METLIFE POLICYHOLDER TRUST – 10-K – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

For purposes of this discussion, "Trust" refers to the MetLife Policyholder Trust. Following this summary is a discussion addressing the results of operations and financial condition of the Trust for the periods indicated. This discussion should be read in conjunction with "Note Regarding Forward-Looking Statements," "Risk Factors," "Selected Financial Data" and the Trust's financial statements included elsewhere herein.

This 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, 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."

Executive Summary

The Trust was established under the Metropolitan Life Insurance Company ("Metropolitan Life") plan of reorganization (the "Plan") and pursuant to the MetLife Policyholder Trust Agreement, dated as of November 3, 1999, by and among Metropolitan Life, MetLife, Inc., Wilmington Trust Company (not in its individual capacity, but solely as trustee for the Trust, the "Trustee") and ChaseMellon Shareholder Services, L.L.C., as custodian (now known as Computershare Shareowner Services LLC, the "Custodian"), as amended on November 8, 2001 (the "Trust Agreement"), in connection with the conversion of Metropolitan Life from a mutual life insurance company to a stock life insurance company. The Trust is a single-purpose trust that does not engage in any business or activity other than voting and holding the shares of common stock of MetLife, Inc. issued to the Trust for the benefit of certain eligible policyholders of Metropolitan Life under the Plan and the Trust Agreement (the "Trust Shares") and certain closely related activities, such as distributing cash dividends.

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Under the Plan and the Trust Agreement, each policyholder's membership interest was extinguished and certain eligible policyholders of Metropolitan Life (the "Trust Eligible Policyholders") received, in exchange for that interest, a number of interests in the Trust ("Trust Interests") equal to the number of shares of common stock of MetLife, Inc., par value $0.01 per share (the "Common Stock"), allocated to them in accordance with the Plan. The assets of the Trust consist principally of the Trust Shares for the benefit of the Trust Eligible Policyholders and permitted transferees (collectively, the "Beneficiaries"). Additionally, after the passage of sufficient time, any unclaimed cash and Common Stock becomes property of the state of last known residence of the Beneficiary, as is the case with other types of unclaimed property. The schedule by which unclaimed property escheats varies by state, but is generally within three to five years of abandonment. It is anticipated that the number of Trust Interests will continue to decrease over time as state dormancy periods expire. Beginning on April 7, 2001, Beneficiaries were able to withdraw all, but generally, not less than all, of their allocated shares of Common Stock in the Trust at any time by providing written notice to the Custodian.

The number of Trust Interests outstanding at December 31, 2011 and 2010 was 212,891,322 and 222,321,295, respectively. The decrease of 9,429,973 in the number of Trust Interests is primarily attributable to net Trust Interests redeemed, Trust Interests withdrawn and Trust Interests escheated. Net assets of the Trust consist solely of Trust Shares and will increase or decrease depending upon, among other things, the movement of Trust Shares into or out of the Trust as directed by the Beneficiaries.

Results of Operations

Discussion of Results

Year ended December 31, 2011 compared with the year ended December 31, 2010

Net assets in the Trust decreased $3,242 million, or 33%, to $6,638 million at December 31, 2011 from $9,880 million at December 31, 2010. This decrease is primarily due to a change in net unrealized investment gains on the Trust Shares, as well as (i) the impact of withdrawals by Beneficiaries from the Trust, and (ii) activity under the MetLife, Inc. Purchase and Sale Program (the "Purchase and Sale Program"). Net unrealized investment gains, which represent the difference between the estimated fair value and the cost basis of the Trust Shares, decreased $3,110 million from the prior year. A net reduction of 9,429,973 Trust Interests resulted from a decrease of 936,871 Trust Interests due to withdrawals by Beneficiaries from the Trust, a decrease of 2,273,170 Trust Interests due to escheatment of Trust Shares and a net decrease of 6,219,932 Trust Interests in connection with issuances and redemptions under the Purchase and Sale Program. Net redemptions by Beneficiaries through the Purchase and Sale Program, withdrawals by Beneficiaries from the Trust and escheatment of unclaimed cash and Trust Shares, resulted in decreases in net assets for the year ended December 31, 2011 of $87 million, $13 million and $32 million, respectively. Net investment income of $158 million, which consists of dividends received from MetLife, Inc. on its Common Stock, and net realized investment gains recognized on the sale of Trust Shares sold in the Purchase and Sale Program of $168 million, were fully allocated to Beneficiaries.

Year ended December 31, 2010 compared with the year ended December 31, 2009

Net assets in the Trust increased $1,638 million, or 20%, to $9,880 million at December 31, 2010 from $8,242 million at December 31, 2009. This increase is primarily due to a change in net unrealized investment gains on the Trust Shares, partially offset by (i) the impact of withdrawals by Beneficiaries from the Trust, and (ii) activity under the Purchase and Sale Program. Net unrealized investment gains, which represent the difference between the estimated fair value and the cost basis of the Trust Shares, increased $1,791 million from the prior year. A net reduction of 10,836,421 Trust Interests resulted from a decrease of 854,809 Trust Interests due to withdrawals by Beneficiaries from the Trust, a decrease of 3,085,213 Trust Interests due to escheatment of Trust Shares and a net decrease of 6,896,399 Trust Interests in connection with issuances and redemptions under the Purchase and Sale Program. Net redemptions by Beneficiaries through the Purchase and Sale Program, withdrawals by Beneficiaries from the Trust and escheatment of unclaimed cash and Trust Shares, resulted in decreases in net assets for the year ended December 31, 2010 of $97 million, $12 million and $44 million, respectively. Net investment income of $166 million, which consists of dividends received from MetLife, Inc. on its Common Stock, and net realized investment gains recognized on the sale of Trust Shares sold in the Purchase and Sale Program of $181 million, were fully allocated to Beneficiaries.

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