Foreign currency contracts		—			—			—			—
Credit contracts		—			—			(2	)		(2	)
Equity market contracts		—			—			13			13

Total net derivatives	$	—		$	—		$	24		$	24

Net embedded derivatives	$	—		$	—		$	208		$	208

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

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


	Changes in Unrealized Gains (Losses)
	Relating to Assets and Liabilities Held at
	September 30, 2009
	Net			Net			Net
	Investment			Investment			Derivatives
	Income			Gains (Losses)			Gains (Losses)			Total
	(In millions)

For the Nine Months Ended September 30, 2009:
Fixed maturity securities:
U.S. corporate securities	$	5		$	(123	)	$	—		$	(118	)
Foreign corporate securities		(1	)		(77	)		—			(78	)
CMBS		1			(56	)		—			(55	)
ABS		—			(34	)		—			(34	)

Total fixed maturity securities	$	5		$	(290	)	$	—		$	(285	)

Equity securities:
Non-redeemable preferred stock	$	—		$	(25	)	$	—		$	(25	)

Total equity securities	$	—		$	(25	)	$	—		$	(25	)

Net derivatives	$	—		$	—		$	(101	)	$	(101	)
Net embedded derivatives	$	—		$	—		$	(209	)	$	(209	)

Fair Value Option — Consolidated Securitization Entities

As discussed in Note 1, upon the adoption of new guidance effective January 1, 2010, the Company elected fair value accounting for the following assets and liabilities held by consolidated securitization entities: commercial mortgage loans and long-term debt. The following table presents these commercial mortgage loans carried under the fair value option at:


	September 30, 2010
	(In millions)

Unpaid principal balance	$	6,881
Excess of estimated fair value over unpaid principal balance		212

Carrying value at estimated fair value	$	7,093

The following table presents the long-term debt carried under the fair value option related to the commercial mortgage loans at:


	September 30, 2010
	(In millions)

Contractual principal balance	$	6,780
Excess of estimated fair value over contractual principal balance		254

Carrying value at estimated fair value	$	7,034

Interest income on commercial mortgage loans held by consolidated securitization entities is recorded in net investment income. Interest expense on long-term debt of consolidated securitization entities is recorded in other expenses. Gains and losses from initial measurement, subsequent changes in estimated fair value and gains or losses on sales of both the commercial mortgage loans and long-term debt are recognized in net investment gains (losses), which is summarized in Note 2.

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

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

Non-Recurring Fair Value Measurements

Certain assets are measured at estimated fair value on a non-recurring basis and are not included in the tables presented above. The amounts below relate to certain investments measured at estimated fair value during the period and still held at the reporting dates.


	Three Months Ended September 30,
	2010							2009
			Estimated		Net					Estimated		Net
	Carrying		Fair		Investment			Carrying		Fair		Investment
	Value Prior to		Value After		Gains			Value Prior to		Value After		Gains
	Measurement		Measurement		(Losses)			Measurement		Measurement		(Losses)
	(In millions)

Other limited partnership interests (1)	$	3	$	1	$	(2	)	$	7	$	5	$	(2	)
Real estate joint ventures (2)	$	—	$	—	$	—		$	12	$	6	$	(6	)


	Nine Months Ended September 30,
	2010							2009
			Estimated		Net					Estimated		Net
	Carrying		Fair		Investment			Carrying		Fair		Investment
	Value Prior to		Value After		Gains			Value Prior to		Value After		Gains
	Measurement		Measurement		(Losses)			Measurement		Measurement		(Losses)
	(In millions)

Other limited partnership interests (1)	$	27	$	18	$	(9	)	$	107	$	41	$	(66	)
Real estate joint ventures (2)	$	25	$	5	$	(20	)	$	106	$	56	$	(50	)


(1)		Other limited partnership interests — The impaired investments presented above were accounted for using the cost basis. Impairments on these cost basis investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several private equity and debt funds that typically invest primarily in a diversified pool of investments across certain investment strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; below investment grade debt and mezzanine debt funds. The estimated fair values of these investments have been determined using the NAV of the Company’s ownership interest in the partners’ capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds, and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $21 million at September 30, 2010.

(2)		Real estate joint ventures — The impaired investments presented above were accounted for using the cost basis. Impairments on these cost basis investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several real estate funds that typically invest primarily in commercial real estate. The estimated fair values of these investments have been determined using the NAV of the Company’s ownership interest in the partners’ capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds, and from liquidation of the underlying assets of the funds. It is estimated that

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

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


		the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $3 million at September 30, 2010.

Fair Value of Financial Instruments

Amounts related to the Company’s financial instruments that were not measured at fair value on a recurring basis, were as follows:


					Estimated
	Notional		Carrying		Fair
September 30, 2010	Amount		Value		Value
	(In millions)

Assets
Mortgage loans (1)			$	5,514	$	5,593
Policy loans			$	1,190	$	1,282
Real estate joint ventures (2)			$	56	$	72
Other limited partnership interests (2)			$	109	$	126
Short-term investments (3)			$	40	$	40
Cash and cash equivalents			$	2,997	$	2,997
Accrued investment income			$	590	$	590
Premiums, reinsurance and other receivables (2)			$	4,707	$	5,210
Liabilities
Policyholder account balances (2)			$	25,014	$	26,913
Payables for collateral under securities loaned and other transactions			$	8,084	$	8,084
Long-term debt (2)			$	950	$	1,070
Other liabilities (2)			$	782	$	782
Separate account liabilities (2)			$	1,318	$	1,318
Commitments (4)
Mortgage loan commitments	$	279	$	—	$	(3	)
Commitments to fund bank credit facilities and private corporate bond investments	$	461	$	—	$	(7	)

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

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


					Estimated
	Notional		Carrying		Fair
December 31, 2009	Amount		Value		Value
	(In millions)

Assets
Mortgage loans (1)			$	4,748	$	4,345
Policy loans			$	1,189	$	1,243
Real estate joint ventures (2)			$	64	$	62
Other limited partnership interests (2)			$	128	$	151
Short-term investments (3)			$	7	$	7
Cash and cash equivalents			$	2,574	$	2,574
Accrued investment income			$	516	$	516
Premiums, reinsurance and other receivables (2)			$	4,582	$	4,032
Liabilities
Policyholder account balances (2)			$	24,591	$	24,233
Payables for collateral under securities loaned and other transactions			$	7,169	$	7,169
Long-term debt			$	950	$	1,003
Other liabilities (2)			$	188	$	188
Separate account liabilities (2)			$	1,367	$	1,367
Commitments (4)
Mortgage loan commitments	$	131	$	—	$	(5	)
Commitments to fund bank credit facilities and private corporate bond investments	$	445	$	—	$	(29	)


(1)		Mortgage loans as presented in the tables above differ from the amount presented in the consolidated balance sheets because these tables do not include commercial mortgage loans held by consolidated securitization entities.

(2)		Carrying values presented herein differ from those presented in the consolidated balance sheets because certain items within the respective financial statement caption are not considered financial instruments. Financial statement captions excluded from the table above are not considered financial instruments.

(3)		Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because these tables do not include short-term investments that meet the definition of a security, which are measured at estimated fair value on a recurring basis.

(4)		Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities.

The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows:

The assets and liabilities measured at estimated fair value on a recurring basis include: fixed maturity securities, equity securities, trading securities, mortgage loans held by consolidated securitization entities, derivative assets and liabilities, net embedded derivatives within asset and liability host contracts, separate account assets and long-term debt of consolidated securitization entities. These assets and liabilities are described in the section “ — Recurring Fair Value Measurements” and, therefore, are excluded from the tables above. The estimated fair value for these financial instruments approximates carrying value.

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

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

Mortgage loans

The Company originates mortgage loans principally for investment purposes. These loans are principally carried at amortized cost. The estimated fair value of mortgage loans is primarily determined by estimating expected future cash flows and discounting them using current interest rates for similar mortgage loans with similar credit risk.

Policy loans

For policy loans with fixed interest rates, estimated fair values are determined using a discounted cash flow model applied to groups of similar policy loans determined by the nature of the underlying insurance liabilities. Cash flow estimates are developed applying a weighted-average interest rate to the outstanding principal balance of the respective group of policy loans and an estimated average maturity determined through experience studies of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance policy. The estimated fair value for policy loans with variable interest rates approximates carrying value due to the absence of borrower credit risk and the short time period between interest rate resets, which presents minimal risk of a material change in estimated fair value due to changes in market interest rates.

Real estate joint ventures and other limited partnership interests

Real estate joint ventures and other limited partnership interests included in the preceding tables consist of those investments accounted for using the cost method. The remaining carrying value recognized in the consolidated balance sheets represents investments in real estate or real estate joint ventures and other limited partnership interests accounted for using the equity method, which do not meet the definition of financial instruments for which fair value is required to be disclosed.

The estimated fair values for other limited partnership interests and real estate joint ventures accounted for under the cost method are generally based on the Company’s share of the NAV as provided in the financial statements of the investees. In certain circumstances, management may adjust the NAV by a premium or discount when it has sufficient evidence to support applying such adjustments.

Short-term investments

Certain short-term investments do not qualify as securities and are recognized at amortized cost in the consolidated balance sheets. For these instruments, the Company believes that there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value approximates carrying value. In light of recent market conditions, short-term investments have been monitored to ensure there is sufficient demand and maintenance of issuer credit quality and the Company has determined additional adjustment is not required.

Cash and cash equivalents

Due to the short-term maturities of cash and cash equivalents, the Company believes there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value generally approximates carrying value. In light of recent market conditions, cash and cash equivalent instruments have been monitored to ensure there is sufficient demand and maintenance of issuer credit quality, or sufficient solvency in the case of depository institutions, and the Company has determined additional adjustment is not required.

Accrued investment income

Due to the short term until settlement of accrued investment income, the Company believes there is minimal risk of material changes in interest rates or credit of the issuer such that estimated fair value approximates carrying

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

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

value. In light of recent market conditions, the Company has monitored the credit quality of the issuers and has determined additional adjustment is not required.

Premiums, reinsurance and other receivables

Premiums, reinsurance and other receivables in the preceding tables are principally comprised of certain amounts recoverable under reinsurance contracts, amounts on deposit with financial institutions to facilitate daily settlements related to certain derivative positions and amounts receivable for securities sold but not yet settled.

Premiums receivable and those amounts recoverable under reinsurance treaties determined to transfer sufficient risk are not financial instruments subject to disclosure and thus have been excluded from the amounts presented in the preceding table. Amounts recoverable under ceded reinsurance contracts, which the Company has determined do not transfer sufficient risk such that they are accounted for using the deposit method of accounting, have been included in the preceding table. The estimated fair value is determined as the present value of expected future cash flows under the related contracts, which were discounted using an interest rate determined to reflect the appropriate credit standing of the assuming counterparty.

The amounts on deposit for derivative settlements essentially represent the equivalent of demand deposit balances and amounts due for securities sold are generally received over short periods such that the estimated fair value approximates carrying value. In light of recent market conditions, the Company has monitored the solvency position of the financial institutions and has determined additional adjustments are not required.

Policyholder account balances

Policyholder account balances in the tables above include investment contracts. Embedded derivatives on investment contracts and certain variable annuity guarantees accounted for as embedded derivatives are included in this caption in the consolidated financial statements but excluded from this caption in the tables above as they are separately presented in the previous section labeled “— Recurring Fair Value Measurements.” The remaining difference between the amounts reflected as policyholder account balances in the preceding table and those recognized in the consolidated balance sheets represents those amounts due under contracts that satisfy the definition of insurance contracts and are not considered financial instruments.

The investment contracts primarily include certain funding agreements, fixed deferred annuities, modified guaranteed annuities, fixed term payout annuities and total control accounts. The fair values for these investment contracts are estimated by discounting best estimate future cash flows using current market risk-free interest rates and adding a spread to reflect the nonperformance risk in the liability.

Payables for collateral under securities loaned and other transactions

The estimated fair value for payables for collateral under securities loaned and other transactions approximates carrying value. The related agreements to loan securities are short-term in nature such that the Company believes there is limited risk of a material change in market interest rates. Additionally, because borrowers are cross-collateralized by the borrowed securities, the Company believes no additional consideration for changes in nonperformance risk are necessary.

Affiliated long-term debt

The estimated fair value of affiliated long-term debt is generally determined by discounting expected future cash flows using market rates currently available for debt with similar terms, remaining maturities and reflecting the credit risk of the Company including inputs, when available, from actively traded debt of other companies with similar types of borrowing arrangements.

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

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

Other liabilities

Other liabilities included in the table above reflect those other liabilities that satisfy the definition of financial instruments subject to disclosure. These items consist primarily of interest payable; amounts due for securities purchased but not yet settled; and funds withheld under reinsurance contracts recognized using the deposit method of accounting. The Company evaluates the specific terms, facts and circumstances of each instrument to determine the appropriate estimated fair values, which were not materially different from the recognized carrying values.

Separate account liabilities

Separate account liabilities included in the preceding tables represent those balances due to policyholders under contracts that are classified as investment contracts. The remaining amounts presented in the consolidated balance sheets represent those contracts classified as insurance contracts which do not satisfy the definition of financial instruments.

Separate account liabilities classified as investment contracts primarily represent variable annuities with no significant mortality risk to the Company such that the death benefit is equal to the account balance and certain contracts that provide for benefit funding.

Separate account liabilities, are recognized in the consolidated balance sheets at an equivalent value of the related separate account assets. Separate account assets, which equal net deposits, net investment income and realized and unrealized investment gains and losses, are fully offset by corresponding amounts credited to the contractholders’ liability which is reflected in separate account liabilities. Since separate account liabilities are fully funded by cash flows from the separate account assets which are recognized at estimated fair value as described in the section “— Recurring Fair Value Measurements,” the Company believes the value of those assets approximates the estimated fair value of the related separate account liabilities.

Mortgage loan commitments and commitments to fund bank credit facilities and private corporate bond investments

The estimated fair values for mortgage loan commitments that will be held for investment and commitments to fund bank credit facilities and private corporate bonds that will be held for investment reflected in the above tables represent the difference between the discounted expected future cash flows using interest rates that incorporate current credit risk for similar instruments on the reporting date and the principal amounts of the commitments.


5.	Contingencies, Commitments and Guarantees

Contingencies

Litigation

The Company is a defendant in a number of litigation matters. In some of the matters, 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

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

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

uncertainties can include how fact finders will view individually and in their totality documentary evidence, the credibility and effectiveness of witnesses’ testimony, and how trial and appellate courts will apply the law in the context of the pleadings or evidence presented, whether by motion practice, or at trial or on appeal. Disposition valuations are also subject to the uncertainty of how opposing parties and their counsel will themselves view the relevant evidence and applicable law.

On a quarterly and annual basis, the Company reviews relevant information with respect to litigation and contingencies to be reflected in the Company’s consolidated financial statements. The review includes senior legal and financial personnel. Estimates of possible 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 at September 30, 2010.

The Company has faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. The Company continues to vigorously defend against the claims in all pending matters. Some sales practices claims have been resolved through settlement. Other sales practices claims have been won by dispositive motions or 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, annuities, mutual funds or other products may be commenced in the future.

Retained Asset Account Matters. MICC offers as a settlement option under its life insurance policies a retained asset account for death benefit payments called a Total Control Account (“TCA”). When a TCA is established for a beneficiary, the Company retains the death benefit proceeds in the general account and pays interest on those proceeds at a rate set by reference to objective indices. Additionally, the accounts enjoy a guaranteed minimum interest rate. Beneficiaries can withdraw all of the funds or a portion of the funds held in the account at any time.

The New York Attorney General announced on July 29, 2010, that his office had launched a major fraud investigation into the life insurance industry for practices related to the use of retained asset accounts and that subpoenas requesting comprehensive data related to retained asset accounts had been served on MetLife, Inc. and other insurance carriers. MetLife, Inc. received the subpoena on July 30, 2010. Metropolitan Life Insurance Company and its affiliates have received requests for documents and information from U.S. congressional committees and members as well as various state regulatory bodies, including the New York Insurance Department. It is possible that other state and federal regulators or legislative bodies may pursue similar investigations or make related inquiries. We cannot predict what effect any such investigations might have on our earnings or the availability of the TCA, but we believe that our financial statements taken as a whole would not be materially affected. We believe that any allegations that information about the TCA is not adequately disclosed or that the accounts are fraudulent or otherwise violate state or federal laws are without merit.

Travelers Ins. Co., et al. v. Banc of America Securities LLC (S.D.N.Y., filed December 13, 2001). On January 6, 2009, after a jury trial, the district court entered a judgment in favor of The Travelers Insurance Company, now known as MetLife Insurance Company of Connecticut, in the amount of approximately $42 million in connection with securities and common law claims against the defendant. On May 14, 2009, the district court issued an opinion and order denying the defendant’s post judgment motion seeking a judgment in its favor or, in the alternative, a new trial. On July 20, 2010, the United States Court of Appeals for the Second Circuit issued an order affirming the district court’s judgment in favor of MetLife Insurance Company of Connecticut and the district court’s order denying defendant’s post-trial motions. On October 14, 2010, the Second Circuit issued an order denying defendant’s petition for rehearing of its appeal. On October 20, 2010, the defendant paid MetLife Insurance

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

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

Company of Connecticut approximately $42 million, which represents the judgment amount due to MetLife Insurance Company of Connecticut. This lawsuit is now fully resolved.

Connecticut General Life Insurance Company and MetLife Insurance Company of Connecticut are engaged in an arbitration proceeding to determine whether MetLife Insurance Company of Connecticut is required to refund several million dollars it collected and/or to stop submitting certain claims under reinsurance contracts in which Connecticut General Life Insurance Company reinsured death benefits payable under certain MetLife Insurance Company of Connecticut annuities.

The Illinois Securities Division, the U.S. Postal Inspector, the Internal Revenue Service, FINRA and the U.S. Attorney’s Office have been conducting inquiries into the alleged misappropriation of customer funds by a former financial services representative with Tower Square Securities, Inc. (“TSS”), a subsidiary of MetLife Insurance Company of Connecticut. We have been working on a remediation plan for customers. On October 27, 2010, the Illinois Securities Division issued a Statement of Evidence and Request for Response to TSS and MetLife, Inc., alleging legal and regulatory violations, which TSS and MetLife, Inc. dispute.

Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, employer, investor, 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 possible to predict the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses. In some of the matters referred to previously, 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 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.

Commitments

Commitments to Fund Partnership Investments

The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $1.3 billion and $1.5 billion at September 30, 2010 and December 31, 2009, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years.

Mortgage Loan Commitments

The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $279 million and $131 million at September 30, 2010 and December 31, 2009, respectively.

Commitments to Fund Bank Credit Facilities and Private Corporate Bond Investments

The Company commits to lend funds under bank credit facilities and private corporate bond investments. The amounts of these unfunded commitments were $461 million and $445 million at September 30, 2010 and December 31, 2009, respectively.

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

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

Other Commitments

The Company has entered into collateral arrangements with affiliates, which require the transfer of collateral in connection with secured demand notes. At September 30, 2010 and December 31, 2009, the Company had agreed to fund up to $114 million and $126 million, respectively, of cash upon the request by these affiliates and had transferred collateral consisting of various securities with a fair market value of $160 million and $158 million, respectively, to custody accounts to secure the notes. Each of these affiliates is permitted by contract to sell or repledge this collateral.

Guarantees

The Company has provided a guarantee on behalf of MetLife International Insurance Company, Ltd. (“MLII”), a former affiliate, that is triggered if MLII cannot pay claims because of insolvency, liquidation or rehabilitation. Life insurance coverage in-force, representing the maximum potential obligation under this guarantee, was $297 million and $322 million at September 30, 2010 and December 31, 2009, respectively. The Company does not hold any collateral related to this guarantee, but has recorded a liability of $1 million that was based on the total account value of the guaranteed policies plus the amounts retained per policy at both September 30, 2010 and December 31, 2009. The remainder of the risk was ceded to external reinsurers.


6.	Other Expenses

Information on other expenses was as follows:


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Compensation	$	46		$	41		$	137		$	111
Commissions		188			143			649			572
Interest and debt issue costs		118			17			362			54
Affiliated interest costs on ceded reinsurance		44			29			124			72
Capitalization of DAC		(182	)		(133	)		(680	)		(611	)
Amortization of DAC and VOBA		219			132			743			160
Rent		1			1			2			3
Insurance tax		12			14			34			32
Other		153			134			486			421

Total other expenses	$	599		$	378		$	1,857		$	814

Interest and Debt Issue Costs

Includes interest expense related to consolidated securitization entities of $101 million and $305 million, for the three months and nine months ended September 30, 2010, respectively, and $0 for both the three months and nine months ended September 30, 2009 (see Note 2), and interest expense on tax audits of $0 and $5 million, for the three months and nine months ended September 30, 2010, respectively, and $0 for both the three months and nine months ended September 30, 2009.

Affiliated Expenses

See Note 8 for a discussion of affiliated expenses included in the table above.

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

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


7.	Business Segment Information

The Company’s business is currently divided into three operating segments: Retirement Products, Corporate Benefit Funding and Insurance Products. In addition, the Company reports certain of its results of operations in Corporate & Other.

Retirement Products offers asset accumulation and income products, including a wide variety of annuities. Corporate Benefit Funding offers pension risk solutions, structured settlements, stable value and investment products and other benefit funding products. Insurance Products offers a broad range of protection products and services to individuals, corporations and other institutions, and is organized into two distinct businesses: Individual Life and Non-Medical Health. Individual Life includes variable life, universal life, term life and whole life insurance products. Non-Medical Health includes individual disability insurance products.

Corporate & Other contains the excess capital not allocated to the operating segments, various domestic and international start-up entities and run-off business, the Company’s ancillary international operations, 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 intersegment amounts.

Operating earnings is the measure of segment profit or loss the Company uses to evaluate segment performance and allocate resources. Consistent with GAAP accounting guidance for segment reporting, it is the Company’s measure of segment performance reported below. Operating earnings does not equate to net income (loss) as determined in accordance with GAAP and should not be viewed as a substitute for those GAAP measures. The Company believes the presentation of operating earnings herein as the Company measures it for management purposes enhances the understanding of its performance by highlighting the results from operations and the underlying profitability drivers of the businesses.

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

Operating revenues is defined as GAAP revenues (i) less net investment gains (losses) and net derivatives gains (losses); (ii) less amortization of unearned revenue related to net investment gains (losses) and net derivatives gains (losses); and (iii) plus scheduled periodic settlement payments on derivatives that are hedges of investments but do not qualify for hedge accounting treatment.

Operating expenses is defined as GAAP expenses (i) less changes in policyholder benefits associated with asset value fluctuations related to experience-rated contractholder liabilities; (ii) less amortization of DAC and VOBA related to net investment gains (losses) and net derivatives gains (losses); and (iii) plus scheduled periodic settlement payments on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment.

In addition, operating revenues and operating expenses do not reflect the consolidation of certain securitization entities that are VIEs as required under GAAP.

Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other for the three months and nine months ended September 30, 2010 and 2009. 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. 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. As a part of the economic capital process, a portion of net investment income is credited to the segments based on the level of allocated equity.

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

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


	Operating Earnings
				Corporate
	Retirement			Benefit			Insurance			Corporate									Total
Three Months Ended September 30, 2010	Products			Funding			Products			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	69		$	73		$	33		$	—		$	175		$	—		$	175
Universal life and investment-type product policy fees		250			7			142			4			403			(1	)		402
Net investment income		243			274			121			98			736			87			823
Other revenues		81			2			29			1			113			—			113
Net investment gains (losses)		—			—			—			—			—			9			9
Net derivatives gains (losses)		—			—			—			—			—			37			37

Total revenues		643			356			325			103			1,427			132			1,559

Expenses
Policyholder benefits and claims		108			199			58			—			365			19			384
Interest credited to policyholder account balances		170			51			58			69			348			(8	)		340
Capitalization of DAC		(151	)		(2	)		(15	)		(14	)		(182	)		—			(182	)
Amortization of DAC and VOBA		92			—			68			3			163			56			219
Interest expense		—			—			—			17			17			101			118
Other expenses		258			11			150			25			444			—			444

Total expenses		477			259			319			100			1,155			168			1,323

Provision for income tax expense (benefit)		58			34			2			10			104			(13	)		91

Operating earnings	$	108		$	63		$	4		$	(7	)		168

Adjustments to:
Total revenues														132
Total expenses														(168	)
Provision for income tax (expense) benefit														13

Net income													$	145					$	145

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

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


	Operating Earnings
				Corporate
	Retirement			Benefit			Insurance			Corporate									Total
Three Months Ended September 30, 2009	Products			Funding			Products			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	62		$	208		$	32		$	—		$	302		$	—		$	302
Universal life and investment-type product policy fees		208			2			120			—			330			(4	)		326
Net investment income		225			260			104			53			642			(2	)		640
Other revenues		70			1			47			—			118			—			118
Net investment gains (losses)		—			—			—			—			—			(180	)		(180	)
Net derivatives gains (losses)		—			—			—			—			—			(6	)		(6	)

Total revenues		565			471			303			53			1,392			(192	)		1,200

Expenses
Policyholder benefits and claims		98			326			35			—			459			31			490
Interest credited to policyholder account balances		188			63			62			69			382			(10	)		372
Capitalization of DAC		(112	)		(1	)		(13	)		(7	)		(133	)		—			(133	)
Amortization of DAC and VOBA		54			1			55			(1	)		109			23			132
Interest expense		—			—			—			17			17			—			17
Other expenses		211			8			124			19			362			—			362

Total expenses		439			397			263			97			1,196			44			1,240

Provision for income tax expense (benefit)		44			26			14			(53	)		31			(84	)		(53	)

Operating earnings	$	82		$	48		$	26		$	9			165

Adjustments to:
Total revenues														(192	)
Total expenses														(44	)
Provision for income tax (expense) benefit														84

Net income													$	13					$	13

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

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


	Operating Earnings
				Corporate
	Retirement			Benefit			Insurance			Corporate									Total
Nine Months Ended September 30, 2010	Products			Funding			Products			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	217		$	570		$	99		$	—		$	886		$	—		$	886
Universal life and investment-type product policy fees		735			22			408			11			1,176			2			1,178
Net investment income		709			822			353			181			2,065			273			2,338
Other revenues		236			4			85			1			326			—			326
Net investment gains (losses)		—			—			—			—			—			96			96
Net derivatives gains (losses)		—			—			—			—			—			292			292

Total revenues		1,897			1,418			945			193			4,453			663			5,116

Expenses
Policyholder benefits and claims		349			954			231			—			1,534			48			1,582
Interest credited to policyholder account balances		534			144			175			93			946			(33	)		913
Capitalization of DAC		(417	)		(4	)		(220	)		(39	)		(680	)		—			(680	)
Amortization of DAC and VOBA		345			1			207			5			558			185			743
Interest expense		—			—			—			52			52			305			357
Other expenses		737			28			584			88			1,437			—			1,437

Total expenses		1,548			1,123			977			199			3,847			505			4,352

Provision for income tax expense (benefit)		122			102			(11	)		(24	)		189			56			245

Operating earnings	$	227		$	193		$	(21	)	$	18			417

Adjustments to:
Total revenues														663
Total expenses														(505	)
Provision for income tax (expense) benefit														(56	)

Net income													$	519					$	519

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

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


	Operating Earnings
				Corporate
	Retirement			Benefit			Insurance			Corporate									Total
Nine Months Ended September 30, 2009	Products			Funding			Products			& Other			Total			Adjustments			Consolidated
	(In millions)

Revenues
Premiums	$	211		$	689		$	86		$	—		$	986		$	—		$	986
Universal life and investment-type product policy fees		528			22			371			4			925			(16	)		909
Net investment income		651			783			266			23			1,723			(22	)		1,701
Other revenues		191			4			298			—			493			—			493
Net investment gains (losses)		—			—			—			—			—			(749	)		(749	)
Net derivatives gains (losses)		—			—			—			—			—			(765	)		(765	)

Total revenues		1,581			1,498			1,021			27			4,127			(1,552	)		2,575

Expenses
Policyholder benefits and claims		298			1,073			162			—			1,533			58			1,591
Interest credited to policyholder account balances		552			205			178			75			1,010			(28	)		982
Capitalization of DAC		(410	)		(2	)		(178	)		(21	)		(611	)		—			(611	)
Amortization of DAC and VOBA		240			3			143			—			386			(226	)		160
Interest expense		—			2			—			52			54			—			54
Other expenses		689			25			440			57			1,211			—			1,211

Total expenses		1,369			1,306			745			163			3,583			(196	)		3,387

Provision for income tax expense (benefit)		74			67			96			(108	)		129			(476	)		(347	)

Operating earnings	$	138		$	125		$	180		$	(28	)		415

Adjustments to:
Total revenues														(1,552	)
Total expenses														196
Provision for income tax (expense) benefit														476

Net loss													$	(465	)				$	(465	)

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


	September 30, 2010		December 31, 2009
	(In millions)

Retirement Products	$	83,029	$	73,840
Corporate Benefit Funding		30,010		28,046
Insurance Products		16,276		13,647
Corporate & Other		21,125		12,156

Total	$	150,440	$	127,689

Net investment income is based upon the actual results of each segment’s specifically identifiable asset portfolio adjusted for allocated equity. Other costs are allocated to each of the segments based upon: (i) a review of

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

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

the nature of such costs; (ii) time studies analyzing the amount of employee compensation costs incurred by each segment; and (iii) cost estimates included in the Company’s product pricing.

Operating revenues derived from any customer did not exceed 10% of consolidated operating revenues for the three months and nine months ended September 30, 2010 and 2009. Operating revenues from U.S. operations were $1.3 billion and $3.8 billion for the three months and nine months ended September 30, 2010, respectively, which represented 90% and 85%, respectively, of consolidated operating revenues. Operating revenues from U.S. operations were $1.1 billion and $3.4 billion for the three months and nine months ended September 30, 2009, respectively, which represented 80% and 82%, respectively, of consolidated operating revenues.


8.	Related Party Transactions

Service Agreements

The Company has entered into various agreements with affiliates for services necessary to conduct its activities. Typical services provided under these agreements include management, policy administrative functions, personnel, investment advice and distribution services. Expenses and fees incurred with affiliates related to these agreements, recorded in other expenses, were $327 million and $965 million for the three months and nine months ended September 30, 2010, respectively, and $251 million and $810 million for the three months and nine months ended September 30, 2009, respectively. For the three months and nine months ended September 30, 2010, the aforementioned expenses and fees incurred with affiliates were comprised of $35 million and $109 million, respectively, recorded in compensation, $142 million and $399 million, respectively, recorded in commissions and $150 million and $457 million, respectively, recorded in other expenses. For the three months and nine months ended September 30, 2009, the aforementioned expenses and fees incurred with affiliates were comprised of $29 million and $87 million, respectively, recorded in compensation, $116 million and $403 million, respectively, recorded in commissions and $106 million and $320 million, respectively, recorded in other expenses. Revenue received from affiliates related to these agreements and recorded in other revenues was $26 million and $73 million for the three months and nine months ended September 30, 2010, respectively, and $19 million and $49 million for the three months and nine months ended September 30, 2009, respectively. Revenue received from affiliates related to these agreements and recorded in universal life and investment-type product policy fees was $29 million and $83 million for the three months and nine months ended September 30, 2010, respectively, and $23 million and $59 million for the three months and nine months ended September 30, 2009, respectively. See Note 2 for expenses related to investment advice under these agreements, recorded in net investment income.

The Company had net receivables from affiliates of $46 million at both September 30, 2010 and December 31, 2009, related to the items discussed above. These amounts exclude affiliated reinsurance balances discussed below.

Reinsurance Transactions

The Company has reinsurance agreements with certain MetLife subsidiaries, including Metropolitan Life Insurance Company, MetLife Reinsurance Company of South Carolina (“MRSC”), Exeter Reassurance Company, Ltd., General American Life Insurance Company and MetLife Reinsurance Company of Vermont (“MRV”), all of which are related parties.

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

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

Information regarding the effect of affiliated reinsurance included in the interim condensed consolidated statements of operations is as follows:


	Three Months						Nine Months
	Ended						Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(In millions)

Premiums:
Reinsurance assumed	$	3		$	3		$	10		$	12
Reinsurance ceded		(63	)		(44	)		(174	)		(123	)

Net premiums	$	(60	)	$	(41	)	$	(164	)	$	(111	)

Universal life and investment-type product policy fees:
Reinsurance assumed	$	19		$	12		$	49		$	33
Reinsurance ceded		(69	)		(61	)		(202	)		(147	)

Net universal life and investment-type product policy fees	$	(50	)	$	(49	)	$	(153	)	$	(114	)

Other revenues:
Reinsurance assumed	$	—		$	—		$	—		$	—
Reinsurance ceded		73			87			212			410

Net other revenues	$	73		$	87		$	212		$	410

Policyholder benefits and claims:
Reinsurance assumed	$	5		$	(4	)	$	11		$	9
Reinsurance ceded		(80	)		(78	)		(253	)		(199	)

Net policyholder benefits and claims	$	(75	)	$	(82	)	$	(242	)	$	(190	)

Interest credited to policyholder account balances:
Reinsurance assumed	$	16		$	15		$	47		$	45
Reinsurance ceded		(17	)		(8	)		(41	)		(24	)

Net interest credited to policyholder account balances	$	(1	)	$	7		$	6		$	21

Other expenses:
Reinsurance assumed	$	11		$	8		$	36		$	29
Reinsurance ceded		57			50			117			78

Net other expenses	$	68		$	58		$	153		$	107

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

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

Information regarding the effect of affiliated reinsurance included in the consolidated balance sheets is as follows:


	September 30, 2010					December 31, 2009
	Assumed		Ceded			Assumed		Ceded
	(In millions)

Assets:
Premiums, reinsurance and other receivables	$	34	$	10,080		$	30	$	7,157
Deferred policy acquisition costs and value of business acquired		212		(479	)		230		(399	)

Total assets	$	246	$	9,601		$	260	$	6,758

Liabilities:
Future policy benefits	$	28	$	—		$	27	$	—
Other policyholder funds		1,459		414			1,393		284
Other liabilities		13		2,803			9		1,150

Total liabilities	$	1,500	$	3,217		$	1,429	$	1,434

The Company cedes risks to an affiliate related to guaranteed minimum benefit guarantees written directly by the Company. These ceded reinsurance agreements contain embedded derivatives and changes in their fair value are included within net derivatives gains (losses). The embedded derivatives associated with the cessions are included within premiums, reinsurance and other receivables and were assets of $1,896 million and $724 million at September 30, 2010 and December 31, 2009, respectively. For the three months and nine months ended September 30, 2010 and 2009, net derivatives gains (losses) included ($31) million and $1,016 million, respectively, and $91 million and ($1,028) million, respectively, in changes in fair value of such embedded derivatives.

MLI-USA cedes two blocks of business to MRV on a 90% coinsurance with funds withheld basis. Certain contractual features of this agreement qualify as embedded derivatives, which are separately accounted for at estimated fair value on the Company’s consolidated balance sheet. The embedded derivative related to the funds withheld associated with this reinsurance agreement is included within other liabilities and increased the funds withheld balance by $150 million at September 30, 2010, and decreased the funds withheld balance by $11 million at December 31, 2009, respectively. The changes in fair value of the embedded derivatives, included in net derivatives gains (losses), were ($71) million and ($161) million for the three months and nine months ended September 30, 2010, respectively, and ($35) million and ($41) million for the three months and nine months ended September 30, 2009, respectively. The reinsurance agreement also includes an experience refund provision, whereby some or all of the profits on the underlying reinsurance agreement are returned to MLI-USA from MRV during the first several years of the reinsurance agreement. The experience refund reduced the funds withheld by MLI-USA from MRV by $68 million and $185 million for the three months and nine months ended September 30, 2010, respectively, and $48 million and $131 million for the three months and nine months ended September 30, 2009, respectively, and are considered unearned revenue, amortized over the life of the contract using the same assumptions as used for the deferred acquisition costs associated with the underlying policies. Amortization of the unearned revenue associated with the experience refund was $21 million and $66 million for the three months and nine months ended September 30, 2010, respectively, and $9 million and $28 million for the three months and nine months ended September 30, 2009, respectively, and is included in universal life and investment-type product policy fees in the consolidated statements of operations. At September 30, 2010 and December 31, 2009, unearned revenue related to the experience refund was $465 million and $337 million, respectively, and is included in other policyholder funds in the consolidated balance sheet.

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

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

The Company cedes its universal life secondary guarantee (“ULSG”) risk to MRSC under certain reinsurance treaties. These treaties do not expose the Company to a reasonable possibility of a significant loss from insurance risk and are recorded using the deposit method of accounting. In the second quarter of 2009, the Company completed a review of various ULSG assumptions and projections including its regular annual third party assessment of these treaties and related assumptions. As a result of projected lower lapse rates and lower interest rates, the Company refined its effective yield methodology to include these updated assumptions and resultant projected cash flows. The deposit receivable balance for these treaties was increased by $18 million and $44 million, with a corresponding increase in other revenues, for the three months and nine months ended September 30, 2010, respectively, and by $34 million and $263 million, with a corresponding increase in other revenues, for the three months and nine months ended September 30, 2009, respectively.


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

For purposes of this discussion, “MICC,” the “Company,” “we,” “our” and “us” refers to MetLife Insurance Company of Connecticut, a Connecticut corporation incorporated in 1863, and its subsidiaries, including MetLife Investors USA Insurance Company (“MLI-USA”). MetLife Insurance Company of Connecticut is a subsidiary of MetLife, Inc. (“MetLife”). Management’s narrative analysis of the results of operations is presented pursuant to General Instruction H(2)(a) of Form 10-Q. This narrative analysis should be read in conjunction with MetLife Insurance Company of Connecticut’s Annual Report on Form 10-K for the year ended December 31, 2009 (“2009 Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”), the forward-looking statement information included below, the “Risk Factors” set forth in Part II, Item 1A, and the additional risk factors referred to therein, and the Company’s interim condensed consolidated financial statements included elsewhere herein.

This narrative analysis may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results. Any or all forward-looking statements may turn out to be wrong. Actual results could differ materially from those expressed or implied in the forward-looking statements. See “Note Regarding Forward-Looking Statements.”

The following discussion includes references to our performance measure, operating earnings, that is not based on generally accepted accounting principles in the United States of America (“GAAP”). Operating earnings is the measure of segment profit or loss we use to evaluate segment performance and allocate resources and, consistent with GAAP accounting guidance for segment reporting, is our measure of segment performance. Operating earnings is defined as operating revenues less operating expenses, net of income tax.

Operating expenses is defined as GAAP expenses (i) less changes in policyholder benefits associated with asset value fluctuations related to experience-rated contractholder liabilities; (ii) less amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”) related to net investment gains (losses) and net derivatives gains (losses); and (iii) plus scheduled periodic settlement payments on derivatives that are hedges of policyholder account balances but do not qualify for hedge accounting treatment.

In addition, operating revenues and operating expenses do not reflect the consolidation of certain securitization entities that are variable interest entities (“VIEs”) as required under GAAP.

We believe the presentation of operating earnings, as we measure it for management purposes, enhances the understanding of our performance by highlighting the results of operations and the underlying profitability drivers of our businesses. Operating earnings should not be viewed as a substitute for GAAP net income (loss). Reconciliations of operating earnings to GAAP net income (loss), the most directly comparable GAAP measure, is included in “— Results of Operations.”

Business

The Company offers individual annuities, individual life insurance, and institutional protection and asset accumulation products. The Company’s Retirement Products offers asset accumulation and income products, including a wide variety of annuities. Corporate Benefit Funding offers pension risk solutions, structured settlements, stable value and investment products and other benefit funding products. Insurance Products offers a broad range of protection products and services to individuals, corporations and other institutions, and is organized into two distinct businesses: Individual Life and Non-Medical Health. Individual Life includes variable

life, universal life, term life and whole life insurance products. Non-Medical Health includes individual disability insurance products.

We market our products and services through various distribution groups. Our life insurance and retirement products targeted to individuals are sold via sales forces comprised of MetLife employees, in addition to third-party organizations. Our corporate benefit funding and non-medical health insurance products are sold via sales forces primarily comprised of MetLife employees. Our sales employees work with all distribution groups to better reach and service customers, brokers, consultants and other intermediaries.

Summary of Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the interim condensed consolidated financial statements. The most critical estimates include those used in determining:


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

	(ii)	investment impairments;

	(iii)	the recognition of income on certain investment entities and the application of the consolidation rules to certain investments;

	(iv)	the estimated fair value of and accounting for freestanding derivatives and the existence and estimated fair value of embedded derivatives requiring bifurcation;

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

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

	(vii)	the liability for future policyholder benefits and the accounting for reinsurance contracts;

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

	(ix)	the liability for litigation and regulatory matters.

In applying the Company’s accounting policies, we make subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company’s businesses and operations. Actual results could differ from these estimates.

The above critical accounting estimates are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Summary of Critical Accounting Estimates” and Note 1 of the Notes to the Consolidated Financial Statements in the 2009 Annual Report. Effective January 1, 2010, the Company adopted new accounting guidance relating to the consolidation of VIEs. See Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements. As part of its regular review of critical accounting estimates, the Company periodically assesses inputs for estimating nonperformance risk (commonly referred to as “own credit”) in fair value measurements. During the second quarter of 2010, the Company completed a study that aggregated and evaluated data, including historical recovery rates of insurance companies as well as policyholder behavior observed over the past two years as the recent financial crisis evolved. As a result, at the end of the second quarter of 2010, the Company refined the manner in which it incorporates expected recovery rates into the nonperformance risk adjustment for purposes of estimating the fair value of investment-type contracts and embedded derivatives within insurance contracts. The refinement impacted the Company’s net income, with no effect on operating earnings. See Note 4 of the Notes to the Interim Condensed Consolidated Financial Statements.

Economic Capital

Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in our businesses. As a part of the economic capital process, a portion of net investment income is credited to the segments based on the level of allocated equity. This is in contrast

to the standardized regulatory risk-based capital formula, which is not as refined in its risk calculations with respect to the nuances of our businesses.

Results of Operations

Nine Months Ended September 30, 2010 Compared with the Nine Months Ended September 30, 2009

Consolidated Results

As the financial markets continue to recover, we have experienced a significant improvement in net investment income and policy fees as well as favorable changes in net investment gains (losses) and net derivatives gains (losses). Market penetration continues in our pension closeout business in the United Kingdom as the number of sold cases has increased, however the average premium has declined resulting in a decrease in premium in the current period of $133 million, before income tax. Premiums associated with the closeout business can vary significantly from period to period. These positive factors were somewhat tempered by the negative impact of the general economic conditions on the demand and sales of certain of our products. Our funding agreement products, primarily the London Inter-Bank Offer Rate (“LIBOR”)-based contracts, were the most significantly affected by the general economic conditions. As a result of companies seeking greater liquidity, investment managers are refraining from repurchasing the contracts when they mature and are opting for more liquid investments. The decrease in sales of these investment-type products is not necessarily evident in our results of operations as the transactions related to these products are recorded through the balance sheet. In addition, sales of our annuity products were down 9%, driven by a decline in fixed annuity sales, partially offset by an increase in sales of our variable annuity products. The unusually high level of fixed annuity sales experienced in the 2009 period was in response to the market disruption and dislocation at that time and, as expected, was not sustained in the current period reflecting the stabilization of the financial markets.


	Nine Months
	Ended
	September 30,
	2010			2009			Change			% Change
	(In millions)

Revenues
Premiums	$	886		$	986		$	(100	)		(10.1	)%
Universal life and investment-type product policy fees		1,178			909			269			29.6	%
Net investment income		2,338			1,701			637			37.4	%
Other revenues		326			493			(167	)		(33.9	)%
Net investment gains (losses)		96			(749	)		845			112.8	%
Net derivatives gains (losses)		292			(765	)		1,057			138.2	%

Total revenues		5,116			2,575			2,541			98.7	%

Expenses
Policyholder benefits and claims		1,582			1,591			(9	)		(0.6	)%
Interest credited to policyholder account balances		913			982			(69	)		(7.0	)%
Capitalization of DAC		(680	)		(611	)		(69	)		(11.3	)%
Amortization of DAC and VOBA		743			160			583			364.4	%
Interest expense		357			54			303			561.1	%
Other expenses		1,437			1,211			226			18.7	%

Total expenses		4,352			3,387			965			28.5	%

Income (loss) before provision for income tax		764			(812	)		1,576			194.1	%
Provision for income tax expense (benefit)		245			(347	)		592			170.6	%

Net income (loss)	$	519		$	(465	)	$	984			211.6	%

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

During the nine months ended September 30, 2010, MICC’s net income (loss) increased $984 million to income of $519 million from a loss of $465 million in the comparable 2009 period. The change was predominantly due to a $687 million favorable change in net derivatives gains (losses), net of income tax, to gains of $190 million in the first nine months of 2010 compared to losses of $497 million in the 2009 period, and a $549 million favorable change in net investment gains (losses), net of income tax. Offsetting these favorable variances totaling $1.2 billion were unfavorable changes in adjustments related to net derivatives gains (losses) and net investment gains (losses) of $255 million, net of income tax, principally associated with DAC and VOBA amortization, resulting in a total favorable variance related to net derivatives gains (losses) and net investment gains (losses), net of related adjustments and income tax, of $981 million.

We manage our investment portfolio using disciplined Asset/Liability Management (“ALM”) principles, focusing on cash flow and duration to support our current and future liabilities. Our intent is to match the timing and amount of liability cash outflows with invested assets that have cash inflows of comparable timing and amount, while optimizing risk-adjusted net investment income and risk-adjusted total return. Our investment portfolio is heavily weighted toward fixed income investments, with over 80% of our portfolio invested in fixed maturity securities and mortgage loans. These securities and loans have varying maturities and other characteristics which cause them to be generally well suited for matching the cash flow and duration of insurance liabilities. Other invested asset classes including, but not limited to, equity securities, other limited partnership interests and real estate and real estate joint ventures provide additional diversification and opportunity for long-term yield enhancement in addition to supporting the cash flow and duration objectives of our investment portfolio. Additional considerations for our investment portfolio include current and expected market conditions and expectations for changes within our mix of products and business segments.

The composition of the investment portfolio of each business segment is tailored to the particular characteristics of its insurance liabilities, causing certain portfolios to be shorter in duration than others. Accordingly, certain portfolios are more heavily weighted in fixed maturity securities, or certain subsectors of fixed maturity securities, than other portfolios.

Investments are purchased to support our insurance liabilities and not to generate net investment gains and losses. However net investment gains and losses are generated and can change significantly from period to period, due to changes in external influences, including movements in interest rates, equity markets, foreign currencies and credit spreads; counterparty specific factors such as financial performance, credit rating and collateral valuation; and internal factors such as portfolio rebalancing. As an investor in the fixed income, equity security, mortgage loan and certain other invested asset classes, we are exposed to the above stated risks, which can lead to both impairments and credit-related losses.

In addition to the above risk management strategies, as an integral part of our management of the investment portfolio we use freestanding derivatives to hedge market risks including changes in interest rates, foreign currencies, credit spreads and the equity market. We also use freestanding derivatives to hedge these same risks in certain of our liabilities including variable annuity minimum benefit guarantees. For those hedges not designated as an accounting hedge, changes in these market risks can lead to the recognition of fair value changes in net derivatives gains (losses) without an offsetting gain or loss recognized in earnings for the item being hedged even though these are effective economic hedges. Additionally we issue liabilities and purchase assets that contain embedded derivatives whose changes in estimated fair value are sensitive to changes in market risks and are also recognized in net derivatives gains (losses).

The favorable variance in net derivatives gains (losses) of $687 million, from losses of $497 million in the 2009 period to gains of $190 million in the 2010 period, was primarily driven by a favorable change in freestanding derivatives of $432 million, from losses in the prior period of $374 million to gains in the current period of $58 million. In addition, a favorable change in embedded derivatives primarily associated with variable annuity minimum benefit guarantees of $255 million, from losses in the prior period of $124 million to gains in the current period of $131 million, contributed to the improvement in net derivatives gains (losses).

The favorable variance in net investment gains (losses) of $549 million was due primarily to lower impairments across most asset classes and from a lower provision for credit losses on mortgage loans.

The $432 million favorable variance in freestanding derivatives was primarily attributable to market factors, including falling long-term and mid-term interest rates, a stronger recovery in equity markets in the prior year period than the current year period, increased equity volatility and widening corporate credit spreads in the financial services sector, partially offset by the impact of the strengthening of the U.S. dollar. Falling long-term and mid-term interest rates in the current period compared to rising interest rates in the prior period had a positive impact of $314 million on our interest rate derivatives, $43 million of which is attributable to hedges of variable annuity minimum benefit guarantees. In addition, a stronger recovery in the equity markets and decreased equity volatility in the prior period compared to the current period had a positive impact of $127 million on our equity derivatives, which we use to hedge variable annuity minimum benefit guarantees. Widening corporate credit spreads in the financial services sector had a positive impact of $37 million on our purchased protection credit derivatives. These favorable variances were partially offset by the negative impact of $43 million of the U.S. dollar strengthening on certain of our foreign currency derivatives, which are used to hedge foreign-denominated asset and liability exposures.

The variable annuity products with minimum benefit guarantees containing embedded derivatives are measured at fair value separately from the host variable annuity contract, with changes in estimated fair value reported in net derivatives gains (losses). The estimated fair value of these embedded derivatives also includes an adjustment for nonperformance risk. The $255 million favorable change in embedded derivatives was primarily attributable to a favorable change in the ceded affiliated reinsurance asset of variable annuity minimum benefit guarantees from changing market factors, partially offset by an unfavorable change in variable annuity minimum benefit guarantee liabilities from changing market factors. Market factors that impact embedded derivatives include falling long-term and mid-term interest rates, less improvement in the equity market and increased equity volatility. The favorable change, from losses in the prior period to gains in the current period, was primarily driven by a favorable change of $1.7 billion on the ceded affiliated reinsurance asset for certain variable annuity minimum benefit guarantee risks, net of an unfavorable change in the adjustment for the reinsurer’s nonperformance risk in the current period of $359 million. Partially offsetting this favorable change was an unfavorable change in the variable annuity minimum benefit guarantee liabilities of $773 million from falling interest rates in the current period compared to rising interest rates in the prior period; and $337 million from a stronger recovery in the equity markets and decreased equity volatility in the prior period compared to the current period. The unfavorable impacts from changing market factors on variable annuity minimum benefit guarantee liabilities were partially offset by a favorable change related to the adjustment for nonperformance risk of $281 million on the related liabilities and a $170 million favorable change in freestanding derivatives, including equity, interest rate and foreign currency-related derivatives that hedge market factors. The aforementioned unfavorable change in the adjustment for the reinsurer’s nonperformance risk in the current period of $359 million was net of a $380 million gain related to a refinement in estimating the spreads used in the adjustment for nonperformance risk. The aforementioned favorable change in the adjustment for nonperformance risk on the related liabilities of $281 million was net of a $256 million loss related to a refinement in estimating the spreads used in the adjustment for nonperformance risk. Finally, there was an unfavorable change of $207 million for all other unhedged risks on the variable annuity minimum benefit guarantee liabilities.

Improved or stabilizing market conditions across several invested asset classes and sectors as compared to the prior period resulted in decreases in impairments of fixed maturity securities, equity securities, real estate and real estate joint ventures and other limited partnership interests. These decreases, coupled with a lower provision for credit losses on mortgage loans, which is due to improving commercial real estate market conditions, resulted in a $549 million improvement in net investment gains (losses).

As more fully described in the discussion of performance measures above, we use operating earnings, which does not equate to net income (loss) as determined in accordance with GAAP, to analyze our performance, evaluate segment performance, and allocate resources. We believe that the presentation of operating earnings, as we measure it for management purposes, enhances the understanding of our performance by highlighting the results of operations and the underlying profitability drivers of the business. Operating earnings should not be viewed as a substitute for GAAP net income (loss). Operating earnings increased by $2 million to $417 million in the first nine months of 2010 from $415 million in the comparable 2009 period.

100

Reconciliation of net income (loss) to operating earnings


	Nine Months
	Ended
	September 30,
	2010			2009
	(In millions)

Net income (loss)	$	519		$	(465	)
Less: Net investment gains (losses)		96			(749	)
Less: Net derivatives gains (losses)		292			(765	)
Less: Adjustments to net income (loss) (1)		(230	)		158
Less: Provision for income tax (expense) benefit		(56	)		476

Operating earnings	$	417		$	415


(1)		See definition of operating revenues and operating expenses for the components of such adjustments.

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


	Nine Months
	Ended
	September 30,
	2010		2009
	(In millions)

Total revenues	$	5,116	$	2,575
Less: Net investment gains (losses)		96		(749	)
Less: Net derivatives gains (losses)		292		(765	)
Less: Adjustments related to net investment gains (losses) and net derivatives gains (losses)		2		(16	)
Less: Other adjustments to revenues (1)		273		(22	)

Total operating revenues	$	4,453	$	4,127

Total expenses	$	4,352	$	3,387
Less: Adjustments related to net investment gains (losses) and net derivatives gains (losses)		185		(226	)
Less: Other adjustments to expenses (1)		320		30

Total operating expenses	$	3,847	$	3,583


(1)		See definition of operating revenues and operating expenses for the components of such adjustments.

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

The change in operating earnings includes a decrease in other revenues related to certain affiliated reinsurance treaties. The most significant impact was in our Insurance Products segment, which benefited, in the prior period, from the impact of a refinement in the assumptions and methodology used to value a deposit receivable from an affiliated reinsurance treaty of $139 million. Relative changes in financial markets had both positive and negative impacts on our financial results. The market improvement from the prior period resulted in higher net investment income. Such improvement also drove higher account balances and, as a result, increased policy fee income. These favorable variances were partially offset by increased DAC, VOBA and deferred sales inducements (“DSI”) amortization as well as increased variable annuity guarantee benefit costs associated with interest rate and equity market changes.

A $222 million increase in net investment income was primarily the result of increasing yields, which had a positive impact of $211 million and growth in average invested assets, which contributed an additional $11 million. Yields were positively impacted by the effects of stabilizing real estate markets, which began in the first quarter of

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2010, and recovering private equity markets period over period on real estate joint ventures and other limited partnership interests. These improvements in yield were partially offset by decreased yields on fixed maturity securities from the reinvestment of proceeds from maturities and sales during this lower interest rate environment. Growth in the investment portfolio was due to the reinvestment of cash flows from operations and growth in the securities lending program, which was primarily invested in fixed maturities securities. Since many of our products are interest-spread-based, higher net investment income is typically offset by higher interest credited expense. However, interest credited expense decreased $42 million primarily due to lower average crediting rates in our domestic funding agreement and fixed annuity businesses. Certain crediting rates can move consistent with the underlying market indices, primarily LIBOR rates, which have decreased significantly since the third quarter of 2009. Interest credited related to the pension closeouts business increased $13 million as a result of the increase in the average policyholder liabilities.

A significant increase in average separate account balances is largely attributable to favorable market performance resulting from improved market conditions since the second quarter of 2009 and positive net cash flows, primarily from our annuity business. This resulted in higher policy fees and other revenues of $192 million, most notably in our Retirement Products segment, which was partially offset by greater DAC, VOBA and DSI amortization of $125 million. Policy fees are typically calculated as a percentage of the average assets in the separate account balances. DAC, VOBA and DSI amortization is based on the earnings of the business, which in the retirement business are derived, in part, from fees earned on separate account balances.

Variable annuity benefits increased by $11 million due to an increase in guaranteed benefit liabilities, partially offset by a reduction in paid claims. While the 2010 and 2009 periods both experienced equity market improvements, the improvement in the 2009 period was greater. Interest rate levels declined in the current year period and increased in the prior year period. As a result, annuity guaranteed benefit liabilities increased in both periods but more significantly in 2010.

Other expenses increased by $147 million, which was mainly attributable to business growth of $63 million, as well as higher variable expenses of $50 million, such as commissions, a portion of which is offset by DAC capitalization. Additionally, higher market driven expenses of $34 million, such as reinsurance costs, contributed to this increase.

Mortality experience varied amongst our businesses with a net unfavorable impact of $33 million. We had unfavorable mortality experience in our Insurance Products segment, while our Corporate Benefit Funding segment benefited from favorable mortality.

The prior period benefited from a higher tax benefit of $38 million as compared to the current period primarily related to the utilization of tax preferenced investments which provide tax credits and deductions.

Liquidity and Capital Resources

Beginning in September 2008, the global financial markets experienced unprecedented disruption, adversely affecting the business environment in general, as well as financial services companies in particular. Conditions in the financial markets have materially improved, but financial institutions may have to pay higher spreads over benchmark U.S. Treasury securities than before the market disruption began. There is still some uncertainty as to whether the stressed conditions that prevailed during the market disruption could recur, which could affect the Company’s ability to meet liquidity needs and obtain capital.

Liquidity Management. Based upon the strength of its franchise, diversification of its businesses and strong financial fundamentals, we continue to believe that the Company has ample liquidity to meet business requirements under current market conditions and unlikely but reasonably possible stress scenarios. The Company’s short-term liquidity position (cash, and cash equivalents and short-term investments, excluding cash collateral received under the Company’s securities lending program that has been reinvested in cash, cash equivalents, short-term investments and publicly-traded securities and cash collateral received from counterparties in connection with derivative instruments) was $2.4 billion and $1.8 billion at September 30, 2010 and December 31, 2009, respectively. We continuously monitor and adjust our liquidity and capital plans for the Company in light of changing needs and opportunities.

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Insurance Liabilities. The Company’s principal cash outflows primarily relate to the liabilities associated with its various life insurance, annuity and group pension products, operating expenses and income tax, 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. For annuity or deposit type products, surrender or lapse product behavior differs somewhat by segment. In the Retirement Products segment, which includes individual annuities, lapses and surrenders tend to occur in the normal course of business. During the nine months ended September 30, 2010 and 2009, general account surrenders and withdrawals from annuity products were $1,415 million and $1,199 million, respectively. In the Corporate Benefit Funding segment, which includes pension closeouts, bank-owned life insurance, other fixed annuity contracts, as well as funding agreements (including funding agreements with the Federal Home Loan Bank of Boston) and other capital market products, most of the products offered have fixed maturities or fairly predictable surrenders or withdrawals. Of the Corporate Benefit Funding liabilities, $417 million were subject to credit ratings downgrade triggers that permit early termination subject to a notice period of 90 days.

Securities Lending. Under the Company’s securities lending program, the Company was liable for cash collateral under its control of $6.8 billion and $6.2 billion at September 30, 2010 and December 31, 2009, respectively. For further detail on the securities lending program and the related liquidity needs, see Note 2 of the Notes to the Interim Condensed Consolidated Financial Statements.

Derivatives and Collateral. The Company pledges collateral to, and has collateral pledged to it by, counterparties under the Company’s current derivative transactions. With respect to derivative transactions with credit ratings downgrade triggers, a two-notch downgrade would have increased the Company’s derivative collateral requirements by $10 million at September 30, 2010.

Short-term Funding Agreements. MetLife Short Term Funding LLC (“Short Term Funding”), is an issuer of commercial paper under a program supported by funding agreements issued by MetLife Insurance Company of Connecticut and Metropolitan Life Insurance Company, an affiliate. The Company’s short-term liability under the funding agreement it issued to Short Term Funding was $2.6 billion and $2.9 billion at September 30, 2010 and December 31, 2009, respectively, which is included in policyholder account balances.

Support Agreements. The Company is a party to capital support commitments with certain of its subsidiaries. Under these arrangements, the Company, with respect to the applicable entity, has agreed to cause such entity to meet specified capital and surplus levels. We anticipate that in the event that these arrangements place demands upon the Company, there will be sufficient liquidity and capital to enable the Company to meet anticipated demands.

Adoption of New Accounting Pronouncements

See “Adoption of New Accounting Pronouncements” in Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.

Future Adoption of New Accounting Pronouncements

See “Future Adoption of New Accounting Pronouncements” in Note 1 of the Notes to the Interim Condensed Consolidated Financial Statements.

Item 4. Controls and Procedures

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

There were no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 15d-15(f) during the quarter ended September 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II — Other Information


Item 1.	*Legal Proceedings*

The following should be read in conjunction with (i) Part I, Item 3, of the 2009 Annual Report; (ii) Part II, Item 1 of MetLife Insurance Company of Connecticut’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009; and (iii) Note 5 of the Notes to the Interim Condensed Consolidated Financial Statements in Part I of this report.

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authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.

Item 1A. Risk Factors

The following should be read in conjunction with and supplements and amends the factors that may affect the Company’s business or operations described under “Risk Factors” in Part I, Item 1A, of the 2009 Annual Report, and the “Risk Factors” in Part II, Item 1A of the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010 (the “June 2010 10-Q”).

Our Insurance Businesses Are Heavily Regulated, and Changes in Regulation May Reduce Our Profitability and Limit Our Growth

Our insurance operations are subject to a wide variety of insurance and other laws and regulations. See “Business — Regulation — Insurance Regulation” in the 2009 Annual Report. State insurance laws regulate most aspects of our U.S. insurance businesses, and our insurance subsidiaries are regulated by the insurance departments of the states in which they are domiciled and the states in which they are licensed. Our non-U.S. insurance operations are principally regulated by insurance regulatory authorities in the jurisdictions in which they are domiciled and operate.

State laws in the United States grant insurance regulatory authorities broad administrative powers with respect to, among other things:


	•	licensing companies and agents to transact business;

	•	calculating the value of assets to determine compliance with statutory requirements;

	•	mandating certain insurance benefits;

	•	regulating certain premium rates;

	•	reviewing and approving policy forms;

	•	regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements;

	•	regulating advertising;

	•	protecting privacy;

	•	establishing statutory capital and reserve requirements and solvency standards;

	•	fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts;

	•	approving changes in control of insurance companies;

	•	restricting the payment of dividends and other transactions between affiliates; and

	•	regulating the types, amounts and valuation of investments.

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State insurance guaranty associations have the right to assess insurance companies doing business in their state for funds to help pay the obligations of insolvent insurance companies to policyholders and claimants. Because the amount and timing of an assessment is beyond our control, the liabilities that we have currently established for these potential liabilities may not be adequate. See “Business — Regulation — Insurance Regulation — Guaranty Associations and Similar Arrangements” in the 2009 Annual Report.

State insurance regulators and the National Association of Insurance Commissioners (“NAIC”) regularly reexamine existing laws and regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, are often made for the benefit of the consumer at the expense of the insurer and, thus, could have a material adverse effect on our financial condition and results of operations.

The NAIC and several states’ legislatures have considered the need for regulations and/or laws to address agent or broker practices that have been the focus of investigations of broker compensation in the State of New York and in other jurisdictions. The NAIC adopted a Compensation Disclosure Amendment to its Producers Licensing Model Act which, if adopted by the states, would require disclosure by agents or brokers to customers that insurers will compensate such agents or brokers for the placement of insurance and documented acknowledgement of this arrangement in cases where the customer also compensates the agent or broker. Several states have enacted laws similar to the NAIC amendment. Others have enacted laws or proposed disclosure regulations which, under differing circumstances, require disclosure of specific compensation earned by a producer on the sale of an insurance or annuity product. We cannot predict how many states may promulgate the NAIC amendment or alternative regulations or the extent to which these regulations may have a material adverse impact on our business.

Currently, the U.S. federal government does not directly regulate the business of insurance. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) allows federal regulators to compel state insurance regulators to liquidate an insolvent insurer under some circumstances if the state regulators have not acted within a specific period. It also establishes some federal authority with respect to reinsurance and surplus lines insurance and gives the new Federal Insurance Office the authority to negotiate international insurance agreements for the United States. In addition, federal legislation and administrative policies in several areas can significantly and adversely affect insurance companies. These areas include financial services regulation, securities regulation, pension regulation, health care regulation, privacy, tort reform legislation and taxation. In addition, various forms of direct and indirect federal regulation of insurance have been proposed from time to time, including proposals for the establishment of an optional federal charter for insurance companies. As part of a comprehensive reform of financial services regulation, Dodd-Frank creates an office within the federal government to collect information about the insurance industry, recommend prudential standards, and represent the United States in dealings with foreign insurance regulators. Other aspects of our insurance operations could also be affected by Dodd-Frank. For example, Dodd-Frank imposes new restrictions on the ability of affiliates of insured depository institutions (such as MetLife Bank) to engage in proprietary trading or sponsor or invest in hedge funds or private equity funds. See “— President Obama Recently Signed a Bill Providing for Comprehensive Reform of Financial Services Regulation in the United States, Various Aspects of Which Could Impact Our Business Operations, Capital Requirements and Profitability and Limit Our Growth” in the June 2010 10-Q.

Our international operations are subject to regulation in the jurisdictions in which they operate, which in many ways is similar to that of the state regulation outlined above. This regulation may impact many of our customers and independent sales intermediaries. Changes in the regulations that affect their operations also may affect our business relationships with them and their ability to purchase or distribute our products. Accordingly, these changes could have a material adverse effect on our financial condition and results of operations. See “— Our International Operations Face Political, Legal, Operational and Other Risks, that Could Negatively Affect Those Operations or Our Profitability” in the 2009 Annual Report.

Compliance with applicable laws and regulations is time consuming and personnel-intensive, and changes in these laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, thus having a material adverse effect on our financial condition and results of operations.

From time to time, regulators raise issues during examinations or audits of MICC and its subsidiaries that could, if determined adversely, have a material impact on us. We cannot predict whether or when regulatory actions may be taken that could adversely affect our operations. In addition, the interpretations of regulations by regulators

106

may change and statutes may be enacted with retroactive impact, particularly in areas such as accounting or statutory reserve requirements.

We are also subject to other regulations and may in the future become subject to additional regulations. See “Business — Regulation” in the 2009 Annual Report.

A Downgrade or a Potential Downgrade in Our Financial Strength Ratings or those of MetLife’s Other Insurance Subsidiaries, or MetLife’s Credit Ratings Could Result in a Loss of Business and Materially Adversely Affect Our Financial Condition and Results of Operations

Financial strength ratings, which various Nationally Recognized Statistical Rating Organizations (each, an “NRSRO”) publish as indicators of an insurance company’s ability to meet contractholder and policyholder obligations, are important to maintaining public confidence in our products, our ability to market our products and our competitive position.

Downgrades in our financial strength ratings could have a material adverse effect on our financial condition and results of operations in many ways, including:


	•	reducing new sales of insurance products, annuities and other investment products;

	•	adversely affecting our relationships with our sales force and independent sales intermediaries;

	•	materially increasing the number or amount of policy surrenders and withdrawals by contractholders and policyholders;

	•	requiring us to reduce prices for many of our products and services to remain competitive; and

	•	adversely affecting our ability to obtain reinsurance at reasonable prices or at all.

In view of the difficulties experienced during 2008 and 2009 by many financial institutions, including our competitors in the insurance industry, we believe it is possible that the NRSROs will continue to heighten the level of scrutiny that they apply to such institutions, will continue to increase the frequency and scope of their credit reviews, will continue to request additional information from the companies that they rate, and may adjust upward the capital and other requirements employed in the NRSRO models for maintenance of certain ratings levels. Rating agencies use an “outlook statement” of “positive,” “stable,” “negative” or “developing” to indicate a medium- or long-term trend in credit fundamentals which, if continued, may lead to a ratings change. A rating may have a “stable” outlook to indicate that the rating is not expected to change; however, a “stable” rating does not preclude a rating agency from changing a rating at any time, without notice. Certain rating agencies assign rating modifiers such as “CreditWatch” or “Under Review” to indicate their opinion regarding the potential direction of a rating. These ratings modifiers are generally assigned in connection with certain events such as potential mergers and acquisitions, or material changes in a company’s results, in order for the rating agencies to perform their analyses to fully determine the rating implications of the event. Certain rating agencies have recently implemented rating actions, including downgrades, outlook changes and modifiers, for MetLife, Inc.’s and certain of its subsidiaries’ insurer financial strength and credit ratings.

Based on the announcement in February 2010 that MetLife was in discussions to acquire American Life Insurance Company, a subsidiary of ALICO Holdings LLC, and Delaware American Life Insurance Company (collectively, the “Acquisition”), in February 2010, Standard & Poor’s Ratings Services (“S&P”) and A.M. Best placed the ratings of MetLife, Inc. and its subsidiaries on “CreditWatch with negative implications” and “under review with negative implications,” respectively. Also in connection with the announcement, in March 2010, Moody’s changed the ratings outlook of MetLife, Inc. and its subsidiaries from “stable” to “negative” outlook. Upon completion of the public financing transactions related to the Acquisition, in August 2010, S&P affirmed the ratings of MetLife, Inc. and subsidiaries with a “negative” outlook, and removed them from “CreditWatch.” Upon closing of the Acquisition, on November 4, 2010, A.M. Best changed the outlook for MetLife, Inc. and certain of its subsidiaries, including MetLife Insurance Company of Connecticut and MLI-USA, to “negative” from “under review with negative implications.”

107

We cannot predict what actions rating agencies may take, or what actions we may take in response to the actions of rating agencies, which could adversely affect our business. As with other companies in the financial services industry, our ratings could be downgraded at any time and without any notice by any NRSRO.

An Inability to Access MetLife’s Credit Facilities Could Result in a Reduction in Our Liquidity and Lead to Downgrades in Our Financial Strength Ratings

In October 2010, MetLife entered into two senior unsecured credit facilities: a three-year $3 billion facility and a 364-day $1 billion facility. MetLife also has other facilities which it enters into in the ordinary course of business.

The availability of these facilities to MetLife could be critical to MetLife’s credit and financial strength ratings, as well as our financial strength ratings, and our ability to meet our obligations as they come due in a market when alternative sources of credit are tight. The credit facilities contain certain administrative, reporting, legal and financial covenants. MetLife must comply with covenants under its credit facilities, including a requirement to maintain a specified minimum consolidated net worth.

MetLife’s right to make borrowings under these facilities is subject to the fulfillment of certain important conditions, including its compliance with all covenants, and its ability to borrow under these facilities is also subject to the continued willingness and ability of the lenders that are parties to the facilities to provide funds. MetLife’s failure to comply with the covenants in the credit facilities or fulfill the conditions to borrowings, or the failure of lenders to fund their lending commitments (whether due to insolvency, illiquidity or other reasons) in the amounts provided for under the terms of the facilities, would restrict MetLife’s ability to access these credit facilities when needed and, consequently, could have a material adverse effect on our financial condition and results of operations.

108


Item 6.	*Exhibits*

(Note Regarding Reliance on Statements in Our Contracts: In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about MetLife Insurance Company of Connecticut, its subsidiaries or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only at the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs at the date they were made or at any other time. Additional information about MetLife Insurance Company of Connecticut and its subsidiaries may be found elsewhere in this Quarterly Report on Form 10-Q and MetLife Insurance Company of Connecticut’s other public filings, which are available without charge through the SEC’s website at www.sec.gov.)


Exhibit
No.			Description

	31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

109

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

METLIFE INSURANCE COMPANY OF CONNECTICUT


	By:	/s/ Peter M. Carlson

Name: Peter M. Carlson


	Title:	Executive Vice-President, Finance Operations and

Chief Accounting Officer

(Authorized Signatory and Principal Accounting Officer)

Date: November 12, 2010

110

Exhibit Index


Exhibit
No.			Description

	31	.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32	.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

E-1

exv31w1

Exhibit 31.1

CERTIFICATIONS

I, Michael K. Farrell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MetLife Insurance Company of Connecticut;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2010



		/s/ Michael K. Farrell
		Michael K. Farrell
		Chairman, President and Chief Executive Officer

exv31w2

Exhibit 31.2

CERTIFICATIONS

I, Stanley J. Talbi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MetLife Insurance Company of Connecticut;

	a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

	c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2010



		/s/ Stanley J. Talbi
		Stanley J. Talbi
		Executive Vice President and Chief Financial Officer

exv32w1

Exhibit 32.1

SECTION 906 CERTIFICATION

CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

I, Michael K. Farrell, certify that (i) MetLife Insurance Company of Connecticut’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of MetLife Insurance Company of Connecticut

Date: November 12, 2010



		/s/ Michael K. Farrell
		Michael K. Farrell
		Chairman, President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to MetLife Insurance Company of Connecticut and will be retained by MetLife Insurance Company of Connecticut and furnished to the Securities and Exchange Commission or its staff upon request.

exv32w2

Exhibit 32.2

SECTION 906 CERTIFICATION

CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

I, Stanley J. Talbi, certify that (i) MetLife Insurance Company of Connecticut’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (ii) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of MetLife Insurance Company of Connecticut

Date: November 12, 2010



		/s/ Stanley J. Talbi
		Stanley J. Talbi
		Executive Vice President and Chief Financial Officer