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Washington, D.C. 20549
(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2009 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware | 13-4075851 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
200 Park Avenue, New York, N.Y. | 10166-0188 | |
(Address of principal executive offices) | (Zip Code) | |
(212) 578-2211 (Registrant’s telephone number, including area code) |
Title of each class | Name of each exchange on which registered | |
Common Stock, par value $0.01 | New York Stock Exchange | |
Floating Rate Non-Cumulative Preferred Stock, Series A, par value $0.01 | New York Stock Exchange | |
6.50% Non-Cumulative Preferred Stock, Series B, par value $0.01 | New York Stock Exchange | |
5.875% Senior Notes | New York Stock Exchange | |
5.375% Senior Notes | Irish Stock Exchange | |
5.25% Senior Notes | Irish Stock Exchange |
Large accelerated filer þ | Accelerated filer o | |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
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• | 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. |
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Item 1. | Business |
• | Insurance Products (group life, individual life and non-medical health insurance products); | |
• | Retirement Products (individual and institutional annuity products); and | |
• | Corporate Benefit Funding (pension closeouts, structured settlements and other benefit funding solutions). |
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• | Build on our widely recognized brand name | |
• | Capitalize on our large customer base of institutions and individual consumers | |
��� | Expand and leverage our broad, diverse distribution channels | |
• | Continue to introduce innovative and competitive products | |
• | Focus on growing our businesses around the globe | |
• | Capitalize on opportunities to provide retirement income solutions | |
• | Maintain balanced focus on income and protection products | |
• | Maintain and enhance capital efficiency | |
• | Continue to achieve organizational efficiencies through our Operational Excellence initiative | |
• | Focus on margin improvement and return on equity expansion | |
• | Further our commitment to a diverse workplace |
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For the Year Ended December 31, 2009 | ||||||||
(In millions) | Percent | |||||||
New York | $ | 392 | 13 | % | ||||
Massachusetts | $ | 281 | 9 | % | ||||
Illinois | $ | 201 | 7 | % | ||||
Florida | $ | 169 | 6 | % | ||||
Connecticut | $ | 150 | 5 | % | ||||
Texas | $ | 129 | 4 | % |
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• | Bank regulatory agencies have issued proposed interagency guidance for funding and liquidity risk management that would apply to MetLife as a bank holding company. | |
• | The proposals under consideration in Congress also include special regulatory and insolvency regimes, including even higher capital and liquidity standards, for financial institutions that are deemed to be systemically significant. These insolvency regimes could vary from the resolution regimes currently applicable to some subsidiaries of such companies and could include assessments on financial companies to provide for a systemic resolution fund. | |
• | The Obama Administration, members of Congress and Federal banking regulators have suggested new or increased taxes or assessments on banks and financial firms to mitigate the costs to taxpayers of various government programs established to address the financial crisis and to offset the costs of potential future crises. | |
• | The proposed legislation also includes new conditions on the writing and trading of certain standardized and non-standardized derivatives. |
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• | expanding the types of institutions that have access to the Federal Reserve Bank of New York’s discount window; | |
• | providing asset guarantees and emergency loans to particular distressed companies; | |
• | a temporary ban on short selling of shares of certain financial institutions (including, for a period, MetLife); | |
• | programs intended to reduce the volume of mortgage foreclosures by modifying the terms of mortgage loans for distressed borrowers; | |
• | temporarily guaranteeing money market funds; and | |
• | programs to support the mortgage-backed securities market and mortgage lending. |
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A.M. Best (1)* | Fitch (2) | Moody’s (3) | S&P (4)** | |||||||
First MetLife Investors Insurance Company | A+ | N/R | N/R | AA− | ||||||
General American Life Insurance Company | A+ | AA− | Aa3 | AA− | ||||||
MetLife Insurance Company of Connecticut | A+ | AA− | Aa3 | AA− | ||||||
MetLife Investors Insurance Company | A+ | AA− | Aa3 | AA− | ||||||
MetLife Investors USA Insurance Company | A+ | AA− | Aa3 | AA− | ||||||
Metropolitan Casualty Insurance Company | A | N/R | N/R | N/R | ||||||
Metropolitan Direct Property and Casualty Insurance Company | A | N/R | N/R | N/R | ||||||
Metropolitan General Insurance Company | A | N/R | N/R | N/R | ||||||
Metropolitan Group Property & Casualty Insurance Company | A | N/R | N/R | N/R | ||||||
Metropolitan Life Insurance Company | A+ | AA− | Aa3 | AA− | ||||||
Metropolitan Lloyds Insurance Company of Texas | A | N/R | N/R | N/R | ||||||
Metropolitan Property and Casualty Insurance Company | A | N/R | N/R | N/R | ||||||
Metropolitan Tower Life Insurance Company | A+ | N/R | Aa3 | N/R | ||||||
New England Life Insurance Company | A+ | AA− | Aa3 | AA− |
A.M. Best (1)* | Fitch (2) | Moody’s (3) | S&P (4)** | |||||||||||||
General American Life Insurance Company (Surplus Notes) | a | N/R | A2 | A | ||||||||||||
MetLife Capital Trust IV & X (Trust Securities) | bbb | BBB | Baa2 | BBB | ||||||||||||
MetLife Funding, Inc. (Commercial Paper) | AMB-1+ | F1+ | P-1 | A-1+ | ||||||||||||
MetLife Short Term Funding LLC (Commercial Paper) | N/R | N/R | P-1 | A-1+ | ||||||||||||
MetLife, Inc. (Commercial Paper) | AMB-1 | F1 | P-2 | A-2 | ||||||||||||
MetLife, Inc. (Senior Unsecured Debt) | a− | A− | A3 | A− | ||||||||||||
MetLife, Inc. (Subordinated Debt) | bbb+ | N/R | Baa1 | NR | ||||||||||||
MetLife, Inc. (Junior Subordinated Debt) | bbb | BBB | Baa2 | BBB | ||||||||||||
MetLife, Inc. (Preferred Stock) | bbb | NR | Baa2 | BBB | ||||||||||||
MetLife, Inc. (Non−Cumulative Preferred Stock) | bbb | BBB | Baa2 | BBB− | ||||||||||||
Metropolitan Life Insurance Company (Surplus Notes) | a | A | A2 | A | ||||||||||||
Metropolitan Life Global Funding I (Senior Secured Debt) | aa− | NR | Aa3 | AA− | ||||||||||||
MetLife Institutional Funding I, LLC (Senior Secured Debt) | aa− | NR | Aa3 | AA− |
* | Under Review with negative implications | |
** | CreditWatch negative outlook | |
(1) | A.M. Best financial strength ratings range from “A++ (superior)” to “S (Suspended).” Ratings of “A+” and “A” are in the “superior” and “excellent” categories, respectively. | |
A.M. Best’s long-term credit ratings range from “aaa (exceptional)” to “d (in default).” A “+” or “−” may be appended to ratings from “aa” to “ccc” to indicate relative position within a category. Ratings of “a” and “bbb” are in the “strong” and “adequate” categories. | ||
A.M. Best’s short-term credit ratings range from “AMB-1+ (strongest)” to “d (in default).” | ||
(2) | Fitch insurer financial strength ratings range from “AAA (exceptionally strong)” to “C (ceased or interrupted payments imminent).” A “+” or “−” may be appended to ratings from “AA” to “CCC” to indicate relative position within a category. A rating of “AA” is in the “very strong” category. |
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Fitch long-term credit ratings range from “AAA (highest credit quality),” to “D (default).” A “+” or “−” may be appended to ratings from “AA” to “CCC” to indicate relative position within a category. Ratings of “A” and “BBB” are in the “strong” and “adequate” categories, respectively. | ||
Fitch short-term credit ratings range from “F1+ (exceptionally strong credit quality)” to “D (in default).” A rating of “F1” is in the “highest credit quality” category. | ||
(3) | Moody’s insurance financial strength ratings range from “Aaa (exceptional)” to “C (extremely poor).” A numeric modifier may be appended to ratings from “Aa” to “Caa” to indicate relative position within a category, with 1 being the highest and 3 being the lowest. A rating of “Aa” is in the “excellent” category. Moody’s long-term credit ratings range from “Aaa (highest quality)” to “C (typically in default).” A numeric modifier may be appended to ratings from “Aa” to “Caa” to indicate relative position within a category, with 1 being the highest and 3 being the lowest. Ratings of “A” and “Baa” are in the “upper-medium grade” and “medium-grade” categories, respectively. | |
Moody’s short-term credit ratings range from“P-1 (superior)” to “NP (not prime).” | ||
(4) | S&P long-term insurer financial strength ratings range from “AAA (extremely strong)” to “R (under regulatory supervision).” A “+” or “−” may be appended to ratings from “AA” to “CCC” to indicate relative position within a category. A rating of “AA” is in the “very strong” category. | |
S&P long-term credit ratings range from “AAA (extremely strong)” to “D (payment default).” A “+” or “−” may be appended to ratings from “AA” to “CCC” to indicate relative position within a category. A rating of “A” is in the “strong” category. A rating of “BBB” has adequate protection parameters and is considered investment grade. | ||
S&P short-term credit ratings range from“A-1+ (extremely strong)” to “D (payment default).” A rating of“A-1” is in the “strong” category. |
N/R | indicates not rated. |
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Item 1A. | Risk Factors |
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• | 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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• | The Obama Administration and Congress have made various proposals that would change the capital and liquidity requirements, credit exposure concentrations and similar prudential matters for bank holding companies, banks and other financial firms. | |
• | Bank regulatory agencies have issued proposed interagency guidance for funding and liquidity risk management that would apply to MetLife as a bank holding company. | |
• | The proposals under consideration in Congress also include special regulatory and insolvency regimes, including even higher capital, prudential and liquidity standards for financial institutions that are deemed to be systemically significant. These insolvency regimes could vary from the resolution regimes currently applicable to some subsidiaries of such companies and could include assessments on financial companies to provide for a systemic resolution fund. | |
• | The Obama Administration, members of Congress and Federal banking regulators have suggested new or increased taxes or assessments on banks and financial firms to mitigate the costs to taxpayers of various government programs established to address the financial crisis and to offset the costs of potential future crises. See “— Actions of the U.S. Government, Federal Reserve Bank of New York and Other Governmental and Regulatory Bodies for the Purpose of Stabilizing and Revitalizing the Financial Markets and Protecting Investors and Consumers May Not Achieve the Intended Effect or Could Adversely Affect MetLife’s Competitive Position.” | |
• | The proposed legislation also includes new conditions on the writing and trading of certain standardized and non-standardized derivatives. |
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• | chartering to carry on business as a bank; | |
• | maintaining minimum capital ratios; | |
• | capital management in relation to the bank’s assets; | |
• | safety and soundness standards; | |
• | loan loss and other related liabilities; | |
• | liquidity; | |
• | financial reporting and disclosure standards; | |
• | counterparty credit concentration; | |
• | restrictions on related party and affiliate transactions; | |
• | lending limits; | |
• | payment of interest; | |
• | unfair or deceptive acts or practices; | |
• | privacy; and | |
• | bank holding company and bank change of control. |
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• | 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. |
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• | Fixed maturity and equity securities are classified asavailable-for-sale, except for trading securities, and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income (loss), net of policyholder related amounts and deferred income taxes. | |
• | Trading securities are recorded at estimated fair value with subsequent changes in estimated fair value recognized in net investment income. | |
• | Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition. Short-term investments that meet the definition of a security are stated at estimated fair value, and short-term investments that do not meet the definition of a security are stated at amortized cost, which approximates estimated fair value. | |
• | The carrying value of mortgage loans is stated at original cost net of repayments, amortization of premiums, accretion of discounts and valuation allowances, except for residential mortgage loansheld-for-sale accounted for under the fair value option which are carried at estimated fair value, as determined on a recurring basis, and certain commercial and residential mortgage loans carried at the lower of cost or estimated fair value, as determined on a nonrecurring basis. | |
• | Policy loans are stated at unpaid principal balances. | |
• | Real estateheld-for-investment, including related improvements, is stated at cost, less accumulated depreciation. | |
• | Real estate joint ventures and other limited partnership interests in which we have more than a minor equity interest or more than a minor influence over the joint ventures or partnership’s operations, but where we do not have a controlling interest and are not the primary beneficiary, are carried using the equity method of accounting. We use the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which we have a minor equity investment and virtually no influence over the joint ventures or the partnership’s operations. | |
• | Other invested assets consist principally of freestanding derivatives with positive estimated fair values and leveraged leases. Freestanding derivatives are carried at estimated fair value with changes in estimated fair value reflected in income for both non-qualifying derivatives and derivatives in fair value hedging relationships. Changes in estimated fair value of derivatives in cash flow or in net investments in foreign operations hedging relationships are reflected as a separate component of other comprehensive income (loss). Leveraged leases are recorded net of non-recourse debt. |
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Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. We define active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. | |
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
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• | an election or removal of directors in which a stockholder has properly nominated one or more candidates in opposition to a nominee or nominees of MetLife, Inc.’s Board of Directors or a vote on a stockholder’s proposal to oppose a board nominee for director, remove a director for cause or fill a vacancy caused by the removal of a director by stockholders, subject to certain conditions; | |
• | a merger or consolidation, a sale, lease or exchange of all or substantially all of the assets, or a recapitalization or dissolution, of MetLife, Inc., in each case requiring a vote of stockholders under applicable Delaware law; | |
• | any transaction that would result in an exchange or conversion of shares of common stock held by the Trust for cash, securities or other property; and | |
• | any proposal requiring MetLife, Inc.’s Board of Directors to amend or redeem the rights under the stockholder rights plan, other than a proposal with respect to which we have received advice of nationally-recognized legal counsel to the effect that the proposal is not a proper subject for stockholder action under Delaware law. |
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Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
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Item 3. | Legal Proceedings |
Item 4. | Submission of Matters to a Vote of Security Holders |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
2009 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
Common Stock Price | ||||||||||||||||
High | $ | 35.97 | $ | 35.50 | $ | 40.83 | $ | 38.35 | ||||||||
Low | $ | 12.10 | $ | 23.43 | $ | 26.90 | $ | 33.22 |
2008 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
Common Stock Price | ||||||||||||||||
High | $ | 61.52 | $ | 62.88 | $ | 63.00 | $ | 48.15 | ||||||||
Low | $ | 54.62 | $ | 52.77 | $ | 43.75 | $ | 16.48 |
Dividend | ||||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | ||||||||||
(In millions, | ||||||||||||||
except per share data) | ||||||||||||||
October 29, 2009 | November 9, 2009 | December 14, 2009 | $ | 0.74 | $ | 610 | ||||||||
October 28, 2008 | November 10, 2008 | December 15, 2008 | $ | 0.74 | $ | 592 |
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(c) Total Number | (d) Maximum Number | |||||||||||||||
of Shares | (or Approximate | |||||||||||||||
Purchased as Part | Dollar Value) of | |||||||||||||||
(a) Total Number | of Publicly | Shares that May Yet | ||||||||||||||
of Shares | (b) Average Price | Announced Plans | Be Purchased Under the | |||||||||||||
Period | Purchased (1) | Paid per Share | or Programs | Plans or Programs (2) | ||||||||||||
October 1- October 31, 2009 | 15,000 | $ | 38.41 | — | $ | 1,260,735,127 | ||||||||||
November 1- November 30, 2009 | — | — | — | $ | 1,260,735,127 | |||||||||||
December 1- December 31, 2009 | — | — | — | $ | 1,260,735,127 | |||||||||||
Total | 15,000 | $ | 38.41 | — | $ | 1,260,735,127 | ||||||||||
(1) | On October 31, 2009, separate account affiliates of the Company purchased 15,000 shares of common stock on the open market in nondiscretionary transactions to rebalance index funds. Except as disclosed above, there were no shares of common stock which were repurchased by the Company. | |
(2) | At December 31, 2009, the Company had $1,261 million remaining under its common stock repurchase program authorizations. In April 2008, the Company’s Board of Directors authorized an additional $1 billion common stock repurchase program, which will begin after the completion of the January 2008 $1 billion common stock repurchase program, of which $261 million remained outstanding at December 31, 2009. Under these authorizations, the Company may purchase its common stock from the MetLife Policyholder Trust, in the open market (including pursuant to the terms of a pre-set trading plan meeting the requirements ofRule 10b5-1 under the Exchange Act) and in privately negotiated transactions. |
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Item 6. | Selected Financial Data |
Years Ended December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Statement of Operations Data (1) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 26,460 | $ | 25,914 | $ | 22,970 | $ | 22,052 | $ | 20,979 | ||||||||||
Universal life and investment-type product policy fees | 5,203 | 5,381 | 5,238 | 4,711 | 3,775 | |||||||||||||||
Net investment income | 14,838 | 16,291 | 18,057 | 16,241 | 14,058 | |||||||||||||||
Other revenues | 2,329 | 1,586 | 1,465 | 1,301 | 1,221 | |||||||||||||||
Net investment gains (losses) | (7,772 | ) | 1,812 | (578 | ) | (1,382 | ) | (112 | ) | |||||||||||
Total revenues | 41,058 | 50,984 | 47,152 | 42,923 | 39,921 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Policyholder benefits and claims | 28,336 | 27,437 | 23,783 | 22,869 | 22,236 | |||||||||||||||
Interest credited to policyholder account balances | 4,849 | 4,788 | 5,461 | 4,899 | 3,650 | |||||||||||||||
Policyholder dividends | 1,650 | 1,751 | 1,723 | 1,698 | 1,678 | |||||||||||||||
Other expenses | 10,556 | 11,947 | 10,405 | 9,514 | 8,269 | |||||||||||||||
Total expenses | 45,391 | 45,923 | 41,372 | 38,980 | 35,833 | |||||||||||||||
Income (loss) from continuing operations before provision for income tax | (4,333 | ) | 5,061 | 5,780 | 3,943 | 4,088 | ||||||||||||||
Provision for income tax expense (benefit) | (2,015 | ) | 1,580 | 1,675 | 1,027 | 1,156 | ||||||||||||||
Income (loss) from continuing operations, net of income tax | (2,318 | ) | 3,481 | 4,105 | 2,916 | 2,932 | ||||||||||||||
Income (loss) from discontinued operations, net of income tax | 40 | (203 | ) | 360 | 3,524 | 1,879 | ||||||||||||||
Net income (loss) | (2,278 | ) | 3,278 | 4,465 | 6,440 | 4,811 | ||||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | (32 | ) | 69 | 148 | 147 | 97 | ||||||||||||||
Net income (loss) attributable to MetLife, Inc. | (2,246 | ) | 3,209 | 4,317 | 6,293 | 4,714 | ||||||||||||||
Less: Preferred stock dividends | 122 | 125 | 137 | 134 | 63 | |||||||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (2,368 | ) | $ | 3,084 | $ | 4,180 | $ | 6,159 | $ | 4,651 | |||||||||
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December 31, | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Balance Sheet Data (1) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
General account assets | $ | 390,273 | $ | 380,839 | $ | 399,007 | $ | 383,758 | $ | 354,857 | ||||||||||
Separate account assets | 149,041 | 120,839 | 160,142 | 144,349 | 127,855 | |||||||||||||||
Total assets | $ | 539,314 | $ | 501,678 | $ | 559,149 | $ | 528,107 | $ | 482,712 | ||||||||||
Liabilities: | ||||||||||||||||||||
Policyholder liabilities (2) | $ | 283,759 | $ | 282,261 | $ | 261,442 | $ | 252,099 | $ | 243,834 | ||||||||||
Payables for collateral under securities loaned and other transactions | 24,196 | 31,059 | 44,136 | 45,846 | 34,515 | |||||||||||||||
Bank deposits | 10,211 | 6,884 | 4,534 | 4,638 | 4,339 | |||||||||||||||
Short-term debt | 912 | 2,659 | 667 | 1,449 | 1,414 | |||||||||||||||
Long-term debt | 13,220 | 9,667 | 9,100 | 8,822 | 9,088 | |||||||||||||||
Collateral financing arrangements | 5,297 | 5,192 | 4,882 | — | — | |||||||||||||||
Junior subordinated debt securities | 3,191 | 3,758 | 4,075 | 3,381 | 2,134 | |||||||||||||||
Other | 15,989 | 15,374 | 33,186 | 32,277 | 29,141 | |||||||||||||||
Separate account liabilities | 149,041 | 120,839 | 160,142 | 144,349 | 127,855 | |||||||||||||||
Total liabilities | 505,816 | 477,693 | 522,164 | 492,861 | 452,320 | |||||||||||||||
Stockholders’ Equity: | ||||||||||||||||||||
MetLife, Inc.’s stockholders’ equity: | ||||||||||||||||||||
Preferred stock, at par value | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Common stock, at par value | 8 | 8 | 8 | 8 | 8 | |||||||||||||||
Additional paid-in capital | 16,859 | 15,811 | 17,098 | 17,454 | 17,274 | |||||||||||||||
Retained earnings | 19,501 | 22,403 | 19,884 | 16,574 | 10,865 | |||||||||||||||
Treasury stock, at cost | (190 | ) | (236 | ) | (2,890 | ) | (1,357 | ) | (959 | ) | ||||||||||
Accumulated other comprehensive income (loss) | (3,058 | ) | (14,253 | ) | 1,078 | 1,118 | 1,912 | |||||||||||||
Total MetLife, Inc.’s stockholders’ equity | 33,121 | 23,734 | 35,179 | 33,798 | 29,101 | |||||||||||||||
Noncontrolling interests | 377 | 251 | 1,806 | 1,448 | 1,291 | |||||||||||||||
Total equity | 33,498 | 23,985 | 36,985 | 35,246 | 30,392 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 539,314 | $ | 501,678 | $ | 559,149 | $ | 528,107 | $ | 482,712 | ||||||||||
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Years Ended December 31, | ||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||
(In millions, except per share data) | ||||||||||||||||||
Other Data (1), (3) | ||||||||||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (2,368) | $ | 3,084 | $ | 4,180 | $ | 6,159 | $ | 4,651 | ||||||||
Return on MetLife, Inc.’s common equity | (9.0)% | 11.2% | 12.9% | 20.9% | 18.6% | |||||||||||||
Return on MetLife, Inc.’s common equity, excluding accumulated other comprehensive income (loss) | (6.8)% | 9.1% | 13.3% | 22.1% | 20.7% | |||||||||||||
EPS Data (1), (4) | ||||||||||||||||||
Income (Loss) from Continuing Operations Available to MetLife, Inc.’s Common Shareholders Per Common Share: | �� | |||||||||||||||||
Basic | $ | (2.94) | $ | 4.60 | $ | 5.32 | $ | 3.64 | $ | 3.85 | ||||||||
Diluted | $ | (2.94) | $ | 4.54 | $ | 5.20 | $ | 3.60 | $ | 3.81 | ||||||||
Income (Loss) from Discontinued Operations Per Common Share: | ||||||||||||||||||
Basic | $ | 0.05 | $ | (0.41) | $ | 0.30 | $ | 4.45 | $ | 2.36 | ||||||||
Diluted | $ | 0.05 | $ | (0.40) | $ | 0.28 | $ | 4.39 | $ | 2.35 | ||||||||
Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders Per Common Share: | ||||||||||||||||||
Basic | $ | (2.89) | $ | 4.19 | $ | 5.62 | $ | 8.09 | $ | 6.21 | ||||||||
Diluted | $ | (2.89) | $ | 4.14 | $ | 5.48 | $ | 7.99 | $ | 6.16 | ||||||||
Dividends Declared Per Common Share | $ | 0.74 | $ | 0.74 | $ | 0.74 | $ | 0.59 | $ | 0.52 |
(1) | On July 1, 2005, the Company completed the acquisition of The Travelers Insurance Company, excluding certain assets, most significantly, Primerica, from Citigroup Inc. (“Citigroup”), and substantially all of Citigroup’s international insurance businesses. The 2005 selected financial data includes total revenues and total expenses of $966 million and $577 million, respectively, from the date of the acquisition. | |
(2) | Policyholder liabilities include future policy benefits, policyholder account balances, other policyholder funds, policyholder dividends payable and the policyholder dividend obligation. | |
(3) | Return on common equity is defined as net income (loss) available to MetLife, Inc.’s common shareholders divided by average common stockholders’ equity. | |
(4) | For the year ended December 31, 2009, shares related to the exercise or issuance of stock-based awards have been excluded from the calculation of diluted earnings per common share as these shares are anti-dilutive. |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Income (loss) from continuing operations, net of income tax | $ | (2,318 | ) | $ | 3,481 | $ | 4,105 | |||||
Less: Net investment gains (losses) | (7,772 | ) | 1,812 | (578 | ) | |||||||
Less: Other adjustments to continuing operations | 284 | (662 | ) | (317 | ) | |||||||
Less: Provision for income tax (expense) benefit | 2,683 | (488 | ) | 293 | ||||||||
Operating earnings | 2,487 | 2,819 | 4,707 | |||||||||
Less: Preferred stock dividends | 122 | 125 | 137 | |||||||||
Operating earnings available to common shareholders | $ | 2,365 | $ | 2,694 | $ | 4,570 | ||||||
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• | Continued growth in premiums, fees & other revenues |
• | We expect top-line growth in 2010 of approximately 6% over 2009. We expect this growth will be driven by: |
• | Higher fees earned on separate accounts, as the full impact of the recovery in the equity market is felt, thereby increasing the value of those separate accounts; | |
• | Increased sales in the pension closeout business, both in the United States and the United Kingdom, as the demand for these products rebounds from the lower levels seen in 2009; | |
• | Increases in our International segment, as a result of ongoing investments and improvements in the various distribution and service operations throughout the regions; and | |
• | Modest growth in Insurance products. Our growth continues to be impacted by the current higher levels of unemployment and it is possible that certain customers may further reduce or eliminate coverages in response to the financial pressures they are experiencing. |
• | Offsetting these growth areas, MetLife Bank’s premiums, fees & other revenues are expected to decline from the 2009 level, which benefited from the large number of mortgage refinancings in that year. |
• | Higher returns on the investment portfolio |
• | Improvement in net investment gains (losses) |
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• | Reduced volatility in guarantee-related liabilities |
• | Focus on disciplined underwriting |
• | Focus on expense management |
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(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; | |
(ix) | accounting for employee benefit plans; and | |
(x) | the liability for litigation and regulatory matters. |
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Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. | |
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of estimated fair value requires significant management judgment or estimation. |
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(i) | the length of time and the extent to which the estimated fair value has been below cost or amortized cost; | |
(ii) | the potential for impairments of securities when the issuer is experiencing significant financial difficulties; | |
(iii) | the potential for impairments in an entire industry sector orsub-sector; | |
(iv) | the potential for impairments in certain economically depressed geographic locations; | |
(v) | the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; | |
(vi) | with respect to fixed maturity securities, whether the Company has the intent to sell or will more likely than not be required to sell a particular security before recovery of the decline in estimated fair value below cost or amortized cost; | |
(vii) | with respect to equity securities, whether the Company’s ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost; | |
(viii) | unfavorable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and | |
(ix) | other subjective factors, including concentrations and information obtained from regulators and rating agencies. |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Investment return | $ | 141 | $ | 70 | $ | (34 | ) | |||||
Separate account balances | (32 | ) | (708 | ) | 8 | |||||||
Net investment gain (loss) related | 712 | (521 | ) | 126 | ||||||||
Expense | 60 | 61 | (53 | ) | ||||||||
In-force/Persistency | (87 | ) | (159 | ) | 1 | |||||||
Policyholder dividends and other | 174 | (30 | ) | (39 | ) | |||||||
Total | $ | 968 | $ | (1,287 | ) | $ | 9 | |||||
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• | Actual gross profits decreased as a result of increased investment losses from the portfolios associated with the hedging of guaranteed insurance obligations on variable annuities, resulting in a decrease of DAC and VOBA amortization of $141 million. | |
• | Changes in net investment gains (losses) resulted in the following changes in DAC and VOBA amortization: |
– | Actual gross profits increased as a result of a decrease in liabilities associated with guarantee obligations on variable annuities, resulting in an increase of DAC and VOBA amortization of $995 million, excluding the impact from the Company’s own credit and risk margins, which are described below. This increase in actual gross profits was partially offset by freestanding derivative losses associated with the hedging of such guarantee obligations, which resulted in a decrease in DAC and VOBA amortization of $636 million. | |
– | The narrowing of the Company’s own credit spreads increased the valuation of guarantee liabilities, decreased actual gross profits and decreased DAC and VOBA amortization by $607 million. This was partially offset by lower risk margins which decreased the guarantee liability valuations, increased actual gross profits and increased DAC and VOBA amortization by $20 million. | |
– | The remainder of the impact of net investment gains (losses), which decreased DAC amortization by $484 million, was primarily attributable to current period investment activities. |
• | Included in policyholder dividends and other was a decrease in amortization of $90 million as a result of changes to long term assumptions. The remainder of the decrease was due to various immaterial items. |
• | The decrease in equity markets during the year significantly lowered separate account balances which lead to a significant reduction in expected future gross profits on variable universal life contracts and variable deferred annuity contracts resulting in an increase of $708 million in DAC and VOBA amortization. | |
• | Changes in net investment gains (losses) resulted in the following changes in DAC and VOBA amortization: |
– | Actual gross profits decreased as a result of an increase in liabilities associated with guarantee obligations on variable annuities resulting in a reduction of DAC and VOBA amortization of $1,047 million. This decrease in actual gross profits was mitigated by freestanding derivative gains associated with the hedging of such guarantee obligations which resulted in an increase in actual gross profits and an increase in DAC and VOBA amortization of $625 million. | |
– | The widening of the Company’s own credit spreads decreased the valuation of guarantee liabilities, increased actual gross profits and increased DAC and VOBA amortization by $739 million. This was partially offset by higher risk margins which increased the guarantee liability valuations, decreased actual gross profits and decreased DAC and VOBA amortization by $100 million. | |
– | Reductions in both actual and expected cumulative earnings of the closed block resulting from recent experience in the closed block combined with changes in expected dividend scales resulted in an increase in closed block DAC amortization of $195 million, $175 million of which was related to net investment gains (losses). | |
– | The remainder of the impact of net investment gains (losses), which increased DAC amortization by $129 million, was attributable to numerous immaterial items. |
• | Increases in amortization in 2008 resulting from changes in assumptions related to in-force/persistency of $159 million were driven by higher than anticipated mortality and lower than anticipated premium persistency during 2008. |
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(i) | future taxable income exclusive of reversing temporary differences and carryforwards; | |
(ii) | future reversals of existing taxable temporary differences; | |
(iii) | taxable income in prior carryback years; and | |
(iv) | tax planning strategies. |
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Premiums | $ | 26,460 | $ | 25,914 | $ | 546 | 2.1 | % | ||||||||
Universal life and investment-type product policy fees | 5,203 | 5,381 | (178 | ) | (3.3 | )% | ||||||||||
Net investment income | 14,838 | 16,291 | (1,453 | ) | (8.9 | )% | ||||||||||
Other revenues | 2,329 | 1,586 | 743 | 46.8 | % | |||||||||||
Net investment gains (losses) | (7,772 | ) | 1,812 | (9,584 | ) | (528.9 | )% | |||||||||
Total revenues | 41,058 | 50,984 | (9,926 | ) | (19.5 | )% | ||||||||||
Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 29,986 | 29,188 | 798 | 2.7 | % | |||||||||||
Interest credited to policyholder account balances | 4,849 | 4,788 | 61 | 1.3 | % | |||||||||||
Interest credited to bank deposits | 163 | 166 | (3 | ) | (1.8 | )% | ||||||||||
Capitalization of DAC | (3,019 | ) | (3,092 | ) | 73 | 2.4 | % | |||||||||
Amortization of DAC and VOBA | 1,307 | 3,489 | (2,182 | ) | (62.5 | )% | ||||||||||
Interest expense | 1,044 | 1,051 | (7 | ) | (0.7 | )% | ||||||||||
Other expenses | 11,061 | 10,333 | 728 | 7.0 | % | |||||||||||
Total expenses | 45,391 | 45,923 | (532 | ) | (1.2 | )% | ||||||||||
Income (loss) from continuing operations before provision for income tax | (4,333 | ) | 5,061 | (9,394 | ) | (185.6 | )% | |||||||||
Provision for income tax expense (benefit) | (2,015 | ) | 1,580 | (3,595 | ) | (227.5 | )% | |||||||||
Income (loss) from continuing operations, net of income tax | (2,318 | ) | 3,481 | (5,799 | ) | (166.6 | )% | |||||||||
Income (loss) from discontinued operations, net of income tax | 40 | (203 | ) | 243 | 119.7 | % | ||||||||||
Net income (loss) | (2,278 | ) | 3,278 | (5,556 | ) | (169.5 | )% | |||||||||
Less: Net income (loss) attributable to noncontrolling interests | (32 | ) | 69 | (101 | ) | (146.4 | )% | |||||||||
Net income (loss) attributable to MetLife, Inc. | (2,246 | ) | 3,209 | (5,455 | ) | (170.0 | )% | |||||||||
Less: Preferred stock dividends | 122 | 125 | (3 | ) | (2.4 | )% | ||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (2,368 | ) | $ | 3,084 | $ | (5,452 | ) | (176.8 | )% | ||||||
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Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | (418 | ) | $ | (367 | ) | $ | (841 | ) | $ | 321 | $ | (280 | ) | $ | (733 | ) | $ | (2,318 | ) | ||||||||
Less: Net investment gains (losses) | (2,258 | ) | (1,606 | ) | (2,260 | ) | (2 | ) | (903 | ) | (743 | ) | (7,772 | ) | ||||||||||||||
Less: Other adjustments to continuing operations | (139 | ) | 522 | 123 | — | (206 | ) | (16 | ) | 284 | ||||||||||||||||||
Less: Provision for income tax (expense) benefit | 837 | 380 | 745 | 1 | 366 | 354 | 2,683 | |||||||||||||||||||||
Operating earnings | $ | 1,142 | $ | 337 | $ | 551 | $ | 322 | $ | 463 | (328 | ) | 2,487 | |||||||||||||||
Less: Preferred stock dividends | 122 | 122 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (450 | ) | $ | 2,365 | |||||||||||||||||||||||
Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 2,195 | $ | 382 | $ | (97 | ) | $ | 275 | $ | 553 | $ | 173 | $ | 3,481 | |||||||||||||
Less: Net investment gains (losses) | 1,558 | 901 | (1,629 | ) | (134 | ) | 169 | 947 | 1,812 | |||||||||||||||||||
Less: Other adjustments to continuing operations | (193 | ) | (612 | ) | 74 | — | 52 | 17 | (662 | ) | ||||||||||||||||||
Less: Provision for income tax (expense) benefit | (480 | ) | (100 | ) | 545 | 46 | (147 | ) | (352 | ) | (488 | ) | ||||||||||||||||
Operating earnings | $ | 1,310 | $ | 193 | $ | 913 | $ | 363 | $ | 479 | (439 | ) | 2,819 | |||||||||||||||
Less: Preferred stock dividends | 125 | 125 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (564 | ) | $ | 2,694 | |||||||||||||||||||||||
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Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 23,483 | $ | 3,543 | $ | 5,669 | $ | 3,113 | $ | 4,383 | $ | 867 | $ | 41,058 | ||||||||||||||
Less: Net investment gains (losses) | (2,258 | ) | (1,606 | ) | (2,260 | ) | (2 | ) | (903 | ) | (743 | ) | (7,772 | ) | ||||||||||||||
Less: Adjustments related to net investment gains (losses) | (27 | ) | — | — | — | — | — | (27 | ) | |||||||||||||||||||
Less: Other adjustments to revenues | (74 | ) | (217 | ) | 187 | — | (169 | ) | 22 | (251 | ) | |||||||||||||||||
Total operating revenues | $ | 25,842 | $ | 5,366 | $ | 7,742 | $ | 3,115 | $ | 5,455 | $ | 1,588 | $ | 49,108 | ||||||||||||||
Total expenses | $ | 24,165 | $ | 4,108 | $ | 6,982 | $ | 2,697 | $ | 4,868 | $ | 2,571 | $ | 45,391 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) | 39 | (739 | ) | — | — | — | — | (700 | ) | |||||||||||||||||||
Less: Other adjustments to expenses | (1 | ) | — | 64 | — | 37 | 38 | 138 | ||||||||||||||||||||
Total operating expenses | $ | 24,127 | $ | 4,847 | $ | 6,918 | $ | 2,697 | $ | 4,831 | $ | 2,533 | $ | 45,953 | ||||||||||||||
Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 26,754 | $ | 5,630 | $ | 7,559 | $ | 3,061 | $ | 6,001 | $ | 1,979 | $ | 50,984 | ||||||||||||||
Less: Net investment gains (losses) | 1,558 | 901 | (1,629 | ) | (134 | ) | 169 | 947 | 1,812 | |||||||||||||||||||
Less: Adjustments related to net investment gains (losses) | 18 | — | — | — | — | — | 18 | |||||||||||||||||||||
Less: Other adjustments to revenues | (1 | ) | (35 | ) | 45 | — | 69 | 13 | 91 | |||||||||||||||||||
Total operating revenues | $ | 25,179 | $ | 4,764 | $ | 9,143 | $ | 3,195 | $ | 5,763 | $ | 1,019 | $ | 49,063 | ||||||||||||||
Total expenses | $ | 23,418 | $ | 5,049 | $ | 7,735 | $ | 2,728 | $ | 5,044 | $ | 1,949 | $ | 45,923 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) | 262 | 577 | — | — | — | — | 839 | |||||||||||||||||||||
Less: Other adjustments to expenses | (52 | ) | — | (29 | ) | — | 17 | (4 | ) | (68 | ) | |||||||||||||||||
Total operating expenses | $ | 23,208 | $ | 4,472 | $ | 7,764 | $ | 2,728 | $ | 5,027 | $ | 1,953 | $ | 45,152 | ||||||||||||||
• | Fixed maturity securities — primarily due to lower yields on floating rate securities from declines in short-term interest rates and an increased allocation to lower yielding, higher quality, U.S. Treasury, agency and |
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government guaranteed securities, to increase liquidity in response to the extraordinary market conditions, as well as decreased income on our securities lending program, primarily due to the smaller size of the program in the current year. These adverse impacts were offset slightly as conditions improved late in 2009 and we began to reallocate our portfolio to higher-yielding assets; |
• | Real estate joint ventures — primarily due to declining property valuations on certain investment funds that carry their real estate at estimated fair value and operating losses incurred on properties that were developed for sale by development joint ventures; | |
• | Cash, cash equivalents and short-term investments — primarily due to declines in short-term interest rates; and | |
• | Mortgage loans — primarily due to lower prepayments on commercial mortgage loans and lower yields on variable rate loans reflecting declines in short-term interest rates. |
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 17,168 | $ | 16,402 | $ | 766 | 4.7 | % | ||||||||
Universal life and investment-type product policy fees | 2,281 | 2,171 | 110 | 5.1 | % | |||||||||||
Net investment income | 5,614 | 5,787 | (173 | ) | (3.0 | )% | ||||||||||
Other revenues | 779 | 819 | (40 | ) | (4.9 | )% | ||||||||||
Total operating revenues | 25,842 | 25,179 | 663 | 2.6 | % | |||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 19,111 | 18,183 | 928 | 5.1 | % | |||||||||||
Interest credited to policyholder account balances | 952 | 930 | 22 | 2.4 | % | |||||||||||
Capitalization of DAC | (873 | ) | (849 | ) | (24 | ) | (2.8 | )% | ||||||||
Amortization of DAC and VOBA | 725 | 743 | (18 | ) | (2.4 | )% | ||||||||||
Interest expense | 6 | 5 | 1 | 20.0 | % | |||||||||||
Other expenses | 4,206 | 4,196 | 10 | 0.2 | % | |||||||||||
Total operating expenses | 24,127 | 23,208 | 919 | 4.0 | % | |||||||||||
Provision for income tax expense (benefit) | 573 | 661 | (88 | ) | (13.3 | )% | ||||||||||
Operating earnings | $ | 1,142 | $ | 1,310 | $ | (168 | ) | (12.8 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 623 | $ | 361 | $ | 262 | 72.6 | % | ||||||||
Universal life and investment-type product policy fees | 1,712 | 1,870 | (158 | ) | (8.4 | )% | ||||||||||
Net investment income | 2,859 | 2,365 | 494 | 20.9 | % | |||||||||||
Other revenues | 172 | 168 | 4 | 2.4 | % | |||||||||||
Total operating revenues | 5,366 | 4,764 | 602 | 12.6 | % | |||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 1,398 | 692 | 706 | 102.0 | % | |||||||||||
Interest credited to policyholder account balances | 1,687 | 1,337 | 350 | 26.2 | % | |||||||||||
Capitalization of DAC | (1,067 | ) | (980 | ) | (87 | ) | (8.9 | )% | ||||||||
Amortization of DAC and VOBA | 424 | 1,356 | (932 | ) | (68.7 | )% | ||||||||||
Interest expense | — | 2 | (2 | ) | (100.0 | )% | ||||||||||
Other expenses | 2,405 | 2,065 | 340 | 16.5 | % | |||||||||||
Total operating expenses | 4,847 | 4,472 | 375 | 8.4 | % | |||||||||||
Provision for income tax expense (benefit) | 182 | 99 | 83 | 83.8 | % | |||||||||||
Operating earnings | $ | 337 | $ | 193 | $ | 144 | 74.6 | % | ||||||||
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 2,561 | $ | 2,683 | $ | (122 | ) | (4.5 | )% | |||||||
Universal life and investment-type product policy fees | 176 | 227 | (51 | ) | (22.5 | )% | ||||||||||
Net investment income | 4,766 | 5,874 | (1,108 | ) | (18.9 | )% | ||||||||||
Other revenues | 239 | 359 | (120 | ) | (33.4 | )% | ||||||||||
Total operating revenues | 7,742 | 9,143 | (1,401 | ) | (15.3 | )% | ||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 4,797 | 4,977 | (180 | ) | (3.6 | )% | ||||||||||
Interest credited to policyholder account balances | 1,633 | 2,298 | (665 | ) | (28.9 | )% | ||||||||||
Capitalization of DAC | (14 | ) | (18 | ) | 4 | 22.2 | % | |||||||||
Amortization of DAC and VOBA | 15 | 29 | (14 | ) | (48.3 | )% | ||||||||||
Interest expense | 3 | 2 | 1 | 50.0 | % | |||||||||||
Other expenses | 484 | 476 | 8 | 1.7 | % | |||||||||||
Total operating expenses | 6,918 | 7,764 | (846 | ) | (10.9 | )% | ||||||||||
Provision for income tax expense (benefit) | 273 | 466 | (193 | ) | (41.4 | )% | ||||||||||
Operating earnings | $ | 551 | $ | 913 | $ | (362 | ) | (39.6 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 2,902 | $ | 2,971 | $ | (69 | ) | (2.3 | )% | |||||||
Net investment income | 180 | 186 | (6 | ) | (3.2 | )% | ||||||||||
Other revenues | 33 | 38 | (5 | ) | (13.2 | )% | ||||||||||
Total operating revenues | 3,115 | 3,195 | (80 | ) | (2.5 | )% | ||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 1,932 | 1,924 | 8 | 0.4 | % | |||||||||||
Capitalization of DAC | (435 | ) | (444 | ) | 9 | 2.0 | % | |||||||||
Amortization of DAC and VOBA | 436 | 454 | (18 | ) | (4.0 | )% | ||||||||||
Other expenses | 764 | 794 | (30 | ) | (3.8 | )% | ||||||||||
Total operating expenses | 2,697 | 2,728 | (31 | ) | (1.1 | )% | ||||||||||
Provision for income tax expense (benefit) | 96 | 104 | (8 | ) | (7.7 | )% | ||||||||||
Operating earnings | $ | 322 | $ | 363 | $ | (41 | ) | (11.3 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 3,187 | $ | 3,470 | $ | (283 | ) | (8.2 | )% | |||||||
Universal life and investment-type product policy fees | 1,061 | 1,095 | (34 | ) | (3.1 | )% | ||||||||||
Net investment income | 1,193 | 1,180 | 13 | 1.1 | % | |||||||||||
Other revenues | 14 | 18 | (4 | ) | (22.2 | )% | ||||||||||
Total operating revenues | 5,455 | 5,763 | (308 | ) | (5.3 | )% | ||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 2,660 | 3,185 | (525 | ) | (16.5 | )% | ||||||||||
Interest credited to policyholder account balances | 581 | 171 | 410 | 239.8 | % | |||||||||||
Capitalization of DAC | (630 | ) | (798 | ) | 168 | 21.1 | % | |||||||||
Amortization of DAC and VOBA | 415 | 381 | 34 | 8.9 | % | |||||||||||
Interest expense | 8 | 9 | (1 | ) | (11.1 | )% | ||||||||||
Other expenses | 1,797 | 2,079 | (282 | ) | (13.6 | )% | ||||||||||
Total operating expenses | 4,831 | 5,027 | (196 | ) | (3.9 | )% | ||||||||||
Provision for income tax expense (benefit) | 161 | 257 | (96 | ) | (37.4 | )% | ||||||||||
Operating earnings | $ | 463 | $ | 479 | $ | (16 | ) | (3.3 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 19 | $ | 27 | $ | (8 | ) | (29.6 | )% | |||||||
Net investment income | 477 | 808 | (331 | ) | (41.0 | )% | ||||||||||
Other revenues | 1,092 | 184 | 908 | 493.5 | % | |||||||||||
Total operating revenues | 1,588 | 1,019 | 569 | 55.8 | % | |||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 4 | 46 | (42 | ) | (91.3 | )% | ||||||||||
Interest credited to policyholder account balances | — | 7 | (7 | ) | (100.0 | )% | ||||||||||
Interest credited to bank deposits | 163 | 166 | (3 | ) | (1.8 | )% | ||||||||||
Capitalization of DAC | — | (3 | ) | 3 | (100.0 | )% | ||||||||||
Amortization of DAC and VOBA | 3 | 5 | (2 | ) | (40.0 | )% | ||||||||||
Interest expense | 1,027 | 1,033 | (6 | ) | (0.6 | )% | ||||||||||
Other expenses | 1,336 | 699 | 637 | 91.1 | % | |||||||||||
Total operating expenses | 2,533 | 1,953 | 580 | 29.7 | % | |||||||||||
Provision for income tax expense (benefit) | (617 | ) | (495 | ) | (122 | ) | (24.6 | )% | ||||||||
Operating earnings | (328 | ) | (439 | ) | 111 | 25.3 | % | |||||||||
Preferred stock dividends | 122 | 125 | (3 | ) | (2.4 | )% | ||||||||||
Operating earnings available to common shareholders | $ | (450 | ) | $ | (564 | ) | $ | 114 | 20.2 | % | ||||||
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Premiums | $ | 25,914 | $ | 22,970 | $ | 2,944 | 12.8 | % | ||||||||
Universal life and investment-type product policy fees | 5,381 | 5,238 | 143 | 2.7 | % | |||||||||||
Net investment income | 16,291 | 18,057 | (1,766 | ) | (9.8 | )% | ||||||||||
Other revenues | 1,586 | 1,465 | 121 | 8.3 | % | |||||||||||
Net investment gains (losses) | 1,812 | (578 | ) | 2,390 | 413.5 | % | ||||||||||
Total revenues | 50,984 | 47,152 | 3,832 | 8.1 | % | |||||||||||
Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 29,188 | 25,506 | 3,682 | 14.4 | % | |||||||||||
Interest credited to policyholder account balances | 4,788 | 5,461 | (673 | ) | (12.3 | )% | ||||||||||
Interest credited to bank deposits | 166 | 200 | (34 | ) | (17.0 | )% | ||||||||||
Capitalization of DAC | (3,092 | ) | (3,064 | ) | (28 | ) | (0.9 | )% | ||||||||
Amortization of DAC and VOBA | 3,489 | 2,250 | 1,239 | 55.1 | % | |||||||||||
Interest expense | 1,051 | 897 | 154 | 17.2 | % | |||||||||||
Other expenses | 10,333 | 10,122 | 211 | 2.1 | % | |||||||||||
Total expenses | 45,923 | 41,372 | 4,551 | 11.0 | % | |||||||||||
Income before provision for income tax | 5,061 | 5,780 | (719 | ) | (12.4 | )% | ||||||||||
Provision for income tax expense (benefit) | 1,580 | 1,675 | (95 | ) | (5.7 | )% | ||||||||||
Income (loss) from continuing operations, net of income tax | 3,481 | 4,105 | (624 | ) | (15.2 | )% | ||||||||||
Income (loss) from discontinued operations, net of income tax | (203 | ) | 360 | (563 | ) | (156.4 | )% | |||||||||
Net income (loss) | 3,278 | 4,465 | (1,187 | ) | (26.6 | )% | ||||||||||
Less: Net income (loss) attributable to noncontrolling interests | 69 | 148 | (79 | ) | (53.4 | )% | ||||||||||
Net income (loss) attributable to MetLife, Inc. | 3,209 | 4,317 | (1,108 | ) | (25.7 | )% | ||||||||||
Less: Preferred stock dividends | 125 | 137 | (12 | ) | (8.8 | )% | ||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 3,084 | $ | 4,180 | $ | (1,096 | ) | (26.2 | )% | |||||||
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Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 2,195 | $ | 382 | $ | (97 | ) | $ | 275 | $ | 553 | $ | 173 | $ | 3,481 | |||||||||||||
Less: Net investment gains (losses) | 1,558 | 901 | (1,629 | ) | (134 | ) | 169 | 947 | 1,812 | |||||||||||||||||||
Less: Other adjustments to continuing operations | (193 | ) | (612 | ) | 74 | — | 52 | 17 | (662 | ) | ||||||||||||||||||
Less: Provision for income tax (expense) benefit | (480 | ) | (100 | ) | 545 | 46 | (147 | ) | (352 | ) | (488 | ) | ||||||||||||||||
Operating earnings | $ | 1,310 | $ | 193 | $ | 913 | $ | 363 | $ | 479 | (439 | ) | 2,819 | |||||||||||||||
Less: Preferred stock dividends | 125 | 125 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (564 | ) | $ | 2,694 | |||||||||||||||||||||||
Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 1,177 | $ | 935 | $ | 675 | $ | 436 | $ | 621 | $ | 261 | $ | 4,105 | ||||||||||||||
Less: Net investment gains (losses) | (121 | ) | 104 | (677 | ) | 15 | 56 | 45 | (578 | ) | ||||||||||||||||||
Less: Other adjustments to continuing operations | (176 | ) | (32 | ) | (156 | ) | — | 32 | 15 | (317 | ) | |||||||||||||||||
Less: Provision for income tax (expense) benefit | 100 | (26 | ) | 298 | (5 | ) | (35 | ) | (39 | ) | 293 | |||||||||||||||||
Operating earnings | $ | 1,374 | $ | 889 | $ | 1,210 | $ | 426 | $ | 568 | 240 | 4,707 | ||||||||||||||||
Less: Preferred stock dividends | 137 | 137 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | 103 | $ | 4,570 | ||||||||||||||||||||||||
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Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 26,754 | $ | 5,630 | $ | 7,559 | $ | 3,061 | $ | 6,001 | $ | 1,979 | $ | 50,984 | ||||||||||||||
Less: Net investment gains (losses) | 1,558 | 901 | (1,629 | ) | (134 | ) | 169 | 947 | 1,812 | |||||||||||||||||||
Less: Adjustments related to net investment gains (losses) | 18 | — | — | — | — | — | 18 | |||||||||||||||||||||
Less: Other adjustments to revenues | (1 | ) | (35 | ) | 45 | — | 69 | 13 | 91 | |||||||||||||||||||
Total operating revenues | $ | 25,179 | $ | 4,764 | $ | 9,143 | $ | 3,195 | $ | 5,763 | $ | 1,019 | $ | 49,063 | ||||||||||||||
Total expenses | $ | 23,418 | $ | 5,049 | $ | 7,735 | $ | 2,728 | $ | 5,044 | $ | 1,949 | $ | 45,923 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) | 262 | 577 | — | — | — | — | 839 | |||||||||||||||||||||
Less: Other adjustments to expenses | (52 | ) | — | (29 | ) | — | 17 | (4 | ) | (68 | ) | |||||||||||||||||
Total operating expenses | $ | 23,208 | $ | 4,472 | $ | 7,764 | $ | 2,728 | $ | 5,027 | $ | 1,953 | $ | 45,152 | ||||||||||||||
Corporate | Banking | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 24,005 | $ | 5,338 | $ | 7,600 | $ | 3,220 | $ | 5,418 | $ | 1,571 | $ | 47,152 | ||||||||||||||
Less: Net investment gains (losses) | (121 | ) | 104 | (677 | ) | 15 | 56 | 45 | (578 | ) | ||||||||||||||||||
Less: Adjustments related to net investment gains (losses) | (12 | ) | — | — | — | — | — | (12 | ) | |||||||||||||||||||
Less: Other adjustments to revenues | (81 | ) | (31 | ) | (148 | ) | — | (2 | ) | (9 | ) | (271 | ) | |||||||||||||||
Total operating revenues | $ | 24,219 | $ | 5,265 | $ | 8,425 | $ | 3,205 | $ | 5,364 | $ | 1,535 | $ | 48,013 | ||||||||||||||
Total expenses | $ | 22,214 | $ | 3,908 | $ | 6,592 | $ | 2,640 | $ | 4,590 | $ | 1,428 | $ | 41,372 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) | 62 | 22 | — | — | — | — | 84 | |||||||||||||||||||||
Less: Other adjustments to expenses | 21 | (21 | ) | 8 | — | (34 | ) | (24 | ) | (50 | ) | |||||||||||||||||
Total operating expenses | $ | 22,131 | $ | 3,907 | $ | 6,584 | $ | 2,640 | $ | 4,624 | $ | 1,452 | $ | 41,338 | ||||||||||||||
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• | Other limited partnership interests — primarily due to the lack of liquidity and credit in the financial markets, as well as unprecedented investor redemptions in an environment with steep declines in the public equity and debt markets; | |
• | Cash, cash equivalents and short-term investments — primarily due to declines in short-term interest rates; | |
• | Fixed maturity securities — primarily due to lower yields on floating rate securities due to declines in short-term interest rates and an increased allocation to lower yielding, higher quality, U.S. government and agency securities, to increase liquidity in response to the extraordinary market conditions; and | |
• | Real estate joint ventures — primarily due to declining property valuations on certain investment funds that carry their real estate at estimated fair value and operating losses incurred on properties that were developed for sale by real estate development joint ventures. |
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 16,402 | $ | 15,269 | $ | 1,133 | 7.4 | % | ||||||||
Universal life and investment-type product policy fees | 2,171 | 2,061 | 110 | �� | 5.3 | % | ||||||||||
Net investment income | 5,787 | 6,079 | (292 | ) | (4.8 | )% | ||||||||||
Other revenues | 819 | 810 | 9 | 1.1 | % | |||||||||||
Total operating revenues | 25,179 | 24,219 | 960 | 4.0 | % | |||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 18,183 | 17,001 | 1,182 | 7.0 | % | |||||||||||
Interest credited to policyholder account balances | 930 | 1,037 | (107 | ) | (10.3 | )% | ||||||||||
Capitalization of DAC | (849 | ) | (885 | ) | 36 | 4.1 | % | |||||||||
Amortization of DAC and VOBA | 743 | 727 | 16 | 2.2 | % | |||||||||||
Interest expense | 5 | 10 | (5 | ) | (50.0 | )% | ||||||||||
Other expenses | 4,196 | 4,241 | (45 | ) | (1.1 | )% | ||||||||||
Total operating expenses | 23,208 | 22,131 | 1,077 | 4.9 | % | |||||||||||
Provision for income tax expense (benefit) | 661 | 714 | (53 | ) | (7.4 | )% | ||||||||||
Operating earnings | $ | 1,310 | $ | 1,374 | $ | (64 | ) | (4.7 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 361 | $ | 339 | $ | 22 | 6.5 | % | ||||||||
Universal life and investment-type product policy fees | 1,870 | 2,005 | (135 | ) | (6.7 | )% | ||||||||||
Net investment income | 2,365 | 2,740 | (375 | ) | (13.7 | )% | ||||||||||
Other revenues | 168 | 181 | (13 | ) | (7.2 | )% | ||||||||||
Total operating revenues | 4,764 | 5,265 | (501 | ) | (9.5 | )% | ||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 692 | 605 | 87 | 14.4 | % | |||||||||||
Interest credited to policyholder account balances | 1,337 | 1,321 | 16 | 1.2 | % | |||||||||||
Capitalization of DAC | (980 | ) | (932 | ) | (48 | ) | (5.2 | )% | ||||||||
Amortization of DAC and VOBA | 1,356 | 822 | 534 | 65.0 | % | |||||||||||
Interest expense | 2 | 3 | (1 | ) | (33.3 | )% | ||||||||||
Other expenses | 2,065 | 2,088 | (23 | ) | (1.1 | )% | ||||||||||
Total operating expenses | 4,472 | 3,907 | 565 | 14.5 | % | |||||||||||
Provision for income tax expense (benefit) | 99 | 469 | (370 | ) | (78.9 | )% | ||||||||||
Operating earnings | $ | 193 | $ | 889 | $ | (696 | ) | (78.3 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 2,683 | $ | 1,265 | $ | 1,418 | 112.1 | % | ||||||||
Universal life and investment-type product policy fees | 227 | 189 | 38 | 20.1 | % | |||||||||||
Net investment income | 5,874 | 6,636 | (762 | ) | (11.5 | )% | ||||||||||
Other revenues | 359 | 335 | 24 | 7.2 | % | |||||||||||
Total operating revenues | 9,143 | 8,425 | 718 | 8.5 | % | |||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 4,977 | 3,365 | 1,612 | 47.9 | % | |||||||||||
Interest credited to policyholder account balances | 2,298 | 2,723 | (425 | ) | (15.6 | )% | ||||||||||
Capitalization of DAC | (18 | ) | (25 | ) | 7 | 28.0 | % | |||||||||
Amortization of DAC and VOBA | 29 | 38 | (9 | ) | (23.7 | )% | ||||||||||
Interest expense | 2 | 6 | (4 | ) | (66.7 | )% | ||||||||||
Other expenses | 476 | 477 | (1 | ) | (0.2 | )% | ||||||||||
Total operating expenses | 7,764 | 6,584 | 1,180 | 17.9 | % | |||||||||||
Provision for income tax expense (benefit) | 466 | 631 | (165 | ) | (26.1 | )% | ||||||||||
Operating earnings | $ | 913 | $ | 1,210 | $ | (297 | ) | (24.5 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 2,971 | $ | 2,966 | $ | 5 | 0.2 | % | ||||||||
Net investment income | 186 | 196 | (10 | ) | (5.1 | )% | ||||||||||
Other revenues | 38 | 43 | (5 | ) | (11.6 | )% | ||||||||||
Total operating revenues | 3,195 | 3,205 | (10 | ) | (0.3 | )% | ||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 1,924 | 1,811 | 113 | 6.2 | % | |||||||||||
Capitalization of DAC | (444 | ) | (471 | ) | 27 | 5.7 | % | |||||||||
Amortization of DAC and VOBA | 454 | 468 | (14 | ) | (3.0 | )% | ||||||||||
Other expenses | 794 | 832 | (38 | ) | (4.6 | )% | ||||||||||
Total operating expenses | 2,728 | 2,640 | 88 | 3.3 | % | |||||||||||
Provision for income tax expense (benefit) | 104 | 139 | (35 | ) | (25.2 | )% | ||||||||||
Operating earnings | $ | 363 | $ | 426 | $ | (63 | ) | (14.8 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 3,470 | $ | 3,096 | $ | 374 | 12.1 | % | ||||||||
Universal life and investment-type product policy fees | 1,095 | 995 | 100 | 10.1 | % | |||||||||||
Net investment income | 1,180 | 1,249 | (69 | ) | (5.5 | )% | ||||||||||
Other revenues | 18 | 24 | (6 | ) | (25.0 | )% | ||||||||||
Total operating revenues | 5,763 | 5,364 | 399 | 7.4 | % | |||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 3,185 | 2,521 | 664 | 26.3 | % | |||||||||||
Interest credited to policyholder account balances | 171 | 354 | (183 | ) | (51.7 | )% | ||||||||||
Capitalization of DAC | (798 | ) | (743 | ) | (55 | ) | (7.4 | )% | ||||||||
Amortization of DAC and VOBA | 381 | 309 | 72 | 23.3 | % | |||||||||||
Interest expense | 9 | 3 | 6 | 200.0 | % | |||||||||||
Other expenses | 2,079 | 2,180 | (101 | ) | (4.6 | )% | ||||||||||
Total operating expenses | 5,027 | 4,624 | 403 | 8.7 | % | |||||||||||
Provision for income tax expense (benefit) | 257 | 172 | 85 | 49.4 | % | |||||||||||
Operating earnings | $ | 479 | $ | 568 | $ | (89 | ) | (15.7 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2008 | 2007 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Operating Revenues | ||||||||||||||||
Premiums | $ | 27 | $ | 35 | $ | (8 | ) | (22.9 | )% | |||||||
Net investment income | 808 | 1,428 | (620 | ) | (43.4 | )% | ||||||||||
Other revenues | 184 | 72 | 112 | 155.6 | % | |||||||||||
Total operating revenues | 1,019 | 1,535 | (516 | ) | (33.6 | )% | ||||||||||
Operating Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 46 | 46 | — | — | % | |||||||||||
Interest credited to policyholder account balances | 7 | — | 7 | — | % | |||||||||||
Interest credited to bank deposits | 166 | 200 | (34 | ) | (17.0 | )% | ||||||||||
Capitalization of DAC | (3 | ) | (8 | ) | 5 | 62.5 | % | |||||||||
Amortization of DAC and VOBA | 5 | 11 | (6 | ) | (54.5 | )% | ||||||||||
Interest expense | 1,033 | 875 | 158 | 18.1 | % | |||||||||||
Other expenses | 699 | 328 | 371 | 113.1 | % | |||||||||||
Total operating expenses | 1,953 | 1,452 | 501 | 34.5 | % | |||||||||||
Provision for income tax expense (benefit) | (495 | ) | (157 | ) | (338 | ) | (215.3 | )% | ||||||||
Operating earnings | (439 | ) | 240 | (679 | ) | (282.9 | )% | |||||||||
Preferred stock dividends | 125 | 137 | (12 | ) | (8.8 | )% | ||||||||||
Operating earnings available to common shareholders | $ | (564 | ) | $ | 103 | $ | (667 | ) | (647.6 | )% | ||||||
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• | credit risk, relating to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest; | |
• | interest rate risk, relating to the market price and cash flow variability associated with changes in market interest rates; | |
• | liquidity risk, relating to the diminished ability to sell certain investments in times of strained market conditions; and | |
• | market valuation risk, relating to the variability in the estimated fair value of investments associated with changes in market factors such as credit spreads. |
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At and for the Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Fixed Maturity Securities | ||||||||||||
Yield (1) | 5.77 | % | 6.40 | % | 6.42 | % | ||||||
Investment income (2) | $ | 11,899 | $ | 12,403 | $ | 12,425 | ||||||
Investment (losses) | $ | (1,663 | ) | $ | (1,953 | ) | $ | (615 | ) | |||
Ending carrying value (2) | $ | 230,026 | $ | 189,197 | $ | 233,115 | ||||||
Mortgage Loans | ||||||||||||
Yield (1) | 5.38 | % | 6.08 | % | 6.56 | % | ||||||
Investment income (3) | $ | 2,735 | $ | 2,774 | $ | 2,648 | ||||||
Investment gains (losses) | $ | (442 | ) | $ | (136 | ) | $ | 3 | ||||
Ending carrying value | $ | 50,909 | $ | 51,364 | $ | 46,154 | ||||||
Real Estate and Real Estate Joint Ventures (4) | ||||||||||||
Yield (1) | (7.47 | )% | 2.98 | % | 10.29 | % | ||||||
Investment income (losses) | $ | (541 | ) | $ | 217 | $ | 607 | |||||
Investment gains (losses) | $ | (156 | ) | $ | (9 | ) | $ | 59 | ||||
Ending carrying value | $ | 6,896 | $ | 7,586 | $ | 6,767 | ||||||
Policy Loans | ||||||||||||
Yield (1) | 6.54 | % | 6.22 | % | 6.21 | % | ||||||
Investment income | $ | 648 | $ | 601 | $ | 572 | ||||||
Ending carrying value | $ | 10,061 | $ | 9,802 | $ | 9,326 | ||||||
Equity Securities | ||||||||||||
Yield (1) | 5.12 | % | 5.25 | % | 5.14 | % | ||||||
Investment income | $ | 175 | $ | 249 | $ | 244 | ||||||
Investment gains (losses) | $ | (399 | ) | $ | (253 | ) | $ | 164 | ||||
Ending carrying value | $ | 3,084 | $ | 3,197 | $ | 5,911 | ||||||
Other Limited Partnership Interests | ||||||||||||
Yield (1) | 3.22 | % | (2.77 | )% | 27.09 | % | ||||||
Investment income (losses) | $ | 173 | $ | (170 | ) | $ | 1,309 | |||||
Investment gains (losses) | $ | (356 | ) | $ | (140 | ) | $ | 16 | ||||
Ending carrying value | $ | 5,508 | $ | 6,039 | $ | 6,155 | ||||||
Cash and Short-Term Investments | ||||||||||||
Yield (1) | 0.44 | % | 1.62 | % | 4.91 | % | ||||||
Investment income | $ | 94 | $ | 307 | $ | 424 | ||||||
Investment gains | $ | 6 | $ | 3 | $ | 3 | ||||||
Ending carrying value | $ | 18,486 | $ | 38,085 | $ | 12,505 | ||||||
Other Invested Assets (4), (5), (6), (7) | ||||||||||||
Investment income | $ | 339 | $ | 279 | $ | 526 | ||||||
Investment gains (losses) | $ | (4,994 | ) | $ | 4,363 | $ | (474 | ) | ||||
Ending carrying value | $ | 12,709 | $ | 17,248 | $ | 8,076 | ||||||
Total Investments | ||||||||||||
Gross investment income yield (1) | 4.90 | % | 5.68 | % | 6.88 | % | ||||||
Investment fees and expenses yield | (0.14 | ) | (0.16 | ) | (0.16 | ) | ||||||
Net Investment Income Yield | 4.76 | % | 5.52 | % | 6.72 | % | ||||||
Gross investment income | $ | 15,522 | $ | 16,660 | $ | 18,755 | ||||||
Investment fees and expenses | (433 | ) | (460 | ) | (427 | ) | ||||||
Net Investment Income (4) | $ | 15,089 | $ | 16,200 | $ | 18,328 | ||||||
Ending Carrying Value | $ | 337,679 | $ | 322,518 | $ | 328,009 | ||||||
Gross investment gains | $ | 1,549 | $ | 2,579 | $ | 1,386 | ||||||
Gross investment losses (6) | (1,842 | ) | (2,084 | ) | (1,710 | ) | ||||||
Writedowns (6) | (2,845 | ) | (2,042 | ) | (140 | ) | ||||||
Subtotal | $ | (3,138 | ) | $ | (1,547 | ) | $ | (464 | ) | |||
Derivatives not qualifying for hedge accounting (4), (6), (7) | (4,866 | ) | 3,422 | (380 | ) | |||||||
Investment Gains (Losses) (4) | $ | (8,004 | ) | $ | 1,875 | $ | (844 | ) | ||||
Investment gains (losses) income tax benefit (provision) | 2,876 | (733 | ) | 280 | ||||||||
Investment Gains (Losses), Net of Income Tax | $ | (5,128 | ) | $ | 1,142 | $ | (564 | ) | ||||
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(1) | Yields are based on average of quarterly average asset carrying values, excluding recognized and unrealized investment gains (losses), and for yield calculation purposes, average of quarterly ending assets exclude collateral received from counterparties associated with the Company’s securities lending program. | |
(2) | Fixed maturity securities include $2,384 million, $946 million and $779 million at estimated fair value related to trading securities at December 31, 2009, 2008 and 2007, respectively. Fixed maturity securities include $400 million, ($193) million and $50 million of investment income related to trading securities for the years ended December 31, 2009, 2008 and 2007, respectively. | |
(3) | Investment income from mortgage loans includes prepayment fees. | |
(4) | Net investment income and net investment gains (losses) presented in this yield table vary from the amounts presented in the GAAP consolidated statement of operations due to certain reclassifications made between net investment income and net investment gains (losses) as presented below. |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Net investment income — per yield table above | $ | 15,089 | $ | 16,200 | $ | 18,328 | ||||||
Real estate discontinued operations | (7 | ) | (9 | ) | (18 | ) | ||||||
Scheduled periodic settlement payments on derivative instruments not qualifying for hedge accounting | (88 | ) | (5 | ) | (253 | ) | ||||||
Hedged embedded derivatives related to certain variable annuities with guarantees of consolidated entities and operating joint ventures | (156 | ) | 105 | — | ||||||||
Net investment income — per consolidated statement of operations | $ | 14,838 | $ | 16,291 | $ | 18,057 | ||||||
Investment gains (losses) — per yield table above | $ | (8,004 | ) | $ | 1,875 | $ | (844 | ) | ||||
Real estate discontinued operations | (8 | ) | (8 | ) | (13 | ) | ||||||
Scheduled periodic settlement payments on derivative instruments not qualifying for hedge accounting | 88 | 5 | 253 | |||||||||
Interest credited to policyholder account balances — scheduled periodic settlement payments on derivative instruments not qualifying for hedge accounting | (4 | ) | 45 | 26 | ||||||||
Hedged embedded derivatives related to certain variable annuities with guarantees of consolidated entities and operating joint ventures | 156 | (105 | ) | — | ||||||||
Net investment gains (losses) — per consolidated statement of operations | $ | (7,772 | ) | $ | 1,812 | $ | (578 | ) | ||||
(5) | Other invested assets were principally comprised of freestanding derivatives with positive estimated fair values and leveraged leases. Freestanding derivatives with negative estimated fair values were included within other liabilities. As yield is not considered a meaningful measure of performance for other invested assets it has been excluded from the yield table. | |
(6) | The components of investment gains (losses) for theyear-to-date ended December 31, 2008, are shown net of a realized gain under purchased credit default swaps that offsets losses incurred on certain fixed maturity securities. | |
(7) | Derivatives not qualifying for hedge accounting is comprised of amounts for freestanding derivatives of ($6,624) million, $6,072 million and ($59) million; and embedded derivatives of $1,758 million, ($2,650) million and ($321) million for the years ended December 31, 2009, 2008 and 2007, respectively. |
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December 31, 2009 | ||||||||||||||||
Equity | ||||||||||||||||
Fixed Maturity Securities | Securities | |||||||||||||||
(In millions) | ||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) | $ | 11,257 | 5.0 | % | $ | 490 | 15.9 | % | ||||||||
Independent pricing source | 171,217 | 75.2 | 394 | 12.8 | ||||||||||||
Internal matrix pricing or discounted cash flow techniques | 27,978 | 12.3 | 960 | 31.1 | ||||||||||||
Significant other observable inputs (Level 2) | 199,195 | 87.5 | 1,354 | 43.9 | ||||||||||||
Independent pricing source | 7,336 | 3.2 | 909 | 29.5 | ||||||||||||
Internal matrix pricing or discounted cash flow techniques | 7,089 | 3.1 | 254 | 8.2 | ||||||||||||
Independent broker quotations | 2,765 | 1.2 | 77 | 2.5 | ||||||||||||
Significant unobservable inputs (Level 3) | 17,190 | 7.5 | 1,240 | 40.2 | ||||||||||||
Total estimated fair value | $ | 227,642 | 100.0 | % | $ | 3,084 | 100.0 | % | ||||||||
December 31, 2009 | ||||||||||||||||
Fair Value Measurements Using | ||||||||||||||||
Quoted Prices | Significant | |||||||||||||||
in Active | Other | Significant | ||||||||||||||
Markets for | Observable | Unobservable | Total | |||||||||||||
Identical Assets | Inputs | Inputs | Estimated | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Fair Value | |||||||||||||
(In millions) | ||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||
U.S. corporate securities | $ | — | $ | 65,493 | $ | 6,694 | $ | 72,187 | ||||||||
Residential mortgage-backed securities (“RMBS”) | — | 42,180 | 1,840 | 44,020 | ||||||||||||
Foreign corporate securities | — | 32,738 | 5,292 | 38,030 | ||||||||||||
U.S. Treasury, agency and government guaranteed securities | 10,951 | 14,459 | 37 | 25,447 | ||||||||||||
Commercial mortgage-backed securities (“CMBS”) | — | 15,483 | 139 | 15,622 | ||||||||||||
Asset-backed securities (“ABS”) | — | 10,450 | 2,712 | 13,162 | ||||||||||||
Foreign government securities | 306 | 11,240 | 401 | 11,947 | ||||||||||||
State and political subdivision securities | — | 7,139 | 69 | 7,208 | ||||||||||||
Other fixed maturity securities | — | 13 | 6 | 19 | ||||||||||||
Total fixed maturity securities | $ | 11,257 | $ | 199,195 | $ | 17,190 | $ | 227,642 | ||||||||
Equity Securities: | ||||||||||||||||
Common stock | $ | 490 | $ | 995 | $ | 136 | $ | 1,621 | ||||||||
Non-redeemable preferred stock | — | 359 | 1,104 | 1,463 | ||||||||||||
Total equity securities | $ | 490 | $ | 1,354 | $ | 1,240 | $ | 3,084 | ||||||||
• | The majority of the Level 3 fixed maturity and equity securities (89.7%, as presented above) were concentrated in four sectors: U.S. and foreign corporate securities, ABS and RMBS. |
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• | Level 3 fixed maturity securities are priced principally through 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. Level 3 fixed maturity securities consists of less liquid fixed maturity securities with very limited trading activity or where less price transparency exists around the inputs to the valuation methodologies including newly issued agency-backed RMBS yet to be priced by independent sources, below investment grade private placements and less liquid investment grade corporate securities (included in U.S. and foreign corporate securities) and less liquid ABS including securities supported bysub-prime mortgage loans (included in ABS). | |
• | During the year ended December 31, 2009, Level 3 fixed maturity securities decreased by $218 million, or 1.3%. Favorable estimated fair value changes recognized in other comprehensive income (loss) were partially offset by transfers out primarily concentrated in foreign corporate securities and to a lesser extent net sales and settlements in excess of purchases and realized and unrealized losses included in earnings. The increase in estimated fair value in fixed maturity securities was concentrated in U.S. and foreign corporate securities and ABS (including RMBS backed bysub-prime mortgage loans) due to improving market conditions including the narrowing of credit spreads reflecting an improvement in liquidity, offset slightly by the effect of rising interest rates on such securities. The transfers out of Level 3 are described in the discussion following the rollforward table below. Net sales and settlements in excess of purchases of fixed maturity securities were concentrated in U.S. and foreign corporate securities. The realized and unrealized losses included in earnings were primarily due to OTTI credit losses, including OTTI credit losses on perpetual hybrid securities included in U.S. and foreign corporate securities. |
Year Ended | ||||||||
December 31, 2009 | ||||||||
Fixed Maturity | Equity | |||||||
Securities | Securities | |||||||
(In millions) | ||||||||
Balance, beginning of year | $ | 17,408 | $ | 1,379 | ||||
Total realized/unrealized gains (losses) included in: | ||||||||
Earnings | (924 | ) | (359 | ) | ||||
Other comprehensive income (loss) | 3,252 | 492 | ||||||
Purchases, sales, issuances and settlements | (1,003 | ) | (231 | ) | ||||
Transfers in and/or out of Level 3 | (1,543 | ) | (41 | ) | ||||
Balance, end of year | $ | 17,190 | $ | 1,240 | ||||
• | Total gains and losses in earnings and other comprehensive income (loss) are calculated assuming transfers in or out of Level 3 occurred at the beginning of the period. Items transferred in and out for the same period are excluded from the rollforward. | |
• | Total gains and losses for fixed maturity securities included in earnings of ($241) million and other comprehensive income (loss) of $169 million respectively, were incurred for transfers subsequent to their transfer to Level 3, for the year ended December 31, 2009. | |
• | Net transfers inand/or out of Level 3 for fixed maturity securities were ($1,543) million for the year ended December 31, 2009, and was comprised of transfers in of $3,490 million and transfers out of ($5,033) million, respectively. |
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December 31, | ||||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||||
Cost or | Estimated | Cost or | Estimated | |||||||||||||||||||||||
NAIC | Amortized | Fair | % of | Amortized | Fair | % of | ||||||||||||||||||||
Rating | Rating Agency Designation | Cost | Value | Total | Cost | Value | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
1 | Aaa/Aa/A | $ | 151,391 | $ | 151,136 | 66.4 | % | $ | 146,796 | $ | 137,125 | 72.9 | % | |||||||||||||
2 | Baa | 55,508 | 56,305 | 24.7 | 45,253 | 38,761 | 20.6 | |||||||||||||||||||
3 | Ba | 13,184 | 12,003 | 5.3 | 10,258 | 7,796 | 4.1 | |||||||||||||||||||
4 | B | 7,474 | 6,461 | 2.9 | 5,915 | 3,779 | 2.0 | |||||||||||||||||||
5 | Caa and lower | 1,809 | 1,425 | 0.6 | 1,192 | 715 | 0.4 | |||||||||||||||||||
6 | In or near default | 343 | 312 | 0.1 | 94 | 75 | — | |||||||||||||||||||
Total fixed maturity securities | $ | 229,709 | $ | 227,642 | 100.0 | % | $ | 209,508 | $ | 188,251 | 100.0 | % | ||||||||||||||
Fixed Maturity Securities — by Sector & Credit Quality Rating at December 31, 2009 | ||||||||||||||||||||||||||||
1 | 2 | 3 | 4 | 5 | 6 | Total | ||||||||||||||||||||||
NAIC Rating | Caa and | In or Near | Estimated | |||||||||||||||||||||||||
Rating Agency Designation | Aaa/Aa/A | Baa | Ba | B | Lower | Default | Fair Value | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 31,848 | $ | 30,266 | $ | 6,319 | $ | 2,965 | $ | 616 | $ | 173 | $ | 72,187 | ||||||||||||||
RMBS | 38,464 | 1,563 | 2,260 | 1,391 | 339 | 3 | 44,020 | |||||||||||||||||||||
Foreign corporate securities | 16,678 | 17,393 | 2,067 | 1,530 | 281 | 81 | 38,030 | |||||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 25,447 | — | — | — | — | — | 25,447 | |||||||||||||||||||||
CMBS | 15,000 | 434 | 152 | 22 | 14 | — | 15,622 | |||||||||||||||||||||
ABS | 11,573 | 1,033 | 275 | 124 | 117 | 40 | 13,162 | |||||||||||||||||||||
Foreign government securities | 5,786 | 4,841 | 890 | 415 | — | 15 | 11,947 | |||||||||||||||||||||
State and political subdivision securities | 6,337 | 765 | 40 | 8 | 58 | — | 7,208 | |||||||||||||||||||||
Other fixed maturity securities | 3 | 10 | — | 6 | — | — | 19 | |||||||||||||||||||||
Total fixed maturity securities | $ | 151,136 | $ | 56,305 | $ | 12,003 | $ | 6,461 | $ | 1,425 | $ | 312 | $ | 227,642 | ||||||||||||||
Percentage of total | 66.4 | % | 24.7 | % | 5.3 | % | 2.9 | % | 0.6 | % | 0.1 | % | 100.0 | % |
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Fixed Maturity Securities — by Sector & Credit Quality Rating at December 31, 2008 | ||||||||||||||||||||||||||||
NAIC Rating | 1 | 2 | 3 | 4 | 5 | 6 | Total | |||||||||||||||||||||
Caa and | In or Near | Estimated | ||||||||||||||||||||||||||
Rating Agency Designation | Aaa/Aa/A | Baa | Ba | B | Lower | Default | Fair Value | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 31,403 | $ | 24,438 | $ | 4,891 | $ | 2,112 | $ | 399 | $ | 60 | $ | 63,303 | ||||||||||||||
RMBS | 34,512 | 638 | 695 | 103 | 80 | — | 36,028 | |||||||||||||||||||||
Foreign corporate securities | 15,936 | 11,039 | 1,357 | 1,184 | 148 | 15 | 29,679 | |||||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 21,310 | — | — | — | — | — | 21,310 | |||||||||||||||||||||
MBS | 12,486 | 81 | 59 | 7 | 11 | — | 12,644 | |||||||||||||||||||||
ABS | 9,393 | 1,037 | 35 | 16 | 42 | — | 10,523 | |||||||||||||||||||||
Foreign government securities | 8,030 | 1,049 | 713 | 357 | 4 | — | 10,153 | |||||||||||||||||||||
State and political subdivision securities | 4,002 | 479 | 46 | — | 30 | — | 4,557 | |||||||||||||||||||||
Other fixed maturity securities | 53 | — | — | — | 1 | — | 54 | |||||||||||||||||||||
Total fixed maturity securities | $ | 137,125 | $ | 38,761 | $ | 7,796 | $ | 3,779 | $ | 715 | $ | 75 | $ | 188,251 | ||||||||||||||
Percentage of total | 72.9 | % | 20.6 | % | 4.1 | % | 2.0 | % | 0.4 | % | — | % | 100.0 | % |
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
RMBS | $ | 44,020 | 60.5 | % | $ | 36,028 | 60.8 | % | ||||||||
CMBS | 15,622 | 21.4 | 12,644 | 21.4 | ||||||||||||
ABS | 13,162 | 18.1 | 10,523 | 17.8 | ||||||||||||
Total structured securities | $ | 72,804 | 100.0 | % | $ | 59,195 | 100.0 | % | ||||||||
Ratings profile: | ||||||||||||||||
RMBS rated Aaa/AAA (1) | $ | 35,626 | 80.9 | % | $ | 33,265 | 92.3 | % | ||||||||
RMBS rated NAIC 1 (2) | $ | 38,464 | 87.4 | % | $ | 34,512 | 95.8 | % | ||||||||
CMBS rated Aaa/AAA | $ | 13,355 | 85.5 | % | $ | 11,778 | 93.2 | % | ||||||||
ABS rated Aaa/AAA (1) | $ | 9,354 | 71.1 | % | $ | 7,934 | 75.4 | % | ||||||||
ABS rated NAIC 1 (2) | $ | 11,573 | 87.9 | % | $ | 9,393 | 89.3 | % |
(1) | Based on rating agency designations, without adjustment for the revised NAIC methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS (and for ABS — including RMBS backed bysub-prime mortgage loans) held by the Company’s domestic insurance subsidiaries. Non-agency RMBS (and for ABS — including RMBS backed bysub-prime mortgage loans) held by the Company’s domestic insurance subsidiaries at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009, which may not correspond to rating agency designations. |
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Fixed Maturity | Equity | Fixed Maturity | Equity | |||||||||||||
Securities | Securities | Securities | Securities | |||||||||||||
(In millions, except number of securities) | ||||||||||||||||
Number of securities | 223 | 9 | 699 | 33 | ||||||||||||
Total gross unrealized loss | $ | 4,465 | $ | 132 | $ | 14,485 | $ | 699 | ||||||||
Percentage of total gross unrealized loss | 43 | % | 48 | % | 50 | % | 71 | % |
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 or | |||||||||||||||||||||||||
Loss | Loss | Securities | Loss | Preferred Stock | Loss | Industries | Better | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Less than six months | $ | 14 | $ | 13 | 93 | % | $ | 9 | 69 | % | $ | 9 | 100 | % | 3 | % | ||||||||||||||||
Six months or greater but less than twelve months | 40 | 39 | 98 | % | 39 | 100 | % | 37 | 95 | % | 99 | % | ||||||||||||||||||||
Twelve months or greater | 138 | 138 | 100 | % | 138 | 100 | % | 136 | 99 | % | 62 | % | ||||||||||||||||||||
All equity securities with a gross unrealized loss of 20% or more | $ | 192 | $ | 190 | 99 | % | $ | 186 | 98 | % | $ | 182 | 98 | % | 67 | % | ||||||||||||||||
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Fixed Maturity Securities | Equity Securities | Total | ||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||
Proceeds | $ | 38,972 | $ | 62,495 | $ | 78,001 | $ | 950 | $ | 2,107 | $ | 1,112 | $ | 39,922 | $ | 64,602 | $ | 79,113 | ||||||||||||||||||
Gross investment gains | 947 | 858 | 554 | 134 | 440 | 226 | 1,081 | 1,298 | 780 | |||||||||||||||||||||||||||
Gross investment losses | (1,110 | ) | (1,515 | ) | (1,091 | ) | (133 | ) | (263 | ) | (43 | ) | (1,243 | ) | (1,778 | ) | (1,134 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings: | ||||||||||||||||||||||||||||||||||||
Credit-related | (1,137 | ) | (1,138 | ) | (58 | ) | — | — | — | (1,137 | ) | (1,138 | ) | (58 | ) | |||||||||||||||||||||
Other (1) | (363 | ) | (158 | ) | (20 | ) | (400 | ) | (430 | ) | (19 | ) | (763 | ) | (588 | ) | (39 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings | (1,500 | ) | (1,296 | ) | (78 | ) | (400 | ) | (430 | ) | (19 | ) | (1,900 | ) | (1,726 | ) | (97 | ) | ||||||||||||||||||
Net investment gains (losses) | $ | (1,663 | ) | $ | (1,953 | ) | $ | (615 | ) | $ | (399 | ) | $ | (253 | ) | $ | 164 | $ | (2,062 | ) | $ | (2,206 | ) | $ | (451 | ) | ||||||||||
(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. |
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• | Year Ended December 31, 2009 compared to the Year Ended December 31, 2008 —Overall OTTI losses recognized in earnings on fixed maturity and equity securities were $1.9 billion for the year ended December 31, 2009 as compared to $1.7 billion in the prior year. The stress in the global financial markets that caused a significant increase in impairments in 2008 as compared to 2007, continued into 2009. Significant impairments were incurred in several industry sectors in 2009, including the financial services industry, but to a lesser degree in the financial services industry sector than in 2008. In 2008 certain financial institutions entered bankruptcy, entered FDIC receivership or received significant government capital infusions causing 2008 financial services industry impairments to be higher than in 2009. Of the fixed maturity and equity securities impairments of $1,900 million in 2009, $799 million were concentrated in the Company’s financial services industry holdings and were comprised of $459 million in impairments on fixed maturity securities and $340 million in impairments on equity securities, and the $799 million included $623 million of perpetual hybrid securities, which were comprised of $313 million on securities classified as fixed maturity securities and $310 million on securities classified as non-redeemable preferred stock. Overall impairments in 2009 were higher due to increased fixed maturity security impairments across several industry sectors as presented in the tables below, which more than offset a reduction in impairments in the financial services industry sector. Impairments across these several industry sectors increased in 2009 due to increased financial restructurings, bankruptcy filings, ratings downgrades, collateral deterioration or difficult operating environments of the issuers as a result of the challenging economic environment. Impairments on perpetual hybrid securities in 2009 were a result of deterioration in the credit rating of the issuer to below investment grade and due to a severe and extended unrealized loss position. | |
• | Year Ended December 31, 2008 compared to the Year Ended December 31, 2007 —Overall OTTI losses recognized in earnings on fixed maturity and equity securities were $1.7 billion for the year ended December 31, 2008 as compared to $97 million in the prior year. The significant increase in impairments of fixed maturity and equity securities in 2008 compared to 2007 was a result of the stress in the global financial markets, particularly in the financial services industry causing an increase in financial restructurings, bankruptcy filings, ratings downgrades, or difficult underlying operating environments for the issuers, as well as an increase in the securities that the Company either lacked the intent to hold, or due to extensive credit spread widening, the Company was uncertain of its intent to hold certain fixed maturity securities for a period of time sufficient to allow for recovery of the market value decline. Of the fixed maturity and equity securities impairments of $1.7 billion in 2008, $1,014 million were concentrated in the Company’s financial services industry securities holdings and were comprised of $673 million in impairments on fixed maturity securities and $341 million in impairments on equity securities, and the $1,014 million included impairments of $154 million of perpetual hybrid securities, which were comprised of $64 million on securities classified as fixed maturity securities and $90 million on securities classified as non-redeemable preferred stock. A substantial portion of the financial services industry impairments were concentrated in the Company’s holdings in three financial institutions that in 2008 entered bankruptcy, entered FDIC receivership or received federal government capital infusions - Lehman Brothers Holdings Inc. (“Lehman”), Washington Mutual, Inc. (“Washington Mutual”) and American International Group, Inc. (“AIG”). Overall, impairments |
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related to Lehman, Washington Mutual and AIG in 2008 were $606 million comprised of $489 million for fixed maturity securities and $117 million for equity securities. These three counterparties account for a substantial portion, $489 million, of the financial services industry fixed maturity security impairments of $673 million; however, at $117 million, they do not account for the majority of the financial services industry equity security impairments of $341 million. As a result of the Company’s equity securities impairment review process, which included a review of the duration and severity of the unrealized loss position of its equity securities holdings, additional OTTI charges totaling $313 million were recorded in 2008. These additional impairments were principally related to impairments on financial services industry preferred securities that had either been in an unrealized loss position for an extended duration (i.e., 12 months or more), or were in a severe unrealized loss position. In the fourth quarter of 2008, the Company not only considered the severity and duration of unrealized losses on its preferred securities, but placed greater weight and emphasis on whether there had been any credit deterioration in the issuer of these holdings in accordance with new guidance. As result of the economic environment as described above, fixed maturity and equity securities impairments on the Company’s financial services industry holdings and total impairments across all industries sectors were higher in 2008 than 2007, as presented in the tables below. |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
U.S. and foreign corporate securities: | ||||||||||||
Finance | $ | 459 | $ | 673 | $ | 18 | ||||||
Communications | 235 | 134 | — | |||||||||
Consumer | 211 | 107 | — | |||||||||
Utility | 89 | 5 | 1 | |||||||||
Industrial | 30 | 26 | 18 | |||||||||
Other | 26 | 185 | 28 | |||||||||
Total U.S. and foreign corporate securities | 1,050 | 1,130 | 65 | |||||||||
RMBS | 193 | — | — | |||||||||
ABS | 168 | 99 | 13 | |||||||||
CMBS | 88 | 65 | — | |||||||||
Foreign government securities | 1 | 2 | — | |||||||||
Total | $ | 1,500 | $ | 1,296 | $ | 78 | ||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Sector: | ||||||||||||
Non-redeemable preferred stock | $ | 333 | $ | 319 | $ | 1 | ||||||
Common stock | 67 | 111 | 18 | |||||||||
Total | $ | 400 | $ | 430 | $ | 19 | ||||||
Industry: | ||||||||||||
Financial services industry: | ||||||||||||
Perpetual hybrid securities | $ | 310 | $ | 90 | $ | — | ||||||
Common and remaining non-redeemable preferred stock | 30 | 251 | 1 | |||||||||
Total financial services industry | 340 | 341 | 1 | |||||||||
Other | 60 | 89 | 18 | |||||||||
Total | $ | 400 | $ | 430 | $ | 19 | ||||||
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December 31, 2009 | ||||||||||||||||
Trading Securities | Trading Liabilities | |||||||||||||||
(In millions) | ||||||||||||||||
Quoted prices in active markets for identical assets and liabilities (Level 1) | $ | 1,886 | 79 | % | $ | 106 | 100 | % | ||||||||
Significant other observable inputs (Level 2) | 415 | 17 | — | — | ||||||||||||
Significant unobservable inputs (Level 3) | 83 | 4 | — | — | ||||||||||||
Total estimated fair value | $ | 2,384 | 100 | % | $ | 106 | 100 | % | ||||||||
Year Ended | ||||
December 31, 2009 | ||||
(In millions) | ||||
Balance, beginning of year | $ | 175 | ||
Total realized/unrealized gains (losses) included in: | ||||
Earnings | 16 | |||
Purchases, sales, issuances and settlements | (108 | ) | ||
Transfer in and/or out of Level 3 | — | |||
Balance, end of year | $ | 83 | ||
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December 31, | ||||||||||||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||||||||||||
% of | % of | |||||||||||||||||||||||||||||||||
Amortized | % of | Valuation | Amortized | Amortized | % of | Valuation | Amortized | |||||||||||||||||||||||||||
Cost | Total | Allowance | Cost | Cost | Total | Allowance | Cost | |||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||||
Performing | $ | 35,066 | 99.7 | % | $ | 548 | 1.6 | % | $ | 36,192 | 100.0 | % | $ | 232 | 0.6 | % | ||||||||||||||||||
Restructured | — | — | — | — | % | — | — | — | — | % | ||||||||||||||||||||||||
Potentially delinquent | 102 | 0.3 | 41 | 40.2 | % | 2 | — | — | — | % | ||||||||||||||||||||||||
Delinquent or under foreclosure | 8 | — | — | — | % | 3 | — | — | — | % | ||||||||||||||||||||||||
Total | $ | 35,176 | 100.0 | % | $ | 589 | 1.7 | % | $ | 36,197 | 100.0 | % | $ | 232 | 0.6 | % | ||||||||||||||||||
Agricultural (1): | ||||||||||||||||||||||||||||||||||
Performing | $ | 11,950 | 97.5 | % | $ | 33 | 0.3 | % | $ | 12,054 | 98.0 | % | $ | 16 | 0.1 | % | ||||||||||||||||||
Restructured | 36 | 0.3 | 10 | 27.8 | % | 1 | — | — | — | % | ||||||||||||||||||||||||
Potentially delinquent | 128 | 1.0 | 34 | 26.6 | % | 133 | 1.1 | 18 | 13.5 | % | ||||||||||||||||||||||||
Delinquent or under foreclosure | 141 | 1.2 | 38 | 27.0 | % | 107 | 0.9 | 27 | 25.2 | % | ||||||||||||||||||||||||
Total | $ | 12,255 | 100.0 | % | $ | 115 | 0.9 | % | $ | 12,295 | 100.0 | % | $ | 61 | 0.5 | % | ||||||||||||||||||
Residential and Consumer (2): | ||||||||||||||||||||||||||||||||||
Performing | $ | 1,389 | 94.4 | % | $ | 16 | 1.2 | % | $ | 1,116 | 95.8 | % | $ | 11 | 1.0 | % | ||||||||||||||||||
Restructured | 1 | 0.1 | — | — | % | — | — | — | — | % | ||||||||||||||||||||||||
Potentially delinquent | 10 | 0.7 | — | — | % | 17 | 1.5 | — | — | % | ||||||||||||||||||||||||
Delinquent or under foreclosure | 71 | 4.8 | 1 | 1.4 | % | 31 | 2.7 | — | — | % | ||||||||||||||||||||||||
Total | $ | 1,471 | 100.0 | % | $ | 17 | 1.2 | % | $ | 1,164 | 100.0 | % | $ | 11 | 0.9 | % | ||||||||||||||||||
(1) | The Company diversifies its agricultural mortgage loansheld-for-investment by both geographic region and product type. Of the $12,255 million of agricultural mortgage loans outstanding at December 31, 2009, 54% were subject to rate resets prior to maturity. A substantial portion of these loans has been successfully renegotiated and remain outstanding to maturity. | |
(2) | Residential and consumer loans consist of primarily residential mortgage loans, home equity lines of credit, and automobile loansheld-for-investment. |
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Residential | ||||||||||||||||||||
and | ||||||||||||||||||||
Commercial | Agricultural | Consumer | Total | |||||||||||||||||
(In millions) | ||||||||||||||||||||
Balance, January 1, 2007 | $ | 153 | $ | 18 | $ | 11 | $ | 182 | ||||||||||||
Additions | 68 | 8 | — | 76 | ||||||||||||||||
Deductions | (54 | ) | (2 | ) | (5 | ) | (61 | ) | ||||||||||||
Balance, December 31, 2007 | 167 | 24 | 6 | 197 | ||||||||||||||||
Additions | 145 | 49 | 6 | 200 | ||||||||||||||||
Deductions | (80 | ) | (12 | ) | (1 | ) | (93 | ) | ||||||||||||
Balance, December 31, 2008 | 232 | 61 | 11 | 304 | ||||||||||||||||
Additions | 384 | 79 | 12 | 475 | ||||||||||||||||
Deductions | (27 | ) | (25 | ) | (6 | ) | (58 | ) | ||||||||||||
Balance, December 31, 2009 | $ | 589 | $ | 115 | $ | 17 | $ | 721 | ||||||||||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Specific credit losses | $ | 123 | $ | 69 | ||||
Non-specifically identified credit losses | 598 | 235 | ||||||
Total valuation allowances | $ | 721 | $ | 304 | ||||
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• | The notional amount and estimated fair value of derivatives and non-derivative instruments designated as hedging instruments by type of hedge designation at December 31, 2009 and 2008. | |
• | The notional amount and estimated fair value of derivatives that are not designated or do not qualify as hedging instruments by derivative type at December 31, 2009 and 2008. | |
• | The statement of operations effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships for the years ended December 31, 2009, 2008, and 2007. |
December 31, 2009 | ||||||||||||||||
Derivative | Derivative | |||||||||||||||
Assets | Liabilities | |||||||||||||||
(In millions) | ||||||||||||||||
Quoted prices in active markets for identical assets and liabilities (Level 1) | $ | 103 | 2 | % | $ | 51 | 1 | % | ||||||||
Significant other observable inputs (Level 2) | 5,600 | 91 | 3,990 | 97 | ||||||||||||
Significant unobservable inputs (Level 3) | 430 | 7 | 74 | 2 | ||||||||||||
Total estimated fair value | $ | 6,133 | 100 | % | $ | 4,115 | 100 | % | ||||||||
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Year Ended | ||||
December 31, 2009 | ||||
(In millions) | ||||
Balance, beginning of period | $ | 2,547 | ||
Total realized/unrealized gains (losses) included in: | ||||
Earnings | (273 | ) | ||
Other comprehensive income (loss) | (11 | ) | ||
Purchases, sales, issuances and settlements | 97 | |||
Transfer in and/or out of Level 3 | (2,004 | ) | ||
Balance, end of period | $ | 356 | ||
December 31, 2009 | ||||||||||||||||||||
Net Embedded Derivatives Within | ||||||||||||||||||||
Asset Host Contracts | Liability Host Contracts | |||||||||||||||||||
(In millions) | ||||||||||||||||||||
Quoted prices in active markets for identical assets and liabilities (Level 1) | $ | — | — | % | $ | — | — | % | ||||||||||||
Significant other observable inputs (Level 2) | — | — | (26 | ) | (2 | ) | ||||||||||||||
Significant unobservable inputs (Level 3) | 76 | 100 | 1,531 | 102 | ||||||||||||||||
Total estimated fair value | $ | 76 | 100 | % | $ | 1,505 | 100 | % | ||||||||||||
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Year Ended December 31, 2009 | ||||
(In millions) | ||||
Balance, beginning of period | $ | (2,929 | ) | |
Total realized/unrealized gains (losses) included in: | ||||
Earnings | 1,602 | |||
Other comprehensive income (loss) | 15 | |||
Purchases, sales, issuances and settlements | (143 | ) | ||
Transfer in and/or out of Level 3 | — | |||
Balance, end of period | $ | (1,455 | ) | |
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
U.S. Business: | ||||||||
Guaranteed minimum accumulation benefit | $ | 60 | $ | 169 | ||||
Guaranteed minimum withdrawal benefit | 154 | 750 | ||||||
Guaranteed minimum income benefit | 66 | 1,043 | ||||||
International: | ||||||||
Guaranteed minimum accumulation benefit | 195 | 271 | ||||||
Guaranteed minimum withdrawal benefit | 1,025 | 901 | ||||||
Total | $ | 1,500 | $ | 3,134 | ||||
December 31, | ||||||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||||||
Primary Underlying | Notional | Estimated Fair Value | Notional | Estimated Fair Value | ||||||||||||||||||||||||
Risk Exposure | Derivative Type | Amount | Assets | Liabilities | Amount | Assets | Liabilities | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Interest rate | Interest rate swaps | $ | 8,847 | $ | 194 | $ | 275 | $ | 5,572 | $ | 632 | $ | 7 | |||||||||||||||
Interest rate futures | 4,997 | 5 | 4 | 9,264 | 36 | 56 | ||||||||||||||||||||||
Foreign currency | Foreign currency forwards | 2,016 | 4 | 30 | 1,017 | 49 | 4 | |||||||||||||||||||||
Currency options | 327 | 14 | — | 582 | 68 | — | ||||||||||||||||||||||
Equity market | Equity futures | 6,033 | 31 | 20 | 4,660 | 1 | 65 | |||||||||||||||||||||
Equity options | 26,661 | 1,596 | 1,018 | 4,842 | 1,997 | — | ||||||||||||||||||||||
Variance swaps | 13,267 | 174 | 58 | 8,835 | 396 | — | ||||||||||||||||||||||
Total rate of return swaps | 126 | — | — | — | — | — | ||||||||||||||||||||||
Total | $ | 62,274 | $ | 2,018 | $ | 1,405 | $ | 34,772 | $ | 3,179 | $ | 132 | ||||||||||||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
U.S. Business: | ||||||||
Guaranteed minimum death benefit | $ | 137 | $ | 204 | ||||
Guaranteed minimum income benefit | 394 | 403 | ||||||
International: | ||||||||
Guaranteed minimum death benefit | 23 | 39 | ||||||
Total | $ | 554 | $ | 646 | ||||
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• | The Holding Company and MetLife Funding, Inc. (“MetLife Funding”) each have commercial paper programs supported by our $2.85 billion general corporate credit facility. MetLife Funding, a subsidiary of MLIC, serves as a centralized finance unit for the Company. Pursuant to a support agreement, MLIC has agreed to cause MetLife Funding to have a tangible net worth of at least one dollar. At both December 31, 2009 and 2008, MetLife Funding had a tangible net worth of $12 million. MetLife Funding raises cash from various funding sources and uses the proceeds to extend loans, through MetLife Credit Corp., another subsidiary of MLIC, to the Holding Company, MLIC and other affiliates. MetLife Funding manages its funding sources to enhance the financial flexibility and liquidity of MLIC and other affiliated companies. At December 31, 2009 and 2008, MetLife Funding had total outstanding liabilities for its commercial paper program, including accrued interest payable, of $319 million and $414 million, respectively. | |
• | The Federal Reserve Bank of New York’s Commercial Paper Funding Facility (“CPFF”) was initiated in 2008 to improve liquidity in short-term funding markets by increasing the availability of term commercial paper funding to issuers and by providing greater assurance to both issuers and investors that firms will be able to rollover their maturing commercial paper. MetLife Short Term Funding LLC, the issuer of commercial paper under a program supported by funding agreements issued by MLIC and MICC, was accepted in October 2008 for the CPFF and could issue a maximum amount of $3.8 billion under the CPFF. At December 31, 2009, MetLife Short Term Funding LLC had no drawdown under its CPFF capacity, compared to $1.65 billion at December 31, 2008. MetLife Funding was accepted in November 2008 for the CPFF and could issue a maximum amount of $1.0 billion under the CPFF. No drawdown by MetLife Funding had taken place under this facility at both December 31, 2009 and 2008. The CPFF program expired on February 1, 2010. | |
• | MetLife Bank is a depository institution that is approved to use the Federal Reserve Bank of New York Discount Window borrowing privileges and participate in the Federal Reserve Bank of New York Term Auction Facility. To utilize these facilities, MetLife Bank has pledged qualifying loans and investment securities to the Federal Reserve Bank of New York as collateral. At December 31, 2009, MetLife Bank had no liability for advances from the Federal Reserve Bank of New York under these facilities. At December 31, 2008 MetLife Bank’s liability for advances from the Federal Reserve Bank of New York under these facilities was $950 million, which is included in short-term debt. See Note 11 of the Notes to the Consolidated Financial Statements. | |
• | As a member of the FHLB of NY, MetLife Bank has entered into repurchase agreements with FHLB of NY on both short- and long-term bases, with a total liability for repurchase agreements with the FHLB of NY of $2.4 billion and $1.8 billion at December 31, 2009 and 2008, respectively. See Note 11 of the Notes to the Consolidated Financial Statements. | |
• | The Holding Company and MetLife Bank elected to continue to participate in the debt guarantee component of the FDIC’s Temporary Liquidity Guarantee Program (the “FDIC Program”). On March 26, 2009, the Holding Company issued $397 million of floating-rate senior notes due June 2012 under the FDIC Program, representing all of MetLife, Inc.’s capacity under the FDIC Program. MetLife Bank let its capacity to issue up to $178 million of guaranteed debt under the FDIC Program expire unused when the program ended on October 31, 2009. | |
• | In addition, the Company had obligations under funding agreements with the FHLB of NY of $13.7 billion and $15.2 billion at December 31, 2009 and 2008, respectively, for MLIC and with the FHLB of Boston of $326 million and $526 million at December 31, 2009 and 2008, respectively, for MICC. The FHLB of |
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Boston had also advanced $300 million to MICC at December 31, 2008, which was included in short-term debt. There were no such advances at December 31, 2009. See Note 8 of the Notes to the Consolidated Financial Statements. |
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• | In December 2007, the Holding Company, in connection with the collateral financing arrangement associated with MetLife Reinsurance Company of Charleston’s (“MRC”) reinsurance of the closed block liabilities, entered into an agreement with an unaffiliated financial institution that referenced the $2.5 billion aggregate principal amount of35-year surplus notes issued by MRC. Under the agreement, the Holding Company is entitled to the interest paid by MRC on the surplus notes of3-month LIBOR plus 0.55% in exchange for the payment of3-month LIBOR plus 1.12%, payable quarterly on such amount as adjusted, as described below. |
• | In May 2007, the Holding Company, in connection with the collateral financing arrangement associated with MetLife Reinsurance Company of South Carolina’s (“MRSC”) reinsurance of universal life secondary guarantees, entered into an agreement with an unaffiliated financial institution under which the Holding Company is entitled to the return on the investment portfolio held by trusts established in connection with this collateral financing arrangement in exchange for the payment of a stated rate of return to the unaffiliated financial institution of3-month LIBOR plus 0.70%, payable quarterly. The collateral financing agreement may be extended by agreement of the Holding Company and the unaffiliated financial institution on each anniversary of the closing. The Holding Company may also be required to make payments to the unaffiliated financial institution, for deposit into the trusts, related to any decline in the estimated fair value of the assets held by the trusts, as well as amounts outstanding upon maturity or early termination of the collateral financing arrangement. During 2009 and 2008, the Holding Company contributed $360 million and $320 million, respectively, as a result of declines in the estimated fair value of the assets in the trusts, and cumulatively, since May 2007, the Holding Company has contributed a total of $680 million as a result of declines in the estimated fair value of the assets in the trusts, all of which was deposited into the trusts. |
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Dividend | ||||||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | ||||||||||||
(In millions, except per share data) | ||||||||||||||||
October 29, 2009 | November 9, 2009 | December 14, 2009 | $ | 0.74 | $ | 610 | ||||||||||
October 28, 2008 | November 10, 2008 | December 15, 2008 | $ | 0.74 | $ | 592 | ||||||||||
October 23, 2007 | November 6, 2007 | December 14, 2007 | $ | 0.74 | $ | 541 |
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Dividend | ||||||||||||||||||||
Series A | Series A | Series B | Series B | |||||||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | Per Share | Aggregate | ||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||
November 16, 2009 | November 30, 2009 | December 15, 2009 | $ | 0.2527777 | $ | 7 | $ | 0.4062500 | $ | 24 | ||||||||||
August 17, 2009 | August 31, 2009 | September 15, 2009 | $ | 0.2555555 | 6 | $ | 0.4062500 | 24 | ||||||||||||
May 15, 2009 | May 31, 2009 | June 15, 2009 | $ | 0.2555555 | 7 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2009 | February 28, 2009 | March 16, 2009 | $ | 0.2500000 | 6 | $ | 0.4062500 | 24 | ||||||||||||
$ | 26 | $ | 96 | |||||||||||||||||
November 17, 2008 | November 30, 2008 | December 15, 2008 | $ | 0.2527777 | $ | 7 | $ | 0.4062500 | $ | 24 | ||||||||||
August 15, 2008 | August 31, 2008 | September 15, 2008 | $ | 0.2555555 | 6 | $ | 0.4062500 | 24 | ||||||||||||
May 15, 2008 | May 31, 2008 | June 16, 2008 | $ | 0.2555555 | 7 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2008 | February 29, 2008 | March 17, 2008 | $ | 0.3785745 | 9 | $ | 0.4062500 | 24 | ||||||||||||
$ | 29 | $ | 96 | |||||||||||||||||
November 15, 2007 | November 30, 2007 | December 17, 2007 | $ | 0.4230476 | $ | 11 | $ | 0.4062500 | $ | 24 | ||||||||||
August 15, 2007 | August 31, 2007 | September 17, 2007 | $ | 0.4063333 | 10 | $ | 0.4062500 | 24 | ||||||||||||
May 15, 2007 | May 31, 2007 | June 15, 2007 | $ | 0.4060062 | 10 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2007 | February 28, 2007 | March 15, 2007 | $ | 0.3975000 | 10 | $ | 0.4062500 | 24 | ||||||||||||
$ | 41 | $ | 96 | |||||||||||||||||
Shares | ||||||||
Amount | Repurchased | |||||||
(In millions) | ||||||||
Remaining authorization at December 31, 2006 | $ | 216 | ||||||
February 2007 and September 2007 additional authorizations | 2,000 | |||||||
Accelerated share repurchases | (1,505 | ) | 23,455,124 | |||||
Open market repurchases | (200 | ) | 3,171,700 | |||||
Remaining authorization at December 31, 2007 | 511 | |||||||
January 2008 and April 2008 additional authorizations | 2,000 | |||||||
Accelerated share repurchases | (1,162 | ) | 19,716,418 | |||||
Open market repurchases | (88 | ) | 1,550,000 | |||||
Remaining authorization at December 31, 2008 | 1,261 | |||||||
Additional authorizations | — | |||||||
Accelerated share repurchases | — | |||||||
Open market repurchases | — | |||||||
Remaining authorization at December 31, 2009 | $ | 1,261 | ||||||
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More Than | ||||||||||||||||||||
More Than | Three Years | |||||||||||||||||||
One Year and | and Less | |||||||||||||||||||
Less Than | Less Than | Than Five | More Than | |||||||||||||||||
Contractual Obligations | Total | One Year | Three Years | Years | Five Years | |||||||||||||||
(In millions) | ||||||||||||||||||||
Future policy benefits | $ | 310,592 | $ | 7,220 | $ | 10,681 | $ | 11,424 | $ | 281,267 | ||||||||||
Policyholder account balances | 198,087 | 22,764 | 30,586 | 24,536 | 120,201 | |||||||||||||||
Other policyholder liabilities | 6,142 | 6,142 | — | — | — | |||||||||||||||
Payables for collateral under securities loaned and other transactions | 24,196 | 24,196 | — | — | — | |||||||||||||||
Bank deposits | 10,354 | 8,998 | 1,293 | 63 | — | |||||||||||||||
Short-term debt | 912 | 912 | — | — | — | |||||||||||||||
Long-term debt | 21,138 | 1,155 | 4,214 | 2,312 | 13,457 | |||||||||||||||
Collateral financing arrangements | 6,694 | 61 | 122 | 122 | 6,389 | |||||||||||||||
Junior subordinated debt securities | 10,450 | 258 | 517 | 517 | 9,158 | |||||||||||||||
Commitments to lend funds | 7,549 | 7,349 | 177 | 4 | 19 | |||||||||||||||
Operating leases | 1,996 | 287 | 427 | 288 | 994 | |||||||||||||||
Other | 11,788 | 11,374 | 6 | 6 | 402 | |||||||||||||||
Total | $ | 609,898 | $ | 90,716 | $ | 48,023 | $ | 39,272 | $ | 431,887 | ||||||||||
Future policyholder benefits — Future policyholder benefits include liabilities related to traditional whole life policies, term life policies, pension closeout and other group annuity contracts, structured settlements, master terminal funding agreements, single premium immediate annuities, long-term disability policies, individual disability income policies, LTC policies and property and casualty contracts. Included within future policyholder benefits are contracts where the Company is currently making payments and will continue to do so until the occurrence of a specific event such as death, as well as those where the timing of a portion of the payments has been determined by the contract. Also included are contracts where the Company is not currently making payments and will not make payments until the occurrence of an insurable event, such as death or illness, or where the occurrence of the payment triggering event, such as a surrender of a policy or contract, is outside the control of the Company. The Company has estimated the timing of the cash flows related to these contracts based on historical experience, as well as its expectation of future payment patterns. | ||
Liabilities related to accounting conventions, or which are not contractually due, such as shadow liabilities, excess interest reserves and property and casualty loss adjustment expenses, of $498 million have been excluded from amounts presented in the table above. | ||
Amounts presented in the table above, excluding those related to property and casualty contracts, represent the estimated cash payments for benefits under such contracts including assumptions related to the receipt of future premiums and assumptions related to mortality, morbidity, policy lapse, renewal, retirement, inflation, disability incidence, disability terminations, policy loans and other contingent events as appropriate to the respective product type. Payments for case reserve liabilities and incurred but not reported liabilities associated with property and casualty contracts of $1.5 billion have been included using an estimate of the ultimate amount to be settled under the policies based upon historical payment patterns. The ultimate amount to be paid under property and casualty contracts is not determined until the Company reaches a settlement with the claimant, which may vary significantly from the liability or contractual obligation presented above especially as it relates to incurred but not reported liabilities. All estimated cash payments presented in the table above are undiscounted as to interest, net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable. The more than five years category includes estimated payments due for periods extending for more than 100 years from the present date. |
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The sum of the estimated cash flows shown for all years in the table of $310.6 billion exceeds the liability amount of $135.9 billion included on the consolidated balance sheet principally due to the time value of money, which accounts for at least 80% of the difference, as well as differences in assumptions, most significantly mortality, between the date the liabilities were initially established and the current date. | ||
For the majority of the Company’s insurance operations, estimated contractual obligations for future policy benefits and policyholder account balance liabilities as presented in the table above are derived from the annual asset adequacy analysis used to develop actuarial opinions of statutory reserve adequacy for state regulatory purposes. These cash flows are materially representative of the cash flows under generally accepted accounting principles. (See “— Policyholder account balances” below.) | ||
Actual cash payments to policyholders may differ significantly from the liabilities as presented in the consolidated balance sheet and the estimated cash payments as presented in the table above due to differences between actual experience and the assumptions used in the establishment of these liabilities and the estimation of these cash payments. | ||
Policyholder account balances — Policyholder account balances include liabilities related to conventional guaranteed interest contracts, guaranteed interest contracts associated with formal offering programs, funding agreements, individual and group annuities, total control accounts, individual and group universal life, variable universal life and company-owned life insurance. | ||
Included within policyholder account balances are contracts where the amount and timing of the payment is essentially fixed and determinable. These amounts relate to policies where the Company is currently making payments and will continue to do so, as well as those where the timing of the payments has been determined by the contract. Other contracts involve payment obligations where the timing of future payments is uncertain and where the Company is not currently making payments and will not make payments until the occurrence of an insurable event, such as death, or where the occurrence of the payment triggering event, such as a surrender of or partial withdrawal on a policy or deposit contract, is outside the control of the Company. The Company has estimated the timing of the cash flows related to these contracts based on historical experience, as well as its expectation of future payment patterns. | ||
Excess interest reserves representing purchase accounting adjustments of $565 million have been excluded from amounts presented in the table above as they represent an accounting convention and not a contractual obligation. | ||
Amounts presented in the table above represent the estimated cash payments to be made to policyholders undiscounted as to interest and including assumptions related to the receipt of future premiums and deposits; withdrawals, including unscheduled or partial withdrawals; policy lapses; surrender charges; annuitization; mortality; future interest credited; policy loans and other contingent events as appropriate to the respective product type. Such estimated cash payments are also presented net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable. For obligations denominated in foreign currencies, cash payments have been estimated using current spot rates. | ||
The sum of the estimated cash flows shown for all years in the table of $198.1 billion exceeds the liability amount of $138.7 billion included on the consolidated balance sheet principally due to the time value of money, which accounts for at least 80% of the difference, as well as differences in assumptions between the date the liabilities were initially established and the current date. See the comments under “— Future policyholder benefits” above regarding the source and uncertainties associated with the estimation of the contractual obligations related to future policyholder benefits and policyholder account balances. | ||
Other policyholder liabilities — Other policyholder liabilities are comprised of other policyholder funds, policyholder dividends payable and the policyholder dividend obligation. Amounts included in the table above related to these liabilities are as follows: | ||
a. Other policyholder funds includes liabilities for incurred but not reported claims and claims payable on group term life, long-term disability, LTC and dental; policyholder dividends left on deposit and policyholder dividends due and unpaid related primarily to traditional life and group life and health; and premiums received in advance. Liabilities related to unearned revenue of $2.1 billion have been excluded from the cash payments presented in the table above because they reflect an accounting convention and not a contractual obligation. With the exception of policyholder dividends left on deposit, and those |
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items excluded as noted in the preceding sentence, the contractual obligation presented in the table above related to other policyholder funds is equal to the liability reflected in the consolidated balance sheet. Such amounts are reported in the less than one year category due to the short-term nature of the liabilities. Contractual obligations on policyholder dividends left on deposit are projected based on assumptions of policyholder withdrawal activity. | ||
b. Policyholder dividends payable consists of liabilities related to dividends payable in the following calendar year on participating policies. As such, the contractual obligation related to policyholder dividends payable is presented in the table above in the less than one year category at the amount of the liability presented in the consolidated balance sheets. | ||
c. The nature of the policyholder dividend obligation is described in Note 10 of the Notes to the Consolidated Financial Statements. Because the exact timing and amount of the ultimate policyholder dividend obligation is subject to significant uncertainty and the amount of the policyholder dividend obligation is based upon a long-term projection of the performance of the closed block, we have reflected the obligation at the amount of the liability, if any, presented in the consolidated balance sheet in the more than five years category. This was presented to reflect the long-duration of the liability and the uncertainty of the ultimate cash payment. | ||
Bank deposits — Bank deposits of $10.4 billion exceed the amount on the balance sheet of $10.2 billion due to the inclusion of estimated interest payments. Liquid deposits, including demand deposit accounts, money market accounts and savings accounts, are assumed to mature at carrying value within one year. Certificates of deposit are assumed to pay all interest and principal at maturity. | ||
Short-term debt, long-term debt, collateral financing arrangements and junior subordinated debt securities —Amounts presented in the table above for short-term debt, long-term debt, collateral financing arrangements and junior subordinated debt securities differ from the balances presented on the consolidated balance sheet as the amounts presented in the table above do not include premiums or discounts upon issuance or purchase accounting fair value adjustments. The amounts presented above also include interest on such obligations as described below. | ||
Short-term debt consists of borrowings with original maturities of less than one year carrying fixed interest rates. The contractual obligation for short-term debt presented in the table above represents the amounts due upon maturity plus the related interest for the period from January 1, 2010 through maturity. | ||
Long-term debt bears interest at fixed and variable interest rates through their respective maturity dates. Interest on fixed rate debt was computed using the stated rate on the obligations through maturity. Interest on variable rate debt was computed using prevailing rates at December 31, 2009 and, as such, does not consider the impact of future rate movements. Long-term debt also includes payments under capital lease obligations of $4 million, $3 million, $0 and $28 million, in the less than one year, one to three years, three to five years and more than five years categories, respectively. | ||
Collateral financing arrangements bear interest at fixed and variable interest rates through their respective maturity dates. Interest on fixed rate debt was computed using the stated rate on the obligations through maturity. Interest on variable rate debt was computed using prevailing rates at December 31, 2009 and, as such, does not consider the impact of future rate movements. Pursuant to these collateral financing arrangements, the Holding Company may be required to deliver cash or pledge collateral to the respective unaffiliated financial institutions. See “— The Company — Liquidity and Capital Sources — Collateral Financing Arrangements.” | ||
Junior subordinated debt securities bear interest at fixed interest rates through their respective redemption dates. Interest was computed using the stated rates on the obligations through the scheduled redemption dates as it is the Company’s expectation that the debt will be redeemed at that time. Inclusion of interest payments on junior subordinated debt through the final maturity dates would increase the contractual obligation by $4.1 billion. | ||
Payables for collateral under securities loaned and other transactions —The Company has accepted cash collateral in connection with securities lending and derivative transactions. As the securities lending transactions expire within the next year or the timing of the return of the collateral is uncertain, the return of the collateral has been included in the less than one year category in the table above. The Company also holds non-cash collateral, which is not reflected as a liability in the consolidated balance sheet, of $227 million at December 31, 2009. |
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Commitments to lend funds —The Company commits to lend funds under mortgage loans, partnerships, bank credit facilities, bridge loans and private corporate bond investments. In the table above, the timing of the funding of mortgage loans and private corporate bond investments is based on the expiration date of the commitment. As it relates to commitments to lend funds to partnerships and under bank credit facilities, the Company anticipates that these amounts could be invested any time over the next five years; however, as the timing of the fulfillment of the obligation cannot be predicted, such obligations are presented in the less than one year category in the table above. Commitments to fund bridge loans are short-term obligations and, as a result, are presented in the less than one year category in the table above. See “— Off-Balance Sheet Arrangements.” | ||
Operating leases —As a lessee, the Company has various operating leases, primarily for office space. Contractual provisions exist that could increase or accelerate those lease obligations presented, including various leases with early buyoutsand/or escalation clauses. However, the impact of any such transactions would not be material to the Company’s financial position or results of operations. See “— Off-Balance Sheet Arrangements.” | ||
Other —Includes other miscellaneous contractual obligations of $15 million not included elsewhere in the table above. Other liabilities presented in the table above are principally comprised of amounts due under reinsurance arrangements, payables related to securities purchased but not yet settled, securities sold short, accrued interest on debt obligations, estimated fair value of derivative obligations, deferred compensation arrangements, guaranty liabilities, the estimated fair value of forward stock purchase contracts, as well as general accruals and accounts payable due under contractual obligations. If the timing of any of the other liabilities is sufficiently uncertain, the amounts are included within the less than one year category. | ||
The other liabilities presented in the table above differs from the amount presented in the consolidated balance sheet by $4.2 billion due primarily to the exclusion of items such as legal liabilities, pension and postretirement benefit obligations, taxes due other than income tax, unrecognized tax benefits and related accrued interest, accrued severance and employee incentive compensation and other liabilities such as deferred gains and losses. Such items have been excluded from the table above as they represent accounting conventions or are not liabilities due under contractual obligations. | ||
The net funded status of the Company’s pension and other postretirement liabilities included within other liabilities has been excluded from the amounts presented in the table above. Rather, the amounts presented represent the discretionary contributions of $150 million to be made by the Company to our pension plan in 2010 and the discretionary contributions of $119 million, based on the current year’s expected gross benefit payments to participants, to be made by the Company to the postretirement benefit plans during 2010. Virtually all contributions to the pension and postretirement benefit plans are made by the insurance subsidiaries of the Holding Company with little impact on the Holding Company’s cash flows. | ||
Excluded from the table above are unrecognized tax benefits and accrued interest of $773 million and $198 million, respectively, for which the Company cannot reliably determine the timing of payment. Current income tax payable is also excluded from the table. | ||
See also “— Off-Balance Sheet Arrangements.” |
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RBC Ratios — Bank Holding Company
Regulatory | Regulatory | |||||||||||||||
December 31, | Requirements | Requirements | ||||||||||||||
2009 | 2008 | Minimum | “Well Capitalized” | |||||||||||||
Total RBC Ratio | 9.36 | % | 9.52 | % | 8.00 | % | 10.00 | % | ||||||||
Tier 1 RBC Ratio | 8.92 | % | 9.21 | % | 4.00 | % | 6.00 | % | ||||||||
Tier 1 Leverage Ratio | 5.40 | % | 5.77 | % | 4.00 | % | n/a |
RBC Ratios — Bank
Regulatory | Regulatory | |||||||||||||||
December 31, | Requirements | Requirements | ||||||||||||||
2009 | 2008 | Minimum | “Well Capitalized” | |||||||||||||
Total RBC Ratio | 13.41 | % | 12.32 | % | 8.00 | % | 10.00 | % | ||||||||
Tier 1 RBC Ratio | 12.16 | % | 11.72 | % | 4.00 | % | 6.00 | % | ||||||||
Tier 1 Leverage Ratio | 6.64 | % | 6.51 | % | 4.00 | % | 5.00 | % |
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2010 | 2009 | 2008 | 2007 | |||||||||||||||||||||||||
Permitted | Permitted | Permitted | Permitted | |||||||||||||||||||||||||
w/o | w/o | w/o | w/o | |||||||||||||||||||||||||
Company | Approval (1) | Paid (2) | Approval (3) | Paid (2) | Approval (3) | Paid (2) | Approval (3) | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Metropolitan Life Insurance Company | $ | 1,262 | $ | — | $ | 552 | $ | 1,318 | (4) | $ | 1,299 | $ | 500 | $ | 919 | |||||||||||||
MetLife Insurance Company of Connecticut | $ | 659 | $ | — | $ | 714 | $ | 500 | $ | 1,026 | $ | 690 | (6) | $ | 690 | |||||||||||||
Metropolitan Tower Life Insurance Company | $ | 93 | $ | — | $ | 88 | $ | 277 | (5) | $ | 113 | $ | — | $ | 104 | |||||||||||||
Metropolitan Property and Casualty Insurance Company | $ | — | $ | 300 | $ | 9 | $ | 300 | $ | — | $ | 400 | $ | 16 |
(1) | Reflects dividend amounts that may be paid during 2010 without prior regulatory approval. However, if paid before a specified date during 2010, some or all of such dividends may require regulatory approval. | |
(2) | Includes amounts paid including those requiring regulatory approval. | |
(3) | Reflects dividend amounts that could have been paid during the relevant year without prior regulatory approval. | |
(4) | Consists of shares of RGA stock distributed by Metropolitan Life Insurance Company to the Holding Company as an in-kind dividend of $1,318 million. | |
(5) | Includes shares of an affiliate distributed to the Holding Company as an in-kind dividend of $164 million. | |
(6) | Includes a return of capital of $404 million as approved by the applicable insurance department, of which $350 million was paid to the Holding Company. |
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Short-term debt | $ | — | $ | 300 | ||||
Long-term debt — unaffiliated | $ | 10,458 | $ | 7,660 | ||||
Long-term debt — affiliated | $ | 500 | $ | 500 | ||||
Collateral financing arrangements | $ | 2,797 | $ | 2,692 | ||||
Junior subordinated debt securities | $ | 1,748 | $ | 2,315 |
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Maturity Date | Principal | Interest Rate | ||||
(In millions) | ||||||
2011 | $ | 750 | 6.13% | |||
2012 | $ | 400 | 5.38% | |||
2012 | $ | 397 | 3-month LIBOR + .032% | |||
2013 | $ | 500 | 5.00% | |||
2014 | $ | 350 | 5.50% | |||
2015 | $ | 1,000 | 5.00% | |||
2016 | $ | 1,250 | 6.75% | |||
2018 | $ | 1,035 | 6.82% | |||
2019 | $ | 1,035 | 7.72% | |||
2020 | $ | 646 | 5.25% | |||
2024 | $ | 565 | 5.38% | |||
2032 | $ | 600 | 6.50% | |||
2033 | $ | 200 | 5.88% | |||
2034 | $ | 750 | 6.38% | |||
2035 | $ | 1,000 | 5.70% |
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December 31, | ||||||||||||
Subsidiaries | Interest Rate | Maturity Date | 2009 | 2008 | ||||||||
(In millions) | ||||||||||||
Metropolitan Life Insurance Company | 3-month LIBOR + 1.15% | December 31, 2009 | $ | — | $ | 700 | ||||||
Metropolitan Life Insurance Company | 6-month LIBOR + 1.80% | December 31, 2011 | 775 | — | ||||||||
Metropolitan Life Insurance Company | 6-month LIBOR + 1.80% | December 31, 2011 | 300 | — | ||||||||
Metropolitan Life Insurance Company | 7.13% | December 15, 2032 | 400 | 400 | ||||||||
Metropolitan Life Insurance Company | 7.13% | January 15, 2033 | 100 | 100 | ||||||||
Total | $ | 1,575 | $ | 1,200 | ||||||||
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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• | implementing a Board of Directors approved corporate risk framework, which outlines the Company’s approach for managing risk on an enterprise-wide basis; | |
• | developing policies and procedures for managing, measuring, monitoring and controlling those risks identified in the corporate risk framework; | |
• | establishing appropriate corporate risk tolerance levels; | |
• | deploying capital on an economic capital basis; and | |
• | reporting on a periodic basis to the Finance and Risk Policy Committee of the Company’s Board of Directors, and with respect to credit risk to the Investment Committee of the Company’s Board of Directors and various financial and non-financial senior management committees. |
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• | The Company’s Treasury Department is responsible for managing the exposure to investments in foreign subsidiaries. Limits to exposures are established and monitored by the Treasury Department and managed by the Investment Department. | |
• | The Investment Department is responsible for managing the exposure to foreign currency investments. Exposure limits to unhedged foreign currency investments are incorporated into the standing authorizations granted to management by the Board of Directors and are reported to the Board of Directors on a periodic basis. | |
• | The lines of business are responsible for establishing limits and managing any foreign exchange rate exposure caused by the sale or issuance of insurance products. |
• | Risks Related to Living Guarantee Benefits — The Company uses a wide range of derivative contracts to hedge the risk associated with variable annuity living guarantee benefits. These hedges include equity and interest rate futures, interest rate swaps, currency futures/forwards, equity indexed options and interest rate option contracts and equity variance swaps. | |
• | Minimum Interest Rate Guarantees — For certain Company liability contracts, the Company provides the contractholder a guaranteed minimum interest rate. These contracts include certain fixed annuities and other insurance liabilities. The Company purchases interest rate floors to reduce risk associated with these liability guarantees. |
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• | Reinvestment Risk in Long Duration Liability Contracts — Derivatives are used to hedge interest rate risk related to certain long duration liability contracts, such as long-term care. Hedges include zero coupon interest rate swaps and swaptions. | |
• | Foreign Currency Risk — The Company uses currency swaps and forwards to hedge foreign currency risk. These hedges primarily swap foreign currency denominated bonds, investments in foreign subsidiaries or equity exposures to US dollars. | |
• | General ALM Hedging Strategies — In the ordinary course of managing the Company’s asset/liability risks, the Company uses interest rate futures, interest rate swaps, interest rate caps, interest rate floors and inflation swaps. These hedges are designed to reduce interest rate risk or inflation risk related to the existing assets or liabilities or related to expected future cash flows. |
• | the net present values of its interest rate sensitive exposures resulting from a 10% change (increase or decrease) in interest rates; | |
• | the U.S. Dollar equivalent estimated fair values of the Company’s foreign currency exposures due to a 10% change (increase or decrease) in foreign currency exchange rates; and | |
• | the estimated fair value of its equity positions due to a 10% change (increase or decrease) in equity market prices. |
• | the market risk information is limited by the assumptions and parameters established in creating the related sensitivity analysis, including the impact of prepayment rates on mortgages; | |
• | the derivatives that qualify as hedges, the impact on reported earnings may be materially different from the change in market values; | |
• | the analysis excludes other significant real estate holdings and liabilities pursuant to insurance contracts; and | |
• | the model assumes that the composition of assets and liabilities remains unchanged throughout the period. |
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December 31, 2009 | ||||
(In millions) | ||||
Non-trading: | ||||
Interest rate risk | $ | 4,050 | ||
Foreign currency exchange rate risk | $ | 798 | ||
Equity price risk | $ | 218 | ||
Trading: | ||||
Interest rate risk | $ | 7 | ||
Foreign currency exchange rate risk | $ | 93 |
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December 31, 2009 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in the Yield | ||||||||||
Amount | Value (3) | Curve | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 227,642 | $ | (4,761 | ) | |||||||
Equity securities | 3,084 | — | ||||||||||
Trading securities | 2,384 | (10 | ) | |||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | 46,315 | (201 | ) | |||||||||
Held-for-sale | 2,728 | (32 | ) | |||||||||
Mortgage loans, net | 49,043 | (233 | ) | |||||||||
Policy loans | 11,294 | (201 | ) | |||||||||
Real estate joint ventures (1) | 127 | — | ||||||||||
Other limited partnership interests (1) | 1,581 | — | ||||||||||
Short-term investments | 8,374 | (1 | ) | |||||||||
Other invested assets: | ||||||||||||
Mortgage servicing rights | 878 | 85 | ||||||||||
Other | 1,284 | (7 | ) | |||||||||
Cash and cash equivalents | 10,112 | — | ||||||||||
Accrued investment income | 3,173 | — | ||||||||||
Premiums and other receivables | 3,532 | (211 | ) | |||||||||
Other assets | 440 | (6 | ) | |||||||||
Net embedded derivatives within asset host contracts (2) | 76 | (17 | ) | |||||||||
Mortgage loan commitments | $ | 2,220 | (48 | ) | 1 | |||||||
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments | $ | 1,263 | (52 | ) | — | |||||||
Total Assets | $ | (5,361 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 96,735 | $ | 786 | ||||||||
Payables for collateral under securities loaned and other transactions | 24,196 | — | ||||||||||
Short-term debt | 912 | — | ||||||||||
Long-term debt | 13,831 | 339 | ||||||||||
Collateral financing arrangements | 2,877 | (8 | ) | |||||||||
Junior subordinated debt securities | 3,167 | 152 | ||||||||||
Other liabilities: | ||||||||||||
Trading liabilities | 106 | 3 | ||||||||||
Other | 1,788 | — | ||||||||||
Net embedded derivatives within liability host contracts (2) | 1,505 | 994 | ||||||||||
Total Liabilities | $ | 2,266 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 38,152 | $ | 315 | $ | (866 | ) | |||||
Interest rate floors | $ | 23,691 | 424 | (48 | ) | |||||||
Interest rate caps | $ | 28,409 | 283 | 86 | ||||||||
Interest rate futures | $ | 7,563 | (2 | ) | (29 | ) | ||||||
Interest rate options | $ | 4,050 | 60 | (33 | ) | |||||||
Interest rate forwards | $ | 9,921 | 39 | 65 | ||||||||
Synthetic GICs | $ | 4,352 | — | — | ||||||||
Foreign currency swaps | $ | 16,879 | 122 | (36 | ) | |||||||
Foreign currency forwards | $ | 6,485 | 26 | — | ||||||||
Currency options | $ | 822 | 18 | — | ||||||||
Credit default swaps | $ | 6,723 | (56 | ) | — | |||||||
Credit forwards | $ | 220 | (4 | ) | — | |||||||
Equity futures | $ | 7,405 | 23 | — | ||||||||
Equity options | $ | 27,175 | 694 | (64 | ) | |||||||
Variance swaps | $ | 13,654 | 123 | (11 | ) | |||||||
Total rate of return swaps | $ | 376 | (47 | ) | (26 | ) | ||||||
Total Derivative Instruments | $ | (962 | ) | |||||||||
Net Change | $ | (4,057 | ) | |||||||||
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(1) | Represents only those investments accounted for using the cost method. | |
(2) | Embedded derivatives are recognized in the consolidated balance sheet in the same caption as the host contract. | |
(3) | Separate account assets and liabilities which are interest rate sensitive are not included herein as any interest rate risk is borne by the holder of the separate account. |
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December 31, 2009 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in the Foreign | ||||||||||
Amount | Value (1) | Exchange Rate | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 227,642 | $ | (2,060 | ) | |||||||
Equity securities | 3,084 | (5 | ) | |||||||||
Trading securities | 2,384 | (93 | ) | |||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | 46,315 | (338 | ) | |||||||||
Held-for-sale | 2,728 | — | ||||||||||
Mortgage loans, net | 49,043 | (338 | ) | |||||||||
Policy loans | 11,294 | (45 | ) | |||||||||
Short-term investments | 8,374 | (65 | ) | |||||||||
Other invested assets: | ||||||||||||
Mortgage servicing rights | 878 | — | ||||||||||
Other | 1,284 | (49 | ) | |||||||||
Cash and cash equivalents | 10,112 | (100 | ) | |||||||||
Accrued investment income | 3,173 | (10 | ) | |||||||||
Total Assets | $ | (2,765 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 96,735 | $ | 1,275 | ||||||||
Long-term debt | 13,831 | 103 | ||||||||||
Net embedded derivatives within liability host contracts (2) | 1,505 | 122 | ||||||||||
Total Liabilities | $ | 1,500 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 38,152 | $ | 315 | $ | 5 | ||||||
Interest rate floors | $ | 23,691 | 424 | — | ||||||||
Interest rate caps | $ | 28,409 | 283 | — | ||||||||
Interest rate futures | $ | 7,563 | (2 | ) | (2 | ) | ||||||
Interest rate options | $ | 4,050 | 60 | — | ||||||||
Interest rate forwards | $ | 9,921 | 39 | — | ||||||||
Synthetic GICs | $ | 4,352 | — | — | ||||||||
Foreign currency swaps | $ | 16,879 | 122 | 215 | ||||||||
Foreign currency forwards | $ | 6,485 | 26 | 220 | ||||||||
Currency options | $ | 822 | 18 | — | ||||||||
Credit default swaps | $ | 6,723 | (56 | ) | — | |||||||
Credit forwards | $ | 220 | (4 | ) | — | |||||||
Equity futures | $ | 7,405 | 23 | (1 | ) | |||||||
Equity options | $ | 27,175 | 694 | (61 | ) | |||||||
Variance swaps | $ | 13,654 | 123 | (2 | ) | |||||||
Total rate of return swaps | $ | 376 | (47 | ) | — | |||||||
Total Derivative Instruments | $ | 374 | ||||||||||
Net Change | $ | (891 | ) | |||||||||
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(1) | Estimated fair value presented in the table above represents the estimated fair value of all financial instruments within this financial statement caption not necessarily those solely subject to foreign exchange risk. | |
(2) | Embedded derivatives are recognized in the consolidated balance sheet in the same caption as the host contract. |
December 31, 2009 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in Equity | ||||||||||
Amount | Value (1) | Prices | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Equity securities | $ | 3,084 | $ | 337 | ||||||||
Other invested assets: | ||||||||||||
Net embedded derivatives within asset host contracts (2) | 76 | (10 | ) | |||||||||
Total Assets | $ | 327 | ||||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 96,735 | $ | — | ||||||||
Other liabilities: | ||||||||||||
Net embedded derivatives within liability host contracts (2) | 1,505 | 414 | ||||||||||
Total Liabilities | $ | 414 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 38,152 | $ | 315 | $ | — | ||||||
Interest rate floors | $ | 23,691 | 424 | — | ||||||||
Interest rate caps | $ | 28,409 | 283 | — | ||||||||
Interest rate futures | $ | 7,563 | (2 | ) | — | |||||||
Interest rate options | $ | 4,050 | 60 | — | ||||||||
Interest rate forwards | $ | 9,921 | 39 | — | ||||||||
Synthetic GICs | $ | 4,352 | — | — | ||||||||
Foreign currency swaps | $ | 16,879 | 122 | — | ||||||||
Foreign currency forwards | $ | 6,485 | 26 | — | ||||||||
Currency options | $ | 822 | 18 | — | ||||||||
Credit default swaps | $ | 6,723 | (56 | ) | — | |||||||
Credit forwards | $ | 220 | (4 | ) | — | |||||||
Equity futures | $ | 7,405 | 23 | (228 | ) | |||||||
Equity options | $ | 27,175 | 694 | (754 | ) | |||||||
Variance swaps | $ | 13,654 | 123 | 10 | ||||||||
Total rate of return swaps | $ | 376 | (47 | ) | 13 | |||||||
Total Derivative Instruments | $ | (959 | ) | |||||||||
Net Change | $ | (218 | ) | |||||||||
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(1) | Estimated fair value presented in the table above represents the estimated fair value of all financial instruments within this financial statement caption not necessarily those solely subject to equity price risk. | |
(2) | Embedded derivatives are recognized in the consolidated balance sheet in the same caption as the host contract. |
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Item 8. | Financial Statements and Supplementary Data |
Page | ||||
F-1 | ||||
Financial Statements at December 31, 2009 and 2008 and for the Years Ended December 31, 2009, 2008 and 2007: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-7 | ||||
F-9 | ||||
Financial Statement Schedules at December 31, 2009 and 2008 and for the Years Ended December 31, 2009, 2008 and 2007: | ||||
F-179 | ||||
F-180 | ||||
F-186 | ||||
F-188 |
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F-1
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Consolidated Balance Sheets
December 31, 2009 and 2008
(In millions, except share and per share data)
2009 | 2008 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $229,709 and $209,508, respectively) | $ | 227,642 | $ | 188,251 | ||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $3,187 and $4,131, respectively) | 3,084 | 3,197 | ||||||
Trading securities, at estimated fair value (cost: $2,249 and $1,107, respectively) | 2,384 | 946 | ||||||
Mortgage loans: | ||||||||
Held-for-investment, at amortized cost (net of valuation allowances of $721 and $304, respectively) | 48,181 | 49,352 | ||||||
Held-for-sale, principally at estimated fair value | 2,728 | 2,012 | ||||||
Mortgage loans, net | 50,909 | 51,364 | ||||||
Policy loans | 10,061 | 9,802 | ||||||
Real estate and real estate joint venturesheld-for-investment | 6,852 | 7,535 | ||||||
Real estateheld-for-sale | 44 | 51 | ||||||
Other limited partnership interests | 5,508 | 6,039 | ||||||
Short-term investments | 8,374 | 13,878 | ||||||
Other invested assets | 12,709 | 17,248 | ||||||
Total investments | 327,567 | 298,311 | ||||||
Cash and cash equivalents | 10,112 | 24,207 | ||||||
Accrued investment income | 3,173 | 3,061 | ||||||
Premiums and other receivables | 16,752 | 16,973 | ||||||
Deferred policy acquisition costs and value of business acquired | 19,256 | 20,144 | ||||||
Current income tax recoverable | 316 | — | ||||||
Deferred income tax assets | 1,228 | 4,927 | ||||||
Goodwill | 5,047 | 5,008 | ||||||
Other assets | 6,822 | 7,262 | ||||||
Assets of subsidiariesheld-for-sale | — | 946 | ||||||
Separate account assets | 149,041 | 120,839 | ||||||
Total assets | $ | 539,314 | $ | 501,678 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities: | ||||||||
Future policy benefits | $ | 135,879 | $ | 130,555 | ||||
Policyholder account balances | 138,673 | 142,921 | ||||||
Other policyholder funds | 8,446 | 7,762 | ||||||
Policyholder dividends payable | 761 | 1,023 | ||||||
Payables for collateral under securities loaned and other transactions | 24,196 | 31,059 | ||||||
Bank deposits | 10,211 | 6,884 | ||||||
Short-term debt | 912 | 2,659 | ||||||
Long-term debt | 13,220 | 9,667 | ||||||
Collateral financing arrangements | 5,297 | 5,192 | ||||||
Junior subordinated debt securities | 3,191 | 3,758 | ||||||
Current income tax payable | — | 342 | ||||||
Other liabilities | 15,989 | 14,284 | ||||||
Liabilities of subsidiariesheld-for-sale | — | 748 | ||||||
Separate account liabilities | 149,041 | 120,839 | ||||||
Total liabilities | 505,816 | 477,693 | ||||||
Contingencies, Commitments and Guarantees (Note 16) | ||||||||
Stockholders’ Equity: | ||||||||
MetLife, Inc.’s stockholders’ equity: | ||||||||
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference | 1 | 1 | ||||||
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 822,359,818 and 798,016,664 shares issued at December 31, 2009 and 2008, respectively; 818,833,810 and 793,629,070 shares outstanding at December 31, 2009 and 2008, respectively | 8 | 8 | ||||||
Additional paid-in capital | 16,859 | 15,811 | ||||||
Retained earnings | 19,501 | 22,403 | ||||||
Treasury stock, at cost; 3,526,008 and 4,387,594 shares at December 31, 2009 and 2008, respectively | (190 | ) | (236 | ) | ||||
Accumulated other comprehensive loss | (3,058 | ) | (14,253 | ) | ||||
Total MetLife, Inc.’s stockholders’ equity | 33,121 | 23,734 | ||||||
Noncontrolling interests | 377 | 251 | ||||||
Total equity | 33,498 | 23,985 | ||||||
Total liabilities and stockholders’ equity | $ | 539,314 | $ | 501,678 | ||||
F-2
Table of Contents
Consolidated Statements of Operations
For the Years Ended December 31, 2009, 2008 and 2007
(In millions, except per share data)
2009 | 2008 | 2007 | ||||||||||
Revenues | ||||||||||||
Premiums | $ | 26,460 | $ | 25,914 | $ | 22,970 | ||||||
Universal life and investment-type product policy fees | 5,203 | 5,381 | 5,238 | |||||||||
Net investment income | 14,838 | 16,291 | 18,057 | |||||||||
Other revenues | 2,329 | 1,586 | 1,465 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (2,439 | ) | (1,296 | ) | (78 | ) | ||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive loss | 939 | — | — | |||||||||
Other net investment gains (losses), net | (6,272 | ) | 3,108 | (500 | ) | |||||||
Total net investment gains (losses) | (7,772 | ) | 1,812 | (578 | ) | |||||||
Total revenues | 41,058 | 50,984 | 47,152 | |||||||||
Expenses | ||||||||||||
Policyholder benefits and claims | 28,336 | 27,437 | 23,783 | |||||||||
Interest credited to policyholder account balances | 4,849 | 4,788 | 5,461 | |||||||||
Policyholder dividends | 1,650 | 1,751 | 1,723 | |||||||||
Other expenses | 10,556 | 11,947 | 10,405 | |||||||||
Total expenses | 45,391 | 45,923 | 41,372 | |||||||||
Income (loss) from continuing operations before provision for income tax | (4,333 | ) | 5,061 | 5,780 | ||||||||
Provision for income tax expense (benefit) | (2,015 | ) | 1,580 | 1,675 | ||||||||
Income (loss) from continuing operations, net of income tax | (2,318 | ) | 3,481 | 4,105 | ||||||||
Income (loss) from discontinued operations, net of income tax | 40 | (203 | ) | 360 | ||||||||
Net income (loss) | (2,278 | ) | 3,278 | 4,465 | ||||||||
Less: Net income (loss) attributable to noncontrolling interests | (32 | ) | 69 | 148 | ||||||||
Net income (loss) attributable to MetLife, Inc. | (2,246 | ) | 3,209 | 4,317 | ||||||||
Less: Preferred stock dividends | 122 | 125 | 137 | |||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (2,368 | ) | $ | 3,084 | $ | 4,180 | |||||
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share: | ||||||||||||
Basic | $ | (2.94 | ) | $ | 4.60 | $ | 5.32 | |||||
Diluted | $ | (2.94 | ) | $ | 4.54 | $ | 5.20 | |||||
Net income (loss) available to MetLife, Inc.’s common shareholders per common share: | ||||||||||||
Basic | $ | (2.89 | ) | $ | 4.19 | $ | 5.62 | |||||
Diluted | $ | (2.89 | ) | $ | 4.14 | $ | 5.48 | |||||
Cash dividends per common share | $ | 0.74 | $ | 0.74 | $ | 0.74 | ||||||
F-3
Table of Contents
Consolidated Statements of Stockholders’ Equity
For the Year Ended December 31, 2009
(In millions)
Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||||||||||||||||||||||
Net | Foreign | Defined | Total | |||||||||||||||||||||||||||||||||||||||||||||
Additional | Treasury | Unrealized | Other-Than- | Currency | Benefit | MetLife, Inc.’s | ||||||||||||||||||||||||||||||||||||||||||
Preferred | Common | Paid-in | Retained | Stock | Investment | Temporary | Translation | Plans | Stockholders’ | Noncontrolling | Total | |||||||||||||||||||||||||||||||||||||
Stock | Stock | Capital | Earnings | at Cost | Gains (Losses) | Impairments | Adjustments | Adjustment | Equity | Interests | Equity | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2008 | $ | 1 | $ | 8 | $ | 15,811 | $ | 22,403 | $ | (236 | ) | $ | (12,564 | ) | $ | — | $ | (246 | ) | $ | (1,443 | ) | $ | 23,734 | $ | 251 | $ | 23,985 | ||||||||||||||||||||
Cumulative effect of change in accounting principle, net of income tax (Note 1) | 76 | (76 | ) | — | — | |||||||||||||||||||||||||||||||||||||||||||
Common stock issuance — newly issued shares | 1,035 | 1,035 | 1,035 | |||||||||||||||||||||||||||||||||||||||||||||
Treasury stock transactions, net | (7 | ) | 14 | 7 | 7 | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 20 | 32 | 52 | 52 | ||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | (122 | ) | (122 | ) | (122 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock | (610 | ) | (610 | ) | (610 | ) | ||||||||||||||||||||||||||||||||||||||||||
Change in equity of noncontrolling interests | 169 | 169 | ||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | (2,246 | ) | (2,246 | ) | (32 | ) | (2,278 | ) | ||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | (116 | ) | (116 | ) | (116 | ) | ||||||||||||||||||||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | 11,863 | (437 | ) | 11,426 | (11 | ) | 11,415 | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | 63 | 63 | 63 | |||||||||||||||||||||||||||||||||||||||||||||
Defined benefit plans adjustment, net of income tax | (102 | ) | (102 | ) | (102 | ) | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | 11,271 | (11 | ) | 11,260 | ||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | 9,025 | (43 | ) | 8,982 | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2009 | $ | 1 | $ | 8 | $ | 16,859 | $ | 19,501 | $ | (190 | ) | $ | (817 | ) | $ | (513 | ) | $ | (183 | ) | $ | (1,545 | ) | $ | 33,121 | $ | 377 | $ | 33,498 | |||||||||||||||||||
F-4
Table of Contents
Consolidated Statements of Stockholders’ Equity — (Continued)
For the Year Ended December 31, 2008
(In millions)
Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized | Foreign | Defined | Total | |||||||||||||||||||||||||||||||||||||||||||||
Additional | Treasury | Investment | Currency | Benefit | MetLife, Inc.’s | Noncontrolling Interests | ||||||||||||||||||||||||||||||||||||||||||
Preferred | Common | Paid-in | Retained | Stock | Gains | Translation | Plans | Stockholders’ | Discontinued | Continuing | Total | |||||||||||||||||||||||||||||||||||||
Stock | Stock | Capital | Earnings | at Cost | (Losses) | Adjustments | Adjustment | Equity | Operations | Operations | Equity | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | $ | 1 | $ | 8 | $ | 17,098 | $ | 19,884 | $ | (2,890 | ) | $ | 971 | $ | 347 | $ | (240 | ) | $ | 35,179 | $ | 1,534 | $ | 272 | $ | 36,985 | ||||||||||||||||||||||
Cumulative effect of changes in accounting principles, net of income tax (Note 1) | 27 | (10 | ) | 17 | 17 | |||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2008 | 1 | 8 | 17,098 | 19,911 | (2,890 | ) | 961 | 347 | (240 | ) | 35,196 | 1,534 | 272 | 37,002 | ||||||||||||||||||||||||||||||||||
Common stock issuance — newly issued shares | 290 | 290 | 290 | |||||||||||||||||||||||||||||||||||||||||||||
Treasury stock transactions: | ||||||||||||||||||||||||||||||||||||||||||||||||
Acquired in connection with share repurchase agreements | 450 | (1,250 | ) | (800 | ) | (800 | ) | |||||||||||||||||||||||||||||||||||||||||
Issued in connection with common stock issuance | (2,104 | ) | 4,040 | 1,936 | 1,936 | |||||||||||||||||||||||||||||||||||||||||||
Issued to settle stock forward contracts | (29 | ) | 1,064 | 1,035 | 1,035 | |||||||||||||||||||||||||||||||||||||||||||
Acquired in connection with split-off of subsidiary | (1,318 | ) | (1,318 | ) | (1,318 | ) | ||||||||||||||||||||||||||||||||||||||||||
Other, net | (35 | ) | 118 | 83 | 83 | |||||||||||||||||||||||||||||||||||||||||||
Deferral of stock-based compensation | 141 | 141 | 141 | |||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | (125 | ) | (125 | ) | (125 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock | (592 | ) | (592 | ) | (592 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends on subsidiary common stock | 34 | 34 | ||||||||||||||||||||||||||||||||||||||||||||||
Change in equity of noncontrolling interests | (1,409 | ) | (6 | ) | (1,415 | ) | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | 3,209 | 3,209 | 94 | (25 | ) | 3,278 | ||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | 241 | 241 | 241 | |||||||||||||||||||||||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | (13,766 | ) | (13,766 | ) | (150 | ) | 10 | (13,906 | ) | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | (593 | ) | (593 | ) | (107 | ) | (700 | ) | ||||||||||||||||||||||||||||||||||||||||
Defined benefit plans adjustment, net of income tax | (1,203 | ) | (1,203 | ) | 4 | (1,199 | ) | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (15,321 | ) | (253 | ) | 10 | (15,564 | ) | |||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | (12,112 | ) | (159 | ) | (15 | ) | (12,286 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2008 | $ | 1 | $ | 8 | $ | 15,811 | $ | 22,403 | $ | (236 | ) | $ | (12,564 | ) | $ | (246 | ) | $ | (1,443 | ) | $ | 23,734 | $ | — | $ | 251 | $ | 23,985 | ||||||||||||||||||||
F-5
Table of Contents
Consolidated Statements of Stockholders’ Equity — (Continued)
For the Year Ended December 31, 2007
(In millions)
Accumulated Other | ||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||
Net | Foreign | Defined | Total | |||||||||||||||||||||||||||||||||||||||||||||
Additional | Treasury | Unrealized | Currency | Benefit | MetLife, Inc.’s | Noncontrolling Interests | ||||||||||||||||||||||||||||||||||||||||||
Preferred | Common | Paid-in | Retained | Stock | Investment | Translation | Plans | Stockholders’ | Discontinued | Continuing | Total | |||||||||||||||||||||||||||||||||||||
Stock | Stock | Capital | Earnings | at Cost | Gains (Losses) | Adjustments | Adjustment | Equity | Operations | Operations | Equity | |||||||||||||||||||||||||||||||||||||
Balance at December 31, 2006 | $ | 1 | $ | 8 | $ | 17,454 | $ | 16,574 | $ | (1,357 | ) | $ | 1,864 | $ | 57 | $ | (803 | ) | $ | 33,798 | $ | 1,347 | $ | 101 | $ | 35,246 | ||||||||||||||||||||||
Cumulative effect of changes in accounting principles, net of income tax (Note 1) | (329 | ) | (329 | ) | (11 | ) | (340 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2007 | 1 | 8 | 17,454 | 16,245 | (1,357 | ) | 1,864 | 57 | (803 | ) | 33,469 | 1,336 | 101 | 34,906 | ||||||||||||||||||||||||||||||||||
Treasury stock transactions, net | 94 | (1,533 | ) | (1,439 | ) | (1,439 | ) | |||||||||||||||||||||||||||||||||||||||||
Obligation under accelerated common stock repurchase agreement | (450 | ) | (450 | ) | (450 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | (137 | ) | (137 | ) | (137 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock | (541 | ) | (541 | ) | (541 | ) | ||||||||||||||||||||||||||||||||||||||||||
Dividends on subsidiary common stock | (34 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Change in equity of noncontrolling interests | 42 | 165 | 207 | |||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income | 4,317 | 4,317 | 141 | 7 | 4,465 | |||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | (40 | ) | (40 | ) | (40 | ) | ||||||||||||||||||||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | (853 | ) | (853 | ) | (8 | ) | (1 | ) | (862 | ) | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | 290 | 290 | 56 | 346 | ||||||||||||||||||||||||||||||||||||||||||||
Defined benefit plans adjustment, net of income tax | 563 | 563 | 1 | 564 | ||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (40 | ) | 49 | (1 | ) | 8 | ||||||||||||||||||||||||||||||||||||||||||
Comprehensive income | 4,277 | 190 | 6 | 4,473 | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2007 | $ | 1 | $ | 8 | $ | 17,098 | $ | 19,884 | $ | (2,890 | ) | $ | 971 | $ | 347 | $ | (240 | ) | $ | 35,179 | $ | 1,534 | $ | 272 | $ | 36,985 | ||||||||||||||||||||||
F-6
Table of Contents
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | (2,278 | ) | $ | 3,278 | $ | 4,465 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization expenses | 520 | 375 | 457 | |||||||||
Amortization of premiums and accretion of discounts associated with investments, net | (967 | ) | (939 | ) | (955 | ) | ||||||
(Gains) losses from sales of investments and businesses, net | 7,715 | (1,127 | ) | 619 | ||||||||
Undistributed equity earnings of real estate joint ventures and other limited partnership interests | 1,118 | 679 | (606 | ) | ||||||||
Interest credited to policyholder account balances | 4,852 | 4,911 | 5,790 | |||||||||
Interest credited to bank deposits | 163 | 166 | 200 | |||||||||
Universal life and investment-type product policy fees | (5,218 | ) | (5,462 | ) | (5,310 | ) | ||||||
Change in accrued investment income | (110 | ) | 428 | (275 | ) | |||||||
Change in premiums and other receivables | (1,653 | ) | (1,929 | ) | (283 | ) | ||||||
Change in deferred policy acquisition costs, net | (1,837 | ) | 545 | (1,178 | ) | |||||||
Change in insurance-related liabilities | 6,401 | 5,307 | 5,463 | |||||||||
Change in trading securities | (1,152 | ) | (418 | ) | 200 | |||||||
Change in residential mortgage loansheld-for-sale, net | (800 | ) | (1,946 | ) | — | |||||||
Change in mortgage servicing rights | (687 | ) | (185 | ) | — | |||||||
Change in income tax payable | (2,614 | ) | 920 | 101 | ||||||||
Change in other assets | (660 | ) | 5,737 | 582 | ||||||||
Change in other liabilities | 865 | 163 | 581 | |||||||||
Other, net | 145 | 199 | 51 | |||||||||
Net cash provided by operating activities | 3,803 | 10,702 | 9,902 | |||||||||
Cash flows from investing activities | ||||||||||||
Sales, maturities and repayments of: | ||||||||||||
Fixed maturity securities | 64,428 | 102,250 | 112,062 | |||||||||
Equity securities | 2,545 | 2,707 | 1,738 | |||||||||
Mortgage loans | 5,769 | 6,077 | 9,854 | |||||||||
Real estate and real estate joint ventures | 43 | 140 | 664 | |||||||||
Other limited partnership interests | 947 | 593 | 1,121 | |||||||||
Purchases of: | ||||||||||||
Fixed maturity securities | (83,940 | ) | (86,874 | ) | (112,534 | ) | ||||||
Equity securities | (1,986 | ) | (1,494 | ) | (2,883 | ) | ||||||
Mortgage loans | (4,692 | ) | (10,096 | ) | (14,365 | ) | ||||||
Real estate and real estate joint ventures | (579 | ) | (1,170 | ) | (2,228 | ) | ||||||
Other limited partnership interests | (803 | ) | (1,643 | ) | (2,041 | ) | ||||||
Net change in short-term investments | 5,534 | (11,269 | ) | 55 | ||||||||
Net change in policy loans | (259 | ) | (467 | ) | (190 | ) | ||||||
Net change in other invested assets | (713 | ) | (492 | ) | (1,020 | ) | ||||||
Purchases of businesses, net of cash received of $0, $314 and $13, respectively | — | (469 | ) | (43 | ) | |||||||
Sales of businesses, net of cash disposed of $180, $0 and $763, respectively | (50 | ) | (4 | ) | (694 | ) | ||||||
Disposal of subsidiary | (19 | ) | (313 | ) | — | |||||||
Other, net | (160 | ) | (147 | ) | (140 | ) | ||||||
Net cash used in investing activities | $ | (13,935 | ) | $ | (2,671 | ) | $ | (10,644 | ) | |||
F-7
Table of Contents
Consolidated Statements of Cash Flows — (Continued)
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Cash flows from financing activities | ||||||||||||
Policyholder account balances: | ||||||||||||
Deposits | $ | 77,517 | $ | 70,051 | $ | 54,977 | ||||||
Withdrawals | (79,799 | ) | (56,406 | ) | (51,903 | ) | ||||||
Net change in payables for collateral under securities loaned and other transactions | (6,863 | ) | (13,077 | ) | (1,710 | ) | ||||||
Net change in bank deposits | 3,164 | 2,185 | (305 | ) | ||||||||
Net change in short-term debt | (1,747 | ) | 1,992 | (782 | ) | |||||||
Long-term debt issued | 2,961 | 339 | 726 | |||||||||
Long-term debt repaid | (555 | ) | (422 | ) | (286 | ) | ||||||
Collateral financing arrangements issued | 105 | 310 | 4,882 | |||||||||
Cash received in connection with collateral financing arrangements | 775 | — | — | |||||||||
Cash paid in connection with collateral financing arrangements | (400 | ) | (800 | ) | — | |||||||
Junior subordinated debt securities issued | 500 | 750 | 694 | |||||||||
Shares subject to mandatory redemption | — | — | (131 | ) | ||||||||
Debt issuance costs | (30 | ) | (34 | ) | (14 | ) | ||||||
Common stock issued, net of issuance costs | — | 290 | — | |||||||||
Common stock issued to settle stock forward contracts | 1,035 | — | — | |||||||||
Stock options exercised | 8 | 45 | 110 | |||||||||
Treasury stock acquired in connection with share repurchase agreements | — | (1,250 | ) | (1,705 | ) | |||||||
Treasury stock issued in connection with common stock issuance, net of issuance costs | — | 1,936 | — | |||||||||
Treasury stock issued to settle stock forward contracts | — | 1,035 | — | |||||||||
Dividends on preferred stock | (122 | ) | (125 | ) | (137 | ) | ||||||
Dividends on common stock | (610 | ) | (592 | ) | (541 | ) | ||||||
Other, net | (42 | ) | (38 | ) | 67 | |||||||
Net cash (used in) provided by financing activities | (4,103 | ) | 6,189 | 3,942 | ||||||||
Effect of change in foreign currency exchange rates on cash balances | 108 | (349 | ) | 61 | ||||||||
Change in cash and cash equivalents | (14,127 | ) | 13,871 | 3,261 | ||||||||
Cash and cash equivalents, beginning of year | 24,239 | 10,368 | 7,107 | |||||||||
Cash and cash equivalents, end of year | $ | 10,112 | $ | 24,239 | $ | 10,368 | ||||||
Cash and cash equivalents, subsidiariesheld-for-sale, beginning of year | $ | 32 | $ | 407 | $ | 170 | ||||||
Cash and cash equivalents, subsidiariesheld-for-sale, end of year | $ | — | $ | 32 | $ | 407 | ||||||
Cash and cash equivalents, from continuing operations, beginning of year | $ | 24,207 | $ | 9,961 | $ | 6,937 | ||||||
Cash and cash equivalents, from continuing operations, end of year | $ | 10,112 | $ | 24,207 | $ | 9,961 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Net cash paid during the year for: | ||||||||||||
Interest | $ | 989 | $ | 1,107 | $ | 1,011 | ||||||
Income tax | $ | 397 | $ | 27 | $ | 2,128 | ||||||
Non-cash transactions during the year: | ||||||||||||
Business acquisitions: | ||||||||||||
Assets acquired | $ | — | $ | 2,083 | $ | — | ||||||
Cash paid | — | (783 | ) | — | ||||||||
Liabilities assumed | $ | — | $ | 1,300 | $ | — | ||||||
Disposal of subsidiary: | ||||||||||||
Assets disposed | $ | — | $ | 22,135 | $ | — | ||||||
Liabilities disposed | — | (20,689 | ) | — | ||||||||
Net assets disposed | — | 1,446 | — | |||||||||
Cash disposed | — | 270 | — | |||||||||
Transaction costs, including cash paid of $19, $43 and $0, respectively | 2 | 60 | — | |||||||||
Treasury stock received in common stock exchange | — | (1,318 | ) | — | ||||||||
Loss on disposal of subsidiary | $ | 2 | $ | 458 | $ | — | ||||||
Remarketing of debt securities: | ||||||||||||
Fixed maturity securities redeemed | $ | 32 | $ | 32 | $ | — | ||||||
Long-term debt issued | $ | 1,035 | $ | 1,035 | $ | — | ||||||
Junior subordinated debt securities redeemed | $ | 1,067 | $ | 1,067 | $ | — | ||||||
Contribution of equity securities to MetLife Foundation | $ | — | $ | — | $ | 12 | ||||||
Purchase money mortgages on real estate sale | $ | 93 | $ | — | $ | — | ||||||
Fixed maturity securities received in connection with insurance contract commutation | $ | — | $ | 115 | $ | — | ||||||
Real estate and real estate joint ventures acquired in satisfaction of debt | $ | 211 | $ | 1 | $ | 1 | ||||||
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1. | Business, Basis of Presentation and Summary of Significant Accounting Policies |
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Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. The Company defines active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. | |
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other significant inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the estimated fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of estimated fair value requires significant management judgment or estimation. |
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(i) | The Company calculates the recovery value of fixed maturity securities by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity security prior to impairment. | |
(ii) | When determining the collectability and the period over which the fixed maturity security is expected to recover, the Company applies the same considerations utilized in its overall impairment evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s best estimates of likely scenario-based outcomes after giving consideration to a variety of variables that include, but are not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; possible corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies. | |
(iii) | Additional considerations are made when assessing the unique features that apply to certain structured securities such as residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”). These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security. | |
(iv) | When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, management considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, management considers in the determination of recovery value the same considerations utilized in its overall impairment evaluation process which incorporates available information and management’s best estimated of scenarios-based outcomes regarding the specific security and issuer; possible corporate restructurings or asset sales by the issuer; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; fundamentals of the industry and geographic area in which the security issuer operates, and the overall macroeconomic conditions. |
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• | Guaranteed minimum death benefit (“GMDB”) liabilities are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the GMDB liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility are consistent with the historical experience of the Standard & Poor’s (“S&P”) 500 Index. The benefit assumptions used in calculating the liabilities are based on the average benefits payable over a range of scenarios. | |
• | Guaranteed minimum income benefit (“GMIB”) liabilities are determined by estimating the expected value of the income benefits in excess of the projected account balance at any future date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used for estimating the GMIB liabilities are consistent with those used for estimating the GMDB liabilities. In addition, the calculation of guaranteed annuitization benefit liabilities incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder. Certain GMIBs have settlement features that result in a portion of that guarantee being accounted for as an embedded derivative and are recorded in policyholder account balances as described below. |
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• | Guaranteed minimum withdrawal benefits (“GMWB”) guarantee the contractholder a return of their purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that the contractholder’s cumulative withdrawals in a contract year do not exceed a certain limit. The initial guaranteed withdrawal amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts). The GMWB is an embedded derivative, which is measured at estimated fair value separately from the host variable annuity product. | |
• | Guaranteed minimum accumulation benefits (“GMAB”) and settlement features in certain GMIB described above provide the contractholder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum accumulation of their purchase payments even if the account value is reduced to zero. The initial guaranteed accumulation amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts). The GMAB is an embedded derivative, which is measured at estimated fair value separately from the host variable annuity product. |
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(i) | future taxable income exclusive of reversing temporary differences and carryforwards; | |
(ii) | future reversals of existing taxable temporary differences; | |
(iii) | taxable income in prior carryback years; and | |
(iv) | tax planning strategies. |
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• | Effective January 1, 2009, the Company adopted prospectively an update on accounting for transfers of financial assets and repurchase financing transactions. This update provides guidance for evaluating whether to account for a transfer of a financial asset and repurchase financing as a single transaction or as two separate transactions. |
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• | Effective December 31, 2008, the Company adopted new guidance on the recognition of interest income and impairment on purchased beneficial interests and beneficial interests that continue to be held by a transferor in securitized financial assets. This new guidance more closely aligns the determination of whether an OTTI has occurred for a beneficial interest in a securitized financial asset with the original guidance for fixed maturity securities classified asavailable-for-sale orheld-to-maturity. | |
• | Effective January 1, 2008, the Company adopted new guidance relating to application of the shortcut method of accounting for derivative instruments and hedging activities. This guidance permits interest rate swaps to have a non-zero fair value at inception when applying the shortcut method of assessing hedge effectiveness as long as the difference between the transaction price (zero) and the fair value (exit price), as defined by current accounting guidance on fair value measurements, is solely attributable to a bid-ask spread. In addition, entities are not precluded from applying the shortcut method of assessing hedge effectiveness in a hedging relationship of interest rate risk involving an interest bearing asset or liability in situations where the hedged item is not recognized for accounting purposes until settlement date as long as the period between trade date and settlement date of the hedged item is consistent with generally established conventions in the marketplace. | |
• | Effective January 1, 2008, the Company adopted new guidance that permits a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset. This new guidance also includes certain terminology modifications. Upon adoption of this guidance, the Company did not change its accounting policy of not offsetting fair value amounts recognized for derivative instruments under master netting arrangements. |
• | All business combinations (whether full, partial or “step” acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions. | |
• | Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date. | |
• | The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date. | |
• | Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if the acquisition-date fair value can be reasonably determined. If the fair value is not estimable, an asset or liability is recorded if existence or incurrence at the acquisition date is probable and its amount is reasonably estimable. | |
• | Changes in deferred income tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. | |
• | Noncontrolling interests (formerly known as “minority interests”) are valued at fair value at the acquisition date and are presented as equity rather than liabilities. | |
• | Net income (loss) includes amounts attributable to noncontrolling interests. | |
• | When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized. |
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• | Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions. | |
• | When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized. |
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• | Effective September 30, 2008, the Company adopted new guidance relating to the fair value measurements of financial assets when the market for those assets is not active. It provides guidance on how a company’s internal cash flow and discount rate assumptions should be considered in the measurement of fair value when relevant market data does not exist, how observable market information in an inactive market affects fair value measurement and how the use of market quotes should be considered when assessing the relevance of observable and unobservable data available to measure fair value. | |
• | Effective January 1, 2009, the Company implemented fair value measurements guidance for certain nonfinancial assets and liabilities that are recorded at fair value on a non-recurring basis. This guidance applies to such items as: (i) nonfinancial assets and nonfinancial liabilities initially measured at estimated fair value in a business combination; (ii) reporting units measured at estimated fair value in the first step of a goodwill impairment test; and (iii) indefinite-lived intangible assets measured at estimated fair value for impairment assessment. | |
• | Effective January 1, 2009, the Company adopted prospectively guidance on issuer’s accounting for liabilities measured at fair value with a third-party credit enhancement. This guidance states that an issuer of a liability with a third-party credit enhancement should not include the effect of the credit enhancement in the fair value measurement of the liability. In addition, it requires disclosures about the existence of any third-party credit enhancement related to liabilities that are measured at fair value. | |
• | Effective December 31, 2009, the Company adopted new guidance on: (i) measuring the fair value of investments in certain entities that calculate NAV per share; (ii) how investments within its scope would be classified in the fair value hierarchy; and (iii) enhanced disclosure requirements, for both interim and annual periods, about the nature and risks of investments measured at fair value on a recurring or non-recurring basis. | |
• | Effective December 31, 2009, the Company adopted new guidance on measuring liabilities at fair value. This guidance provides clarification for measuring fair value in circumstances in which a quoted price in an active market for the identical liability is not available. In such circumstances a company is required to measure fair value using either a valuation technique that uses: (i) the quoted price of the identical liability when traded as an asset; or (ii) quoted prices for similar liabilities or similar liabilities when traded as assets; or (iii) another valuation technique that is consistent with the principles of fair value measurement such as an income approach (e.g., present value technique) or a market approach (e.g., “entry” value technique). |
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• | Effective January 1, 2009, the Company adopted guidance on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock. This guidance provides a framework for evaluating the terms of a particular instrument and whether such terms qualify the instrument as being indexed to an entity’s own stock. | |
• | Effective January 1, 2008, the Company adopted new guidance on written loan commitments recorded at fair value through earnings. It provides guidance on (i) incorporating expected net future cash flows when related to the associated servicing of a loan when measuring fair value; and (ii) broadening the SEC staff’s view that internally-developed intangible assets should not be recorded as part of the fair value of a derivative loan commitment or to written loan commitments that are accounted for at fair value through earnings. Internally-developed intangible assets are not considered a component of the related instruments. | |
• | Effective January 1, 2008, the Company prospectively adopted new guidance on the sale of real estate when the agreement includes a buy-sell clause. This guidance addresses whether the existence of a buy-sell arrangement would preclude partial sales treatment when real estate is sold to a jointly owned entity and concludes that the existence of a buy-sell clause does not necessarily preclude partial sale treatment under current guidance. |
• | The financial instrument transfer guidance eliminates the concept of a “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 guidance also requires additional disclosures about transfers of financial assets, including securitized transactions, as well as a company’s continuing involvement in transferred financial assets. The Company does not expect the adoption of the new guidance to have a material impact on the Company’s consolidated financial statements. | |
• | The consolidation guidance relating to VIEs changes the determination of the primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the primary beneficiary must have both the ability to direct the activities of the VIE and the obligation to absorb either losses or gains that could be significant to the VIE. The guidance also changes when reassessment is needed, as well as requires enhanced disclosures, including the effects of a company’s involvement with VIEs on its financial statements. The Company does not expect the adoption of the new guidance to have a material impact on the Company’s consolidated financial statements. |
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2. | Acquisitions and Dispositions |
• | A recapitalization of RGA common stock into two classes of common stock — RGA Class A common stock and RGA Class B common stock. Pursuant to the terms of the recapitalization, each outstanding share of RGA common stock, including the 32,243,539 shares of RGA common stock beneficially owned by the Company and its subsidiaries, was reclassified as one share of RGA Class A common stock. Immediately thereafter, the Company and its subsidiaries exchanged 29,243,539 shares of its RGA Class A common stock — which represented all of the RGA Class A common stock beneficially owned by the Company and its subsidiaries other than 3,000,000 shares of RGA Class A common stock — with RGA for 29,243,539 shares of RGA Class B common stock. | |
• | An exchange offer, pursuant to which the Company offered to acquire MetLife common stock from its stockholders in exchange for all of its 29,243,539 shares of RGA Class B common stock. The exchange ratio was determined based upon a ratio of the value of the MetLife and RGA shares during thethree-day period prior to the closing of the exchange offer. The 3,000,000 shares of the RGA Class A common stock were not subject to the tax-free exchange. |
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3. | Investments |
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 | $ | 72,075 | $ | 2,821 | $ | 2,699 | $ | 10 | $ | 72,187 | 31.7 | % | ||||||||||||
RMBS | 45,343 | 1,234 | 1,957 | 600 | 44,020 | 19.3 | ||||||||||||||||||
Foreign corporate securities | 37,254 | 2,011 | 1,226 | 9 | 38,030 | 16.7 | ||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities (1) | 25,712 | 745 | 1,010 | — | 25,447 | 11.2 | ||||||||||||||||||
CMBS | 16,555 | 191 | 1,106 | 18 | 15,622 | 6.9 | ||||||||||||||||||
ABS | 14,272 | 189 | 1,077 | 222 | 13,162 | 5.8 | ||||||||||||||||||
Foreign government securities | 11,010 | 1,076 | 139 | — | 11,947 | 5.2 | ||||||||||||||||||
State and political subdivision securities | 7,468 | 151 | 411 | — | 7,208 | 3.2 | ||||||||||||||||||
Other fixed maturity securities | 20 | 1 | 2 | — | 19 | — | ||||||||||||||||||
Total fixed maturity securities (2), (3) | $ | 229,709 | $ | 8,419 | $ | 9,627 | $ | 859 | $ | 227,642 | 100.0 | % | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Common stock | $ | 1,537 | $ | 92 | $ | 8 | $ | — | $ | 1,621 | 52.6 | % | ||||||||||||
Non-redeemable preferred stock (2) | 1,650 | 80 | 267 | — | 1,463 | 47.4 | ||||||||||||||||||
Total equity securities (4) | $ | 3,187 | $ | 172 | $ | 275 | $ | — | $ | 3,084 | 100.0 | % | ||||||||||||
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December 31, 2008 | ||||||||||||||||||||
Cost or | Estimated | |||||||||||||||||||
Amortized | Gross Unrealized | Fair | % of | |||||||||||||||||
Cost | Gain | Loss | Value | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||
U.S. corporate securities | $ | 72,211 | $ | 994 | $ | 9,902 | $ | 63,303 | 33.6 | % | ||||||||||
RMBS | 39,995 | 753 | 4,720 | 36,028 | 19.2 | |||||||||||||||
Foreign corporate securities | 34,798 | 565 | 5,684 | 29,679 | 15.8 | |||||||||||||||
U.S. Treasury, agency and government guaranteed securities (1) | 17,229 | 4,082 | 1 | 21,310 | 11.3 | |||||||||||||||
CMBS | 16,079 | 18 | 3,453 | 12,644 | 6.7 | |||||||||||||||
ABS | 14,246 | 16 | 3,739 | 10,523 | 5.6 | |||||||||||||||
Foreign government securities | 9,474 | 1,056 | 377 | 10,153 | 5.4 | |||||||||||||||
State and political subdivision securities | 5,419 | 80 | 942 | 4,557 | 2.4 | |||||||||||||||
Other fixed maturity securities | 57 | — | 3 | 54 | — | |||||||||||||||
Total fixed maturity securities (2), (3) | $ | 209,508 | $ | 7,564 | $ | 28,821 | $ | 188,251 | 100.0 | % | ||||||||||
Equity Securities: | ||||||||||||||||||||
Common stock | $ | 1,778 | $ | 40 | $ | 133 | $ | 1,685 | 52.7 | % | ||||||||||
Non-redeemable preferred stock (2) | 2,353 | 4 | 845 | 1,512 | 47.3 | |||||||||||||||
Total equity securities (4) | $ | 4,131 | $ | 44 | $ | 978 | $ | 3,197 | 100.0 | % | ||||||||||
(1) | The Company has classified within the U.S. Treasury, agency and government guaranteed securities caption certain corporate fixed maturity securities issued by U.S. financial institutions that were guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) pursuant to the FDIC’s Temporary Liquidity Guarantee Program (“FDIC Program”) of $407 million and $2 million at estimated fair value with unrealized gains (losses) of $2 million and less than ($1) million at December 31, 2009 and 2008, respectively. | |
(2) | At time of acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has a punitive interest ratestep-up feature, as it believes in most instances this feature will compel the issuer to redeem the security at the specified call date. Perpetual securities that do not have a punitive interest ratestep-up feature are classified as equity securities within non-redeemable preferred stock. Many of such securities have been issued bynon-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: |
December 31, | ||||||||||||
2009 | 2008 | |||||||||||
Estimated | Estimated | |||||||||||
Classification | Fair | Fair | ||||||||||
Consolidated Balance Sheets | Sector Table | Primary Issuers | Value | Value | ||||||||
(In millions) | ||||||||||||
Equity securities | Non-redeemable preferred stock | Non-U.S. financial institutions | $ | 988 | $ | 1,224 | ||||||
Equity securities | Non-redeemable preferred stock | U.S. financial institutions | $ | 349 | $ | 288 | ||||||
Fixed maturity securities | Foreign corporate securities | Non-U.S. financial institutions | $ | 2,626 | $ | 2,110 | ||||||
Fixed maturity securities | U.S. corporate securities | U.S. financial institutions | $ | 91 | $ | 46 |
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(3) | The Company held $2.5 billion and $2.1 billion at estimated fair value of redeemable preferred stock which have stated maturity dates at December 31, 2009 and 2008, respectively. These securities, commonly referred to as “capital securities”, are primarily issued by U.S. financial institutions, have cumulative interest deferral features and are included in the U.S. corporate securities sector within fixed maturity securities. | |
(4) | Equity securities primarily consist of investments in common and preferred stocks, including certain perpetual hybrid securities and mutual fund interests. Privately-held equity securities represented $1.0 billion and $1.1 billion at estimated fair value at December 31, 2009 and 2008, respectively. |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Below investment grade or non-rated fixed maturity securities (1): | ||||||||
Estimated fair value | $ | 20,201 | $ | 12,365 | ||||
Net unrealized loss | $ | 2,609 | $ | 5,094 | ||||
Non-income producing fixed maturity securities (1): | ||||||||
Estimated fair value | $ | 312 | $ | 75 | ||||
Net unrealized loss | $ | 31 | $ | 19 | ||||
Fixed maturity securities credit enhanced by financial guarantor insurers — by sector — at estimated fair value: | ||||||||
State and political subdivision securities | $ | 2,154 | $ | 2,005 | ||||
U.S. corporate securities | 1,750 | 2,007 | ||||||
ABS | 803 | 833 | ||||||
Other | 43 | 51 | ||||||
Total fixed maturity securities credit enhanced by financial guarantor insurers | $ | 4,750 | $ | 4,896 | ||||
Ratings of the financial guarantor insurers providing the credit enhancement: | ||||||||
Portion rated Aa/AA | 18 | % | 15 | % | ||||
Portion rated A | 2 | % | — | % | ||||
Portion rated Baa/BBB | 36 | % | 68 | % | ||||
(1) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS held by the Company’s domestic insurance subsidiaries. Non-agency RMBS held by the Company’s domestic insurance subsidiaries at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Corporate fixed maturity securities — by industry type: | ||||||||||||||||
Foreign (1) | $ | 38,030 | 34.5 | % | $ | 29,679 | 32.0 | % | ||||||||
Industrial | 17,246 | 15.6 | 13,324 | 14.3 | ||||||||||||
Consumer | 16,924 | 15.4 | 13,122 | 14.1 | ||||||||||||
Utility | 14,785 | 13.4 | 12,434 | 13.4 | ||||||||||||
Finance | 13,756 | 12.5 | 14,996 | 16.1 | ||||||||||||
Communications | 6,580 | 6.0 | 5,714 | 6.1 | ||||||||||||
Other | 2,896 | 2.6 | 3,713 | 4.0 | ||||||||||||
Total | $ | 110,217 | 100.0 | % | $ | 92,982 | 100.0 | % | ||||||||
(1) | Includes U.S. Dollar-denominated debt obligations of foreign obligors and other foreign fixed maturity security investments. |
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
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 | $ | 1,038 | 0.3 | % | $ | 1,469 | 0.5 | % | ||||||||
Holdings in ten issuers with the largest exposures | $ | 7,506 | 2.3 | % | $ | 8,446 | 2.8 | % |
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
By security type: | ||||||||||||||||
Collateralized mortgage obligations | $ | 24,480 | 55.6 | % | $ | 26,025 | 72.2 | % | ||||||||
Pass-through securities | 19,540 | 44.4 | 10,003 | 27.8 | ||||||||||||
Total RMBS | $ | 44,020 | 100.0 | % | $ | 36,028 | 100.0 | % | ||||||||
By risk profile: | ||||||||||||||||
Agency | $ | 33,334 | 75.7 | % | $ | 24,409 | 67.8 | % | ||||||||
Prime | 6,775 | 15.4 | 8,254 | 22.9 | ||||||||||||
Alternative residential mortgage loans | 3,911 | 8.9 | 3,365 | 9.3 | ||||||||||||
Total RMBS | $ | 44,020 | 100.0 | % | $ | 36,028 | 100.0 | % | ||||||||
Portion rated Aaa/AAA (1) | $ | 35,626 | 80.9 | % | $ | 33,265 | 92.3 | % | ||||||||
Portion rated NAIC 1 (2) | $ | 38,464 | 87.4 | % | $ | 34,513 | 95.8 | % | ||||||||
(1) | Based on rating agency designations, without adjustment for the revised National Association of Insurance Commissioners (“NAIC”) methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS held by the Company’s domestic insurance subsidiaries. Non-agency RMBS held by the Company’s domestic insurance subsidiaries at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-45
Table of Contents
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Vintage Year: | ||||||||||||||||
2004 & Prior | $ | 109 | 2.8 | % | $ | 250 | 7.4 | % | ||||||||
2005 | 1,395 | 35.7 | 1,493 | 44.4 | ||||||||||||
2006 | 825 | 21.1 | 857 | 25.5 | ||||||||||||
2007 | 814 | 20.8 | 765 | 22.7 | ||||||||||||
2008 | — | — | — | — | ||||||||||||
2009 | 768 | 19.6 | — | — | ||||||||||||
Total | $ | 3,911 | 100.0 | % | $ | 3,365 | 100.0 | % | ||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Total | Amount | Total | |||||||||||||
(In millions) | ||||||||||||||||
Net unrealized loss | $ | 1,248 | $ | 1,951 | ||||||||||||
Rated Aa/AA or better (1) | 26.3 | % | 63.4 | % | ||||||||||||
Rated NAIC 1 (2) | 31.3 | 66.7 | ||||||||||||||
Fixed rate | 89.3 | 87.9 | ||||||||||||||
Hybrid ARM | 10.7 | 12.1 | ||||||||||||||
Total Alt-A RMBS | 100.0 | % | 100.0 | % | ||||||||||||
(1) | Based on rating agency designations, without adjustment for the revised NAIC methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS held by the Company’s domestic insurance subsidiaries. Non-agency RMBS held by the Company’s domestic insurance subsidiaries at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-46
Table of Contents
December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||
Below | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||||||||||||||||||||||
Aaa | Aa | A | Baa | Grade | Total | |||||||||||||||||||||||||||||||||||||||||||
Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | |||||||||||||||||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
2003 & Prior | $ | 6,836 | $ | 6,918 | $ | 394 | $ | 365 | $ | 162 | $ | 140 | $ | 52 | $ | 41 | $ | 36 | $ | 18 | $ | 7,480 | $ | 7,482 | ||||||||||||||||||||||||
2004 | 2,240 | 2,255 | 200 | 166 | 114 | 71 | 133 | 87 | 88 | 58 | 2,775 | 2,637 | ||||||||||||||||||||||||||||||||||||
2005 | 2,956 | 2,853 | 144 | 108 | 85 | 65 | 39 | 24 | 57 | 51 | 3,281 | 3,101 | ||||||||||||||||||||||||||||||||||||
2006 | 1,087 | 1,009 | 162 | 139 | 380 | 323 | 187 | 129 | 123 | 48 | 1,939 | 1,648 | ||||||||||||||||||||||||||||||||||||
2007 | 432 | 314 | 13 | 12 | 361 | 257 | 234 | 153 | 35 | 13 | 1,075 | 749 | ||||||||||||||||||||||||||||||||||||
2008 | 5 | 5 | — | — | — | — | — | — | — | — | 5 | 5 | ||||||||||||||||||||||||||||||||||||
2009 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | $ | 13,556 | $ | 13,354 | $ | 913 | $ | 790 | $ | 1,102 | $ | 856 | $ | 645 | $ | 434 | $ | 339 | $ | 188 | $ | 16,555 | $ | 15,622 | ||||||||||||||||||||||||
Ratings Distribution | 85.4 | % | 5.1 | % | 5.5 | % | 2.8 | % | 1.2 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||
Below | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||||||||||||||||||||||
Aaa | Aa | A | Baa | Grade | Total | |||||||||||||||||||||||||||||||||||||||||||
Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | |||||||||||||||||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
2003 & Prior | $ | 5,428 | $ | 4,975 | $ | 424 | $ | 272 | $ | 213 | $ | 124 | $ | 51 | $ | 24 | $ | 42 | $ | 17 | $ | 6,158 | $ | 5,412 | ||||||||||||||||||||||||
2004 | 2,630 | 2,255 | 205 | 100 | 114 | 41 | 47 | 11 | 102 | 50 | 3,098 | 2,457 | ||||||||||||||||||||||||||||||||||||
2005 | 3,403 | 2,664 | 187 | 49 | 40 | 13 | 5 | 1 | 18 | 10 | 3,653 | 2,737 | ||||||||||||||||||||||||||||||||||||
2006 | 1,825 | 1,348 | 110 | 39 | 25 | 14 | 94 | 36 | — | — | 2,054 | 1,437 | ||||||||||||||||||||||||||||||||||||
2007 | 999 | 535 | 43 | 28 | 63 | 28 | 10 | 9 | — | — | 1,115 | 600 | ||||||||||||||||||||||||||||||||||||
2008 | 1 | 1 | — | — | — | — | — | — | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||||
2009 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | $ | 14,286 | $ | 11,778 | $ | 969 | $ | 488 | $ | 455 | $ | 220 | $ | 207 | $ | 81 | $ | 162 | $ | 77 | $ | 16,079 | $ | 12,644 | ||||||||||||||||||||||||
Ratings Distribution | 93.2 | % | 3.9 | % | 1.7 | % | 0.6 | % | 0.6 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
F-47
Table of Contents
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
By collateral type: | ||||||||||||||||
Credit card loans | $ | 7,057 | 53.6 | % | $ | 5,190 | 49.3 | % | ||||||||
Student loans | 1,855 | 14.1 | 1,085 | 10.3 | ||||||||||||
RMBS backed bysub-prime mortgage loans | 1,044 | 7.9 | 1,142 | 10.9 | ||||||||||||
Automobile loans | 963 | 7.3 | 1,051 | 10.0 | ||||||||||||
Other loans | 2,243 | 17.1 | 2,055 | 19.5 | ||||||||||||
Total | $ | 13,162 | 100.0 | % | $ | 10,523 | 100.0 | % | ||||||||
Portion rated Aaa/AAA (1) | $ | 9,354 | 71.1 | % | $ | 7,934 | 75.4 | % | ||||||||
Portion rated NAIC 1 (2) | $ | 11,573 | 87.9 | % | $ | 9,393 | 89.3 | % | ||||||||
RMBS backed bysub-prime mortgage loans — portion credit enhanced by financial guarantor insurers | 37.6 | % | 37.2 | % | ||||||||||||
Of the 37.6% and 37.2% credit enhanced, the financial guarantor insurers were rated as follows: | ||||||||||||||||
By financial guarantor insurers rated Aa/AA | 17.2 | % | 18.8 | % | ||||||||||||
By financial guarantor insurers rated A | 7.9 | % | — | % | ||||||||||||
By financial guarantor insurers rated Baa/BBB | — | % | 37.3 | % |
(1) | Based on rating agency designations, without adjustment for the revised NAIC methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS backed bysub-prime mortgage loans held by the Company’s domestic insurance subsidiaries. Non-agency RMBS backed bysub-prime mortgage loans held by the Company’s domestic insurance subsidiaries at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-48
Table of Contents
December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||
Below | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||||||||||||||||||||||
Aaa | Aa | A | Baa | Grade | Total | |||||||||||||||||||||||||||||||||||||||||||
Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | |||||||||||||||||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
2003 & Prior | $ | 57 | $ | 48 | $ | 73 | $ | 58 | $ | 11 | $ | 8 | $ | 7 | $ | 6 | $ | 98 | $ | 56 | $ | 246 | $ | 176 | ||||||||||||||||||||||||
2004 | 99 | 68 | 316 | 222 | 39 | 27 | 24 | 15 | 31 | 15 | 509 | 347 | ||||||||||||||||||||||||||||||||||||
2005 | 64 | 45 | 226 | 144 | 40 | 26 | 24 | 18 | 209 | 139 | 563 | 372 | ||||||||||||||||||||||||||||||||||||
2006 | 6 | 6 | 62 | 22 | — | — | 22 | 5 | 115 | 72 | 205 | 105 | ||||||||||||||||||||||||||||||||||||
2007 | — | — | 78 | 28 | — | — | — | — | 36 | 16 | 114 | 44 | ||||||||||||||||||||||||||||||||||||
2008 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
2009 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | $ | 226 | $ | 167 | $ | 755 | $ | 474 | $ | 90 | $ | 61 | $ | 77 | $ | 44 | $ | 489 | $ | 298 | $ | 1,637 | $ | 1,044 | ||||||||||||||||||||||||
Ratings Distribution | 16.0 | % | 45.4 | % | 5.8 | % | 4.2 | % | 28.6 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||
Below | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||||||||||||||||||||||
Aaa | Aa | A | Baa | Grade | Total | |||||||||||||||||||||||||||||||||||||||||||
Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | Cost or | Estimated | |||||||||||||||||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
2003 & Prior | $ | 96 | $ | 77 | $ | 92 | $ | 72 | $ | 26 | $ | 16 | $ | 83 | $ | 53 | $ | 8 | $ | 4 | $ | 305 | $ | 222 | ||||||||||||||||||||||||
2004 | 129 | 70 | 372 | 204 | 5 | 3 | 37 | 28 | 2 | 1 | 545 | 306 | ||||||||||||||||||||||||||||||||||||
2005 | 357 | 227 | 186 | 114 | 20 | 11 | 79 | 46 | 4 | 4 | 646 | 402 | ||||||||||||||||||||||||||||||||||||
2006 | 146 | 106 | 69 | 30 | 15 | 10 | 26 | 7 | 2 | 2 | 258 | 155 | ||||||||||||||||||||||||||||||||||||
2007 | — | — | 78 | 33 | 35 | 21 | 2 | 2 | 3 | 1 | 118 | 57 | ||||||||||||||||||||||||||||||||||||
2008 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Total | $ | 728 | $ | 480 | $ | 797 | $ | 453 | $ | 101 | $ | 61 | $ | 227 | $ | 136 | $ | 19 | $ | 12 | $ | 1,872 | $ | 1,142 | ||||||||||||||||||||||||
Ratings Distribution | 42.0 | % | 39.7 | % | 5.3 | % | 11.9 | % | 1.1 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
F-49
Table of Contents
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(In millions) | ||||||||||||||||
Due in one year or less | $ | 6,845 | $ | 6,924 | $ | 5,556 | $ | 5,491 | ||||||||
Due after one year through five years | 38,408 | 39,399 | 33,604 | 30,884 | ||||||||||||
Due after five years through ten years | 40,448 | 41,568 | 41,481 | 36,895 | ||||||||||||
Due after ten years | 67,838 | 66,947 | 58,547 | 55,786 | ||||||||||||
Subtotal | 153,539 | 154,838 | 139,188 | 129,056 | ||||||||||||
RMBS, CMBS and ABS | 76,170 | 72,804 | 70,320 | 59,195 | ||||||||||||
Total fixed maturity securities | $ | 229,709 | $ | 227,642 | $ | 209,508 | $ | 188,251 | ||||||||
F-50
Table of Contents
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Fixed maturity securities that were temporarily impaired | $ | (1,208 | ) | $ | (21,246 | ) | $ | 3,479 | ||||
Fixed maturity securities with noncredit OTTI losses in other comprehensive loss | (859 | ) | — | — | ||||||||
Total fixed maturity securities | (2,067 | ) | (21,246 | ) | 3,479 | |||||||
Equity securities | (103 | ) | (934 | ) | 159 | |||||||
Derivatives | (144 | ) | (2 | ) | (373 | ) | ||||||
Other | 71 | 53 | 3 | |||||||||
Subtotal | (2,243 | ) | (22,129 | ) | 3,268 | |||||||
Amounts allocated from: | ||||||||||||
Insurance liability loss recognition | (118 | ) | 42 | (608 | ) | |||||||
DAC and VOBA on which noncredit OTTI losses have been recognized | 71 | — | — | |||||||||
DAC and VOBA | 145 | 3,025 | (327 | ) | ||||||||
Policyholder dividend obligation | — | — | (789 | ) | ||||||||
Subtotal | 98 | 3,067 | (1,724 | ) | ||||||||
Deferred income tax benefit (expense) on which noncredit OTTI losses have been recognized | 275 | — | — | |||||||||
Deferred income tax benefit (expense) | 539 | 6,508 | (423 | ) | ||||||||
Net unrealized investment gains (losses) | (1,331 | ) | (12,554 | ) | 1,121 | |||||||
Net unrealized investment gains (losses) attributable to noncontrolling interests | 1 | (10 | ) | (150 | ) | |||||||
Net unrealized investment gains (losses) attributable to MetLife, Inc. | $ | (1,330 | ) | $ | (12,564 | ) | $ | 971 | ||||
F-51
Table of Contents
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance, beginning of period | $ | (12,564 | ) | $ | 971 | $ | 1,864 | |||||
Cumulative effect of changes in accounting principle, net of income tax | (76 | ) | (10 | ) | — | |||||||
Fixed maturity securities on which noncredit OTTI losses have been recognized | (733 | ) | — | — | ||||||||
Unrealized investment gains (losses) during the year | 20,745 | (25,536 | ) | (2,149 | ) | |||||||
Unrealized investment losses of subsidiaries at the date of disposal | — | 149 | — | |||||||||
Unrealized investment gains (losses) relating to: | ||||||||||||
Insurance liability gain (loss) recognition | (160 | ) | 650 | 541 | ||||||||
DAC and VOBA on which noncredit OTTI losses have been recognized | 61 | — | — | |||||||||
DAC and VOBA | (2,880 | ) | 3,370 | (138 | ) | |||||||
DAC and VOBA of subsidiary at date of disposal | — | (18 | ) | — | ||||||||
Policyholder dividend obligation | — | 789 | 273 | |||||||||
Deferred income tax benefit (expense) on which noncredit OTTI losses have been recognized | 235 | — | — | |||||||||
Deferred income tax benefit (expense) | (5,969 | ) | 6,991 | 571 | ||||||||
Deferred income tax benefit (expense) of subsidiaries at date of disposal | — | (60 | ) | — | ||||||||
Net unrealized investment gains (losses) | (1,341 | ) | (12,704 | ) | 962 | |||||||
Net unrealized investment gains (losses) attributable to noncontrolling interests | 11 | (10 | ) | 1 | ||||||||
Net unrealized investment gains (losses) attributable to noncontrolling interests of subsidiary at date of disposal | — | 150 | 8 | |||||||||
Balance, end of period | $ | (1,330 | ) | $ | (12,564 | ) | $ | 971 | ||||
Change in net unrealized investment gains (losses) | $ | 11,223 | $ | (13,665 | ) | $ | (902 | ) | ||||
Change in net unrealized investment gains (losses) attributable to noncontrolling interests | 11 | (10 | ) | 1 | ||||||||
Change in net unrealized investment gains (losses) attributable to noncontrolling interests of subsidiary at date of disposal | — | 150 | 8 | |||||||||
Change in net unrealized investment gains (losses) attributable to MetLife, Inc.’s common shareholders | $ | 11,234 | $ | (13,525 | ) | $ | (893 | ) | ||||
F-52
Table of Contents
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 | $ | 8,641 | $ | 395 | $ | 18,004 | $ | 2,314 | $ | 26,645 | $ | 2,709 | ||||||||||||
RMBS | 5,623 | 119 | 10,268 | 2,438 | 15,891 | 2,557 | ||||||||||||||||||
Foreign corporate securities | 3,786 | 139 | 7,282 | 1,096 | 11,068 | 1,235 | ||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 15,051 | 990 | 51 | 20 | 15,102 | 1,010 | ||||||||||||||||||
CMBS | 2,052 | 29 | 5,435 | 1,095 | 7,487 | 1,124 | ||||||||||||||||||
ABS | 1,259 | 143 | 5,875 | 1,156 | 7,134 | 1,299 | ||||||||||||||||||
Foreign government securities | 2,318 | 55 | 507 | 84 | 2,825 | 139 | ||||||||||||||||||
State and political subdivision securities | 2,086 | 94 | 1,843 | 317 | 3,929 | 411 | ||||||||||||||||||
Other fixed maturity securities | 6 | 2 | — | — | 6 | 2 | ||||||||||||||||||
Total fixed maturity securities | $ | 40,822 | $ | 1,966 | $ | 49,265 | $ | 8,520 | $ | 90,087 | $ | 10,486 | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Common stock | 56 | 7 | 14 | 1 | 70 | 8 | ||||||||||||||||||
Non-redeemable preferred stock | 66 | 41 | 930 | 226 | 996 | 267 | ||||||||||||||||||
Total equity securities | $ | 122 | $ | 48 | $ | 944 | $ | 227 | $ | 1,066 | $ | 275 | ||||||||||||
Total number of securities in an unrealized loss position | 2,210 | 3,333 | ||||||||||||||||||||||
F-53
Table of Contents
December 31, 2008 | ||||||||||||||||||||||||
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 | $ | 30,076 | $ | 4,479 | $ | 18,011 | $ | 5,423 | $ | 48,087 | $ | 9,902 | ||||||||||||
RMBS | 10,032 | 2,711 | 4,572 | 2,009 | 14,604 | 4,720 | ||||||||||||||||||
Foreign corporate securities | 15,634 | 3,157 | 6,609 | 2,527 | 22,243 | 5,684 | ||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 106 | 1 | — | — | 106 | 1 | ||||||||||||||||||
CMBS | 9,259 | 1,665 | 3,093 | 1,788 | 12,352 | 3,453 | ||||||||||||||||||
ABS | 6,412 | 1,325 | 3,777 | 2,414 | 10,189 | 3,739 | ||||||||||||||||||
Foreign government securities | 2,030 | 316 | 403 | 61 | 2,433 | 377 | ||||||||||||||||||
State and political subdivision securities | 2,035 | 405 | 948 | 537 | 2,983 | 942 | ||||||||||||||||||
Other fixed maturity securities | 20 | 3 | 2 | — | 22 | 3 | ||||||||||||||||||
Total fixed maturity securities | $ | 75,604 | $ | 14,062 | $ | 37,415 | $ | 14,759 | $ | 113,019 | $ | 28,821 | ||||||||||||
Equity securities | $ | 727 | $ | 306 | $ | 978 | $ | 672 | $ | 1,705 | $ | 978 | ||||||||||||
Total number of securities in an unrealized loss position | 9,066 | 3,539 | ||||||||||||||||||||||
F-54
Table of Contents
December 31, 2009 | ||||||||||||||||||||||||
Cost or Amortized Cost | Gross Unrealized Loss | Number of 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 | $ | 35,163 | $ | 2,658 | $ | 933 | $ | 713 | 1,725 | 186 | ||||||||||||||
Six months or greater but less than nine months | 4,908 | 674 | 508 | 194 | 124 | 49 | ||||||||||||||||||
Nine months or greater but less than twelve months | 1,723 | 1,659 | 167 | 517 | 106 | 79 | ||||||||||||||||||
Twelve months or greater | 41,721 | 12,067 | 3,207 | 4,247 | 2,369 | 724 | ||||||||||||||||||
Total | $ | 83,515 | $ | 17,058 | $ | 4,815 | $ | 5,671 | ||||||||||||||||
Percentage of cost or amortized cost | 6 | % | 33 | % | ||||||||||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Less than six months | $ | 66 | $ | 63 | $ | 7 | $ | 14 | 199 | 8 | ||||||||||||||
Six months or greater but less than nine months | 6 | 1 | 1 | 1 | 15 | 2 | ||||||||||||||||||
Nine months or greater but less than twelve months | 13 | 94 | 2 | 39 | 8 | 6 | ||||||||||||||||||
Twelve months or greater | 610 | 488 | 73 | 138 | 50 | 24 | ||||||||||||||||||
Total | $ | 695 | $ | 646 | $ | 83 | $ | 192 | ||||||||||||||||
Percentage of cost | 12 | % | 30 | % | ||||||||||||||||||||
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December 31, 2008 | ||||||||||||||||||||||||
Cost or Amortized Cost | Gross Unrealized Loss | Number of 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 | $ | 32,658 | $ | 48,114 | $ | 2,358 | $ | 17,191 | 4,566 | 2,827 | ||||||||||||||
Six months or greater but less than nine months | 14,975 | 2,180 | 1,313 | 1,109 | 1,314 | 157 | ||||||||||||||||||
Nine months or greater but less than twelve months | 16,372 | 3,700 | 1,830 | 2,072 | 934 | 260 | ||||||||||||||||||
Twelve months or greater | 23,191 | 650 | 2,533 | 415 | 1,809 | 102 | ||||||||||||||||||
Total | $ | 87,196 | $ | 54,644 | $ | 8,034 | $ | 20,787 | ||||||||||||||||
Percentage of cost or amortized cost | 9 | % | 38 | % | ||||||||||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Less than six months | $ | 386 | $ | 1,190 | $ | 58 | $ | 519 | 351 | 551 | ||||||||||||||
Six months or greater but less than nine months | 33 | 413 | 6 | 190 | 8 | 32 | ||||||||||||||||||
Nine months or greater but less than twelve months | 3 | 487 | — | 194 | 5 | 15 | ||||||||||||||||||
Twelve months or greater | 171 | — | 11 | — | 20 | — | ||||||||||||||||||
Total | $ | 593 | $ | 2,090 | $ | 75 | $ | 903 | ||||||||||||||||
Percentage of cost | 13 | % | 43 | % | ||||||||||||||||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
Sector: | ||||||||
U.S. corporate securities | 25 | % | 33 | % | ||||
RMBS | 24 | 16 | ||||||
ABS | 12 | 13 | ||||||
Foreign corporate securities | 11 | 19 | ||||||
CMBS | 10 | 11 | ||||||
U.S. Treasury, agency and government guaranteed securities | 9 | — | ||||||
State and political subdivision securities | 4 | 3 | ||||||
Other | 5 | 5 | ||||||
Total | 100 | % | 100 | % | ||||
Industry: | ||||||||
Mortgage-backed | 34 | % | 27 | % | ||||
Finance | 22 | 24 | ||||||
Asset-backed | 12 | 13 | ||||||
U.S. Treasury, agency and government guaranteed securities | 9 | — | ||||||
Consumer | 4 | 11 | ||||||
Utility | 4 | 8 | ||||||
State and political subdivision securities | 4 | 3 | ||||||
Communications | 2 | 5 | ||||||
Industrial | 1 | 4 | ||||||
Other | 8 | 5 | ||||||
Total | 100 | % | 100 | % | ||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Fixed Maturity | Equity | Fixed Maturity | Equity | |||||||||||||
Securities | Securities | Securities | Securities | |||||||||||||
(In millions, except number of securities) | ||||||||||||||||
Number of securities | 223 | 9 | 699 | 33 | ||||||||||||
Total gross unrealized loss | $ | 4,465 | $ | 132 | $ | 14,485 | $ | 699 | ||||||||
Percentage of total gross unrealized loss | 43 | % | 48 | % | 50 | % | 71 | % |
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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 | % A | ||||||||||||||||||||||||||
Unrealized | Unrealized | Equity | Unrealized | Non-Redeemable | Unrealized | % of All | Rated or | |||||||||||||||||||||||||
Loss | Loss | Securities | Loss | Preferred Stock | Loss | Industries | Better | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Less than six months | $ | 14 | $ | 13 | 93 | % | $ | 9 | 69 | % | $ | 9 | 100 | % | 3 | % | ||||||||||||||||
Six months or greater but less than twelve months | 40 | 39 | 98 | % | 39 | 100 | % | 37 | 95 | % | 99 | % | ||||||||||||||||||||
Twelve months or greater | 138 | 138 | 100 | % | 138 | 100 | % | 136 | 99 | % | 62 | % | ||||||||||||||||||||
All equity securities with a gross unrealized loss of 20% or more | $ | 192 | $ | 190 | 99 | % | $ | 186 | 98 | % | $ | 182 | 98 | % | 67 | % | ||||||||||||||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Total losses on fixed maturity securities: | ||||||||||||
Total OTTI losses recognized | $ | (2,439 | ) | $ | (1,296 | ) | $ | (78 | ) | |||
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive loss | 939 | — | — | |||||||||
Net OTTI losses on fixed maturity securities recognized in earnings | (1,500 | ) | (1,296 | ) | (78 | ) | ||||||
Fixed maturity securities — net gains (losses) on sales and disposals | (163 | ) | (657 | ) | (537 | ) | ||||||
Total losses on fixed maturity securities | (1,663 | ) | (1,953 | ) | (615 | ) | ||||||
Other net investment gains (losses): | ||||||||||||
Equity securities | (399 | ) | (253 | ) | 164 | |||||||
Mortgage loans | (442 | ) | (136 | ) | 3 | |||||||
Real estate and real estate joint ventures | (164 | ) | (18 | ) | 46 | |||||||
Other limited partnership interests | (356 | ) | (140 | ) | 16 | |||||||
Freestanding derivatives | (6,624 | ) | 6,560 | 61 | ||||||||
Embedded derivatives | 1,758 | (2,650 | ) | (321 | ) | |||||||
Other | 118 | 402 | 68 | |||||||||
Total net investment gains (losses) | $ | (7,772 | ) | $ | 1,812 | $ | (578 | ) | ||||
Fixed Maturity Securities | Equity Securities | Total | ||||||||||||||||||||||||||||||||||
Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||
Proceeds | $ | 38,972 | $ | 62,495 | $ | 78,001 | $ | 950 | $ | 2,107 | $ | 1,112 | $ | 39,922 | $ | 64,602 | $ | 79,113 | ||||||||||||||||||
Gross investment gains | 947 | 858 | 554 | 134 | 440 | 226 | 1,081 | 1,298 | 780 | |||||||||||||||||||||||||||
Gross investment losses | (1,110 | ) | (1,515 | ) | (1,091 | ) | (133 | ) | (263 | ) | (43 | ) | (1,243 | ) | (1,778 | ) | (1,134 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings: | ||||||||||||||||||||||||||||||||||||
Credit-related | (1,137 | ) | (1,138 | ) | (58 | ) | — | — | — | (1,137 | ) | (1,138 | ) | (58 | ) | |||||||||||||||||||||
Other (1) | (363 | ) | (158 | ) | (20 | ) | (400 | ) | (430 | ) | (19 | ) | (763 | ) | (588 | ) | (39 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings | (1,500 | ) | (1,296 | ) | (78 | ) | (400 | ) | (430 | ) | (19 | ) | (1,900 | ) | (1,726 | ) | (97 | ) | ||||||||||||||||||
Net investment gains (losses) | $ | (1,663 | ) | $ | (1,953 | ) | $ | (615 | ) | $ | (399 | ) | $ | (253 | ) | $ | 164 | $ | (2,062 | ) | $ | (2,206 | ) | $ | (451 | ) | ||||||||||
(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. |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
U.S. and foreign corporate securities: | ||||||||||||
Finance | $ | 459 | $ | 673 | $ | 18 | ||||||
Communications | 235 | 134 | — | |||||||||
Consumer | 211 | 107 | — | |||||||||
Utility | 89 | 5 | 1 | |||||||||
Industrial | 30 | 26 | 18 | |||||||||
Other | 26 | 185 | 28 | |||||||||
Total U.S. and foreign corporate securities | 1,050 | 1,130 | 65 | |||||||||
RMBS | 193 | — | — | |||||||||
ABS | 168 | 99 | 13 | |||||||||
CMBS | 88 | 65 | — | |||||||||
Foreign government securities | 1 | 2 | — | |||||||||
Total | $ | 1,500 | $ | 1,296 | $ | 78 | ||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Sector: | ||||||||||||
Non-redeemable preferred stock | $ | 333 | $ | 319 | $ | 1 | ||||||
Common stock | 67 | 111 | 18 | |||||||||
Total | $ | 400 | $ | 430 | $ | 19 | ||||||
Industry: | ||||||||||||
Financial services industry: | ||||||||||||
Perpetual hybrid securities | $ | 310 | $ | 90 | $ | — | ||||||
Common and remaining non-redeemable preferred stock | 30 | 251 | 1 | |||||||||
Total financial services industry | 340 | 341 | 1 | |||||||||
Other | 60 | 89 | 18 | |||||||||
Total | $ | 400 | $ | 430 | $ | 19 | ||||||
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Year Ended December 31, 2009 | ||||
(In millions) | ||||
Balance, beginning of period | $ | — | ||
Credit loss component of OTTI loss not reclassified to other comprehensive loss in the cumulative effect transition adjustment | 230 | |||
Additions: | ||||
Initial impairments — credit loss OTTI recognized on securities not previously impaired | 311 | |||
Additional impairments — credit loss OTTI recognized on securities previously impaired | 91 | |||
Reductions: | ||||
Due to sales (or maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired | (49 | ) | ||
Due to increases in cash flows — accretion of previous credit loss OTTI | (2 | ) | ||
Balance, end of period | $ | 581 | ||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Fixed maturity securities | $ | 11,617 | $ | 13,577 | $ | 14,576 | ||||||
Equity securities | 178 | 258 | 265 | |||||||||
Trading securities | 400 | (193 | ) | 50 | ||||||||
Mortgage loans | 2,743 | 2,855 | 2,811 | |||||||||
Policy loans | 648 | 601 | 572 | |||||||||
Real estate and real estate joint ventures | (196 | ) | 574 | 943 | ||||||||
Other limited partnership interests | 174 | (170 | ) | 1,309 | ||||||||
Cash, cash equivalents and short-term investments | 129 | 353 | 491 | |||||||||
International joint ventures (1) | (115 | ) | 43 | 17 | ||||||||
Other | 205 | 350 | 320 | |||||||||
Total investment income | 15,783 | 18,248 | 21,354 | |||||||||
Less: Investment expenses | 945 | 1,957 | 3,297 | |||||||||
Net investment income | $ | 14,838 | $ | 16,291 | $ | 18,057 | ||||||
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(1) | Amounts are presented net of changes in estimated fair value of derivatives related to economic hedges of the Company’s investment in these equity method international joint investments that do not qualify for hedge accounting of ($143) million, $178 million and $12 million for the years ended December 31, 2009, 2008 and 2007, respectively. The current year losses were primarily attributable to losses on equity derivatives and losses on foreign currency derivatives (both of which are used to hedge embedded derivative risk) due to improving equity markets in the current period and the U.S. Dollar weakening against several major foreign currencies. In addition, included in the equity in earnings of the joint ventures were losses attributable to the narrowing of the Company’s own credit spread, which is included in the valuation of certain liabilities, including embedded derivatives, that are carried at estimated fair value. |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Securities on loan: | ||||||||
Cost or amortized cost | $ | 21,012 | $ | 20,791 | ||||
Estimated fair value | $ | 20,949 | $ | 22,885 | ||||
Aging of cash collateral liability: | ||||||||
Open (1) | $ | 3,290 | $ | 5,118 | ||||
Less than thirty days | 13,605 | 14,711 | ||||||
Thirty days or greater but less than sixty days | 3,534 | 3,472 | ||||||
Sixty days or greater but less than ninety days | 92 | — | ||||||
Ninety days or greater | 995 | — | ||||||
Total cash collateral liability | $ | 21,516 | $ | 23,301 | ||||
Security collateral on deposit from counterparties | $ | 6 | $ | 279 | ||||
Reinvestment portfolio — estimated fair value | $ | 20,339 | $ | 19,509 | ||||
(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. |
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Invested assets on deposit: | ||||||||
Regulatory agencies (1) | $ | 1,383 | $ | 1,282 | ||||
Invested assets held in trust: | ||||||||
Collateral financing arrangements (2) | 5,653 | 4,431 | ||||||
Reinsurance arrangements (3) | 2,719 | 2,037 | ||||||
Invested assets pledged as collateral: | ||||||||
Debt and funding agreements — FHLB of NY (4) | 20,612 | 20,880 | ||||||
Debt and funding agreements — FHLB of Boston (4) | 419 | 1,284 | ||||||
Funding agreements — Farmer MAC (5) | 2,871 | 2,875 | ||||||
Federal Reserve Bank of New York (6) | 1,537 | 1,577 | ||||||
Collateral financing arrangements (7) | 80 | 316 | ||||||
Derivative transactions (8) | 1,671 | 1,744 | ||||||
Short sale agreements (9) | 496 | 346 | ||||||
Other | — | 180 | ||||||
Total invested assets on deposit, held in trust and pledged as collateral | $ | 37,441 | $ | 36,952 | ||||
(1) | The Company had investment assets on deposit with regulatory agencies consisting primarily of fixed maturity and equity securities. | |
(2) | The Company held in trust cash and securities, primarily fixed maturity and equity securities, to satisfy collateral requirements. | |
(3) | The Company has pledged certain investments, primarily fixed maturity securities, in connection with certain reinsurance transactions. | |
(4) | The Company has pledged fixed maturity securities and mortgage loans in support of its debt and funding agreements with the Federal Home Loan Bank of New York (“FHLB of NY”) and has pledged fixed maturity securities to the Federal Home Loan Bank of Boston (“FHLB of Boston”). The nature of these Federal Home Loan Bank arrangements is described in Note 8. | |
(5) | The Company has pledged certain agricultural real estate mortgage loans in connection with funding agreements with the Federal Agricultural Mortgage Corporation (“Farmer MAC”). The nature of the Farmer MAC arrangements is described in Note 8. | |
(6) | The Company has pledged qualifying mortgage loans and fixed maturity securities in connection with collateralized borrowings from the Federal Reserve Bank of New York’s Term Auction Facility. The nature of the Federal Reserve Bank of New York arrangements is described in Note 11. | |
(7) | The Holding Company has pledged certain collateral in support of the collateral financing arrangements described in Note 12. |
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(8) | Certain of the Company’s invested assets are pledged as collateral for various derivative transactions as described in Note 4. | |
(9) | Certain of the Company’s trading securities and cash and cash equivalents are pledged to secure liabilities associated with short sale agreements in the trading securities portfolio as described in the following section. |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Trading securities — at estimated fair value | $ | 2,384 | $ | 946 | ||||
Short sale agreement liabilities — at estimated fair value (included in other liabilities) | $ | 106 | $ | 57 | ||||
Investments pledged to secure short sale agreement liabilities | $ | 496 | $ | 346 |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Net investment income (1) | $ | 400 | $ | (193 | ) | $ | 50 | |||||
Changes in estimated fair value included in net investment income | $ | 309 | $ | (174 | ) | $ | (4 | ) |
(1) | Includes 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 and the related short sale agreement liabilities. |
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Mortgage loansheld-for-investment: | ||||||||||||||||
Commercial mortgage loans | $ | 34,587 | 67.9 | % | $ | 35,965 | 70.1 | % | ||||||||
Agricultural mortgage loans | 12,140 | 23.8 | 12,234 | 23.8 | ||||||||||||
Residential and consumer loans | 1,454 | 2.9 | 1,153 | 2.2 | ||||||||||||
Total mortgage loansheld-for-investment | 48,181 | 94.6 | % | 49,352 | 96.1 | % | ||||||||||
Mortgage loansheld-for-sale: | ||||||||||||||||
Residential — fair value option | 2,470 | 4.9 | 1,975 | 3.8 | ||||||||||||
Commercial and residential — lower of amortized cost or estimated fair value | 258 | 0.5 | 37 | 0.1 | ||||||||||||
Total mortgage loansheld-for-sale | 2,728 | 5.4 | 2,012 | 3.9 | ||||||||||||
Total mortgage loans, net | $ | 50,909 | 100.0 | % | $ | 51,364 | 100.0 | % | ||||||||
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Region: | ||||||||||||||||
Pacific | $ | 8,684 | 25.1 | % | $ | 8,837 | 24.6 | % | ||||||||
South Atlantic | 7,342 | 21.2 | 8,101 | 22.5 | ||||||||||||
Middle Atlantic | 5,948 | 17.2 | 5,931 | 16.5 | ||||||||||||
International | 3,564 | 10.3 | 3,414 | 9.5 | ||||||||||||
West South Central | 2,870 | 8.3 | 3,070 | 8.5 | ||||||||||||
East North Central | 2,487 | 7.2 | 2,591 | 7.2 | ||||||||||||
New England | 1,414 | 4.1 | 1,529 | 4.3 | ||||||||||||
Mountain | 944 | 2.7 | 1,052 | 2.9 | ||||||||||||
West North Central | 641 | 1.9 | 716 | 2.0 | ||||||||||||
East South Central | 443 | 1.3 | 468 | 1.3 | ||||||||||||
Other | 250 | 0.7 | 256 | 0.7 | ||||||||||||
Total | $ | 34,587 | 100.0 | % | $ | 35,965 | 100.0 | % | ||||||||
Property Type: | ||||||||||||||||
Office | $ | 14,986 | 43.3 | % | $ | 15,307 | 42.6 | % | ||||||||
Retail | 7,870 | 22.8 | 8,038 | 22.3 | ||||||||||||
Apartments | 3,696 | 10.7 | 4,113 | 11.4 | ||||||||||||
Hotel | 2,947 | 8.5 | 3,078 | 8.6 | ||||||||||||
Industrial | 2,759 | 8.0 | 2,901 | 8.1 | ||||||||||||
Other | 2,329 | 6.7 | 2,528 | 7.0 | ||||||||||||
Total | $ | 34,587 | 100.0 | % | $ | 35,965 | 100.0 | % | ||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance, January 1, | $ | 304 | $ | 197 | $ | 182 | ||||||
Additions | 475 | 200 | 76 | |||||||||
Deductions | (58 | ) | (93 | ) | (61 | ) | ||||||
Balance, December 31, | $ | 721 | $ | 304 | $ | 197 | ||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Impaired loans with valuation allowances | $ | 316 | $ | 259 | ||||
Impaired loans without valuation allowances | 106 | 52 | ||||||
Subtotal | 422 | 311 | ||||||
Less: Valuation allowances on impaired loans | 123 | 69 | ||||||
Impaired loans, net | $ | 299 | $ | 242 | ||||
As of and for the | ||||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Impaired loans — average investment during the period | $ | 338 | $ | 389 | $ | 453 | ||||||
Impaired loans — interest income recognized — accrual basis | $ | 1 | $ | 10 | $ | 38 | ||||||
Impaired loans — interest income recognized — cash basis | $ | 8 | $ | 12 | $ | 19 | ||||||
Restructured loans — amount | $ | 37 | $ | 1 | $ | 2 | ||||||
Restructured loans — interest income recognized | $ | — | $ | 1 | $ | 1 | ||||||
Loans 90 days or more past due, interest still accruing — amortized cost | $ | 14 | $ | 2 | $ | 4 | ||||||
Loans 90 days or more past due, interest no longer accruing — amortized cost | $ | 62 | $ | 11 | $ | 28 | ||||||
Loans in foreclosure — amortized cost | $ | 91 | $ | 28 | $ | 12 |
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Real estate | $ | 5,435 | 78.8 | % | $ | 5,351 | 70.6 | % | ||||||||
Accumulated depreciation | (1,408 | ) | (20.4 | ) | (1,340 | ) | (17.7 | ) | ||||||||
Net real estate | 4,027 | 58.4 | 4,011 | 52.9 | ||||||||||||
Real estate joint ventures and funds | 2,698 | 39.1 | 3,522 | 46.4 | ||||||||||||
Foreclosed real estate | 127 | 1.9 | 2 | — | ||||||||||||
Real estateheld-for-investment | 6,852 | 99.4 | 7,535 | 99.3 | ||||||||||||
Real estateheld-for-sale | 44 | 0.6 | 51 | 0.7 | ||||||||||||
Total real estate holdings | $ | 6,896 | 100.0 | % | $ | 7,586 | 100.0 | % | ||||||||
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Office | $ | 3,557 | 52 | % | $ | 3,489 | 46 | % | ||||||||
Apartments | 1,438 | 21 | 1,602 | 21 | ||||||||||||
Real estate investment funds | 504 | 7 | 1,080 | 14 | ||||||||||||
Retail | 467 | 7 | 472 | 6 | ||||||||||||
Industrial | 436 | 6 | 483 | 7 | ||||||||||||
Hotel | 203 | 3 | 180 | 3 | ||||||||||||
Land | 110 | 1 | 155 | 2 | ||||||||||||
Agriculture | 57 | 1 | 24 | — | ||||||||||||
Other | 124 | 2 | 101 | 1 | ||||||||||||
Total real estate holdings | $ | 6,896 | 100 | % | $ | 7,586 | 100 | % | ||||||||
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Freestanding derivatives with positive fair values | $ | 6,133 | 48.2 | % | $ | 12,306 | 71.3 | % | ||||||||
Leveraged leases, net of non-recourse debt | 2,227 | 17.5 | 2,146 | 12.4 | ||||||||||||
Joint venture investments | 977 | 7.7 | 751 | 4.4 | ||||||||||||
MSRs | 878 | 6.9 | 191 | 1.1 | ||||||||||||
Tax credit partnerships | 719 | 5.7 | 503 | 2.9 | ||||||||||||
Funds withheld | 505 | 4.0 | 62 | 0.4 | ||||||||||||
Funding agreements | 409 | 3.2 | 394 | 2.3 | ||||||||||||
Other | 861 | 6.8 | 895 | 5.2 | ||||||||||||
Total | $ | 12,709 | 100.0 | % | $ | 17,248 | 100.0 | % | ||||||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Rental receivables, net | $ | 1,698 | $ | 1,486 | ||||
Estimated residual values | 1,921 | 1,913 | ||||||
Subtotal | 3,619 | 3,399 | ||||||
Unearned income | (1,392 | ) | (1,253 | ) | ||||
Investment in leveraged leases | $ | 2,227 | $ | 2,146 | ||||
F-69
Table of Contents
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Income from investment in leveraged leases (included in net investment income) | $ | 114 | $ | 116 | $ | 68 | ||||||
Less: Income tax expense on leveraged leases | (40 | ) | (40 | ) | (24 | ) | ||||||
Net income from investment in leveraged leases | $ | 74 | $ | 76 | $ | 44 | ||||||
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Estimated fair value, January 1, | $ | 191 | $ | — | ||||
Acquisition of MSRs | 117 | 350 | ||||||
Origination of MSRs | 511 | — | ||||||
Reductions due to loan payments | (113 | ) | (10 | ) | ||||
Reductions due to sales | — | — | ||||||
Changes in estimated fair value due to: | ||||||||
Changes in valuation model inputs or assumptions | 172 | (149 | ) | |||||
Other changes in estimated fair value | — | — | ||||||
Estimated fair value, December 31, | $ | 878 | $ | 191 | ||||
F-70
Table of Contents
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Total | Total | Total | Total | |||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
(In millions) | ||||||||||||||||
MRSC collateral financing arrangement (1) | $ | 3,230 | $ | — | $ | 2,361 | $ | — | ||||||||
Other limited partnership interests | 367 | 72 | 20 | 3 | ||||||||||||
Other invested assets | 27 | 1 | 10 | 3 | ||||||||||||
Real estate joint ventures | 22 | 17 | 26 | 15 | ||||||||||||
Total | $ | 3,646 | $ | 90 | $ | 2,417 | $ | 21 | ||||||||
(1) | See Note 12 for a description of the MetLife Reinsurance Company of South Carolina (“MRSC”) collateral financing arrangement. At December 31, 2009 and 2008, these assets are presented at estimated fair value and consist of the following: |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Fixed maturity securitiesavailable-for-sale: | ||||||||
U.S. corporate securities | $ | 1,049 | $ | 948 | ||||
ABS | 963 | 409 | ||||||
RMBS | 672 | 561 | ||||||
CMBS | 348 | 98 | ||||||
Foreign corporate securities | 80 | 95 | ||||||
U.S. Treasury, agency and government guaranteed securities | 33 | — | ||||||
State and political subdivision securities | 21 | 21 | ||||||
Foreign government securities | 5 | 5 | ||||||
Cash and cash equivalents (including cash held in trust of less than $1 million and $60 million, respectively) | 59 | 224 | ||||||
Total | $ | 3,230 | $ | 2,361 | ||||
F-71
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Maximum | Maximum | |||||||||||||||
Carrying | Exposure | Carrying | Exposure | |||||||||||||
Amount | to Loss (1) | Amount | to Loss (1) | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securitiesavailable-for-sale: | ||||||||||||||||
Foreign corporate securities | $ | 1,254 | $ | 1,254 | $ | 1,080 | $ | 1,080 | ||||||||
U.S. corporate securities | 1,216 | 1,216 | 992 | 992 | ||||||||||||
Other limited partnership interests | 2,543 | 2,887 | 3,496 | 4,004 | ||||||||||||
Other invested assets | 416 | 409 | 318 | 108 | ||||||||||||
Equity securitiesavailable-for-sale: | ||||||||||||||||
Non-redeemable preferred | 31 | 31 | — | — | ||||||||||||
Real estate joint ventures | 30 | 30 | 32 | 32 | ||||||||||||
Total | $ | 5,490 | $ | 5,827 | $ | 5,918 | $ | 6,216 | ||||||||
(1) | The maximum exposure to loss relating to the fixed maturity securitiesavailable-for-sale and equity securitiesavailable-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. For certain of its investments in other invested assets, the Company’s return is in the form of tax credits which are guaranteed by a creditworthy third-party. For such investments, the maximum exposure to loss is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by third parties of $232 million and $278 million at December 31, 2009 and 2008, respectively. |
4. | Derivative Financial Instruments |
F-72
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December 31, | ||||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||||
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 | $ | 38,152 | $ | 1,570 | $ | 1,255 | $ | 34,060 | $ | 4,617 | $ | 1,468 | |||||||||||||
Interest rate floors | 23,691 | 461 | 37 | 48,517 | 1,748 | — | ||||||||||||||||||||
Interest rate caps | 28,409 | 283 | — | 24,643 | 11 | — | ||||||||||||||||||||
Interest rate futures | 7,563 | 8 | 10 | 13,851 | 44 | 117 | ||||||||||||||||||||
Interest rate options | 4,050 | 117 | 57 | 2,365 | 939 | 35 | ||||||||||||||||||||
Interest rate forwards | 9,921 | 66 | 27 | 16,616 | 49 | 70 | ||||||||||||||||||||
Synthetic GICs | 4,352 | — | — | 4,260 | — | — | ||||||||||||||||||||
Foreign currency | Foreign currency swaps | 16,879 | 1,514 | 1,392 | 19,438 | 1,953 | 1,866 | |||||||||||||||||||
Foreign currency forwards | 6,485 | 83 | 57 | 5,167 | 153 | 129 | ||||||||||||||||||||
Currency options | 822 | 18 | — | 932 | 73 | — | ||||||||||||||||||||
Non-derivative hedging instruments (2) | — | — | — | 351 | — | 323 | ||||||||||||||||||||
Credit | Swap spreadlocks | — | — | — | 2,338 | — | 99 | |||||||||||||||||||
Credit default swaps | 6,723 | 74 | 130 | 5,219 | 152 | 69 | ||||||||||||||||||||
Credit forwards | 220 | 2 | 6 | — | — | — | ||||||||||||||||||||
Equity market | Equity futures | 7,405 | 44 | 21 | 6,057 | 1 | 88 | |||||||||||||||||||
Equity options | 27,175 | 1,712 | 1,018 | 5,153 | 2,150 | — | ||||||||||||||||||||
Variance swaps | 13,654 | 181 | 58 | 9,222 | 416 | — | ||||||||||||||||||||
Total rate of return swaps | 376 | — | 47 | 250 | — | 101 | ||||||||||||||||||||
Total | $ | 195,877 | $ | 6,133 | $ | 4,115 | $ | 198,439 | $ | 12,306 | $ | 4,365 | ||||||||||||||
(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. | |
(2) | The estimated fair value of non-derivative hedging instruments represents the amortized cost of the instruments, as adjusted for foreign currency transaction gains or losses. Non-derivative hedging instruments are reported within policyholder account balances in the consolidated balance sheets. |
F-73
Table of Contents
Remaining Life | ||||||||||||||||||||
After One Year | After Five Years | |||||||||||||||||||
One Year or | Through Five | Through Ten | After Ten | |||||||||||||||||
Less | Years | Years | Years | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Interest rate swaps | $ | 2,509 | $ | 9,855 | $ | 16,498 | $ | 9,290 | $ | 38,152 | ||||||||||
Interest rate floors | 325 | 2,580 | 20,786 | — | 23,691 | |||||||||||||||
Interest rate caps | 4,003 | 21,050 | 3,356 | — | 28,409 | |||||||||||||||
Interest rate futures | 7,563 | — | — | — | 7,563 | |||||||||||||||
Interest rate options | 200 | 100 | 3,750 | — | 4,050 | |||||||||||||||
Interest rate forwards | 9,921 | — | — | — | 9,921 | |||||||||||||||
Synthetic GICs | 4,352 | — | — | — | 4,352 | |||||||||||||||
Foreign currency swaps | 880 | 8,290 | 4,588 | 3,121 | 16,879 | |||||||||||||||
Foreign currency forwards | 6,485 | — | — | — | 6,485 | |||||||||||||||
Currency options | 822 | — | — | — | 822 | |||||||||||||||
Credit default swaps | 112 | 5,910 | 701 | — | 6,723 | |||||||||||||||
Credit forwards | 200 | 20 | — | — | 220 | |||||||||||||||
Equity futures | 7,405 | — | — | — | 7,405 | |||||||||||||||
Equity options | 355 | 22,007 | 4,384 | 429 | 27,175 | |||||||||||||||
Variance swaps | — | 1,259 | 11,908 | 487 | 13,654 | |||||||||||||||
Total rate of return swaps | 376 | — | — | — | 376 | |||||||||||||||
Total | $ | 45,508 | $ | 71,071 | $ | 65,971 | $ | 13,327 | $ | 195,877 | ||||||||||
F-74
Table of Contents
F-75
Table of Contents
F-76
Table of Contents
December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Fair | Fair | |||||||||||||||||||||||
Value | Value | |||||||||||||||||||||||
Notional | Notional | |||||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Amount | Assets | Liabilities | Amount | Assets | Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Fair Value Hedges: | ||||||||||||||||||||||||
Foreign currency swaps | $ | 4,807 | $ | 854 | $ | 132 | $ | 6,093 | $ | 467 | $ | 550 | ||||||||||||
Interest rate swaps | 4,824 | 500 | 75 | 4,141 | 1,338 | 153 | ||||||||||||||||||
Subtotal | 9,631 | 1,354 | 207 | 10,234 | 1,805 | 703 | ||||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||||||
Foreign currency swaps | 4,108 | 127 | 347 | 3,782 | 463 | 381 | ||||||||||||||||||
Interest rate swaps | 1,740 | — | 48 | 286 | — | 6 | ||||||||||||||||||
Interest rate forwards | — | — | — | — | — | — | ||||||||||||||||||
Credit forwards | 220 | 2 | 6 | — | — | — | ||||||||||||||||||
Subtotal | 6,068 | 129 | 401 | 4,068 | 463 | 387 | ||||||||||||||||||
Foreign Operations Hedges: | ||||||||||||||||||||||||
Foreign currency forwards | 1,880 | 27 | 13 | 1,670 | 32 | 50 | ||||||||||||||||||
Foreign currency swaps | — | — | — | 164 | 1 | — | ||||||||||||||||||
Non-derivative hedging instruments | — | — | — | 351 | — | 323 | ||||||||||||||||||
Subtotal | 1,880 | 27 | 13 | 2,185 | 33 | 373 | ||||||||||||||||||
Total Qualifying Hedges | $ | 17,579 | $ | 1,510 | $ | 621 | $ | 16,487 | $ | 2,301 | $ | 1,463 | ||||||||||||
F-77
Table of Contents
December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Fair | Fair | |||||||||||||||||||||||
Value | Value | |||||||||||||||||||||||
Derivatives Not Designated or Not | Notional | Notional | ||||||||||||||||||||||
Qualifying as Hedging Instruments | Amount | Assets | Liabilities | Amount | Assets | Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Interest rate swaps | $ | 31,588 | $ | 1,070 | $ | 1,132 | $ | 29,633 | $ | 3,279 | $ | 1,309 | ||||||||||||
Interest rate floors | 23,691 | 461 | 37 | 48,517 | 1,748 | — | ||||||||||||||||||
Interest rate caps | 28,409 | 283 | — | 24,643 | 11 | — | ||||||||||||||||||
Interest rate futures | 7,563 | 8 | 10 | 13,851 | 44 | 117 | ||||||||||||||||||
Interest rate options | 4,050 | 117 | 57 | 2,365 | 939 | 35 | ||||||||||||||||||
Interest rate forwards | 9,921 | 66 | 27 | 16,616 | 49 | 70 | ||||||||||||||||||
Synthetic GICs | 4,352 | — | — | 4,260 | — | — | ||||||||||||||||||
Foreign currency swaps | 7,964 | 533 | 913 | 9,399 | 1,022 | 935 | ||||||||||||||||||
Foreign currency forwards | 4,605 | 56 | 44 | 3,497 | 121 | 79 | ||||||||||||||||||
Currency options | 822 | 18 | — | 932 | 73 | — | ||||||||||||||||||
Swap spreadlocks | — | — | — | 2,338 | — | 99 | ||||||||||||||||||
Credit default swaps | 6,723 | 74 | 130 | 5,219 | 152 | 69 | ||||||||||||||||||
Equity futures | 7,405 | 44 | 21 | 6,057 | 1 | 88 | ||||||||||||||||||
Equity options | 27,175 | 1,712 | 1,018 | 5,153 | 2,150 | — | ||||||||||||||||||
Variance swaps | 13,654 | 181 | 58 | 9,222 | 416 | — | ||||||||||||||||||
Total rate of return swaps | 376 | — | 47 | 250 | — | 101 | ||||||||||||||||||
Total non-designated or non-qualifying derivatives | $ | 178,298 | $ | 4,623 | $ | 3,494 | $ | 181,952 | $ | 10,005 | $ | 2,902 | ||||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Qualifying hedges: | ||||||||||||
Net investment income | $ | 49 | $ | 19 | $ | 29 | ||||||
Interest credited to policyholder account balances | 220 | 105 | (34 | ) | ||||||||
Other expenses | (3 | ) | (9 | ) | 1 | |||||||
Non-qualifying hedges: | ||||||||||||
Net investment income | (2 | ) | 1 | (5 | ) | |||||||
Net investment gains (losses) | 91 | 49 | 278 | |||||||||
Other revenues | 77 | 3 | — | |||||||||
Total | $ | 432 | $ | 168 | $ | 269 | ||||||
F-78
Table of Contents
Net Investment | Ineffectiveness | |||||||||||||
Gains (Losses) | Net Investment Gains | Recognized in | ||||||||||||
Derivatives in Fair Value | Hedged Items in Fair Value | Recognized | (Losses) Recognized | Net Investment | ||||||||||
Hedging Relationships | Hedging Relationships | for Derivatives | for Hedged Items | Gains (Losses) | ||||||||||
(In millions) | ||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||
Interest rate swaps: | Fixed maturity securities | $ | 49 | $ | (42 | ) | $ | 7 | ||||||
Policyholder account balances (1) | (963 | ) | 951 | (12 | ) | |||||||||
Foreign currency swaps: | Foreign-denominated fixed maturity securities | (13 | ) | 10 | (3 | ) | ||||||||
Foreign-denominated policyholder account balances (2) | 462 | (449 | ) | 13 | ||||||||||
Total | $ | (465 | ) | $ | 470 | $ | 5 | |||||||
For the Year Ended December 31, 2008 | $ | 245 | $ | (248 | ) | $ | (3 | ) | ||||||
For the Year Ended December 31, 2007 | $ | 334 | $ | (326 | ) | $ | 8 | |||||||
(1) | Fixed rate liabilities | |
(2) | Fixed rate or floating rate liabilities |
F-79
Table of Contents
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Other comprehensive income (loss), balance at January 1, | $ | 82 | $ | (270 | ) | $ | (208 | ) | ||||
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges | (221 | ) | 203 | (168 | ) | |||||||
Amounts reclassified to net investment gains (losses) | 54 | 140 | 96 | |||||||||
Amounts reclassified to net investment income | 8 | 9 | 13 | |||||||||
Amortization of transition adjustment | (2 | ) | 1 | (1 | ) | |||||||
Amounts reclassified to other expenses | 3 | (1 | ) | (2 | ) | |||||||
Other comprehensive income (loss), balance at December 31, | $ | (76 | ) | $ | 82 | $ | (270 | ) | ||||
Amount of Gains | Amount and Location | |||||||||||||||||||||||
(Losses) Deferred | of Gains (Losses) | Amount and Location | ||||||||||||||||||||||
in Accumulated Other | Reclassified from | of Gains (Losses) | ||||||||||||||||||||||
Derivatives in Cash Flow | Comprehensive Income | Accumulated Other Comprehensive | Recognized in Income (Loss) | |||||||||||||||||||||
Hedging Relationships | (Loss) on Derivatives | Income (Loss) into Income (Loss) | on Derivatives | |||||||||||||||||||||
(Ineffective Portion and | ||||||||||||||||||||||||
Amount Excluded from | ||||||||||||||||||||||||
(Effective Portion) | (Effective Portion) | Effectiveness Testing) | ||||||||||||||||||||||
Net Investment | Net Investment | Other | Net Investment | Net Investment | ||||||||||||||||||||
Gains (Losses) | Income | Expenses | Gains (Losses) | Income | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||||||||||||
Interest rate swaps | $ | (45 | ) | $ | — | $ | — | $ | (4 | ) | $ | (2 | ) | $ | — | |||||||||
Foreign currency swaps | (319 | ) | (133 | ) | (6 | ) | 1 | (1 | ) | — | ||||||||||||||
Interest rate forwards | 147 | 79 | — | — | — | — | ||||||||||||||||||
Credit forwards | (4 | ) | — | — | — | — | — | |||||||||||||||||
Total | $ | (221 | ) | $ | (54 | ) | $ | (6 | ) | $ | (3 | ) | $ | (3 | ) | $ | — | |||||||
For the Year Ended December 31, 2008: | ||||||||||||||||||||||||
Interest rate swaps | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Foreign currency swaps | 203 | (140 | ) | (10 | ) | 1 | — | — | ||||||||||||||||
Total | $ | 203 | $ | (140 | ) | $ | (10 | ) | $ | 1 | $ | — | $ | — | ||||||||||
For the Year Ended December 31, 2007: | ||||||||||||||||||||||||
Interest rate swaps | $ | 3 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Foreign currency swaps | (171 | ) | (96 | ) | (12 | ) | 2 | — | — | |||||||||||||||
Total | $ | (168 | ) | $ | (96 | ) | $ | (12 | ) | $ | 2 | $ | — | $ | — | |||||||||
F-80
Table of Contents
Amount and Location | ||||||||||||||||||||||||
of Gains (Losses) | ||||||||||||||||||||||||
Amount of Gains (Losses) | Reclassified From Accumulated Other | |||||||||||||||||||||||
Deferred in Accumulated | Comprehensive Income | |||||||||||||||||||||||
Other Comprehensive Income (Loss) | (Loss) into Income (Loss) | |||||||||||||||||||||||
(Effective Portion) | (Effective Portion) | |||||||||||||||||||||||
Net Investment Gains (Losses) | ||||||||||||||||||||||||
Derivatives and Non-Derivative Hedging Instruments in Net | Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
Investment Hedging Relationships (1), (2) | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Foreign currency forwards | $ | (244 | ) | $ | 338 | $ | (36 | ) | $ | (59 | ) | $ | — | $ | — | |||||||||
Foreign currency swaps | (18 | ) | 76 | (82 | ) | (63 | ) | — | — | |||||||||||||||
Non-derivative hedging instruments | (37 | ) | 81 | (62 | ) | (11 | ) | — | — | |||||||||||||||
Total | $ | (299 | ) | $ | 495 | $ | (180 | ) | $ | (133 | ) | $ | — | $ | — | |||||||||
(1) | During the year-ended December 31, 2009, the Company substantially liquidated, through assumption reinsurance (see Note 2), the portion of its Canadian operations that was being hedged in a net investment hedging relationship. As a result, the Company reclassified losses of $133 million from accumulated other comprehensive loss into earnings. During the years ended December 31, 2008 and 2007, there were no sales or substantial liquidations of net investments in foreign operations that would have required the reclassification of gains or losses from accumulated other comprehensive loss into earnings. | |
(2) | There was no ineffectiveness recognized for the Company’s hedges of net investments in foreign operations. |
F-81
Table of Contents
Net | Net | Policyholder | ||||||||||||||||||
Investment | Investment | Benefits | Other | Other | ||||||||||||||||
Gains (Losses) | Income (1) | and Claims (2) | Revenues (3) | Expenses (4) | ||||||||||||||||
(In millions) | ||||||||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||||||||
Interest rate swaps | $ | (1,700 | ) | $ | (5 | ) | $ | (13 | ) | $ | (161 | ) | $ | — | ||||||
Interest rate floors | (907 | ) | — | — | — | — | ||||||||||||||
Interest rate caps | 33 | — | — | — | — | |||||||||||||||
Interest rate futures | (366 | ) | 2 | — | — | — | ||||||||||||||
Equity futures | (681 | ) | (38 | ) | (363 | ) | — | — | ||||||||||||
Foreign currency swaps | (405 | ) | — | — | — | — | ||||||||||||||
Foreign currency forwards | (102 | ) | (24 | ) | — | — | — | |||||||||||||
Currency options | (36 | ) | (1 | ) | — | — | (3 | ) | ||||||||||||
Equity options | (1,713 | ) | (68 | ) | — | — | — | |||||||||||||
Interest rate options | (379 | ) | — | — | — | — | ||||||||||||||
Interest rate forwards | (7 | ) | — | — | (4 | ) | — | |||||||||||||
Variance swaps | (276 | ) | (13 | ) | — | — | — | |||||||||||||
Swap spreadlocks | (38 | ) | — | — | — | — | ||||||||||||||
Credit default swaps | (243 | ) | (11 | ) | — | — | — | |||||||||||||
Total rate of return swaps | 63 | — | — | — | — | |||||||||||||||
Total | $ | (6,757 | ) | $ | (158 | ) | $ | (376 | ) | $ | (165 | ) | $ | (3 | ) | |||||
For the Year Ended December 31, 2008 | $ | 6,688 | $ | 240 | $ | 331 | $ | 146 | $ | — | ||||||||||
For the Year Ended December 31, 2007 | $ | (227 | ) | $ | 31 | $ | 7 | $ | — | $ | — | |||||||||
(1) | Changes in estimated fair value related to economic hedges of equity method investments in joint ventures, and changes in estimated fair value related to derivatives held in relation to trading portfolios. | |
(2) | Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits. | |
(3) | Changes in estimated fair value related to derivatives held in connection with the Company’s mortgage banking activities. | |
(4) | Changes in estimated fair value related to economic hedges of foreign currency exposure associated with the Company’s international subsidiaries. |
F-82
Table of Contents
December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Maximum | Maximum | |||||||||||||||||||||||
Estimated | Amount | Estimated | Amount of | |||||||||||||||||||||
Fair | of Future | Weighted | Fair Value | Future | Weighted | |||||||||||||||||||
Value of Credit | Payments under | Average | of Credit | Payments under | Average | |||||||||||||||||||
Rating Agency Designation of Referenced | Default | Credit Default | Years to | 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) | $ | 5 | $ | 175 | 4.3 | $ | 1 | $ | 143 | 5.0 | ||||||||||||||
Credit default swaps referencing indices | 46 | 2,676 | 3.4 | (33 | ) | 1,372 | 4.1 | |||||||||||||||||
Subtotal | 51 | 2,851 | 3.5 | (32 | ) | 1,515 | 4.2 | |||||||||||||||||
Baa | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | 2 | 195 | 4.8 | 2 | 110 | 2.6 | ||||||||||||||||||
Credit default swaps referencing indices | — | 10 | 5.0 | (5 | ) | 215 | 4.1 | |||||||||||||||||
Subtotal | 2 | 205 | 4.8 | (3 | ) | 325 | 3.6 | |||||||||||||||||
Ba | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | 25 | 5.0 | — | 25 | 1.6 | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | 25 | 5.0 | — | 25 | 1.6 | ||||||||||||||||||
B | �� | |||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | 20 | 5.0 | (2 | ) | 10 | 5.0 | |||||||||||||||||
Subtotal | — | 20 | 5.0 | (2 | ) | 10 | 5.0 | |||||||||||||||||
Caa and lower | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | — | — | — | — | — | ||||||||||||||||||
In or near default | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 53 | $ | 3,101 | 3.6 | $ | (37 | ) | $ | 1,875 | 4.0 | |||||||||||||
(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 the MetLife 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. |
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Estimated | Estimated | |||||||||||||||
Fair Value (1) of | Fair Value of | |||||||||||||||
Derivatives in Net | Collateral | |||||||||||||||
Liability Position | Provided | Fair Value of Incremental Collateral | ||||||||||||||
December 31, 2009 | December 31, 2009 | Provided Upon: | ||||||||||||||
Downgrade in the | ||||||||||||||||
One Notch | Company’s Credit Rating | |||||||||||||||
Downgrade | to a Level that Triggers | |||||||||||||||
in the | Full Overnight | |||||||||||||||
Company’s | Collateralization or | |||||||||||||||
Fixed Maturity | Credit | Termination | ||||||||||||||
Securities (2) | Rating | of the Derivative Position | ||||||||||||||
(In millions) | ||||||||||||||||
Derivatives subject to credit-contingent provisions | $ | 1,163 | $ | 1,017 | $ | 90 | $ | 218 | ||||||||
Derivatives not subject to credit-contingent provisions | 48 | 42 | — | — | ||||||||||||
Total | $ | 1,211 | $ | 1,059 | $ | 90 | $ | 218 | ||||||||
(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 December 31, 2009, the Company did not provide any cash collateral. |
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Net embedded derivatives within asset host contracts: | ||||||||
Ceded guaranteed minimum benefits | $ | 76 | $ | 205 | ||||
Call options in equity securities | (37 | ) | (173 | ) | ||||
Net embedded derivatives within asset host contracts | $ | 39 | $ | 32 | ||||
Net embedded derivatives within liability host contracts: | ||||||||
Direct guaranteed minimum benefits | $ | 1,500 | $ | 3,134 | ||||
Other | 5 | (83 | ) | |||||
Net embedded derivatives within liability host contracts | $ | 1,505 | $ | 3,051 | ||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Net investment gains (losses) (1) | $ | 1,758 | $ | (2,650 | ) | $ | (321 | ) | ||||
Policyholder benefits and claims | $ | (114 | ) | $ | 182 | $ | — |
(1) | Effective January 1, 2008, the valuation of the Company’s guaranteed minimum benefits includes an adjustment for the Company’s own credit. Included in net investment gains (losses) for the years ended December 31, 2009 and 2008 were gains (losses) of ($1,932) million and $2,994 million, respectively, in connection with this adjustment. |
5. | Fair Value |
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Estimated | ||||||||||||
Notional | Carrying | Fair | ||||||||||
December 31, 2009 | Amount | Value | Value | |||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 227,642 | $ | 227,642 | ||||||||
Equity securities | $ | 3,084 | $ | 3,084 | ||||||||
Trading securities | $ | 2,384 | $ | 2,384 | ||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | $ | 48,181 | $ | 46,315 | ||||||||
Held-for-sale | 2,728 | 2,728 | ||||||||||
Mortgage loans, net | $ | 50,909 | $ | 49,043 | ||||||||
Policy loans | $ | 10,061 | $ | 11,294 | ||||||||
Real estate joint ventures (1) | $ | 115 | $ | 127 | ||||||||
Other limited partnership interests (1) | $ | 1,571 | $ | 1,581 | ||||||||
Short-term investments | $ | 8,374 | $ | 8,374 | ||||||||
Other invested assets: (1) | ||||||||||||
Derivative assets (2) | $ | 122,156 | $ | 6,133 | $ | 6,133 | ||||||
Mortgage servicing rights | $ | 878 | $ | 878 | ||||||||
Other | $ | 1,241 | $ | 1,284 | ||||||||
Cash and cash equivalents | $ | 10,112 | $ | 10,112 | ||||||||
Accrued investment income | $ | 3,173 | $ | 3,173 | ||||||||
Premiums and other receivables (1) | $ | 3,375 | $ | 3,532 | ||||||||
Other assets (1) | $ | 425 | $ | 440 | ||||||||
Separate account assets | $ | 149,041 | $ | 149,041 | ||||||||
Net embedded derivatives within asset host contracts (3) | $ | 76 | $ | 76 | ||||||||
Liabilities: | ||||||||||||
Policyholder account balances (1) | $ | 97,131 | $ | 96,735 | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 24,196 | $ | 24,196 | ||||||||
Bank deposits | $ | 10,211 | $ | 10,300 | ||||||||
Short-term debt | $ | 912 | $ | 912 | ||||||||
Long-term debt (1) | $ | 13,185 | $ | 13,831 | ||||||||
Collateral financing arrangements | $ | 5,297 | $ | 2,877 | ||||||||
Junior subordinated debt securities | $ | 3,191 | $ | 3,167 | ||||||||
Other liabilities: (1) | ||||||||||||
Derivative liabilities (2) | $ | 73,721 | $ | 4,115 | $ | 4,115 | ||||||
Trading liabilities | $ | 106 | $ | 106 | ||||||||
Other | $ | 1,788 | $ | 1,788 | ||||||||
Separate account liabilities (1) | $ | 32,171 | $ | 32,171 | ||||||||
Net embedded derivatives within liability host contracts (3) | $ | 1,505 | $ | 1,505 | ||||||||
Commitments:(4) | ||||||||||||
Mortgage loan commitments | $ | 2,220 | $ | — | $ | (48 | ) | |||||
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments | $ | 1,261 | $ | — | $ | (52 | ) |
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Estimated | ||||||||||||
Notional | Carrying | Fair | ||||||||||
December 31, 2008 | Amount | Value | Value | |||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 188,251 | $ | 188,251 | ||||||||
Equity securities | $ | 3,197 | $ | 3,197 | ||||||||
Trading securities | $ | 946 | $ | 946 | ||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | $ | 49,352 | $ | 48,133 | ||||||||
Held-for-sale | 2,012 | 2,010 | ||||||||||
Mortgage loans, net | $ | 51,364 | $ | 50,143 | ||||||||
Policy loans | $ | 9,802 | $ | 11,952 | ||||||||
Real estate joint ventures (1) | $ | 163 | $ | 176 | ||||||||
Other limited partnership interests (1) | $ | 1,900 | $ | 2,269 | ||||||||
Short-term investments | $ | 13,878 | $ | 13,878 | ||||||||
Other invested assets: (1) | ||||||||||||
Derivative assets (2) | $ | 133,565 | $ | 12,306 | $ | 12,306 | ||||||
Mortgage servicing rights | $ | 191 | $ | 191 | ||||||||
Other | $ | 801 | $ | 900 | ||||||||
Cash and cash equivalents | $ | 24,207 | $ | 24,207 | ||||||||
Accrued investment income | $ | 3,061 | $ | 3,061 | ||||||||
Premiums and other receivables (1) | $ | 2,995 | $ | 3,473 | ||||||||
Other assets (1) | $ | 800 | $ | 629 | ||||||||
Assets of subsidiariesheld-for-sale (1) | $ | 630 | $ | 649 | ||||||||
Separate account assets | $ | 120,839 | $ | 120,839 | ||||||||
Net embedded derivatives within asset host contracts (3) | $ | 205 | $ | 205 | ||||||||
Liabilities: | ||||||||||||
Policyholder account balances (1) | $ | 103,290 | $ | 95,950 | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 31,059 | $ | 31,059 | ||||||||
Bank deposits | $ | 6,884 | $ | 6,952 | ||||||||
Short-term debt | $ | 2,659 | $ | 2,659 | ||||||||
Long-term debt (1) | $ | 9,619 | $ | 8,155 | ||||||||
Collateral financing arrangements | $ | 5,192 | $ | 1,880 | ||||||||
Junior subordinated debt securities | $ | 3,758 | $ | 2,606 | ||||||||
Other liabilities: (1) | ||||||||||||
Derivative liabilities (2) | $ | 64,523 | $ | 4,042 | $ | 4,042 | ||||||
Trading liabilities | $ | 57 | $ | 57 | ||||||||
Other | $ | 638 | $ | 638 | ||||||||
Liabilities of subsidiariesheld-for-sale (1) | $ | 50 | $ | 49 | ||||||||
Separate account liabilities (1) | $ | 28,862 | $ | 28,862 | ||||||||
Net embedded derivatives within liability host contracts (3) | $ | 3,051 | $ | 3,051 | ||||||||
Commitments:(4) | ||||||||||||
Mortgage loan commitments | $ | 2,690 | $ | — | $ | (129 | ) | |||||
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments | $ | 971 | $ | — | $ | (105 | ) |
(1) | 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. | |
(2) | Derivative assets are presented within other invested assets and derivative liabilities are presented within other liabilities. At December 31, 2009 and 2008, certain non-derivative hedging instruments of $0 and $323 million, |
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respectively, which are carried at amortized cost, are included with the liabilities total in Note 4 but are excluded from derivative liabilities here as they are not derivative instruments. | ||
(3) | Net embedded derivatives within asset host contracts are presented within premiums and other receivables. Net embedded derivatives within liability host contracts are presented primarily within policyholder account balances. At December 31, 2009 and 2008, equity securities also included embedded derivatives of ($37) million and ($173) million, respectively. | |
(4) | Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. |
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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 | $ | — | $ | 65,493 | $ | 6,694 | $ | 72,187 | ||||||||
RMBS | — | 42,180 | 1,840 | 44,020 | ||||||||||||
Foreign corporate securities | — | 32,738 | 5,292 | 38,030 | ||||||||||||
U.S. Treasury, agency and government guaranteed securities | 10,951 | 14,459 | 37 | 25,447 | ||||||||||||
CMBS | — | 15,483 | 139 | 15,622 | ||||||||||||
ABS | — | 10,450 | 2,712 | 13,162 | ||||||||||||
Foreign government securities | 306 | 11,240 | 401 | 11,947 | ||||||||||||
State and political subdivision securities | — | 7,139 | 69 | 7,208 | ||||||||||||
Other fixed maturity securities | — | 13 | 6 | 19 | ||||||||||||
Total fixed maturity securities | 11,257 | 199,195 | 17,190 | 227,642 | ||||||||||||
Equity securities: | ||||||||||||||||
Common stock | 490 | 995 | 136 | 1,621 | ||||||||||||
Non-redeemable preferred stock | — | 359 | 1,104 | 1,463 | ||||||||||||
Total equity securities | 490 | 1,354 | 1,240 | 3,084 | ||||||||||||
Trading securities | 1,886 | 415 | 83 | 2,384 | ||||||||||||
Short-term investments (1) | 5,650 | 2,500 | 23 | 8,173 | ||||||||||||
Mortgage loans (2) | — | 2,445 | 25 | 2,470 | ||||||||||||
Derivative assets (3) | 103 | 5,600 | 430 | 6,133 | ||||||||||||
Net embedded derivatives within asset host contracts (4) | — | — | 76 | 76 | ||||||||||||
Mortgage servicing rights (5) | — | — | 878 | 878 | ||||||||||||
Separate account assets (6) | 17,601 | 129,545 | 1,895 | 149,041 | ||||||||||||
Total assets | $ | 36,987 | $ | 341,054 | $ | 21,840 | $ | 399,881 | ||||||||
Liabilities | ||||||||||||||||
Derivative liabilities (3) | $ | 51 | $ | 3,990 | $ | 74 | $ | 4,115 | ||||||||
Net embedded derivatives within liability host contracts (4) | — | (26 | ) | 1,531 | 1,505 | |||||||||||
Trading liabilities (7) | 106 | — | — | 106 | ||||||||||||
Total liabilities | $ | 157 | $ | 3,964 | $ | 1,605 | $ | 5,726 | ||||||||
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December 31, 2008 | ||||||||||||||||
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 | $ | — | $ | 55,805 | $ | 7,498 | $ | 63,303 | ||||||||
RMBS | — | 35,433 | 595 | 36,028 | ||||||||||||
Foreign corporate securities | — | 23,735 | 5,944 | 29,679 | ||||||||||||
U.S. Treasury, agency and government guaranteed securities | 10,132 | 11,090 | 88 | 21,310 | ||||||||||||
CMBS | — | 12,384 | 260 | 12,644 | ||||||||||||
ABS | — | 8,071 | 2,452 | 10,523 | ||||||||||||
Foreign government securities | 282 | 9,463 | 408 | 10,153 | ||||||||||||
State and political subdivision securities | — | 4,434 | 123 | 4,557 | ||||||||||||
Other fixed maturity securities | — | 14 | 40 | 54 | ||||||||||||
Total fixed maturity securities | 10,414 | 160,429 | 17,408 | 188,251 | ||||||||||||
Equity securities: | ||||||||||||||||
Common stock | 413 | 1,167 | 105 | 1,685 | ||||||||||||
Non-redeemable preferred stock | — | 238 | 1,274 | 1,512 | ||||||||||||
Total equity securities | 413 | 1,405 | 1,379 | 3,197 | ||||||||||||
Trading securities | 587 | 184 | 175 | 946 | ||||||||||||
Short-term investments (1) | 10,549 | 2,913 | 100 | 13,562 | ||||||||||||
Mortgage loans (2) | — | 1,798 | 177 | 1,975 | ||||||||||||
Derivative assets (3) | 55 | 9,483 | 2,768 | 12,306 | ||||||||||||
Net embedded derivatives within asset host contracts (4) | — | — | 205 | 205 | ||||||||||||
Mortgage servicing rights (5) | — | — | 191 | 191 | ||||||||||||
Separate account assets (6) | 85,886 | 33,195 | 1,758 | 120,839 | ||||||||||||
Total assets | $ | 107,904 | $ | 209,407 | $ | 24,161 | $ | 341,472 | ||||||||
Liabilities | ||||||||||||||||
Derivative liabilities (3) | $ | 273 | $ | 3,548 | $ | 221 | $ | 4,042 | ||||||||
Net embedded derivatives within liability host contracts (4) | — | (83 | ) | 3,134 | 3,051 | |||||||||||
Trading liabilities (7) | 57 | — | — | 57 | ||||||||||||
Total liabilities | $ | 330 | $ | 3,465 | $ | 3,355 | $ | 7,150 | ||||||||
(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, money market funds, etc.). | |
(2) | Mortgage loans as presented in the tables above differ from the amount presented in the consolidated balance sheets as these tables only include residential mortgage loansheld-for-sale measured at estimated fair value on a recurring basis. | |
(3) | Derivative assets are presented within other invested assets and derivative liabilities are presented within other liabilities. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the following tables. At December 31, |
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2009 and 2008, certain non-derivative hedging instruments of $0 and $323 million, respectively, which are carried at amortized cost, are included with the liabilities total in Note 4 but are excluded from derivative liabilities here as they are not derivative instruments. | ||
(4) | Net embedded derivatives within asset host contracts are presented within premiums and other receivables. Net embedded derivatives within liability host contracts are presented primarily within policyholder account balances. At December 31, 2009 and 2008, equity securities also included embedded derivatives of ($37) million and ($173) million, respectively. | |
(5) | MSRs are presented within other invested assets. | |
(6) | 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. | |
(7) | Trading liabilities are presented within other liabilities. |
Level 1 | This category includes certain U.S. Treasury, agency and government guaranteed fixed maturity securities, certain foreign government fixed maturity securities; exchange-traded common stock; certain trading securities; and certain short-term money market securities. As it relates to derivatives, this level includes exchange-traded equity and interest rate futures, as well as interest rate forwards to sell certain to be announced securities. Separate account assets classified within this level are similar in nature to those classified in this level for the general account. | |
Level 2 | This category includes fixed maturity and equity securities priced principally by independent pricing services using observable inputs. Fixed maturity securities classified as Level 2 include most U.S. Treasury, agency and government guaranteed securities, as well as the majority of U.S. and foreign corporate securities, RMBS, CMBS, state and political subdivision securities, foreign government securities and ABS. Equity securities classified as Level 2 securities consist principally of common stock and non-redeemable preferred stock where market quotes are available but are not considered actively traded. Short-term investments and trading securities included within Level 2 are of a similar nature to these fixed maturity and equity securities. Mortgage loans included in Level 2 include residential mortgage loansheld-for-sale for which there is readily available observable pricing for similar loans or securities backed by similar loans and the unobservable adjustments to such prices are insignificant. As it relates to derivatives, this level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded futures and interest rate forwards to sell certain to be announced securities included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. Separate account assets classified within this level are generally similar to those classified within this level for the general account, with the exception of certain mutual funds without readily determinable fair values given prices are not published publicly. Hedge funds and mutual funds owned by separate accounts are also included within this level. Embedded derivatives classified within this level include embedded equity derivatives contained in certain funding agreements. | |
Level 3 | This category includes fixed maturity securities priced principally through 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. This level primarily consists of less liquid fixed maturity securities with very limited trading activity or where |
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less price transparency exists around the inputs to the valuation methodologies including: U.S. and foreign corporate securities — including below investment grade private placements; RMBS and ABS — including all of those supported bysub-prime mortgage loans. Equity securities classified as Level 3 securities consist principally of non-redeemable preferred stock and common stock of companies that are privately held or of companies for which there has been very limited trading activity or where less price transparency exists around the inputs to the valuation. Short-term investments and trading securities included within Level 3 are of a similar nature to these fixed maturity and equity securities. Mortgage loans included in Level 3 include residential mortgage loansheld-for-sale for which pricing for similar loans or securities backed by similar loans is not observable and the estimated fair value is determined using unobservable independent broker quotations. As it relates to derivatives this category includes: swap spreadlocks with maturities which extend beyond observable periods; interest rate forwards including interest rate lock commitments with certain unobservable inputs, including pull-through rates; equity variance swaps with unobservable volatility inputs or that are priced via independent broker quotations; foreign currency swaps which are cancelable and priced through independent broker quotations; interest rate swaps with maturities which extend beyond the observable portion of the yield curve; credit default swaps based upon baskets of credits having unobservable credit correlations, as well as credit default swaps with maturities which extend beyond the observable portion of the credit curves and credit default swaps priced through independent broker quotations; foreign currency forwards priced via independent broker quotations or with liquidity adjustments; interest rate caps and floors referencing unobservable yield curvesand/or which include liquidity and volatility adjustments; implied volatility swaps with unobservable volatility inputs; currency options based upon baskets of currencies having unobservable currency correlations; credit forwards having unobservable repurchase rates; and equity options with unobservable volatility inputs. Separate account assets classified within this level are generally similar to those classified within this level for the general account; however, they also include mortgage loans, and other limited partnership interests. Embedded derivatives classified within this level primarily include embedded derivatives associated with certain variable annuity guarantees. This category also includes MSRs which are carried at estimated fair value and have multiple significant unobservable inputs including discount rates, estimates of loan prepayments and servicing costs. |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (1) | ||||||||||||||||||||||||||||||||
TotalRealized/Unrealized | ||||||||||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||||||||||
Other | Sales, | Transfer In | ||||||||||||||||||||||||||||||
Balance, | Impact of | Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||||||||
December 31, 2007 | Adoption (2) | January 1, | Earnings (3), (4) | Income (Loss) | Settlements (5) | of Level 3 (6) | December 31, | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
U.S. corporate securities | $ | 7,498 | $ | (429 | ) | $ | 939 | $ | (1,358 | ) | $ | 44 | $ | 6,694 | ||||||||||||||||||
RMBS | 595 | 31 | 105 | 1,199 | (90 | ) | 1,840 | |||||||||||||||||||||||||
Foreign corporate securities | 5,944 | (330 | ) | 1,517 | (511 | ) | (1,328 | ) | 5,292 | |||||||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 88 | — | (1 | ) | (29 | ) | (21 | ) | 37 | |||||||||||||||||||||||
CMBS | 260 | (36 | ) | 53 | (44 | ) | (94 | ) | 139 | |||||||||||||||||||||||
ABS | 2,452 | (121 | ) | 578 | (212 | ) | 15 | 2,712 | ||||||||||||||||||||||||
Foreign government securities | 408 | (40 | ) | 54 | 6 | (27 | ) | 401 | ||||||||||||||||||||||||
State and political subdivision securities | 123 | — | 7 | (19 | ) | (42 | ) | 69 | ||||||||||||||||||||||||
Other fixed maturity securities | 40 | 1 | — | (35 | ) | — | 6 | |||||||||||||||||||||||||
Total fixed maturity securities | $ | 17,408 | $ | (924 | ) | $ | 3,252 | $ | (1,003 | ) | $ | (1,543 | ) | $ | 17,190 | |||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Common stock | $ | 105 | $ | (2 | ) | $ | 6 | $ | 23 | $ | 4 | $ | 136 | |||||||||||||||||||
Non-redeemable preferred stock | 1,274 | (357 | ) | 486 | (254 | ) | (45 | ) | 1,104 | |||||||||||||||||||||||
Total equity securities | $ | 1,379 | $ | (359 | ) | $ | 492 | $ | (231 | ) | $ | (41 | ) | $ | 1,240 | |||||||||||||||||
Trading securities | $ | 175 | $ | 16 | $ | — | $ | (108 | ) | $ | — | $ | 83 | |||||||||||||||||||
Short-term investments | $ | 100 | $ | (21 | ) | $ | — | $ | (51 | ) | $ | (5 | ) | $ | 23 | |||||||||||||||||
Mortgage loans | $ | 177 | $ | (3 | ) | $ | — | $ | 2 | $ | (151 | ) | $ | 25 | ||||||||||||||||||
Net derivatives (7) | $ | 2,547 | $ | (273 | ) | $ | (11 | ) | $ | 97 | $ | (2,004 | ) | $ | 356 | |||||||||||||||||
Mortgage servicing rights (8), (9) | $ | 191 | $ | 172 | $ | — | $ | 515 | $ | — | $ | 878 | ||||||||||||||||||||
Separate account assets (10) | $ | 1,758 | $ | (213 | ) | $ | — | $ | 485 | $ | (135 | ) | $ | 1,895 | ||||||||||||||||||
Net embedded derivatives (11) | $ | (2,929 | ) | $ | 1,602 | $ | 15 | $ | (143 | ) | $ | — | $ | (1,455 | ) |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (1) | ||||||||||||||||||||||||||||||||
TotalRealized/Unrealized | ||||||||||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||||||||||
Other | Sales, | Transfer In | ||||||||||||||||||||||||||||||
Balance, | Impact of | Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||||||||
December 31, 2007 | Adoption (2) | January 1, | Earnings (3), (4) | Income (Loss) | Settlements (5) | of Level 3 (6) | December 31, | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2008: | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
U.S. corporate securities | $ | 8,368 | $ | — | $ | 8,368 | $ | (696 | ) | $ | (1,758 | ) | $ | 859 | $ | 725 | $ | 7,498 | ||||||||||||||
RMBS | 1,423 | — | 1,423 | 4 | (218 | ) | (204 | ) | (410 | ) | 595 | |||||||||||||||||||||
Foreign corporate securities | 7,228 | (8 | ) | 7,220 | (12 | ) | (2,873 | ) | (57 | ) | 1,666 | 5,944 | ||||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 80 | — | 80 | — | (1 | ) | 3 | 6 | 88 | |||||||||||||||||||||||
CMBS | 539 | — | 539 | (72 | ) | (136 | ) | 2 | (73 | ) | 260 | |||||||||||||||||||||
ABS | 4,490 | — | 4,490 | (125 | ) | (1,136 | ) | (740 | ) | (37 | ) | 2,452 | ||||||||||||||||||||
Foreign government securities | 785 | — | 785 | 19 | (101 | ) | (295 | ) | — | 408 | ||||||||||||||||||||||
State and political subdivision securities | 124 | — | 124 | — | (8 | ) | 45 | (38 | ) | 123 | ||||||||||||||||||||||
Other fixed maturity securities | 289 | — | 289 | 1 | (41 | ) | (209 | ) | — | 40 | ||||||||||||||||||||||
Total fixed maturity securities | $ | 23,326 | $ | (8 | ) | $ | 23,318 | $ | (881 | ) | $ | (6,272 | ) | $ | (596 | ) | $ | 1,839 | $ | 17,408 | ||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Common stock | $ | 183 | $ | — | $ | 183 | $ | (2 | ) | $ | (12 | ) | $ | (46 | ) | $ | (18 | ) | $ | 105 | ||||||||||||
Non-redeemable preferred stock | 2,188 | — | 2,188 | (195 | ) | (466 | ) | (242 | ) | (11 | ) | 1,274 | ||||||||||||||||||||
Total equity securities | $ | 2,371 | $ | — | $ | 2,371 | $ | (197 | ) | $ | (478 | ) | $ | (288 | ) | $ | (29 | ) | $ | 1,379 | ||||||||||||
Trading securities | $ | 183 | $ | 8 | $ | 191 | $ | (26 | ) | $ | — | $ | 18 | $ | (8 | ) | $ | 175 | ||||||||||||||
Short-term investments | $ | 179 | $ | — | $ | 179 | $ | — | $ | — | $ | (79 | ) | $ | — | $ | 100 | |||||||||||||||
Mortgage loans | $ | — | $ | — | $ | — | $ | 4 | $ | — | $ | 171 | $ | 2 | $ | 177 | ||||||||||||||||
Net derivatives (7) | $ | 789 | $ | (1 | ) | $ | 788 | $ | 1,729 | $ | — | $ | 29 | $ | 1 | $ | 2,547 | |||||||||||||||
Mortgage servicing rights (8), (9) | $ | — | $ | — | $ | — | $ | (149 | ) | $ | — | $ | 340 | $ | — | $ | 191 | |||||||||||||||
Separate account assets (10) | $ | 1,464 | $ | — | $ | 1,464 | $ | (129 | ) | $ | — | $ | 90 | $ | 333 | $ | 1,758 | |||||||||||||||
Net embedded derivatives (11) | $ | (278 | ) | $ | 24 | $ | (254 | ) | $ | (2,500 | ) | $ | (81 | ) | $ | (94 | ) | $ | — | $ | (2,929 | ) |
(1) | Amounts presented do not reflect any associated hedging activities. Actual earnings associated with Level 3, inclusive of hedging activities, could differ materially. | |
(2) | Impact of adoption of fair value measurement guidance represents the amount recognized in earnings as a change in estimate associated with Level 3 financial instruments held at January 1, 2008. The net impact of adoption on Level 3 assets and liabilities presented in the table above was a $23 million increase to net assets. Such amount was also impacted by an increase to DAC of $17 million. The impact of this adoption on RGA — not reflected in the table above as a result of the reflection of RGA in discontinued operations — was a net increase of $2 million (i.e., a decrease in Level 3 net embedded derivative liabilities of $17 million offset by a DAC decrease of $15 million) for a total impact of $42 million on Level 3 assets and liabilities. This impact of $42 million along with a $12 million reduction in the estimated fair value of Level 2 freestanding derivatives, resulted in a total net impact of adoption of $30 million. | |
(3) | 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). | |
(4) | Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. | |
(5) | 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 |
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from the rollforward. For embedded derivatives, attributed fees are included within this caption along with settlements, if any. | ||
(6) | 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. | |
(7) | Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. | |
(8) | The additions and reductions (due to loan payments) affecting MSRs were $628 million and ($113) million, respectively, for the year ended December 31, 2009 and $350 million and ($10) million, respectively, for the year ended December 31, 2008. | |
(9) | The changes in estimated fair value due to changes in valuation model inputs or assumptions, and other changes in estimated fair value affecting MSRs were $172 million and $0, respectively, for the year ended December 31, 2009, and ($149) million and $0, respectively, for the year ended December 31, 2008. | |
(10) | Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. | |
(11) | Embedded derivative assets and liabilities are presented net for purposes of the rollforward. |
Total Gains and Losses | ||||||||||||||||||||||||
Classification of Realized/Unrealized Gains | ||||||||||||||||||||||||
(Losses) included in Earnings | ||||||||||||||||||||||||
Net | ||||||||||||||||||||||||
Net | Investment | Policyholder | ||||||||||||||||||||||
Investment | Gains | Other | Benefits and | Other | ||||||||||||||||||||
Income | (Losses) | Revenues | Claims | Expenses | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 15 | $ | (444 | ) | $ | — | $ | — | $ | — | $ | (429 | ) | ||||||||||
RMBS | 30 | 1 | — | — | — | 31 | ||||||||||||||||||
Foreign corporate securities | (4 | ) | (326 | ) | — | — | — | (330 | ) | |||||||||||||||
U.S. Treasury, agency and government guaranteed securities | — | — | — | — | — | — | ||||||||||||||||||
CMBS | 1 | (37 | ) | — | — | — | (36 | ) | ||||||||||||||||
ABS | 8 | (129 | ) | — | — | — | (121 | ) | ||||||||||||||||
Foreign government securities | 12 | (52 | ) | — | — | — | (40 | ) | ||||||||||||||||
State and political subdivision securities | — | — | — | — | — | — | ||||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | — | 1 | ||||||||||||||||||
Total fixed maturity securities | $ | 63 | $ | (987 | ) | $ | — | $ | — | $ | — | $ | (924 | ) | ||||||||||
Equity securities: | ||||||||||||||||||||||||
Common stock | $ | — | $ | (2 | ) | $ | — | $ | — | $ | — | $ | (2 | ) | ||||||||||
Non-redeemable preferred stock | — | (357 | ) | — | — | — | (357 | ) | ||||||||||||||||
Total equity securities | $ | — | $ | (359 | ) | $ | — | $ | — | $ | — | $ | (359 | ) | ||||||||||
Trading securities | $ | 16 | $ | — | $ | — | $ | — | $ | — | $ | 16 | ||||||||||||
Short-term investments | $ | — | $ | (21 | ) | $ | — | $ | — | $ | — | $ | (21 | ) | ||||||||||
Mortgage loans | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | (3 | ) | ||||||||||
Net derivatives | $ | (13 | ) | $ | (225 | ) | $ | (33 | ) | $ | — | $ | (2 | ) | $ | (273 | ) | |||||||
Mortgage servicing rights | $ | — | $ | — | $ | 172 | $ | — | $ | — | $ | 172 | ||||||||||||
Net embedded derivatives | $ | — | $ | 1,716 | $ | — | $ | (114 | ) | $ | — | $ | 1,602 |
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Total Gains and Losses | ||||||||||||||||||||||||
Classification of Realized/Unrealized Gains | ||||||||||||||||||||||||
(Losses) included in Earnings | ||||||||||||||||||||||||
Net | ||||||||||||||||||||||||
Net | Investment | Policyholder | ||||||||||||||||||||||
Investment | Gains | Other | Benefits and | Other | ||||||||||||||||||||
Income | (Losses) | Revenues | Claims | Expenses | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
For the Year Ended December 31, 2008: | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 15 | $ | (711 | ) | $ | — | $ | — | $ | — | $ | (696 | ) | ||||||||||
RMBS | 3 | 1 | — | — | — | 4 | ||||||||||||||||||
Foreign corporate securities | 123 | (135 | ) | — | — | — | (12 | ) | ||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | — | — | — | — | — | — | ||||||||||||||||||
CMBS | 4 | (76 | ) | — | — | — | (72 | ) | ||||||||||||||||
ABS | 4 | (129 | ) | — | — | — | (125 | ) | ||||||||||||||||
Foreign government securities | 27 | (8 | ) | — | — | — | 19 | |||||||||||||||||
State and political subdivision securities | (1 | ) | 1 | — | — | — | — | |||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | — | 1 | ||||||||||||||||||
Total fixed maturity securities | $ | 176 | $ | (1,057 | ) | $ | — | $ | — | $ | — | $ | (881 | ) | ||||||||||
Equity securities: | ||||||||||||||||||||||||
Common stock | $ | — | $ | (2 | ) | $ | — | $ | — | $ | — | $ | (2 | ) | ||||||||||
Non-redeemable preferred stock | — | (195 | ) | — | — | — | (195 | ) | ||||||||||||||||
Total equity securities | $ | — | $ | (197 | ) | $ | — | $ | — | $ | — | $ | (197 | ) | ||||||||||
Trading securities | $ | (26 | ) | $ | — | $ | — | $ | — | $ | — | $ | (26 | ) | ||||||||||
Short-term investments | $ | 1 | $ | (1 | ) | $ | — | $ | — | $ | — | $ | — | |||||||||||
Mortgage loans | $ | — | $ | — | $ | 4 | $ | — | $ | — | $ | 4 | ||||||||||||
Net derivatives | $ | 103 | $ | 1,587 | $ | 39 | $ | — | $ | — | $ | 1,729 | ||||||||||||
Mortgage servicing rights | $ | — | $ | — | $ | (149 | ) | $ | — | $ | — | $ | (149 | ) | ||||||||||
Net embedded derivatives | $ | — | $ | (2,682 | ) | $ | — | $ | 182 | $ | — | $ | (2,500 | ) |
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Changes in Unrealized Gains (Losses) | ||||||||||||||||||||||||
Relating to Assets and Liabilities Held at December 31, 2009 | ||||||||||||||||||||||||
Net | ||||||||||||||||||||||||
Net | Investment | Policyholder | ||||||||||||||||||||||
Investment | Gains | Other | Benefits and | Other | ||||||||||||||||||||
Income | (Losses) | Revenues | Claims | Expenses | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 18 | $ | (412 | ) | $ | — | $ | — | $ | — | $ | (394 | ) | ||||||||||
RMBS | 30 | 6 | — | — | — | 36 | ||||||||||||||||||
Foreign corporate securities | (3 | ) | (176 | ) | — | — | — | (179 | ) | |||||||||||||||
U.S. Treasury, agency and government guaranteed securities | — | — | — | — | — | — | ||||||||||||||||||
CMBS | 1 | (61 | ) | — | — | — | (60 | ) | ||||||||||||||||
ABS | 8 | (136 | ) | — | — | — | (128 | ) | ||||||||||||||||
Foreign government securities | 11 | — | — | — | — | 11 | ||||||||||||||||||
State and political subdivision securities | — | — | — | — | — | — | ||||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | — | 1 | ||||||||||||||||||
Total fixed maturity securities | $ | 66 | $ | (779 | ) | $ | — | $ | — | $ | — | $ | (713 | ) | ||||||||||
Equity securities: | ||||||||||||||||||||||||
Common stock | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | $ | (1 | ) | ||||||||||
Non-redeemable preferred stock | — | (168 | ) | — | — | — | (168 | ) | ||||||||||||||||
Total equity securities | $ | — | $ | (169 | ) | $ | — | $ | — | $ | — | $ | (169 | ) | ||||||||||
Trading securities | $ | 15 | $ | — | $ | — | $ | — | $ | — | $ | 15 | ||||||||||||
Short-term investments | $ | — | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | ||||||||||||
Mortgage loans | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | (3 | ) | ||||||||||
Net derivatives | $ | (13 | ) | $ | (194 | ) | $ | 5 | $ | — | $ | (2 | ) | $ | (204 | ) | ||||||||
Mortgage servicing rights | $ | — | $ | — | $ | 147 | $ | — | $ | — | $ | 147 | ||||||||||||
Net embedded derivatives | $ | — | $ | 1,697 | $ | — | $ | (114 | ) | $ | — | $ | 1,583 |
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Changes in Unrealized Gains (Losses) | ||||||||||||||||||||||||
Relating to Assets and Liabilities Held at December 31, 2008 | ||||||||||||||||||||||||
Net | ||||||||||||||||||||||||
Net | Investment | Policyholder | ||||||||||||||||||||||
Investment | Gains | Other | Benefits and | Other | ||||||||||||||||||||
Income | (Losses) | Revenues | Claims | Expenses | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
For the Year Ended December 31, 2008: | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 12 | $ | (497 | ) | $ | — | $ | — | $ | — | $ | (485 | ) | ||||||||||
RMBS | 4 | — | — | — | — | 4 | ||||||||||||||||||
Foreign corporate securities | 117 | (125 | ) | — | — | — | (8 | ) | ||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | — | — | — | — | — | — | ||||||||||||||||||
CMBS | 4 | (69 | ) | — | — | — | (65 | ) | ||||||||||||||||
ABS | 3 | (102 | ) | — | — | — | (99 | ) | ||||||||||||||||
Foreign government securities | 23 | — | — | — | — | 23 | ||||||||||||||||||
State and political subdivision securities | (1 | ) | — | — | — | — | (1 | ) | ||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | — | 1 | ||||||||||||||||||
Total fixed maturity securities | $ | 163 | $ | (793 | ) | $ | — | $ | — | $ | — | $ | (630 | ) | ||||||||||
Equity securities: | ||||||||||||||||||||||||
Common stock | $ | — | $ | (1 | ) | $ | — | $ | — | $ | — | $ | (1 | ) | ||||||||||
Non-redeemable preferred stock | — | (163 | ) | — | — | — | (163 | ) | ||||||||||||||||
Total equity securities | $ | — | $ | (164 | ) | $ | — | $ | — | $ | — | $ | (164 | ) | ||||||||||
Trading securities | $ | (17 | ) | $ | — | $ | — | $ | — | $ | — | $ | (17 | ) | ||||||||||
Short-term investments | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Mortgage loans | $ | — | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | ||||||||||||
Net derivatives | $ | 114 | $ | 1,504 | $ | 38 | $ | — | $ | — | $ | 1,656 | ||||||||||||
Mortgage servicing rights | $ | — | $ | — | $ | (150 | ) | $ | — | $ | — | $ | (150 | ) | ||||||||||
Net embedded derivatives | $ | — | $ | (2,779 | ) | $ | — | $ | 182 | $ | — | $ | (2,597 | ) |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Unpaid principal balance | $ | 2,418 | $ | 1,920 | ||||
Excess estimated fair value over unpaid principal balance | 52 | 55 | ||||||
Carrying value at estimated fair value | $ | 2,470 | $ | 1,975 | ||||
Loans in non-accrual status | $ | 4 | $ | — | ||||
Loans more than 90 days past due | $ | 2 | $ | — | ||||
Loans in non-accrual status or more than 90 days past due, or both — difference between aggregate estimated fair value and unpaid principal balance | $ | (2 | ) | $ | — |
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For the | ||||||||
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Instrument-specific credit risk based on changes in credit spreads for non-agency loans and adjustments in individual loan quality | $ | (2 | ) | $ | — | |||
Other changes in estimated fair value | 600 | 55 | ||||||
Total gains (losses) recognized in other revenues | $ | 598 | $ | 55 | ||||
For the Years Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||||||||
Value Prior to | Value After | Gains | Value Prior to | Value After | Gains | |||||||||||||||||||
Impairment | Impairment | (Losses) | Impairment | Impairment | (Losses) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Mortgage loans (1): | ||||||||||||||||||||||||
Held-for-investment | $ | 294 | $ | 202 | $ | (92 | ) | $ | 257 | $ | 188 | $ | (69 | ) | ||||||||||
Held-for-sale | 9 | 8 | (1 | ) | 42 | 32 | (10 | ) | ||||||||||||||||
Mortgage loans, net | $ | 303 | $ | 210 | $ | (93 | ) | $ | 299 | $ | 220 | $ | (79 | ) | ||||||||||
Other limited partnership interests (2) | $ | 915 | $ | 561 | $ | (354 | ) | $ | 242 | $ | 137 | $ | (105 | ) | ||||||||||
Real estate joint ventures (3) | $ | 175 | $ | 93 | $ | (82 | ) | $ | — | $ | — | $ | — |
(1) | Mortgage Loans —The impaired mortgage loans presented above were written down to their estimated fair values at the date the impairments were recognized. Estimated fair values for impaired mortgage loans are based on observable market prices or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, on the estimated fair value of the underlying collateral, or the present value of the expected future cash flows. Impairments to estimated fair value represent non-recurring fair value measurements that have been categorized as Level 3 due to the lack of price transparency inherent in the limited markets for such mortgage loans. | |
(2) | 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 |
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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 $354 million as of December 31, 2009. | ||
(3) | 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 the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $86 million as of December 31, 2009. |
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6. | Deferred Policy Acquisition Costs and Value of Business Acquired |
DAC | VOBA | Total | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, 2007 | $ | 13,212 | $ | 4,292 | $ | 17,504 | ||||||
Effect of adoption of new accounting principle | (205 | ) | (248 | ) | (453 | ) | ||||||
Capitalizations | 3,064 | — | 3,064 | |||||||||
Acquisitions | — | 48 | 48 | |||||||||
Subtotal | 16,071 | 4,092 | 20,163 | |||||||||
Less: Amortization related to: | ||||||||||||
Net investment gains (losses) | (115 | ) | (11 | ) | (126 | ) | ||||||
Other expenses | 1,881 | 495 | 2,376 | |||||||||
Total amortization | 1,766 | 484 | 2,250 | |||||||||
Less: Unrealized investment gains (losses) | 75 | 63 | 138 | |||||||||
Less: Other | (30 | ) | (5 | ) | (35 | ) | ||||||
Balance at December 31, 2007 | 14,260 | 3,550 | 17,810 | |||||||||
Capitalizations | 3,092 | — | 3,092 | |||||||||
Acquisitions | — | (5 | ) | (5 | ) | |||||||
Subtotal | 17,352 | 3,545 | 20,897 | |||||||||
Less: Amortization related to: | ||||||||||||
Net investment gains (losses) | 489 | 32 | 521 | |||||||||
Other expenses | 2,460 | 508 | 2,968 | |||||||||
Total amortization | 2,949 | 540 | 3,489 | |||||||||
Less: Unrealized investment gains (losses) | (2,753 | ) | (599 | ) | (3,352 | ) | ||||||
Less: Other | 503 | 113 | 616 | |||||||||
Balance at December 31, 2008 | 16,653 | 3,491 | 20,144 | |||||||||
Capitalizations | 3,019 | — | 3,019 | |||||||||
Subtotal | 19,672 | 3,491 | 23,163 | |||||||||
Less: Amortization related to: | ||||||||||||
Net investment gains (losses) | (625 | ) | (87 | ) | (712 | ) | ||||||
Other expenses | 1,754 | 265 | 2,019 | |||||||||
Total amortization | 1,129 | 178 | 1,307 | |||||||||
Less: Unrealized investment gains (losses) | 2,314 | 505 | 2,819 | |||||||||
Less: Other | (163 | ) | (56 | ) | (219 | ) | ||||||
Balance at December 31, 2009 | $ | 16,392 | $ | 2,864 | $ | 19,256 | ||||||
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DAC | VOBA | Total | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products: | ||||||||||||||||||||||||
Group life | $ | 27 | $ | 33 | $ | — | $ | 7 | $ | 27 | $ | 40 | ||||||||||||
Individual life | 8,129 | 9,495 | 1,005 | 1,122 | 9,134 | 10,617 | ||||||||||||||||||
Non-medical health | 942 | 898 | — | — | 942 | 898 | ||||||||||||||||||
Total Insurance Products | 9,098 | 10,426 | 1,005 | 1,129 | 10,103 | 11,555 | ||||||||||||||||||
Retirement Products | 4,611 | 3,971 | 1,412 | 1,917 | 6,023 | 5,888 | ||||||||||||||||||
Corporate Benefit Funding | 73 | 72 | 2 | 3 | 75 | 75 | ||||||||||||||||||
Auto & Home | 181 | 183 | — | — | 181 | 183 | ||||||||||||||||||
Total U.S. Business | 13,963 | 14,652 | 2,419 | 3,049 | 16,382 | 17,701 | ||||||||||||||||||
International | 2,426 | 1,998 | 444 | 438 | 2,870 | 2,436 | ||||||||||||||||||
Banking, Corporate & Other | 3 | 3 | 1 | 4 | 4 | 7 | ||||||||||||||||||
Total | $ | 16,392 | $ | 16,653 | $ | 2,864 | $ | 3,491 | $ | 19,256 | $ | 20,144 | ||||||||||||
7. | Goodwill |
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at beginning of the period | $ | 5,008 | $ | 4,814 | $ | 4,801 | ||||||
Acquisitions (1) | — | 256 | 2 | |||||||||
Other, net (2) | 39 | (62 | ) | 11 | ||||||||
Balance at the end of the period | $ | 5,047 | $ | 5,008 | $ | 4,814 | ||||||
(1) | See Note 2 for a description of acquisitions and dispositions. | |
(2) | Consisting principally of foreign currency translation adjustments. |
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
U.S. Business: | ||||||||
Insurance Products: | ||||||||
Group life | $ | 2 | $ | 2 | ||||
Individual life | 1,263 | 1,265 | ||||||
Non-medical health | 149 | 149 | ||||||
Total Insurance Products | 1,414 | 1,416 | ||||||
Retirement Products | 1,692 | 1,692 | ||||||
Corporate Benefit Funding | 900 | 900 | ||||||
Auto & Home | 157 | 157 | ||||||
Total U.S. Business | 4,163 | 4,165 | ||||||
International: | ||||||||
Latin America region | 214 | 184 | ||||||
Asia Pacific region | 160 | 152 | ||||||
EMEI region | 40 | 37 | ||||||
Total International | 414 | 373 | ||||||
Banking, Corporate & Other | 470 | 470 | ||||||
Total | $ | 5,047 | $ | 5,008 | ||||
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8. | Insurance |
Future Policy | Policyholder Account | Other Policyholder | ||||||||||||||||||||||
Benefits | Balances | Funds | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products: | ||||||||||||||||||||||||
Group life | $ | 2,981 | $ | 2,984 | $ | 8,985 | $ | 8,422 | $ | 2,411 | $ | 2,341 | ||||||||||||
Individual life | 55,302 | 54,099 | 18,632 | 17,587 | 2,911 | 2,876 | ||||||||||||||||||
Non-medical health | 12,738 | 11,619 | 501 | 501 | 616 | 609 | ||||||||||||||||||
Total Insurance Products | 71,021 | 68,702 | 28,118 | 26,510 | 5,938 | 5,826 | ||||||||||||||||||
Retirement Products | 3,978 | 3,655 | 46,821 | 44,282 | 103 | 88 | ||||||||||||||||||
Corporate Benefit Funding | 41,614 | 40,682 | 55,556 | 66,409 | 216 | 249 | ||||||||||||||||||
Auto & Home | 2,972 | 3,083 | — | — | 184 | 43 | ||||||||||||||||||
Total U.S. Business | 119,585 | 116,122 | 130,495 | 137,201 | 6,441 | 6,206 | ||||||||||||||||||
International | 10,830 | 9,241 | 8,128 | 5,654 | 1,637 | 1,227 | ||||||||||||||||||
Banking, Corporate & Other | 5,464 | 5,192 | 50 | 66 | 368 | 329 | ||||||||||||||||||
Total | $ | 135,879 | $ | 130,555 | $ | 138,673 | $ | 142,921 | $ | 8,446 | $ | 7,762 | ||||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 822 | $ | 706 | $ | 708 | ||||||
Acquisitions | — | 144 | 11 | |||||||||
Amortization | (34 | ) | (25 | ) | (16 | ) | ||||||
Other | 4 | (3 | ) | 3 | ||||||||
Balance at December 31, | $ | 792 | $ | 822 | $ | 706 | ||||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 711 | $ | 677 | $ | 578 | ||||||
Capitalization | 193 | 176 | 181 | |||||||||
Amortization | (63 | ) | (142 | ) | (82 | ) | ||||||
Balance at December 31, | $ | 841 | $ | 711 | $ | 677 | ||||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Fixed maturity securities | $ | 11 | $ | 21 | ||||
Equity securities | $ | 57 | $ | 19 | ||||
Cash and cash equivalents | $ | 2 | $ | 3 |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 8,260 | $ | 7,836 | $ | 7,244 | ||||||
Less: Reinsurance recoverables | (1,042 | ) | (955 | ) | (937 | ) | ||||||
Net balance at January 1, | 7,218 | 6,881 | 6,307 | |||||||||
Incurred related to: | ||||||||||||
Current year | 6,569 | 6,263 | 5,796 | |||||||||
Prior years | (152 | ) | (353 | ) | (325 | ) | ||||||
6,417 | 5,910 | 5,471 | ||||||||||
Paid related to: | ||||||||||||
Current year | (3,972 | ) | (3,861 | ) | (3,297 | ) | ||||||
Prior years | (1,991 | ) | (1,712 | ) | (1,600 | ) | ||||||
(5,963 | ) | (5,573 | ) | (4,897 | ) | |||||||
Net balance at December 31, | 7,672 | 7,218 | 6,881 | |||||||||
Add: Reinsurance recoverables | 547 | 1,042 | 955 | |||||||||
Balance at December 31, | $ | 8,219 | $ | 8,260 | $ | 7,836 | ||||||
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December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
In the | At | In the | At | |||||||||||||
Event of Death | Annuitization | Event of Death | Annuitization | |||||||||||||
(In millions) | ||||||||||||||||
Annuity Contracts (1) | ||||||||||||||||
Return of Net Deposits | ||||||||||||||||
Separate account value | $ | 24,747 | N/A | $ | 15,882 | N/A | ||||||||||
Net amount at risk (2) | $ | 1,531 | (3) | N/A | $ | 4,384 | (3) | N/A | ||||||||
Average attained age of contractholders | 62 years | N/A | 62 years | N/A | ||||||||||||
Anniversary Contract Value or Minimum Return | ||||||||||||||||
Separate account value | $ | 78,808 | $ | 40,234 | $ | 62,345 | $ | 24,328 | ||||||||
Net amount at risk (2) | $ | 9,039 | (3) | $ | 7,361 | (4) | $ | 18,637 | (3) | $ | 11,312 | (4) | ||||
Average attained age of contractholders | 61 years | 61 years | 60 years | 61 years | ||||||||||||
Two Tier Annuities | ||||||||||||||||
General account value | N/A | $ | 282 | N/A | $ | 283 | ||||||||||
Net amount at risk (2) | N/A | $ | 50 | (5) | N/A | $ | 50 | (5) | ||||||||
Average attained age of contractholders | N/A | 61 years | N/A | 60 years | ||||||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Secondary | Paid-Up | Secondary | Paid-Up | |||||||||||||
Guarantees | Guarantees | Guarantees | Guarantees | |||||||||||||
(In millions) | ||||||||||||||||
Universal and Variable Life Contracts (1) | ||||||||||||||||
Account value (general and separate account) | $ | 9,483 | $ | 4,104 | $ | 7,825 | $ | 4,135 | ||||||||
Net amount at risk (2) | $ | 150,905 | (3) | $ | 28,826 | (3) | $ | 145,927 | (3) | $ | 31,274 | (3) | ||||
Average attained age of policyholders | 52 years | 57 years | 50 years | 56 years |
(1) | The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. | |
(2) | The net amount at risk is based on the direct amount at risk (excluding reinsurance). | |
(3) | The net amount at risk for guarantees of amounts in the event of death is defined as the current GMDB in excess of the current account balance at the balance sheet date. | |
(4) | The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. | |
(5) | The net amount at risk for two tier annuities is based on the excess of the upper tier, adjusted for a profit margin, less the lower tier. |
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Universal and Variable | ||||||||||||||||||||
Annuity Contracts | Life Contracts | |||||||||||||||||||
Guaranteed | Guaranteed | |||||||||||||||||||
Death | Annuitization | Secondary | Paid-Up | |||||||||||||||||
Benefits | Benefits | Guarantees | Guarantees | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Direct | ||||||||||||||||||||
Balance, at January 1, 2007 | $ | 60 | $ | 39 | $ | 95 | $ | 108 | $ | 302 | ||||||||||
Incurred guaranteed benefits | 28 | 39 | 57 | 13 | 137 | |||||||||||||||
Paid guaranteed benefits | (8 | ) | — | — | — | (8 | ) | |||||||||||||
Balance, at December 31, 2007 | 80 | 78 | 152 | 121 | 431 | |||||||||||||||
Incurred guaranteed benefits | 267 | 325 | 119 | 19 | 730 | |||||||||||||||
Paid guaranteed benefits | (96 | ) | — | — | — | (96 | ) | |||||||||||||
Balance, at December 31, 2008 | 251 | 403 | 271 | 140 | 1,065 | |||||||||||||||
Incurred guaranteed benefits | 118 | (1 | ) | 233 | 34 | 384 | ||||||||||||||
Paid guaranteed benefits | (201 | ) | — | — | — | (201 | ) | |||||||||||||
Balance, at December 31, 2009 | $ | 168 | $ | 402 | $ | 504 | $ | 174 | $ | 1,248 | ||||||||||
Ceded | ||||||||||||||||||||
Balance, at January 1, 2007 | $ | 7 | $ | 3 | $ | 51 | $ | 68 | $ | 129 | ||||||||||
Incurred guaranteed benefits | (1 | ) | 1 | 4 | 7 | 11 | ||||||||||||||
Paid guaranteed benefits | — | — | — | — | — | |||||||||||||||
Balance, at December 31, 2007 | 6 | 4 | 55 | 75 | 140 | |||||||||||||||
Incurred guaranteed benefits | 18 | (4 | ) | 25 | 15 | 54 | ||||||||||||||
Paid guaranteed benefits | (16 | ) | — | — | — | (16 | ) | |||||||||||||
Balance, at December 31, 2008 | 8 | — | 80 | 90 | 178 | |||||||||||||||
Incurred guaranteed benefits | 26 | — | 102 | 32 | 160 | |||||||||||||||
Paid guaranteed benefits | (28 | ) | — | — | — | (28 | ) | |||||||||||||
Balance, at December 31, 2009 | $ | 6 | $ | — | $ | 182 | $ | 122 | $ | 310 | ||||||||||
Net | ||||||||||||||||||||
Balance, at January 1, 2007 | $ | 53 | $ | 36 | $ | 44 | $ | 40 | $ | 173 | ||||||||||
Incurred guaranteed benefits | 29 | 38 | 53 | 6 | 126 | |||||||||||||||
Paid guaranteed benefits | (8 | ) | — | — | — | (8 | ) | |||||||||||||
Balance, at December 31, 2007 | 74 | 74 | 97 | 46 | 291 | |||||||||||||||
Incurred guaranteed benefits | 249 | 329 | 94 | 4 | 676 | |||||||||||||||
Paid guaranteed benefits | (80 | ) | — | — | — | (80 | ) | |||||||||||||
Balance, at December 31, 2008 | 243 | 403 | 191 | 50 | 887 | |||||||||||||||
Incurred guaranteed benefits | 92 | (1 | ) | 131 | 2 | 224 | ||||||||||||||
Paid guaranteed benefits | (173 | ) | — | — | — | (173 | ) | |||||||||||||
Balance, at December 31, 2009 | $ | 162 | $ | 402 | $ | 322 | $ | 52 | $ | 938 | ||||||||||
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Fund Groupings: | ||||||||
Equity | $ | 48,852 | $ | 39,842 | ||||
Balanced | 31,011 | 14,548 | ||||||
Bond | 7,166 | 5,671 | ||||||
Money Market | 2,104 | 2,456 | ||||||
Specialty | 1,865 | 488 | ||||||
Total | $ | 90,998 | $ | 63,005 | ||||
9. | Reinsurance |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Premiums: | ||||||||||||
Direct premiums | $ | 27,472 | $ | 27,058 | $ | 24,149 | ||||||
Reinsurance assumed | 1,313 | 1,466 | 1,192 | |||||||||
Reinsurance ceded | (2,325 | ) | (2,610 | ) | (2,371 | ) | ||||||
Net premiums | $ | 26,460 | $ | 25,914 | $ | 22,970 | ||||||
Universal life and investment-type product policy fees: | ||||||||||||
Direct universal life and investment-type product policy fees | $ | 5,790 | $ | 5,909 | $ | 5,686 | ||||||
Reinsurance assumed | 106 | 79 | 54 | |||||||||
Reinsurance ceded | (693 | ) | (607 | ) | (502 | ) | ||||||
Net universal life and investment-type product policy fees | $ | 5,203 | $ | 5,381 | $ | 5,238 | ||||||
Policyholder benefits and claims: | ||||||||||||
Direct policyholder benefits and claims | $ | 30,363 | $ | 29,772 | $ | 25,507 | ||||||
Reinsurance assumed | 1,024 | 1,235 | 804 | |||||||||
Reinsurance ceded | (3,051 | ) | (3,570 | ) | (2,528 | ) | ||||||
Net policyholder benefits and claims | $ | 28,336 | $ | 27,437 | $ | 23,783 | ||||||
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December 31, 2009 | ||||||||||||||||
Total | ||||||||||||||||
Balance | Total, Net of | |||||||||||||||
Sheet | Assumed | Ceded | Reinsurance | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums and other receivables | $ | 16,752 | $ | 550 | $ | 12,274 | $ | 3,928 | ||||||||
Deferred policy acquisition costs and value of business acquired | 19,256 | 190 | (206 | ) | 19,272 | |||||||||||
Total assets | $ | 36,008 | $ | 740 | $ | 12,068 | $ | 23,200 | ||||||||
Liabilities: | ||||||||||||||||
Future policy benefits | $ | 135,879 | $ | 2,000 | $ | (43 | ) | $ | 133,922 | |||||||
Policyholder account balances | 138,673 | 1,321 | — | 137,352 | ||||||||||||
Other policyholder funds | 8,446 | 257 | 494 | 7,695 | ||||||||||||
Other liabilities | 15,989 | 364 | 2,489 | 13,136 | ||||||||||||
Total liabilities | $ | 298,987 | $ | 3,942 | $ | 2,940 | $ | 292,105 | ||||||||
December 31, 2008 | ||||||||||||||||
Total | ||||||||||||||||
Balance | Total, Net of | |||||||||||||||
Sheet | Assumed | Ceded | Reinsurance | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums and other receivables | $ | 16,973 | $ | 489 | $ | 11,067 | $ | 5,417 | ||||||||
Deferred policy acquisition costs and value of business acquired | 20,144 | 61 | (79 | ) | 20,162 | |||||||||||
Total assets | $ | 37,117 | $ | 550 | $ | 10,988 | $ | 25,579 | ||||||||
Liabilities: | ||||||||||||||||
Future policy benefits | $ | 130,555 | $ | 1,761 | $ | (41 | ) | $ | 128,835 | |||||||
Policyholder account balances | 142,921 | 1,247 | (59 | ) | 141,733 | |||||||||||
Other policyholder funds | 7,762 | 235 | 350 | 7,177 | ||||||||||||
Other liabilities | 14,284 | 309 | 1,096 | 12,879 | ||||||||||||
Total liabilities | $ | 295,522 | $ | 3,552 | $ | 1,346 | $ | 290,624 | ||||||||
10. | Closed Block |
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Table of Contents
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Closed Block Liabilities | ||||||||
Future policy benefits | $ | 43,576 | $ | 43,520 | ||||
Other policyholder funds | 307 | 315 | ||||||
Policyholder dividends payable | 615 | 711 | ||||||
Payables for collateral under securities loaned and other transactions | — | 2,852 | ||||||
Other liabilities | 576 | 254 | ||||||
Total closed block liabilities | 45,074 | 47,652 | ||||||
Assets Designated to the Closed Block | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $27,129 and $27,947, respectively) | 27,375 | 26,205 | ||||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $204 and $280, respectively) | 218 | 210 | ||||||
Mortgage loans | 6,200 | 7,243 | ||||||
Policy loans | 4,538 | 4,426 | ||||||
Real estate and real estate joint venturesheld-for-investment | 321 | 381 | ||||||
Short-term investments | 1 | 52 | ||||||
Other invested assets | 463 | 952 | ||||||
Total investments | 39,116 | 39,469 | ||||||
Cash and cash equivalents | 241 | 262 | ||||||
Accrued investment income | 489 | 484 | ||||||
Premiums and other receivables | 78 | 98 | ||||||
Current income tax recoverable | 112 | — | ||||||
Deferred income tax assets | 612 | 1,632 | ||||||
Total assets designated to the closed block | 40,648 | 41,945 | ||||||
Excess of closed block liabilities over assets designated to the closed block | 4,426 | 5,707 | ||||||
Amounts included in accumulated other comprehensive income (loss): | ||||||||
Unrealized investment gains (losses), net of income tax of $89 and ($633), respectively | 166 | (1,174 | ) | |||||
Unrealized gains (losses) on derivative instruments, net of income tax of ($3) and ($8), respectively | (5 | ) | (15 | ) | ||||
Total amounts included in accumulated other comprehensive income (loss) | 161 | (1,189 | ) | |||||
Maximum future earnings to be recognized from closed block assets and liabilities | $ | 4,587 | $ | 4,518 | ||||
Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In millions) | ||||||||
Balance at January 1, | $ | 789 | $ | 1,063 | ||||
Change in unrealized investment and derivative gains (losses) | (789 | ) | (274 | ) | ||||
Balance at December 31, | $ | — | $ | 789 | ||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Revenues | ||||||||||||
Premiums | $ | 2,708 | $ | 2,787 | $ | 2,870 | ||||||
Net investment income and other revenues | 2,197 | 2,248 | 2,350 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (107 | ) | (94 | ) | (3 | ) | ||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive loss | 40 | — | — | |||||||||
Other net investment gains (losses), net | 199 | 10 | 31 | |||||||||
Total net investment gains (losses) | 132 | (84 | ) | 28 | ||||||||
Total revenues | 5,037 | 4,951 | 5,248 | |||||||||
Expenses | ||||||||||||
Policyholder benefits and claims | 3,329 | 3,393 | 3,457 | |||||||||
Policyholder dividends | 1,394 | 1,498 | 1,492 | |||||||||
Other expenses | 203 | 217 | 231 | |||||||||
Total expenses | 4,926 | 5,108 | 5,180 | |||||||||
Revenues, net of expenses before provision for income tax expense (benefit) | 111 | (157 | ) | 68 | ||||||||
Provision (benefit) for income tax expense (benefit) | 36 | (68 | ) | 21 | ||||||||
Revenues, net of expenses and provision for income tax expense (benefit) | $ | 75 | $ | (89 | ) | $ | 47 | |||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at December 31, | $ | 4,587 | $ | 4,518 | $ | 4,429 | ||||||
Less: | ||||||||||||
Cumulative effect of a change in accounting principle, net of income tax | — | — | (4 | ) | ||||||||
Closed block adjustment (1) | 144 | — | — | |||||||||
Balance at January 1, | 4,518 | 4,429 | 4,480 | |||||||||
Change during year | $ | (75 | ) | $ | 89 | $ | (47 | ) | ||||
(1) | The closed block adjustment represents an intra-company reallocation of assets which affected the closed block. The adjustment had no impact on the Company’s consolidated financial statements. |
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11. | Long-term and Short-term Debt |
Interest Rates | ||||||||||||||||
Weighted | December 31, | |||||||||||||||
Range | Average | Maturity | 2009 | 2008 | ||||||||||||
(In millions) | ||||||||||||||||
Senior notes | 0.57%-7.71% | 5.94 | % | 2011-2035 | $ | 10,458 | $ | 7,660 | ||||||||
Repurchase agreements | 0.31%-4.90% | 3.35 | % | 2010-2014 | 1,846 | 1,062 | ||||||||||
Surplus notes | 7.63%-7.88% | 7.98 | % | 2015-2025 | 698 | 698 | ||||||||||
Fixed rate notes | 3.76%-8.56% | 8.56 | % | 2010 | 63 | 65 | ||||||||||
Other notes with varying interest rates | 2.16%-8.00% | 4.50 | % | 2010-2016 | 120 | 134 | ||||||||||
Capital lease obligations | 35 | 48 | ||||||||||||||
Total long-term debt | 13,220 | 9,667 | ||||||||||||||
Total short-term debt | 912 | 2,659 | ||||||||||||||
Total | $ | 14,132 | $ | 12,326 | ||||||||||||
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F-124
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Commercial paper | $ | 319 | $ | 714 | ||||
MetLife Bank, N.A. — Collateralized borrowings from the Federal Reserve Bank of New York | — | 950 | ||||||
MetLife Bank, N.A. — Repurchase agreements with the FHLB of NY | 585 | 695 | ||||||
MetLife Insurance Company of Connecticut — Collateralized borrowings from the FHLB of Boston | — | 300 | ||||||
Other | 8 | — | ||||||
Total short-term debt | $ | 912 | $ | 2,659 | ||||
Average daily balance | $ | 2,845 | $ | 1,252 | ||||
Average days outstanding | 16 days | 25 days |
Letter of | ||||||||||||||||||
Credit | Unused | |||||||||||||||||
Borrower(s) | Expiration | Capacity | Issuances | Drawdowns | Commitments | |||||||||||||
(In millions) | ||||||||||||||||||
MetLife, Inc. and MetLife Funding, Inc. | June 2012 (1) | $ | 2,850 | $ | 548 | $ | — | $ | 2,302 | |||||||||
MetLife Bank, N.A. | August 2010 | 300 | — | — | 300 | |||||||||||||
Total | $ | 3,150 | $ | 548 | $ | — | $ | 2,602 | ||||||||||
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(1) | Proceeds are available to be used for general corporate purposes, to support the borrowers’ commercial paper programs and for the issuance of letters of credit. All borrowings under the credit agreement must be repaid by June 2012, except that letters of credit outstanding upon termination may remain outstanding until June 2013. |
Letter of | ||||||||||||||||||||
Credit | Unused | Maturity | ||||||||||||||||||
Account Party/Borrower(s) | Expiration | Capacity | Issuances | Drawdowns | Commitments | (Years) | ||||||||||||||
(In millions) | ||||||||||||||||||||
MetLife, Inc. | August 2010 | $300 | $ | 300 | $ | — | $ | — | — | |||||||||||
MetLife, Inc. | December 2010 | 1,500 | 412 | — | 1,088 | — | ||||||||||||||
Exeter Reassurance Company Ltd., MetLife, Inc., & Missouri Reinsurance (Barbados), Inc. | June 2016 (1) | 500 | 490 | — | 10 | 6 | ||||||||||||||
Exeter Reassurance Company Ltd. | December 2027 (2) | 650 | 490 | — | 160 | 18 | ||||||||||||||
MetLife Reinsurance Company of South Carolina & MetLife, Inc. | June 2037 | 3,500 | — | 2,797 | 703 | 27 | ||||||||||||||
MetLife Reinsurance Company of Vermont & MetLife, Inc. | December 2037 (2) | 2,896 | 1,483 | — | 1,413 | 28 | ||||||||||||||
MetLife Reinsurance Company of Vermont & MetLife, Inc. | September 2038 (2) | 3,500 | 1,508 | — | 1,992 | 28 | ||||||||||||||
Total | $12,846 | $ | 4,683 | $ | 2,797 | $ | 5,366 | |||||||||||||
(1) | Letters of credit and replacements or renewals thereof issued under this facility of $280 million, $10 million and $200 million are set to expire no later than December 2015, March 2016 and June 2016, respectively. | |
(2) | The Holding Company is a guarantor under this agreement. |
12. | Collateral Financing Arrangements |
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13. | Junior Subordinated Debt Securities |
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Interest Rate | ||||||||||||||||||||||||
Subsequent to | ||||||||||||||||||||||||
Scheduled | Carrying Value | |||||||||||||||||||||||
Face | Interest | Scheduled | Redemption | Final | at December 31, | |||||||||||||||||||
Issuer | Issue Date | Value | Rate (2) | Redemption Date | Date (3) | Maturity | 2009 | 2008 | ||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
MetLife, Inc. | July 2009 | $ | 500 | 10.750 | % | August 2039 | LIBOR + 7.548% | August 2069 | $ | 500 | $ | — | ||||||||||||
MetLife Capital Trust X (1) | April 2008 | $ | 750 | 9.250 | % | April 2038 | LIBOR + 5.540% | April 2068 | 750 | 750 | ||||||||||||||
MetLife Capital Trust IV (1) | December 2007 | $ | 700 | 7.875 | % | December 2037 | LIBOR + 3.960% | December 2067 | 694 | 694 | ||||||||||||||
MetLife, Inc. | December 2006 | $ | 1,250 | 6.400 | % | December 2036 | LIBOR + 2.205% | December 2066 | 1,247 | 1,247 | ||||||||||||||
$ | 3,191 | $ | 2,691 | |||||||||||||||||||||
(1) | MetLife Capital Trust X and MetLife Capital Trust IV are VIEs which are consolidated in the financial statements of the Company. The securities issued by these entities are exchangeable surplus trust securities, which will be exchanged for a like amount of the Holding Company’s junior subordinated debt securities on the scheduled redemption date; mandatorily under certain circumstances, and at any time upon the Holding Company exercising its option to redeem the securities. The exchangeable surplus trust securities are classified as junior subordinated debt securities for purposes of financial statement presentation. | |
(2) | Prior to the scheduled redemption date, interest is payable semiannually in arrears. | |
(3) | In the event the securities are not redeemed on or before the scheduled redemption date, interest will accrue after such date at an annual rate of3-month LIBOR plus a margin, payable quarterly in arrears. |
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14. | Common Equity Units |
15. | Income Tax |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Current: | ||||||||||||
Federal | $ | (45 | ) | $ | 216 | $ | 439 | |||||
State and local | 12 | 10 | 15 | |||||||||
Foreign | 50 | 372 | 200 | |||||||||
Subtotal | 17 | 598 | 654 | |||||||||
Deferred: | ||||||||||||
Federal | (2,190 | ) | 1,078 | 1,015 | ||||||||
State and local | 26 | (6 | ) | 31 | ||||||||
Foreign | 132 | (90 | ) | (25 | ) | |||||||
Subtotal | (2,032 | ) | 982 | 1,021 | ||||||||
Provision for income tax expense (benefit) | $ | (2,015 | ) | $ | 1,580 | $ | 1,675 | |||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Tax provision at U.S. statutory rate | $ | (1,517 | ) | $ | 1,771 | $ | 2,023 | |||||
Tax effect of: | ||||||||||||
Tax-exempt investment income | (288 | ) | (254 | ) | (296 | ) | ||||||
State and local income tax | 17 | 2 | 39 | |||||||||
Prior year tax | (26 | ) | 53 | 70 | ||||||||
Tax credits | (87 | ) | (58 | ) | (42 | ) | ||||||
Foreign tax rate differential and change in valuation allowance | (118 | ) | 65 | (108 | ) | |||||||
Other, net | 4 | 1 | (11 | ) | ||||||||
Provision for income tax expense (benefit) | $ | (2,015 | ) | $ | 1,580 | $ | 1,675 | |||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Deferred income tax assets: | ||||||||
Policyholder liabilities and receivables | $ | 3,929 | $ | 5,553 | ||||
Net operating loss carryforwards | 871 | 741 | ||||||
Employee benefits | 661 | 657 | ||||||
Capital loss carryforwards | 551 | 273 | ||||||
Tax credit carryforwards | 401 | 348 | ||||||
Net unrealized investment losses | 816 | 6,590 | ||||||
Litigation-related and government mandated | 240 | 284 | ||||||
Other | 276 | 242 | ||||||
7,745 | 14,688 | |||||||
Less: Valuation allowance | 217 | 272 | ||||||
7,528 | 14,416 | |||||||
Deferred income tax liabilities: | ||||||||
Investments, including derivatives | 1,434 | 5,299 | ||||||
Intangibles | 334 | 156 | ||||||
DAC | 4,439 | 3,939 | ||||||
Other | 93 | 95 | ||||||
6,300 | 9,489 | |||||||
Net deferred income tax asset | $ | 1,228 | $ | 4,927 | ||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at beginning of the period | $ | 766 | $ | 840 | $ | 932 | ||||||
Additions for tax positions of prior years | 43 | 11 | 73 | |||||||||
Reductions for tax positions of prior years | (33 | ) | (51 | ) | (53 | ) | ||||||
Additions for tax positions of current year | 52 | 147 | 77 | |||||||||
Reductions for tax positions of current year | (9 | ) | (22 | ) | (8 | ) | ||||||
Settlements with tax authorities | (46 | ) | (153 | ) | (177 | ) | ||||||
Lapses of statutes of limitations | — | (6 | ) | (4 | ) | |||||||
Balance at end of the period | $ | 773 | $ | 766 | $ | 840 | ||||||
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16. | Contingencies, Commitments and Guarantees |
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December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions, except number of claims) | ||||||||||||
Asbestos personal injury claims at year end | 68,804 | 74,027 | 79,717 | |||||||||
Number of new claims during the year | 3,910 | 5,063 | 7,161 | |||||||||
Settlement payments during the year (1) | $ | 37.6 | $ | 99.0 | $ | 28.2 |
(1) | Settlement payments represent payments made by MLIC during the year in connection with settlements made in that year and in prior years. Amounts do not include MLIC’s attorneys’ fees and expenses and do not reflect amounts received from insurance carriers. |
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December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Other Assets: | ||||||||
Premium tax offset for future undiscounted assessments | $ | 54 | $ | 50 | ||||
Premium tax offsets currently available for paid assessments | 9 | 7 | ||||||
Receivable for reimbursement of paid assessments (1) | 4 | 7 | ||||||
$ | 67 | $ | 64 | |||||
Other Liabilities: | ||||||||
Insolvency assessments | $ | 86 | $ | 83 | ||||
(1) | The Company holds a receivable from the seller of a prior acquisition in accordance with the purchase agreement. |
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Gross | ||||||||||||
Rental | Sublease | Rental | ||||||||||
Income | Income | Payments | ||||||||||
(In millions) | ||||||||||||
2010 | $ | 415 | $ | 15 | $ | 287 | ||||||
2011 | $ | 357 | $ | 17 | $ | 237 | ||||||
2012 | $ | 288 | $ | 16 | $ | 190 | ||||||
2013 | $ | 253 | $ | 15 | $ | 169 | ||||||
2014 | $ | 221 | $ | 9 | $ | 119 | ||||||
Thereafter | $ | 723 | $ | 44 | $ | 994 |
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17. | Employee Benefit Plans |
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Other | ||||||||||||||||
Pension | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
December 31, | ||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In millions) | ||||||||||||||||
Change in benefit obligation: | ||||||||||||||||
Benefit obligation at beginning of year | $ | 6,041 | $ | 5,722 | $ | 1,632 | $ | 1,599 | ||||||||
Service cost | 170 | 164 | 22 | 21 | ||||||||||||
Interest cost | 395 | 379 | 125 | 103 | ||||||||||||
Plan participants’ contributions | — | — | 30 | 31 | ||||||||||||
Net actuarial losses | 421 | 129 | 351 | 16 | ||||||||||||
Settlements and curtailments | 12 | — | — | — | ||||||||||||
Change in benefits | (6 | ) | (1 | ) | (167 | ) | 1 | |||||||||
Prescription drug subsidy | — | — | 12 | 10 | ||||||||||||
Benefits paid | (384 | ) | (352 | ) | (158 | ) | (149 | ) | ||||||||
Benefit obligation at end of year | 6,649 | 6,041 | 1,847 | 1,632 | ||||||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | 5,559 | 6,520 | 1,011 | 1,183 | ||||||||||||
Actual return on plan assets | 525 | (952 | ) | 137 | (150 | ) | ||||||||||
Plan participants’ contributions | — | — | 2 | — | ||||||||||||
Employer contribution | 70 | 343 | 4 | 2 | ||||||||||||
Benefits paid | (384 | ) | (352 | ) | (33 | ) | (24 | ) | ||||||||
Fair value of plan assets at end of year | 5,770 | 5,559 | 1,121 | 1,011 | ||||||||||||
Funded status at end of year | $ | (879 | ) | $ | (482 | ) | $ | (726 | ) | $ | (621 | ) | ||||
Amounts recognized in the consolidated balance sheets consist of: | ||||||||||||||||
Other assets | $ | — | $ | 227 | $ | — | $ | — | ||||||||
Other liabilities | (879 | ) | (709 | ) | (726 | ) | (621 | ) | ||||||||
Net amount recognized | $ | (879 | ) | $ | (482 | ) | $ | (726 | ) | $ | (621 | ) | ||||
Accumulated other comprehensive (income) loss: | ||||||||||||||||
Net actuarial losses | $ | 2,267 | $ | 2,184 | $ | 388 | $ | 147 | ||||||||
Prior service cost (credit) | 25 | 45 | (288 | ) | (157 | ) | ||||||||||
2,292 | 2,229 | 100 | (10 | ) | ||||||||||||
Deferred income tax and noncontrolling interests, net of income tax | (811 | ) | (780 | ) | (36 | ) | 4 | |||||||||
$ | 1,481 | $ | 1,449 | $ | 64 | $ | (6 | ) | ||||||||
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Qualified Plan | Non-Qualified Plan | Total | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Aggregate fair value of plan assets | $ | 5,770 | $ | 5,559 | $ | — | $ | — | $ | 5,770 | $ | 5,559 | ||||||||||||
Aggregate projected benefit obligation | 5,862 | 5,356 | 787 | 685 | 6,649 | 6,041 | ||||||||||||||||||
Over (under) funded | $ | (92 | ) | $ | 203 | $ | (787 | ) | $ | (685 | ) | $ | (879 | ) | $ | (482 | ) | |||||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Projected benefit obligation | $ | 798 | $ | 708 | ||||
Accumulated benefit obligation | $ | 714 | $ | 590 | ||||
Fair value of plan assets | $ | 1 | $ | — |
Other | ||||||||||||||||
Pension | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
December 31, | ||||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
(In millions) | ||||||||||||||||
Projected benefit obligation | $ | 6,580 | $ | 712 | $ | 1,847 | $ | 1,632 | ||||||||
Fair value of plan assets | $ | 5,700 | $ | 4 | $ | 1,121 | $ | 1,011 |
i) | Service Cost — Service cost is the increase in the projected (expected) pension benefit obligation resulting from benefits payable to employees of the Subsidiaries on service rendered during the current year. | |
ii) | Interest Cost on the Liability — Interest cost is the time value adjustment on the projected (expected) pension benefit obligation at the end of each year. | |
iii) | Expected Return on Plan Assets — Expected return on plan assets is the assumed return earned by the accumulated (other) pension fund assets in a particular year. | |
iv) | Amortization of Prior Service Cost — This cost relates to the recognition of increases or decreases in pension (other postretirement) benefit obligation due to amendments in plans or initiation of new plans. These increases or decreases in obligation are recognized in accumulated other comprehensive income at the time of the amendment. These costs are then amortized to pension (other postretirement benefit) expense over the expected service years of the employees affected by the change. |
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v) | Amortization of Net Actuarial Gains or Losses — Actuarial gains and losses result from differences between the actual experience and the expected experience on pension (other postretirement) plan assets or projected (expected) pension benefit obligation during a particular period. These gains and losses are accumulated and, to the extent they exceed 10% of the greater of the PBO or the fair value of plan assets, the excess is amortized into pension (other postretirement benefit) expense over the expected service years of the employees. |
Other | ||||||||||||||||||||||||
Pension | Postretirement | |||||||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Net Periodic Benefit Cost | ||||||||||||||||||||||||
Service cost | $ | 170 | $ | 164 | $ | 162 | $ | 22 | $ | 21 | $ | 27 | ||||||||||||
Interest cost | 395 | 379 | 351 | 125 | 103 | 103 | ||||||||||||||||||
Settlement and curtailment cost | 17 | — | — | — | — | — | ||||||||||||||||||
Expected return on plan assets | (439 | ) | (517 | ) | (505 | ) | (72 | ) | (86 | ) | (86 | ) | ||||||||||||
Amortization of net actuarial (gains) losses | 227 | 24 | 68 | 42 | (1 | ) | — | |||||||||||||||||
Amortization of prior service cost (credit) | 10 | 15 | 17 | (36 | ) | (37 | ) | (36 | ) | |||||||||||||||
Net periodic benefit cost | 380 | 65 | 93 | 81 | — | 8 | ||||||||||||||||||
Net periodic benefit cost of subsidiaryheld-for-sale | — | 1 | 5 | — | — | 1 | ||||||||||||||||||
380 | 66 | 98 | 81 | — | 9 | |||||||||||||||||||
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) | ||||||||||||||||||||||||
Net actuarial (gains) losses | 310 | 1,561 | (432 | ) | 283 | 259 | (440 | ) | ||||||||||||||||
Prior service cost (credit) | (10 | ) | (19 | ) | 40 | (167 | ) | 36 | — | |||||||||||||||
Amortization of net actuarial (gains) losses | (227 | ) | (24 | ) | (68 | ) | (42 | ) | 1 | — | ||||||||||||||
Amortization of prior service cost (credit) | (10 | ) | (15 | ) | (17 | ) | 36 | 37 | 36 | |||||||||||||||
Total recognized in other comprehensive income (loss) | 63 | 1,503 | (477 | ) | 110 | 333 | (404 | ) | ||||||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 443 | $ | 1,569 | $ | (379 | ) | $ | 191 | $ | 333 | $ | (395 | ) | ||||||||||
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December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Cumulative reduction in benefit obligation: | ||||||||||||
Balance at January 1, | $ | 317 | $ | 299 | $ | 328 | ||||||
Service cost | 2 | 5 | 7 | |||||||||
Interest cost | 16 | 20 | 19 | |||||||||
Net actuarial gains (losses) | (76 | ) | 3 | (42 | ) | |||||||
Prescription drug subsidy | (12 | ) | (10 | ) | (13 | ) | ||||||
Balance at December 31, | $ | 247 | $ | 317 | $ | 299 | ||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Reduction in net periodic benefit cost: | ||||||||||||
Service cost | $ | 3 | $ | 5 | $ | 7 | ||||||
Interest cost | 16 | 20 | 19 | |||||||||
Amortization of net actuarial gains (losses) | 10 | — | 5 | |||||||||
Total reduction in net periodic benefit cost | $ | 29 | $ | 25 | $ | 31 | ||||||
Pension | Other Postretirement | |||||||
Benefits | Benefits | |||||||
December 31, | ||||||||
2009 | 2008 | 2009 | 2008 | |||||
Weighted average discount rate | 6.25% | 6.60% | 6.25% | 6.62% | ||||
Rate of compensation increase | 2.0%-7.5% | 3.5%-7.5% | N/A | N/A |
Pension Benefits | Other Postretirement Benefits | |||||||||||
December 31, | ||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | |||||||
Weighted average discount rate | 6.60% | 6.65% | 6.00% | 6.60% | 6.65% | 6.00% | ||||||
Weighted average expected rate of return on plan assets | 8.25% | 8.25% | 8.25% | 7.36% | 7.33% | 7.47% | ||||||
Rate of compensation increase | 3.5%-7.5% | 3.5%-8% | 3.5%-8% | N/A | N/A | N/A |
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December 31, | ||||
2009 | 2008 | |||
Pre-and Post-Medicare eligible claims | 8.2% down to 5.8% in 2018 and gradually decreasing until 2079 reaching the ultimate rate of 4.1% | 8.8% down to 5.8% in 2018 and gradually decreasing until 2079 reaching the ultimate rate of 4.1% |
One Percent | One Percent | |||||||
Increase | Decrease | |||||||
(In millions) | ||||||||
Effect on total of service and interest cost components | $ | 9 | $ | (10 | ) | |||
Effect of accumulated postretirement benefit obligation | $ | 94 | $ | (103 | ) |
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December 31, 2009 | ||||||||||||||||||||||||||||||||
Pension Assets | Other Postretirement Assets | |||||||||||||||||||||||||||||||
Fair Value Measurements at | Fair Value Measurements at | |||||||||||||||||||||||||||||||
Reporting Date Using | Reporting Date Using | |||||||||||||||||||||||||||||||
Quoted | Quoted | |||||||||||||||||||||||||||||||
Prices | Prices | |||||||||||||||||||||||||||||||
In Active | In Active | |||||||||||||||||||||||||||||||
Markets | Markets | |||||||||||||||||||||||||||||||
for | Significant | for | Significant | |||||||||||||||||||||||||||||
Identical | Other | Significant | Total | Identical | Other | Significant | Total | |||||||||||||||||||||||||
Assets and | Observable | Unobservable | Estimated | Assets and | Observable | Unobservable | Estimated | |||||||||||||||||||||||||
Liabilities | Inputs | Inputs | Fair | Liabilities | Inputs | Inputs | Fair | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | (Level 1) | (Level 2) | (Level 3) | Value | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Asset Class | ||||||||||||||||||||||||||||||||
Short-term investments | $ | 23 | $ | — | $ | — | $ | 23 | $ | 11 | $ | — | $ | — | $ | 11 | ||||||||||||||||
Fixed maturities and equity securities | — | 63 | — | 63 | — | 57 | — | 57 | ||||||||||||||||||||||||
Insurance general account | — | 90 | — | 90 | — | 440 | — | 440 | ||||||||||||||||||||||||
Investments in separate accounts — equity securities: | ||||||||||||||||||||||||||||||||
Large cap growth (1) | — | 115 | — | 115 | — | 68 | — | 68 | ||||||||||||||||||||||||
Large cap value (2) | — | — | — | — | — | 176 | — | 176 | ||||||||||||||||||||||||
Large cap core (3) | — | 1,338 | — | 1,338 | — | 24 | — | 24 | ||||||||||||||||||||||||
Small cap growth (4) | — | 149 | — | 149 | — | — | — | — | ||||||||||||||||||||||||
Small cap core (5) | — | 112 | — | 112 | — | 72 | — | 72 | ||||||||||||||||||||||||
Developed international (6) | — | 423 | — | 423 | — | 75 | — | 75 | ||||||||||||||||||||||||
Total separate accounts — equity securities | — | 2,137 | — | 2,137 | — | 415 | — | 415 | ||||||||||||||||||||||||
Investments in separate accounts — fixed income securities: | ||||||||||||||||||||||||||||||||
Long duration (government & credit) (7) | — | 2,149 | — | 2,149 | — | — | — | — | ||||||||||||||||||||||||
Core (8) | — | 326 | — | 326 | — | 128 | — | 128 | ||||||||||||||||||||||||
U.S. government and agencies | — | — | — | — | — | 17 | — | 17 | ||||||||||||||||||||||||
Mortgage-backed securities | — | — | — | — | — | 28 | — | 28 | ||||||||||||||||||||||||
Short-term and cash | — | 80 | — | 80 | — | 19 | — | 19 | ||||||||||||||||||||||||
Total separate accounts — fixed income securities | — | 2,555 | — | 2,555 | — | 192 | — | 192 | ||||||||||||||||||||||||
Investments in separate accounts — alternatives: | ||||||||||||||||||||||||||||||||
Multi-strategy hedge funds (9) | — | 238 | — | 238 | — | 6 | — | 6 | ||||||||||||||||||||||||
Real estate (10) | — | 49 | 242 | 291 | — | — | — | — | ||||||||||||||||||||||||
Private equity (11) | — | — | 373 | 373 | — | — | — | — | ||||||||||||||||||||||||
Total separate accounts — alternatives | — | 287 | 615 | 902 | — | 6 | — | 6 | ||||||||||||||||||||||||
Total | $ | 23 | $ | 5,132 | $ | 615 | $ | 5,770 | $ | 11 | $ | 1,110 | $ | — | $ | 1,121 | ||||||||||||||||
(1) | Investment portfolio includes U.S. equity securities with relatively large market capitalization that exhibit signs of above average sales and earnings growth. |
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(2) | Investment portfolio includes U.S. equity securities with relatively large market capitalization and low price to book and price to earnings ratios. | |
(3) | Investment portfolio includes U.S. equity securities with relatively large market capitalization and no particular bias toward value or growth. | |
(4) | Investment portfolio includes U.S. equity securities with relatively small market capitalization that exhibit signs of above average sales and earnings growth. | |
(5) | Investment portfolio includes U.S. equity securities with relatively small market capitalization and no particular bias toward value or growth. | |
(6) | Investment portfolio includes International equity securities with relatively large market capitalization and no particular bias toward value or growth. | |
(7) | Investment portfolio includes longer-maturity investment-grade fixed income securities invested across diverse asset sectors such as government, corporate and structured finance. | |
(8) | Investment portfolio includes investment-grade fixed income securities with varying maturities invested across diverse asset sectors such as government, corporate and structured finance. | |
(9) | Investment portfolio includes multiple hedge funds with strategies such as fixed income arbitrage, long-short equity, tactical trading and global macro. |
(10) | Investment portfolio includes domestic real estate equity investments in both privately held commercial real estate and publicly listed real estate investment trust securities. | |
(11) | Investment portfolio includes domestic and foreign private investments in companies not publicly traded on a stock exchange. |
Level 1 | This category includes investments in liquid securities, such as cash, short-term money market and bank time deposits, expected to mature within a year. | |
Level 2 | This category includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair value of such separate account is based upon reported NAV provided by fund managers and this value represents the amount at which transfers in and out of the respective separate account are effected. These separate accounts provide reasonable levels of price transparency and can be corroborated through observable market data. |
Level 3 | This category includes separate accounts that are invested in real estate and private equity investments provide little or no price transparency due to the infrequency with which the underlying assets trade and generally require additional time to liquidate in an orderly manner. Accordingly, the values for separate accounts invested in these alternative asset classes are based on inputs that cannot be readily derived from or corroborated by observable market data. |
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Fair Value Measurement Using Significant | ||||||||
Unobservable Outputs (Level 3) | ||||||||
Private Equity Funds | Real Estate | |||||||
(In millions) | ||||||||
Balance January 1, | $ | 430 | $ | 379 | ||||
Actual return on plan assets: | ||||||||
Assets held at reporting date | (55 | ) | (137 | ) | ||||
Assets sold during the period | (33 | ) | — | |||||
Purchases, sales and settlements | 31 | — | ||||||
Transfers in and out of Level 3 | — | — | ||||||
Balance at December 31, | $ | 373 | $ | 242 | ||||
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Actual Asset Allocation | ||||||||||||
December 31, 2009 | ||||||||||||
Asset Class | Defined Benefit Plan | Postretirement Medical | Postretirement Life | |||||||||
Equity (target range): | 25% to 45 | % | 50% to 80 | % | — | |||||||
Large cap growth | 2 | % | 10 | % | — | |||||||
Large cap value | — | 26 | — | |||||||||
Large cap core | 23 | 4 | — | |||||||||
Small cap growth | 3 | — | — | |||||||||
Small cap core | 2 | 11 | — | |||||||||
Developed international | 7 | 11 | — | |||||||||
Total equity | 37 | % | 62 | % | — | |||||||
Fixed income (target range): | 35% to 55 | % | 10% to 40 | % | — | |||||||
Long duration (government and credit) | 37 | % | —% | — | ||||||||
Core | 6 | 18 | — | |||||||||
U.S. government and agencies | — | 3 | — | |||||||||
Mortgage-backed securities | — | 4 | — | |||||||||
Directly held bonds | 1 | 9 | — | |||||||||
Insurance general account | 2 | — | 100 | % | ||||||||
Short-term and cash | 1 | 3 | — | |||||||||
Total fixed income | 47 | % | 37 | % | 100 | % | ||||||
Alternatives (target range): | 10% to 25 | % | 0% to 15 | % | — | |||||||
Multi-strategy hedge funds | 4 | % | 1 | % | — | |||||||
Real estate | 5 | — | — | |||||||||
Private equity | 7 | — | — | |||||||||
Total alternatives | 16 | % | 1 | % | — | |||||||
Total investments | 100 | % | 100 | % | 100 | % |
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Other Postretirement Benefits | ||||||||||||||||
Prescription | ||||||||||||||||
Pension | Drug | |||||||||||||||
Benefits | Gross | Subsidies | Net | |||||||||||||
(In millions) | ||||||||||||||||
2010 | $ | 436 | $ | 131 | $ | (12 | ) | $ | 119 | |||||||
2011 | $ | 413 | $ | 135 | $ | (12 | ) | $ | 123 | |||||||
2012 | $ | 430 | $ | 137 | $ | (13 | ) | $ | 124 | |||||||
2013 | $ | 441 | $ | 138 | $ | (13 | ) | $ | 125 | |||||||
2014 | $ | 460 | $ | 140 | $ | (14 | ) | $ | 126 | |||||||
2015-2019 | $ | 2,536 | $ | 733 | $ | (77 | ) | $ | 656 |
18. | Equity |
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Dividend | ||||||||||||||||||||
Series A | Series A | Series B | Series B | |||||||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | Per Share | Aggregate | ||||||||||||||
(In millions, except per share data) | ||||||||||||||||||||
November 16, 2009 | November 30, 2009 | December 15, 2009 | $ | 0.2527777 | $ | 7 | $ | 0.4062500 | $ | 24 | ||||||||||
August 17, 2009 | August 31, 2009 | September 15, 2009 | $ | 0.2555555 | 6 | $ | 0.4062500 | 24 | ||||||||||||
May 15, 2009 | May 31, 2009 | June 15, 2009 | $ | 0.2555555 | 7 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2009 | February 28, 2009 | March 16, 2009 | $ | 0.2500000 | 6 | $ | 0.4062500 | 24 | ||||||||||||
$ | 26 | $ | 96 | |||||||||||||||||
November 17, 2008 | November 30, 2008 | December 15, 2008 | $ | 0.2527777 | $ | 7 | $ | 0.4062500 | $ | 24 | ||||||||||
August 15, 2008 | August 31, 2008 | September 15, 2008 | $ | 0.2555555 | 6 | $ | 0.4062500 | 24 | ||||||||||||
May 15, 2008 | May 31, 2008 | June 16, 2008 | $ | 0.2555555 | 7 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2008 | February 29, 2008 | March 17, 2008 | $ | 0.3785745 | 9 | $ | 0.4062500 | 24 | ||||||||||||
$ | 29 | $ | 96 | |||||||||||||||||
November 15, 2007 | November 30, 2007 | December 17, 2007 | $ | 0.4230476 | $ | 11 | $ | 0.4062500 | $ | 24 | ||||||||||
August 15, 2007 | August 31, 2007 | September 17, 2007 | $ | 0.4063333 | 10 | $ | 0.4062500 | 24 | ||||||||||||
May 15, 2007 | May 31, 2007 | June 15, 2007 | $ | 0.4060062 | 10 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2007 | February 28, 2007 | March 15, 2007 | $ | 0.3975000 | 10 | $ | 0.4062500 | 24 | ||||||||||||
$ | 41 | $ | 96 | |||||||||||||||||
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Shares | ||||||||
Amount | Repurchased | |||||||
(In millions) | ||||||||
Remaining authorization at December 31, 2006 | $ | 216 | ||||||
February 2007 and September 2007 additional authorizations | 2,000 | |||||||
Accelerated share repurchases | (1,505 | ) | 23,455,124 | |||||
Open market repurchases | (200 | ) | 3,171,700 | |||||
Remaining authorization at December 31, 2007 | 511 | |||||||
January 2008 and April 2008 additional authorizations | 2,000 | |||||||
Accelerated share repurchases | (1,162 | ) | 19,716,418 | |||||
Open market repurchases | (88 | ) | 1,550,000 | |||||
Remaining authorization at December 31, 2008 | 1,261 | |||||||
Additional authorizations | — | |||||||
Accelerated share repurchases | — | |||||||
Open market repurchases | — | |||||||
Remaining authorization at December 31, 2009 | $ | 1,261 | ||||||
Dividend | ||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | ||||||||
(In millions, except | ||||||||||||
per share data) | ||||||||||||
October 29, 2009 | November 9, 2009 | December 14, 2009 | $ | 0.74 | $ | 610 | ||||||
October 28, 2008 | November 10, 2008 | December 15, 2008 | $ | 0.74 | $ | 592 | ||||||
October 23, 2007 | November 6, 2007 | December 14, 2007 | $ | 0.74 | $ | 541 |
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Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Shares Under | Weighted Average | Contractual | Intrinsic | |||||||||||||
Option | Exercise Price | Term | Value | |||||||||||||
(Years) | (In millions) | |||||||||||||||
Outstanding at January 1, 2009 | 26,158,275 | $ | 41.73 | 5.73 | $ | — | ||||||||||
Granted | 5,450,662 | $ | 23.61 | |||||||||||||
Exercised | (254,576 | ) | $ | 30.23 | ||||||||||||
Cancelled/Expired | (794,655 | ) | $ | 39.79 | ||||||||||||
Forfeited | (407,301 | ) | $ | 48.72 | ||||||||||||
Outstanding at December 31, 2009 | 30,152,405 | $ | 38.51 | 5.50 | $ | — | ||||||||||
Aggregate number of stock options expected to vest at December 31, 2009 | 29,552,636 | $ | 38.58 | 5.43 | $ | — | ||||||||||
Exercisable at December 31, 2009 | 21,651,876 | $ | 38.94 | 4.28 | $ | — | ||||||||||
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Years Ended December 31, | ||||||
2009 | 2008 | 2007 | ||||
Dividend yield | 3.15% | 1.21% | 0.94% | |||
Risk-free rate of return | 0.73%-6.67% | 1.91%-7.21% | 4.30%-5.32% | |||
Expected volatility | 44.39% | 24.85% | 19.54% | |||
Exercise multiple | 1.76 | 1.73 | 1.66 | |||
Post-vesting termination rate | 3.70% | 3.05% | 3.66% | |||
Contractual term (years) | 10 | 10 | 10 | |||
Expected life (years) | 6 | 6 | 6 | |||
Weighted average exercise price of stock options granted | $23.61 | $59.48 | $62.86 | |||
Weighted average fair value of stock options granted | $8.37 | $17.51 | $17.76 |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Total intrinsic value of stock options exercised | $ | 1 | $ | 36 | $ | 122 | ||||||
Cash received from exercise of stock options | $ | 8 | $ | 45 | $ | 110 | ||||||
Tax benefit realized from stock options exercised | $ | — | $ | 13 | $ | 43 |
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Weighted Average | ||||||||
Performance | Grant Date | |||||||
Shares | Fair Value | |||||||
Outstanding at January 1, | 2,586,650 | $ | 55.63 | |||||
Granted | 1,944,298 | $ | 20.72 | |||||
Forfeited | (224,538 | ) | $ | 25.75 | ||||
Paid | (812,975 | ) | $ | 48.43 | ||||
Outstanding at December 31, | 3,493,435 | $ | 38.43 | |||||
Performance Shares expected to vest at December 31, 2009 | 3,452,028 | $ | 44.55 | |||||
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Weighted Average | ||||||||
Restricted Stock | Grant Date | |||||||
Units | Fair Value | |||||||
Outstanding at January 1, | 149,374 | $ | 51.46 | |||||
Granted | 295,000 | $ | 20.83 | |||||
Forfeited | (31,850 | ) | $ | 57.57 | ||||
Paid | (19,162 | ) | $ | 50.25 | ||||
Outstanding at December 31, | 393,362 | $ | 28.05 | |||||
Restricted Stock Units expected to vest at December 31, 2009 | 393,362 | $ | 28.05 | |||||
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2010 | 2009 | 2008 | ||||||||||||||||||
Permitted w/o | Permitted w/o | Permitted w/o | ||||||||||||||||||
Company | Approval (1) | Paid (2) | Approval (3) | Paid (2) | Approval (3) | |||||||||||||||
(In millions) | ||||||||||||||||||||
Metropolitan Life Insurance Company | $ | 1,262 | $ | — | $ | 552 | $ | 1,318 | (4) | $ | 1,299 | |||||||||
MetLife Insurance Company of Connecticut | $ | 659 | $ | — | $ | 714 | $ | 500 | $ | 1,026 | ||||||||||
Metropolitan Tower Life Insurance Company | $ | 93 | $ | — | $ | 88 | $ | 277 | (5) | $ | 113 | |||||||||
Metropolitan Property and Casualty Insurance Company | $ | — | $ | 300 | $ | 9 | $ | 300 | $ | — |
(1) | Reflects dividend amounts that may be paid during 2010 without prior regulatory approval. However, if paid before a specified date during 2010, some or all of such dividends may require regulatory approval. | |
(2) | All amounts paid, including those requiring regulatory approval. | |
(3) | Reflects dividend amounts that could have been paid during the relevant year without prior regulatory approval. | |
(4) | As described in Note 2, consists of shares of RGA stock distributed by MLIC to the Holding Company as an in-kind dividend of $1,318 million. | |
(5) | Includes shares of an affiliate distributed to the Holding Company as an in-kind dividend in the amount of $164 million. |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Holding gains (losses) on investments arising during the year | $ | 18,548 | $ | (26,650 | ) | $ | (1,494 | ) | ||||
Income tax effect of holding gains (losses) | (6,243 | ) | 8,989 | 581 | ||||||||
Reclassification adjustments: | ||||||||||||
Recognized holding (gains) losses included in current year income | 1,954 | 2,040 | 176 | |||||||||
Amortization of premiums and accretion of discounts associated with investments | (490 | ) | (926 | ) | (831 | ) | ||||||
Income tax effect | (493 | ) | (377 | ) | 254 | |||||||
Allocation of holding (gains) losses on investments relating to other policyholder amounts | (2,979 | ) | 4,809 | 676 | ||||||||
Income tax effect of allocation of holding (gains) losses to other policyholder amounts | 1,002 | (1,621 | ) | (264 | ) | |||||||
Unrealized investment loss of subsidiary at date of sale | — | 131 | — | |||||||||
Deferred income tax on unrealized investment loss of subsidiary at date of sale | — | (60 | ) | — | ||||||||
Net unrealized investment gains (losses), net of income tax | 11,299 | (13,665 | ) | (902 | ) | |||||||
Foreign currency translation adjustment, net of income tax | 63 | (700 | ) | 346 | ||||||||
Defined benefit plan adjustment, net of income tax | (102 | ) | (1,199 | ) | 564 | |||||||
Other comprehensive income (loss) | 11,260 | (15,564 | ) | 8 | ||||||||
Other comprehensive income (loss) attributable to noncontrolling interests | 11 | (10 | ) | 1 | ||||||||
Other comprehensive income (loss) attributable to noncontrolling interests of subsidiary at date of disposal | — | 150 | 8 | |||||||||
Foreign currency translation adjustment attributable to noncontrolling interests of subsidiary at date of disposal | — | 107 | (56 | ) | ||||||||
Defined benefit plans adjustment attributable to noncontrolling interests of subsidiary at date of disposal | — | (4 | ) | (1 | ) | |||||||
Other comprehensive income (loss) attributable to MetLife, Inc., excluding cumulative effect of change in accounting principle | 11,271 | (15,321 | ) | (40 | ) | |||||||
Cumulative effect of change in accounting principle, net of income tax of $40 million, effective April 1, 2009 (See Note 1) | (76 | ) | — | — | ||||||||
Other comprehensive income (loss) attributable to MetLife, Inc. | $ | 11,195 | $ | (15,321 | ) | $ | (40 | ) | ||||
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19. | Other Expenses |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Compensation | $ | 3,804 | $ | 3,368 | $ | 3,362 | ||||||
Commissions | 3,433 | 3,384 | 3,207 | |||||||||
Interest and debt issue costs | 1,083 | 1,086 | 987 | |||||||||
Interest credited to bank deposits | 163 | 166 | 200 | |||||||||
Amortization of DAC and VOBA | 1,307 | 3,489 | 2,250 | |||||||||
Capitalization of DAC | (3,019 | ) | (3,092 | ) | (3,064 | ) | ||||||
Rent, net of sublease income | 479 | 477 | 373 | |||||||||
Insurance tax | 550 | 497 | 503 | |||||||||
Other | 2,756 | 2,572 | 2,587 | |||||||||
Total other expenses | $ | 10,556 | $ | 11,947 | $ | 10,405 | ||||||
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Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Balance, beginning of period | $ | 86 | $ | — | ||||
Severance charges | 84 | 109 | ||||||
Change in severance charge estimates | (8 | ) | (8 | ) | ||||
Cash payments | (126 | ) | (15 | ) | ||||
Balance, end of period | $ | 36 | $ | 86 | ||||
Restructuring charges incurred in current period | $ | 76 | $ | 101 | ||||
Total restructuring charges incurred since inception of program | $ | 177 | $ | 101 | ||||
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20. | Earnings Per Common Share |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions, except share and per share data) | ||||||||||||
Weighted Average Shares: | ||||||||||||
Weighted average common stock outstanding for basic earnings per common share | 818,462,150 | 735,184,337 | 744,153,514 | |||||||||
Incremental common shares from assumed: | ||||||||||||
Stock purchase contracts underlying common equity units (1) | — | 2,043,553 | 7,138,900 | |||||||||
Exercise or issuance of stock-based awards (2) | — | 7,557,540 | 10,971,585 | |||||||||
Weighted average common stock outstanding for diluted earnings per common share | 818,462,150 | 744,785,430 | 762,263,999 | |||||||||
Income (Loss) from Continuing Operations: | ||||||||||||
Income (loss) from continuing operations, net of income tax | $ | (2,318 | ) | $ | 3,481 | $ | 4,105 | |||||
Less: Income (loss) attributable to noncontrolling interests, net of income tax | (32 | ) | (25 | ) | 7 | |||||||
Less: Preferred stock dividends | 122 | 125 | 137 | |||||||||
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders | $ | (2,408 | ) | $ | 3,381 | $ | 3,961 | |||||
Basic | $ | (2.94 | ) | $ | 4.60 | $ | 5.32 | |||||
Diluted | $ | (2.94 | ) | $ | 4.54 | $ | 5.20 | |||||
Income from Discontinued Operations: | ||||||||||||
Income (loss) from discontinued operations, net of income tax | $ | 40 | $ | (203 | ) | $ | 360 | |||||
Less: Income from discontinued operations, net of income tax, attributable to noncontrolling interests | — | 94 | 141 | |||||||||
Income (loss) from discontinued operations, net of income tax, available to MetLife, Inc.’s common shareholders | $ | 40 | $ | (297 | ) | $ | 219 | |||||
Basic | $ | 0.05 | $ | (0.41 | ) | $ | 0.30 | |||||
Diluted | $ | 0.05 | $ | (0.40 | ) | $ | 0.28 | |||||
Net Income (Loss): | ||||||||||||
Net income (loss) | $ | (2,278 | ) | $ | 3,278 | $ | 4,465 | |||||
Less: Net income (loss) attributable to noncontrolling interests | (32 | ) | 69 | 148 | ||||||||
Less: Preferred stock dividends | 122 | 125 | 137 | |||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (2,368 | ) | $ | 3,084 | $ | 4,180 | |||||
Basic | $ | (2.89 | ) | $ | 4.19 | $ | 5.62 | |||||
Diluted | $ | (2.89 | ) | $ | 4.14 | $ | 5.48 | |||||
(1) | See Note 14 for a description of the Company’s common equity units. | |
(2) | For the year ended December 31, 2009, 4,213,700 shares related to the exercise or issuance of stock-based awards have been excluded from the calculation of diluted earnings per common share as these shares are anti-dilutive. |
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21. | Quarterly Results of Operations (Unaudited) |
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
2009 | ||||||||||||||||
Total revenues | $ | 10,214 | $ | 8,265 | $ | 10,238 | $ | 12,341 | ||||||||
Total expenses | $ | 11,176 | $ | 10,640 | $ | 11,413 | $ | 12,162 | ||||||||
Income (loss) from continuing operations, net of income tax | $ | (585 | ) | $ | (1,419 | ) | $ | (624 | ) | $ | 310 | |||||
Income (loss) from discontinued operations, net of income tax | $ | 37 | $ | 1 | $ | (1 | ) | $ | 3 | |||||||
Net income (loss) | $ | (548 | ) | $ | (1,418 | ) | $ | (625 | ) | $ | 313 | |||||
Less: Net income (loss) attributable to noncontrolling interests | $ | (4 | ) | $ | (16 | ) | $ | (5 | ) | $ | (7 | ) | ||||
Net income (loss) attributable to MetLife, Inc. | $ | (544 | ) | $ | (1,402 | ) | $ | (620 | ) | $ | 320 | |||||
Less: Preferred stock dividends | $ | 30 | $ | 31 | $ | 30 | $ | 31 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (574 | ) | $ | (1,433 | ) | $ | (650 | ) | $ | 289 | |||||
Basic earnings per share: | ||||||||||||||||
Income (loss) from continuing operations available to MetLife, Inc.’s common shareholders | $ | (0.76 | ) | $ | (1.74 | ) | $ | (0.79 | ) | $ | 0.35 | |||||
Income (loss) from discontinued operations, net of income tax, attributable to MetLife, Inc. | $ | 0.05 | $ | — | $ | — | $ | — | ||||||||
Net income (loss) attributable to MetLife, Inc. | $ | (0.67 | ) | $ | (1.71 | ) | $ | (0.75 | ) | $ | 0.39 | |||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (0.71 | ) | $ | (1.74 | ) | $ | (0.79 | ) | $ | 0.35 | |||||
Diluted earnings per share: | ||||||||||||||||
Income (loss) from continuing operations available to MetLife, Inc.’s common shareholders | $ | (0.76 | ) | $ | (1.74 | ) | $ | (0.79 | ) | $ | 0.35 | |||||
Income (loss) from discontinued operations, net of income tax, attributable to MetLife, Inc. | $ | 0.05 | $ | — | $ | — | $ | — | ||||||||
Net income (loss) attributable to MetLife, Inc. | $ | (0.67 | ) | $ | (1.71 | ) | $ | (0.75 | ) | $ | 0.39 | |||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | (0.71 | ) | $ | (1.74 | ) | $ | (0.79 | ) | $ | 0.35 | |||||
2008 (1) | ||||||||||||||||
Total revenues | $ | 11,622 | $ | 12,049 | $ | 13,351 | $ | 13,962 | ||||||||
Total expenses | $ | 10,792 | $ | 10,828 | $ | 11,772 | $ | 12,531 | ||||||||
Income (loss) from continuing operations, net of income tax | $ | 624 | $ | 879 | $ | 1,050 | $ | 928 | ||||||||
Income (loss) from discontinued operations, net of income tax | $ | 36 | $ | 117 | $ | (404 | ) | $ | 48 | |||||||
Net income (loss) | $ | 660 | $ | 996 | $ | 646 | $ | 976 | ||||||||
Less: Net income (loss) attributable to noncontrolling interests | $ | 12 | $ | 50 | $ | 16 | $ | (9 | ) | |||||||
Net income (loss) attributable to MetLife, Inc. | $ | 648 | $ | 946 | $ | 630 | $ | 985 | ||||||||
Less: Preferred stock dividends | $ | 33 | $ | 31 | $ | 30 | $ | 31 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 615 | $ | 915 | $ | 600 | $ | 954 | ||||||||
Basic earnings per share: | ||||||||||||||||
Income (loss) from continuing operations available to MetLife, Inc.’s common shareholders | $ | 0.82 | $ | 1.19 | $ | 1.43 | $ | 1.15 | ||||||||
Income (loss) from discontinued operations, net of income tax, attributable to MetLife, Inc. | $ | 0.03 | $ | 0.09 | $ | (0.59 | ) | $ | 0.06 | |||||||
Net income (loss) attributable to MetLife, Inc. | $ | 0.90 | $ | 1.33 | $ | 0.88 | $ | 1.25 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 0.85 | $ | 1.28 | $ | 0.84 | $ | 1.21 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Income (loss) from continuing operations available to MetLife, Inc.’s common shareholders | $ | 0.81 | $ | 1.18 | $ | 1.42 | $ | 1.14 | ||||||||
Income (loss) from discontinued operations, net of income tax, attributable to MetLife, Inc. | $ | 0.03 | $ | 0.08 | $ | (0.59 | ) | $ | 0.06 | |||||||
Net income (loss) attributable to MetLife, Inc. | $ | 0.88 | $ | 1.30 | $ | 0.88 | $ | 1.25 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 0.84 | $ | 1.26 | $ | 0.83 | $ | 1.20 |
(1) | During the fourth quarter of 2008, the Company recorded a cumulativeout-of-period adjustment in connection with the exclusion of certain derivative gains from the estimation of cumulative gross profits used in the determination of DAC amortization. The adjustment decreased DAC and increased DAC amortization by |
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$124 million and decreased net income by $80 million in the fourth quarter of 2008. Had the amounts been reflected during the first, second and third quarters of 2008 — in the periods in which they arose — DAC amortization would have increased (decreased) by $100 million, ($61) million and $85 million, respectively, resulting in an increase (decrease) of net income by ($65) million, $40 million and ($55) million, respectively. Net income available to common shareholders per diluted common share would have been higher (lower) by ($0.09), $0.06, ($0.08) and $0.10 during the first, second, third and fourth quarters, respectively, of 2008 had the amounts been reflected in the periods in which they arose. Based upon an evaluation of all relevant quantitative and qualitative factors, management believes this correcting adjustment was not material to the Company’s full year results for 2008 or the trend of earnings. |
22. | Business Segment Information |
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Operating Earnings | ||||||||||||||||||||||||||||||||||||||||
U.S. Business | ||||||||||||||||||||||||||||||||||||||||
Corporate | Banking, | |||||||||||||||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto | Corporate | Total | |||||||||||||||||||||||||||||||||||
Year Ended December 31, 2009: | Products | Products | Funding | & Home | Total | International | & Other | Total | Adjustments | Consolidated | ||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 17,168 | $ | 623 | $ | 2,561 | $ | 2,902 | $ | 23,254 | $ | 3,187 | $ | 19 | $ | 26,460 | $ | — | $ | 26,460 | ||||||||||||||||||||
Universal life and investment-type product policy fees | 2,281 | 1,712 | 176 | — | 4,169 | 1,061 | — | 5,230 | (27 | ) | 5,203 | |||||||||||||||||||||||||||||
Net investment income | 5,614 | 2,859 | 4,766 | 180 | 13,419 | 1,193 | 477 | 15,089 | (251 | ) | 14,838 | |||||||||||||||||||||||||||||
Other revenues | 779 | 172 | 239 | 33 | 1,223 | 14 | 1,092 | 2,329 | — | 2,329 | ||||||||||||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | — | — | — | (7,772 | ) | (7,772 | ) | ||||||||||||||||||||||||||||
Total revenues | 25,842 | 5,366 | 7,742 | 3,115 | 42,065 | 5,455 | 1,588 | 49,108 | (8,050 | ) | 41,058 | |||||||||||||||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 19,111 | 1,398 | 4,797 | 1,932 | 27,238 | 2,660 | 4 | 29,902 | 84 | 29,986 | ||||||||||||||||||||||||||||||
Interest credited to policyholder account balances | 952 | 1,687 | 1,633 | — | 4,272 | 581 | — | 4,853 | (4 | ) | 4,849 | |||||||||||||||||||||||||||||
Interest credited to bank deposits | — | — | — | — | — | — | 163 | 163 | — | 163 | ||||||||||||||||||||||||||||||
Capitalization of DAC | (873 | ) | (1,067 | ) | (14 | ) | (435 | ) | (2,389 | ) | (630 | ) | — | (3,019 | ) | — | (3,019 | ) | ||||||||||||||||||||||
Amortization of DAC and VOBA | 725 | 424 | 15 | 436 | 1,600 | 415 | 3 | 2,018 | (711 | ) | 1,307 | |||||||||||||||||||||||||||||
Interest expense | 6 | — | 3 | — | 9 | 8 | 1,027 | 1,044 | — | 1,044 | ||||||||||||||||||||||||||||||
Other expenses | 4,206 | 2,405 | 484 | 764 | 7,859 | 1,797 | 1,336 | 10,992 | 69 | 11,061 | ||||||||||||||||||||||||||||||
Total benefits and expenses | 24,127 | 4,847 | 6,918 | 2,697 | 38,589 | 4,831 | 2,533 | 45,953 | (562 | ) | 45,391 | |||||||||||||||||||||||||||||
Provision for income tax expense (benefit) | 573 | 182 | 273 | 96 | 1,124 | 161 | (617 | ) | 668 | (2,683 | ) | (2,015 | ) | |||||||||||||||||||||||||||
Operating earnings | $ | 1,142 | $ | 337 | $ | 551 | $ | 322 | $ | 2,352 | $ | 463 | $ | (328 | ) | 2,487 | ||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||||||||||||||
Total revenues | (8,050 | ) | ||||||||||||||||||||||||||||||||||||||
Total benefits and expenses | 562 | |||||||||||||||||||||||||||||||||||||||
Provision for income tax (expense) benefit | 2,683 | |||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | (2,318 | ) | $ | (2,318 | ) | ||||||||||||||||||||||||||||||||||
U.S. Business | ||||||||||||||||||||||||||||||||
Corporate | Banking, | |||||||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto | Corporate | ||||||||||||||||||||||||||||
At December 31, 2009: | Products | Products | Funding | & Home | Total | International | & Other | Total | ||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Total assets | $ | 132,717 | $ | 148,756 | $ | 159,270 | $ | 5,517 | $ | 446,260 | $ | 33,923 | $ | 59,131 | $ | 539,314 | ||||||||||||||||
Separate account assets | $ | 8,838 | $ | 87,113 | $ | 45,732 | $ | — | $ | 141,683 | $ | 7,358 | $ | — | $ | 149,041 | ||||||||||||||||
Separate account liabilities | $ | 8,838 | $ | 87,113 | $ | 45,732 | $ | — | $ | 141,683 | $ | 7,358 | $ | — | $ | 149,041 |
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Operating Earnings | ||||||||||||||||||||||||||||||||||||||||
U.S. Business | ||||||||||||||||||||||||||||||||||||||||
Corporate | Auto | Banking, | ||||||||||||||||||||||||||||||||||||||
Insurance | Retirement | Benefit | & | Corporate | Total | |||||||||||||||||||||||||||||||||||
Year Ended December 31, 2008: | Products | Products | Funding | Home | Total | International | & Other | Total | Adjustments | Consolidated | ||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 16,402 | $ | 361 | $ | 2,683 | $ | 2,971 | $ | 22,417 | $ | 3,470 | $ | 27 | $ | 25,914 | $ | — | $ | 25,914 | ||||||||||||||||||||
Universal life and investment-type product policy fees | 2,171 | 1,870 | 227 | — | 4,268 | 1,095 | — | 5,363 | 18 | 5,381 | ||||||||||||||||||||||||||||||
Net investment income | 5,787 | 2,365 | 5,874 | 186 | 14,212 | 1,180 | 808 | 16,200 | 91 | 16,291 | ||||||||||||||||||||||||||||||
Other revenues | 819 | 168 | 359 | 38 | 1,384 | 18 | 184 | 1,586 | — | 1,586 | ||||||||||||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | — | — | — | 1,812 | 1,812 | ||||||||||||||||||||||||||||||
Total revenues | 25,179 | 4,764 | 9,143 | 3,195 | 42,281 | 5,763 | 1,019 | 49,063 | 1,921 | 50,984 | ||||||||||||||||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 18,183 | 692 | 4,977 | 1,924 | 25,776 | 3,185 | 46 | 29,007 | 181 | 29,188 | ||||||||||||||||||||||||||||||
Interest credited to policyholder account balances | 930 | 1,337 | 2,298 | — | 4,565 | 171 | 7 | 4,743 | 45 | 4,788 | ||||||||||||||||||||||||||||||
Interest credited to bank deposits | — | — | — | — | — | — | 166 | 166 | — | 166 | ||||||||||||||||||||||||||||||
Capitalization of DAC | (849 | ) | (980 | ) | (18 | ) | (444 | ) | (2,291 | ) | (798 | ) | (3 | ) | (3,092 | ) | — | (3,092 | ) | |||||||||||||||||||||
Amortization of DAC and VOBA | 743 | 1,356 | 29 | 454 | 2,582 | 381 | 5 | 2,968 | 521 | 3,489 | ||||||||||||||||||||||||||||||
Interest expense | 5 | 2 | 2 | — | 9 | 9 | 1,033 | 1,051 | — | 1,051 | ||||||||||||||||||||||||||||||
Other expenses | 4,196 | 2,065 | 476 | 794 | 7,531 | 2,079 | 699 | 10,309 | 24 | 10,333 | ||||||||||||||||||||||||||||||
Total benefits and expenses | 23,208 | 4,472 | 7,764 | 2,728 | 38,172 | 5,027 | 1,953 | 45,152 | 771 | 45,923 | ||||||||||||||||||||||||||||||
Provision for income tax expense (benefit) | 661 | 99 | 466 | 104 | 1,330 | 257 | (495 | ) | 1,092 | 488 | 1,580 | |||||||||||||||||||||||||||||
Operating earnings | $ | 1,310 | $ | 193 | $ | 913 | $ | 363 | $ | 2,779 | $ | 479 | $ | (439 | ) | 2,819 | ||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||||||||||||||
Total revenues | 1,921 | |||||||||||||||||||||||||||||||||||||||
Total benefits and expenses | (771 | ) | ||||||||||||||||||||||||||||||||||||||
Provision for income tax (expense) benefit | (488 | ) | ||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 3,481 | $ | 3,481 | ||||||||||||||||||||||||||||||||||||
U.S. Business | ||||||||||||||||||||||||||||||||
Corporate | Banking, | |||||||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto | Corporate | ||||||||||||||||||||||||||||
At December 31, 2008: | Products | Products | Funding | & Home | Total | International | & Other | Total | ||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Total assets | $ | 126,734 | $ | 121,387 | $ | 161,513 | $ | 5,232 | $ | 414,866 | $ | 25,891 | $ | 60,921 | $ | 501,678 | ||||||||||||||||
Separate account assets | $ | 8,290 | $ | 62,264 | $ | 45,814 | $ | — | $ | 116,368 | $ | 4,471 | $ | — | $ | 120,839 | ||||||||||||||||
Separate account liabilities | $ | 8,290 | $ | 62,264 | $ | 45,814 | $ | — | $ | 116,368 | $ | 4,471 | $ | — | $ | 120,839 |
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Operating Earnings | ||||||||||||||||||||||||||||||||||||||||
U.S. Business | ||||||||||||||||||||||||||||||||||||||||
Corporate | Banking, | |||||||||||||||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto | Corporate | Total | |||||||||||||||||||||||||||||||||||
Year Ended December 31, 2007: | Products | Products | Funding | & Home | Total | International | & Other | Total | Adjustments | Consolidated | ||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 15,269 | $ | 339 | $ | 1,265 | $ | 2,966 | $ | 19,839 | $ | 3,096 | $ | 35 | $ | 22,970 | $ | — | $ | 22,970 | ||||||||||||||||||||
Universal life and investment-type product policy fees | 2,061 | 2,005 | 189 | — | 4,255 | 995 | — | 5,250 | (12 | ) | 5,238 | |||||||||||||||||||||||||||||
Net investment income | 6,079 | 2,740 | 6,636 | 196 | 15,651 | 1,249 | 1,428 | 18,328 | (271 | ) | 18,057 | |||||||||||||||||||||||||||||
Other revenues | 810 | 181 | 335 | 43 | 1,369 | 24 | 72 | 1,465 | — | 1,465 | ||||||||||||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | — | — | — | (578 | ) | (578 | ) | ||||||||||||||||||||||||||||
Total revenues | 24,219 | 5,265 | 8,425 | 3,205 | 41,114 | 5,364 | 1,535 | 48,013 | (861 | ) | 47,152 | |||||||||||||||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 17,001 | 605 | 3,365 | 1,811 | 22,782 | 2,521 | 46 | 25,349 | 157 | 25,506 | ||||||||||||||||||||||||||||||
Interest credited to policyholder account balances | 1,037 | 1,321 | 2,723 | — | 5,081 | 354 | — | 5,435 | 26 | 5,461 | ||||||||||||||||||||||||||||||
Interest credited to bank deposits | — | — | — | — | — | — | 200 | 200 | — | 200 | ||||||||||||||||||||||||||||||
Capitalization of DAC | (885 | ) | (932 | ) | (25 | ) | (471 | ) | (2,313 | ) | (743 | ) | (8 | ) | (3,064 | ) | — | (3,064 | ) | |||||||||||||||||||||
Amortization of DAC and VOBA | 727 | 822 | 38 | 468 | 2,055 | 309 | 11 | 2,375 | (125 | ) | 2,250 | |||||||||||||||||||||||||||||
Interest expense | 10 | 3 | 6 | — | 19 | 3 | 875 | 897 | — | 897 | ||||||||||||||||||||||||||||||
Other expenses | 4,241 | 2,088 | 477 | 832 | 7,638 | 2,180 | 328 | 10,146 | (24 | ) | 10,122 | |||||||||||||||||||||||||||||
Total benefits and expenses | 22,131 | 3,907 | 6,584 | 2,640 | 35,262 | 4,624 | 1,452 | 41,338 | 34 | 41,372 | ||||||||||||||||||||||||||||||
Provision for income tax expense (benefit) | 714 | 469 | 631 | 139 | 1,953 | 172 | (157 | ) | 1,968 | (293 | ) | 1,675 | ||||||||||||||||||||||||||||
Operating earnings | $ | 1,374 | $ | 889 | $ | 1,210 | $ | 426 | $ | 3,899 | $ | 568 | $ | 240 | 4,707 | |||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||||||||||||||
Total revenues | (861 | ) | ||||||||||||||||||||||||||||||||||||||
Total benefits and expenses | (34 | ) | ||||||||||||||||||||||||||||||||||||||
Provision for income tax (expense) benefit | 293 | |||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 4,105 | $ | 4,105 | ||||||||||||||||||||||||||||||||||||
23. | Discontinued Operations |
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Revenues | ||||||||||||
Investment income | $ | 9 | $ | 13 | $ | 28 | ||||||
Investment expense | (2 | ) | (4 | ) | (10 | ) | ||||||
Net investment gains (losses) | 8 | 8 | 13 | |||||||||
Total revenues | 15 | 17 | 31 | |||||||||
Provision for income tax | 5 | 6 | 13 | |||||||||
Income from discontinued operations, net of income tax | $ | 10 | $ | 11 | $ | 18 | ||||||
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Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Revenues: | ||||||||||||
Premiums | $ | 3 | $ | 17 | $ | 15 | ||||||
Universal life and investment-type product policy fees | 15 | 81 | 72 | |||||||||
Net investment income | 6 | 38 | 39 | |||||||||
Other revenues | — | — | 1 | |||||||||
Net investment gains (losses) | 1 | (2 | ) | 16 | ||||||||
Total revenues | 25 | 134 | 143 | |||||||||
Expenses: | ||||||||||||
Policyholder benefits and claims | 10 | 70 | 56 | |||||||||
Interest credited to policyholder account balances | 3 | 17 | 17 | |||||||||
Policyholder dividends | 1 | 3 | 3 | |||||||||
Other expenses | 5 | 29 | 29 | |||||||||
Total expenses | 19 | 119 | 105 | |||||||||
Income before provision for income tax | 6 | 15 | 38 | |||||||||
Provision for income tax | 2 | 4 | 13 | |||||||||
Income from operations of discontinued operations, net of income tax | 4 | 11 | 25 | |||||||||
Gain on disposal, net of income tax | 28 | 37 | — | |||||||||
Income from discontinued operations, net of income tax | $ | 32 | $ | 48 | $ | 25 | ||||||
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December 31, 2008 | ||||
(In millions) | ||||
Fixed maturity securities | $ | 514 | ||
Equity securities | 1 | |||
Mortgage loans | 41 | |||
Policy loans | 35 | |||
Real estate and real estate joint venturesheld-for-investment | 2 | |||
Total investments | 593 | |||
Cash and cash equivalents | 32 | |||
Accrued investment income | 7 | |||
Premiums and other receivables | 19 | |||
DAC and VOBA | 232 | |||
Deferred income tax asset | 61 | |||
Other assets | 2 | |||
Total assetsheld-for-sale | $ | 946 | ||
Future policy benefits | $ | 180 | ||
Policyholder account balances | 356 | |||
Other policyholder funds | 181 | |||
Policyholder dividends payable | 4 | |||
Current income tax payable | 1 | |||
Other liabilities | 26 | |||
Total liabilitiesheld-for-sale | $ | 748 | ||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In millions) | ||||||||
Revenues: | ||||||||
Premiums | $ | 3,535 | $ | 4,910 | ||||
Net investment income | 597 | 908 | ||||||
Other revenues | 69 | 77 | ||||||
Net investment gains (losses) | (249 | ) | (177 | ) | ||||
Total revenues | 3,952 | 5,718 | ||||||
Expenses: | ||||||||
Policyholder benefits and claims | 2,989 | 3,989 | ||||||
Interest credited to policyholder account balances | 108 | 262 | ||||||
Other expenses | 699 | 1,226 | ||||||
Total expenses | 3,796 | 5,477 | ||||||
Income before provision for income tax | 156 | 241 | ||||||
Provision for income tax | 53 | 84 | ||||||
Income from discontinued operations, net of income tax, available to MetLife, Inc.’s common shareholders | 103 | 157 | ||||||
Income from discontinued operations, net of income tax, attributable to noncontrolling interests | 94 | 141 | ||||||
Loss on disposal, net of income tax | (458 | ) | — | |||||
Income (loss) from discontinued operations, net of income tax | $ | (261 | ) | $ | 298 | |||
24. | Subsequent Events |
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Other Than Investments in Related Parties
December 31, 2009
(In millions)
Amount at | ||||||||||||
Cost or | Estimated | Which Shown on | ||||||||||
Type of Investments | Amortized Cost (1) | Fair Value | Balance Sheet | |||||||||
Fixed maturity securities: | ||||||||||||
Bonds: | ||||||||||||
U.S. Treasury, agency and government guaranteed securities | $ | 25,712 | $ | 25,447 | $ | 25,447 | ||||||
Foreign government securities | 11,010 | 11,947 | 11,947 | |||||||||
Public utilities | 10,156 | 10,365 | 10,365 | |||||||||
State and political subdivision securities | 7,468 | 7,208 | 7,208 | |||||||||
All other corporate bonds | 92,963 | 94,637 | 94,637 | |||||||||
Total bonds | 147,309 | 149,604 | 149,604 | |||||||||
Mortgage-backed and asset-backed securities | 76,170 | 72,804 | 72,804 | |||||||||
Redeemable preferred stock | 6,210 | 5,215 | 5,215 | |||||||||
Other fixed maturity securities | 20 | 19 | 19 | |||||||||
Total fixed maturity securities | 229,709 | 227,642 | 227,642 | |||||||||
Trading securities | 2,249 | 2,384 | 2,384 | |||||||||
Equity securities: | ||||||||||||
Non-redeemable preferred stock | 1,650 | 1,463 | 1,463 | |||||||||
Common stock: | ||||||||||||
Public utilities | 60 | 68 | 68 | |||||||||
Industrial, miscellaneous and all other | 1,473 | 1,548 | 1,548 | |||||||||
Banks, trust and insurance companies | 4 | 5 | 5 | |||||||||
Total equity securities | 3,187 | 3,084 | 3,084 | |||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | 48,181 | 48,181 | ||||||||||
Held-for-sale | 2,728 | 2,728 | ||||||||||
Mortgage loans, net | 50,909 | 50,909 | ||||||||||
Policy loans | 10,061 | 10,061 | ||||||||||
Real estate and real estate joint ventures | 6,769 | 6,769 | ||||||||||
Real estate acquired in satisfaction of debt | 127 | 127 | ||||||||||
Other limited partnership interests | 5,508 | 5,508 | ||||||||||
Short-term investments | 8,374 | 8,374 | ||||||||||
Other invested assets | 12,709 | 12,709 | ||||||||||
Total investments | $ | 329,602 | $ | 327,567 | ||||||||
(1) | The Company’s trading securities portfolio is mainly comprised of fixed maturity and equity securities. Cost or amortized cost for fixed maturity securities and mortgage loansheld-for-investment represents original cost reduced by repayments, valuation allowances and impairments fromother-than-temporary declines in estimated fair value that are charged to earnings and adjusted for amortization of premiums or discounts; for equity securities, cost represents original cost reduced by impairments fromother-than-temporary declines in estimated fair value; for real estate, cost represents original cost reduced by impairments and adjusted for valuation allowances and depreciation; for real estate joint ventures and other limited partnership interests cost represents original cost reduced forother-than-temporary impairments or original cost adjusted for equity in earnings and distributions. |
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December 31, 2009 and 2008
(In millions, except share and per share data)
2009 | 2008 | |||||||
Condensed Balance Sheets | ||||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $3,173 and $1,504, respectively) | $ | 3,187 | $ | 1,391 | ||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $20 and $20, respectively) | 17 | 8 | ||||||
Short-term investments | 303 | 1,073 | ||||||
Other invested assets | 37 | 39 | ||||||
Total investments | 3,544 | 2,511 | ||||||
Cash and cash equivalents | 679 | 678 | ||||||
Accrued investment income | 36 | 29 | ||||||
Investment in subsidiaries | 42,997 | 33,203 | ||||||
Loans to subsidiaries | 1,575 | 1,200 | ||||||
Receivables from subsidiaries | 11 | 1 | ||||||
Other assets | 991 | 974 | ||||||
Total assets | $ | 49,833 | $ | 38,596 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities: | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 427 | $ | 343 | ||||
Short-term debt | — | 300 | ||||||
Long-term debt — unaffiliated | 10,458 | 7,660 | ||||||
Long-term debt — affiliated | 500 | 500 | ||||||
Collateral financing arrangements | 2,797 | 2,692 | ||||||
Junior subordinated debt securities | 1,748 | 2,315 | ||||||
Other liabilities | 782 | 1,052 | ||||||
Total liabilities | $ | 16,712 | $ | 14,862 | ||||
Stockholders’ Equity: | ||||||||
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized; 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference | 1 | 1 | ||||||
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 822,359,818 and 798,016,664 shares issued at December 31, 2009 and 2008, respectively; 818,833,810 and 793,629,070 shares outstanding at December 31, 2009 and 2008, respectively | 8 | 8 | ||||||
Additional paid-in capital | 16,859 | 15,811 | ||||||
Retained earnings | 19,501 | 22,403 | ||||||
Treasury stock, at cost; 3,526,008 and 4,387,594 shares at December 31, 2009 and 2008, respectively | (190 | ) | (236 | ) | ||||
Accumulated other comprehensive loss | (3,058 | ) | (14,253 | ) | ||||
Total stockholders’ equity | 33,121 | 23,734 | ||||||
Total liabilities and stockholders’ equity | $ | 49,833 | $ | 38,596 | ||||
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For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Condensed Statements of Operations | ||||||||||||
Equity in earnings of subsidiaries | $ | (1,811 | ) | $ | 3,666 | $ | 4,632 | |||||
Net investment income | 153 | 167 | 274 | |||||||||
Other income | 155 | 149 | 84 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (23 | ) | (12 | ) | (9 | ) | ||||||
Other net investment gains (losses), net | 114 | (260 | ) | (32 | ) | |||||||
Total net investment gains (losses) | 91 | (272 | ) | (41 | ) | |||||||
Interest expense | (776 | ) | (736 | ) | (733 | ) | ||||||
Other expenses | (202 | ) | (89 | ) | (62 | ) | ||||||
Income (loss) before provision for income tax | (2,390 | ) | 2,885 | 4,154 | ||||||||
Provision for income tax benefit | (144 | ) | (324 | ) | (163 | ) | ||||||
Net income (loss) | (2,246 | ) | 3,209 | 4,317 | ||||||||
Less: Preferred stock dividends | 122 | 125 | 137 | |||||||||
Net income (loss) available to common shareholders | $ | (2,368 | ) | $ | 3,084 | $ | 4,180 | |||||
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Table of Contents
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Condensed Statements of Cash Flows | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | (2,246 | ) | $ | 3,209 | $ | 4,317 | |||||
Earnings of subsidiaries | 1,811 | (3,666 | ) | (4,632 | ) | |||||||
Dividends from subsidiaries | 515 | 1,148 | 1,254 | |||||||||
Other, net | (458 | ) | 509 | 248 | ||||||||
Net cash (used in) provided by operating activities | (378 | ) | 1,200 | 1,187 | ||||||||
Cash flows from investing activities | ||||||||||||
Sales of fixed maturity securities | 1,005 | 3,970 | 5,203 | |||||||||
Purchases of fixed maturity securities | (3,002 | ) | (2,983 | ) | (4,586 | ) | ||||||
Sales of equity securities | — | — | 13 | |||||||||
Purchases of equity securities | (3 | ) | (1 | ) | (32 | ) | ||||||
Net change in short-term investments | 772 | (1,073 | ) | — | ||||||||
Purchase of businesses | — | (202 | ) | — | ||||||||
Sale of businesses | 130 | — | — | |||||||||
Expense paid on behalf of subsidiaries | (69 | ) | — | — | ||||||||
Capital contributions to subsidiaries | (876 | ) | (1,284 | ) | (422 | ) | ||||||
Returns of capital from subsidiaries | — | — | 526 | |||||||||
Repayments of loans to subsidiaries | — | 400 | 800 | |||||||||
Issuance of loans to subsidiaries | (75 | ) | — | (700 | ) | |||||||
Disposal of subsidiary | (19 | ) | (43 | ) | — | |||||||
Other, net | (71 | ) | 57 | (60 | ) | |||||||
Net cash (used in) provided by investing activities | (2,208 | ) | (1,159 | ) | 742 | |||||||
Cash flows from financing activities | ||||||||||||
Net change in payables for collateral under securities loaned and other transactions | 84 | (471 | ) | (282 | ) | |||||||
Net change in short-term debt | (300 | ) | (10 | ) | (306 | ) | ||||||
Long-term debt issued | 1,647 | — | — | |||||||||
Cash received in connection with collateral financing arrangements | 775 | — | — | |||||||||
Cash paid in connection with collateral financing arrangements | (400 | ) | (800 | ) | — | |||||||
Junior subordinated debt securities issued | 500 | — | — | |||||||||
Debt issuance costs | (30 | ) | (8 | ) | (7 | ) | ||||||
Common stock issued, net of issuance costs | — | 290 | — | |||||||||
Common stock issued to settle stock forward contracts | 1,035 | — | — | |||||||||
Stock options exercised | 8 | 45 | 110 | |||||||||
Treasury stock acquired in connection with share repurchase agreements | — | (1,250 | ) | (1,705 | ) | |||||||
Treasury stock issued in connection with common stock issuance, net of issuance costs | — | 1,936 | — | |||||||||
Treasury stock issued to settle stock forward contracts | — | 1,035 | — | |||||||||
Dividends on preferred stock | (122 | ) | (125 | ) | (137 | ) | ||||||
Dividends on common stock | (610 | ) | (592 | ) | (541 | ) | ||||||
Net cash provided by (used in) financing activities | 2,587 | 50 | (2,868 | ) | ||||||||
Change in cash and cash equivalents | 1 | 91 | (939 | ) | ||||||||
Cash and cash equivalents, beginning of year | 678 | 587 | 1,526 | |||||||||
Cash and cash equivalents, end of year | $ | 679 | $ | 678 | $ | 587 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Net cash paid (received) during the year for: | ||||||||||||
Interest | $ | 704 | $ | 696 | $ | 711 | ||||||
Income tax | $ | 104 | $ | (249 | ) | $ | (241 | ) | ||||
Non-cash transactions during the year: | ||||||||||||
Disposal of subsidiary: | ||||||||||||
Investment in subsidiary disposed | $ | — | $ | 1,716 | $ | — | ||||||
Transaction costs, including cash paid of $19, $43 and $0, respectively | 2 | 60 | — | |||||||||
Treasury stock received in common stock exchange | — | (1,318 | ) | — | ||||||||
Loss on disposal of subsidiary | $ | 2 | $ | 458 | $ | — | ||||||
Remarketing of debt securities: | ||||||||||||
Fixed maturity securities redeemed | $ | 32 | $ | 32 | $ | — | ||||||
Long-term debt issued | $ | 1,035 | $ | 1,035 | $ | — | ||||||
Junior subordinated debt securities redeemed | $ | 1,067 | $ | 1,067 | $ | — | ||||||
Contribution of goodwill to subsidiaries | $ | — | $ | 22 | $ | — | ||||||
Contribution of other intangible assets to subsidiaries, net of deferred income tax | $ | — | $ | 97 | $ | — | ||||||
Issuance of collateral financing arrangements | $ | 105 | $ | 310 | $ | 2,382 | ||||||
Capital contribution to subsidiary | $ | 105 | $ | 310 | $ | 2,382 | ||||||
Allocation of interest expense to subsidiary | $ | 44 | $ | 107 | $ | 84 | ||||||
Allocation of interest income to subsidiary | $ | 56 | $ | 110 | $ | 72 | ||||||
Issuance of loan to subsidiary via transfer of fixed maturity securities | $ | 300 | $ | — | $ | — | ||||||
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1. | Basis of Presentation |
2. | Loans to Subsidiaries |
Interest | Maturity | December 31, | ||||||||||
Subsidiaries | Rate | Date | 2009 | 2008 | ||||||||
(In millions) | ||||||||||||
Metropolitan Life Insurance Company | 3-month LIBOR + 1.15% | December 31, 2009 | $ | — | $ | 700 | ||||||
Metropolitan Life Insurance Company | 6-month LIBOR + 1.80% | December 31, 2011 | 775 | — | ||||||||
Metropolitan Life Insurance Company | 6-month LIBOR + 1.80% | December 31, 2011 | 300 | — | ||||||||
Metropolitan Life Insurance Company | 7.13% | December 15, 2032 | 400 | 400 | ||||||||
Metropolitan Life Insurance Company | 7.13% | January 15, 2033 | 100 | 100 | ||||||||
Total | $ | 1,575 | $ | 1,200 | ||||||||
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3. | Long-term and Short-term Debt |
Interest Rates | December 31, | |||||||||||||||
Range | Weighted Average | Maturity | 2009 | 2008 | ||||||||||||
(In millions) | ||||||||||||||||
Senior notes — unaffiliated | 0.57%-7.72% | 5.94% | 2011-2035 | $ | 10,458 | $ | 7,660 | |||||||||
Affiliated debt | 0.99% | 1.57% | 2015-2016 | 500 | 500 | |||||||||||
Total | $ | 10,958 | $ | 8,160 | ||||||||||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Commercial paper | $ | — | $ | 300 | ||||
Average daily balance | $ | 5 | $ | 352 | ||||
Average days outstanding | 6 days | 26 days |
December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Short-term debt | $ | — | $ | 10 | $ | 33 | ||||||
Long-term debt — unaffiliated | 589 | 412 | 401 | |||||||||
Long-term debt — affiliated | 16 | 28 | 30 | |||||||||
Collateral financing arrangements | 59 | 121 | 84 | |||||||||
Junior subordinated debt securities | 112 | 164 | 183 | |||||||||
Stock purchase contracts | — | 1 | 2 | |||||||||
Total interest expense | $ | 776 | $ | 736 | $ | 733 | ||||||
4. | Support Agreements |
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F-185
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December 31, 2009, 2008 and 2007
(In millions)
Future Policy | ||||||||||||||||||||
Benefits, Other | ||||||||||||||||||||
DAC | Policyholder Funds | Policyholder | Policyholder | |||||||||||||||||
and | and Policyholder | Account | Dividends | Unearned | ||||||||||||||||
Segment | VOBA | Dividend Obligation | Balances | Payable | Revenue (1) | |||||||||||||||
2009 | ||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||
Insurance Products | $ | 10,103 | $ | 76,959 | $ | 28,118 | $ | 761 | $ | 1,123 | ||||||||||
Retirement Products | 6,023 | 4,081 | 46,821 | — | 79 | |||||||||||||||
Corporate Benefit Funding | 75 | 41,830 | 55,556 | — | 62 | |||||||||||||||
Auto & Home | 181 | 3,156 | — | — | — | |||||||||||||||
Total U.S. Business | 16,382 | 126,026 | 130,495 | 761 | 1,264 | |||||||||||||||
International | 2,870 | 12,467 | 8,128 | — | 805 | |||||||||||||||
Banking, Corporate & Other | 4 | 5,832 | 50 | — | — | |||||||||||||||
Total | $ | 19,256 | $ | 144,325 | $ | 138,673 | $ | 761 | $ | 2,069 | ||||||||||
2008 | ||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||
Insurance Products | $ | 11,555 | $ | 74,528 | $ | 26,510 | $ | 1,023 | $ | 1,213 | ||||||||||
Retirement Products | 5,888 | 3,743 | 44,282 | — | 54 | |||||||||||||||
Corporate Benefit Funding | 75 | 40,931 | 66,409 | — | 73 | |||||||||||||||
Auto & Home | 183 | 3,126 | — | — | — | |||||||||||||||
Total U.S. Business | 17,701 | 122,328 | 137,201 | 1,023 | 1,340 | |||||||||||||||
International | 2,436 | 10,468 | 5,654 | — | 583 | |||||||||||||||
Banking, Corporate & Other | 7 | 5,521 | 66 | — | — | |||||||||||||||
Total | $ | 20,144 | $ | 138,317 | $ | 142,921 | $ | 1,023 | $ | 1,923 | ||||||||||
2007 | ||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||
Insurance Products | $ | 9,327 | $ | 73,396 | $ | 26,192 | $ | 991 | $ | 1,200 | ||||||||||
Retirement Products | 5,549 | 3,132 | 37,784 | — | 38 | |||||||||||||||
Corporate Benefit Funding | 85 | 38,679 | 56,874 | — | 56 | |||||||||||||||
Auto & Home | 193 | 3,324 | — | — | — | |||||||||||||||
Total U.S. Business | 15,154 | 118,531 | 120,850 | 991 | 1,294 | |||||||||||||||
International | 2,648 | 11,121 | 4,961 | — | 544 | |||||||||||||||
Banking, Corporate & Other | 8 | 4,991 | (3 | ) | — | — | ||||||||||||||
Total | $ | 17,810 | $ | 134,643 | $ | 125,808 | $ | 991 | $ | 1,838 | ||||||||||
(1) | Amounts are included within the future policy benefits, other policyholder funds and policyholder dividend obligation column. |
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December 31, 2009, 2008 and 2007
(In millions)
Amortization of | ||||||||||||||||||||||||
Premium | Net | Policyholder | DAC and VOBA | Other | ||||||||||||||||||||
Revenue and | Investment | Benefits and | Charged to | Operating | Premiums Written | |||||||||||||||||||
Segment | Policy Charges | Income | Interest Credited | Other Expenses | Expenses (1) | (Excluding Life) | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products | $ | 19,422 | $ | 5,540 | $ | 18,431 | $ | 753 | $ | 4,981 | $ | 5,936 | ||||||||||||
Retirement Products | 2,335 | 2,642 | 3,085 | (315 | ) | 1,338 | — | |||||||||||||||||
Corporate Benefit Funding | 2,737 | 4,953 | 6,495 | 15 | 472 | — | ||||||||||||||||||
Auto & Home | 2,902 | 180 | 1,930 | 436 | 331 | 2,898 | ||||||||||||||||||
Total U.S. Business | 27,396 | 13,315 | 29,941 | 889 | 7,122 | 8,834 | ||||||||||||||||||
International | 4,248 | 1,024 | 3,240 | 415 | 1,213 | 645 | ||||||||||||||||||
Banking, Corporate & Other | 19 | 499 | 4 | 3 | 2,564 | — | ||||||||||||||||||
Total | $ | 31,663 | $ | 14,838 | $ | 33,185 | $ | 1,307 | $ | 10,899 | $ | 9,479 | ||||||||||||
2008 | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products | $ | 18,591 | $ | 5,786 | $ | 17,640 | $ | 687 | $ | 5,091 | $ | 5,594 | ||||||||||||
Retirement Products | 2,231 | 2,330 | 2,029 | 1,933 | 1,087 | — | ||||||||||||||||||
Corporate Benefit Funding | 2,910 | 5,919 | 7,246 | 29 | 460 | — | ||||||||||||||||||
Auto & Home | 2,971 | 186 | 1,919 | 454 | 355 | 2,949 | ||||||||||||||||||
Total U.S. Business | 26,703 | 14,221 | 28,834 | 3,103 | 6,993 | 8,543 | ||||||||||||||||||
International | 4,565 | 1,249 | 3,338 | 381 | 1,325 | 846 | ||||||||||||||||||
Banking, Corporate & Other | 27 | 821 | 53 | 5 | 1,891 | — | ||||||||||||||||||
Total | $ | 31,295 | $ | 16,291 | $ | 32,225 | $ | 3,489 | $ | 10,209 | $ | 9,389 | ||||||||||||
2007 | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products | $ | 17,318 | $ | 5,998 | $ | 16,553 | $ | 578 | $ | 5,083 | $ | 4,972 | ||||||||||||
Retirement Products | 2,344 | 2,709 | 1,926 | 846 | 1,136 | — | ||||||||||||||||||
Corporate Benefit Funding | 1,454 | 6,488 | 6,098 | 38 | 456 | — | ||||||||||||||||||
Auto & Home | 2,966 | 196 | 1,807 | 468 | 365 | 2,982 | ||||||||||||||||||
Total U.S. Business | 24,082 | 15,391 | 26,384 | 1,930 | 7,040 | 7,954 | ||||||||||||||||||
International | 4,091 | 1,247 | 2,814 | 309 | 1,467 | 669 | ||||||||||||||||||
Banking, Corporate & Other | 35 | 1,419 | 46 | 11 | 1,371 | — | ||||||||||||||||||
Total | $ | 28,208 | $ | 18,057 | $ | 29,244 | $ | 2,250 | $ | 9,878 | $ | 8,623 | ||||||||||||
(1) | Includes other expenses and policyholder dividends, excluding amortization of DAC and VOBA charged to other expenses. |
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Consolidated Reinsurance
December 31, 2009, 2008 and 2007
(In millions)
% Amount | ||||||||||||||||||||||||
Assumed | ||||||||||||||||||||||||
Gross Amount | Ceded | Assumed | Net Amount | to Net | ||||||||||||||||||||
2009 | ||||||||||||||||||||||||
Life insurance in-force | $ | 3,800,380 | $ | 715,405 | $ | 740,196 | $ | 3,825,171 | 19.4 | % | ||||||||||||||
Insurance premium | ||||||||||||||||||||||||
Life insurance | $ | 17,594 | $ | 1,816 | $ | 1,223 | $ | 17,001 | 7.2 | % | ||||||||||||||
Accident and health | 6,897 | 430 | 79 | 6,546 | 1.2 | % | ||||||||||||||||||
Property and casualty insurance | 2,981 | 79 | 11 | 2,913 | 0.4 | % | ||||||||||||||||||
Total insurance premium | $ | 27,472 | $ | 2,325 | $ | 1,313 | $ | 26,460 | 5.0 | % | ||||||||||||||
2008 | ||||||||||||||||||||||||
Life insurance in-force | $ | 3,697,999 | $ | 715,741 | $ | 684,281 | $ | 3,666,539 | 18.7 | % | ||||||||||||||
Insurance premium | ||||||||||||||||||||||||
Life insurance | $ | 17,252 | $ | 2,066 | $ | 1,224 | $ | 16,410 | 7.5 | % | ||||||||||||||
Accident and health | 6,741 | 444 | 226 | 6,523 | 3.5 | % | ||||||||||||||||||
Property and casualty insurance | 3,065 | 100 | 16 | 2,981 | 0.5 | % | ||||||||||||||||||
Total insurance premium | $ | 27,058 | $ | 2,610 | $ | 1,466 | $ | 25,914 | 5.7 | % | ||||||||||||||
2007 | ||||||||||||||||||||||||
Life insurance in-force | $ | 3,368,637 | $ | 566,998 | $ | 489,340 | $ | 3,290,979 | 14.9 | % | ||||||||||||||
Insurance premium | ||||||||||||||||||||||||
Life insurance | $ | 15,184 | $ | 1,819 | $ | 965 | $ | 14,330 | 6.7 | % | ||||||||||||||
Accident and health | 5,900 | 436 | 201 | 5,665 | 3.5 | % | ||||||||||||||||||
Property and casualty insurance | 3,065 | 116 | 26 | 2,975 | 0.9 | % | ||||||||||||||||||
Total insurance premium | $ | 24,149 | $ | 2,371 | $ | 1,192 | $ | 22,970 | 5.2 | % | ||||||||||||||
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Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
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Item 9B. | Other Information |
Name | Amount | |||
C. Robert Henrikson | $ | 3,500,000 | ||
William J. Wheeler | $ | 1,300,000 | ||
William J. Toppeta | $ | 900,000 | ||
Steven A. Kandarian | $ | 1,100,000 |
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December 31, 2009 | ||||
(In millions, | ||||
except share and | ||||
per share data) | ||||
Income (loss) from continuing operations, net of income tax | $ | (2,318 | ) | |
Less: Net investment gains (losses) | (7,772 | ) | ||
Less: Other adjustments to continuing operations | 284 | |||
Less: Provision for income tax expense (benefit) | 2,683 | |||
Operating earnings | 2,487 | |||
Less: Preferred stock dividends | 122 | |||
Operating earnings available to common shareholders | $ | 2,365 | ||
Weighted average common stock outstanding for basic operating earnings available to common shareholders per common share | 818,462,150 | |||
Incremental common shares from assumed: | ||||
Exercise or issuance of stock-based awards | 4,213,700 | |||
Weighted average common stock outstanding for diluted operating earnings available to common shareholders per common share | 822,675,850 | |||
Operating earnings available to common shareholders per diluted share | $ | 2.87 | ||
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Item 10. | Directors, Executive Officers and Corporate Governance |
Item 11. | Executive Compensation |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Number of Securities | ||||||||||||
Remaining Available for | ||||||||||||
Future Issuance Under | ||||||||||||
Number of Securities to | Weighted-average | Equity Compensation | ||||||||||
be Issued upon Exercise | Exercise Price of | Plans (Excluding | ||||||||||
of Outstanding Options, | Outstanding Options, | Securities Reflected | ||||||||||
Warrants and Rights (2) | Warrants and Rights (2) | in Column (a)) (2) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders (1) | 41,985,632 | $ | 38.51 | 61,820,029 | ||||||||
Equity compensation plans not approved by security holders | None | — | None | |||||||||
Total | 41,985,632 | $ | 38.51 | 61,820,029 |
(1) | Includes the MetLife, Inc. 2000 Stock Incentive Plan (the “2000 Stock Plan”) and the MetLife, Inc. 2000 Directors Stock Plan (the “2000 Directors Stock Plan”) each of which was approved by MLIC, the sole shareholder of the Holding Company at the time of approval. The policyholders of MLIC entitled to vote on its plan of reorganization (the “Plan”) approved that the Plan, which included both the 2000 Stock Plan and the 2000 Directors Stock Plan. The policyholders entitled to so vote received a summary description of each plan, including the applicable limits on the number of shares available for issuance under each plan. | |
(2) | The aggregate number of shares of common stock of the Holding Company (“Shares”) reserved for issuance under the MetLife, Inc. 2005 Stock and Incentive Compensation Plan (the “2005 Stock Plan”), is 68,000,000. In addition, 6,099,881 Shares that were available but had not been utilized under the 2000 Stock Plan became available for issuance under the 2005 Stock Plan at the time the 2005 Stock Plan became effective. At December 31, 2009, 6,919,058 additional Shares recovered due to forfeiture or expiration of awards under the 2000 Stock Plan from the time the 2005 Stock Plan became effective were also available for issuance under the 2005 Stock Plan. | |
Under the 2005 Stock Plan, awards granted may be in the form of Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, Performance Shares or Performance Share Units, Cash-Based Awards, and Stock-Based Awards (each as defined in the 2005 Stock Plan). At December 31, 2009, Stock Options, Performance Shares, Restricted Stock Units and Stock-Based Awards have been awarded under the 2005 Stock Plan. | ||
Stock Options outstanding as December 31, 2009 are included in column (a) and are included in column (b) at their weighted average exercise price. | ||
Under the award agreements that apply to the Performance Share awards made as of December 31, 2009, Shares are payable to eligible award recipients following the conclusion of the performance period. The number of shares payable is determined by multiplying the number of performance shares by a performance factor (from 0% to 200%) based on the performance of the Holding Company with respect to: (i) change in annual net operating earnings per share; and (ii) proportionate total shareholder return, as defined, as a percentile of the performance of other companies in the Fortune 500® companies in the Standard & Poor’s Insurance Index, with regard to the performance period. With respect to Performance Share awards made in 2009, no Performance Shares will be payable unless the Holding Company generates positive net income for either the third year of the performance period or for the performance period as a whole. In addition, with respect to Performance Share awards made in 2009, the performance factor will be multiplied by 0.75 if the Holding Company’s total shareholder return with regard to the performance period is zero percent or less. Performance Shares that were unvested on December 31, 2009, or that vested by December 31, 2009 but whose performance factor has not yet been determined and has not yet become payable, are included in column (a) assuming the maximum performance factor, but are not included in determining the weighted average in column (b) because they have no exercise price. | ||
Under the award agreements that apply to the Restricted Stock Unit awards, Shares equal to the number of Restricted Stock Units awarded are normally payable to eligible award recipients on the third or later |
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anniversary of the date the Restricted Stock Units were granted. Restricted Stock Units that were unvested by December 31, 2009 are included in column (a), but are not included in determining the weighted average in column (b) because they have no exercise price. | ||
Shares that had become payable from any awards but had been deferred and remained unpaid as of December 31, 2009 are included in column (a), but are not included in determining the weighted average in column (b) because they have no exercise price. | ||
Each Share issued under the 2005 Stock Plan in connection with awards other than Stock Options or Stock Appreciation Rights (including Shares payable on account of Performance Shares, Restricted Stock Units, and Stock-Based Awards) reduces the number of Shares remaining for issuance under the 2005 Stock Plan by 1.179 Shares. Accordingly, outstanding Performance Shares are reflected as reducing the number of Shares remaining for issuance by a factor of 1.179. Each Share issued under the 2005 Stock Plan in connection with a Stock Option or Stock Appreciation Right reduces the number of Shares remaining for issuance under the 2005 Stock Plan by 1.0. Accordingly, outstanding Stock Options are reflected as reducing the number of Shares remaining for issuance by a factor of 1.0. | ||
Share awards to Directors were made under a separate Share award authorization under the 2000 Directors Stock Plan. Those awards have not reduced the number of Shares remaining available for issuance as of December 31, 2009. Under the MetLife, Inc. 2005 Non-Management Director Stock Compensation Plan (the “2005 Directors Stock Plan”), awards granted may be in the form of non-qualified Stock Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units, or Stock-Based Awards (each as defined in the 2005 Directors Stock Plan). Stock-Based awards have been made under the 2005 Directors Stock Plan. The number of Shares reserved for issuance under the 2005 Directors Stock Plan is 2,000,000. | ||
Under both the 2005 Stock Plan and the 2005 Directors Stock Plan, in the event of a corporate event or transaction (including, but not limited to, a change in the Shares or the capitalization of the Holding Company) such as a merger, consolidation, reorganization, recapitalization, separation, stock dividend, extraordinary dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Holding Company, combination of securities, exchange of securities, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of the Holding Company, or any similar corporate event or transaction, the appropriate committee of the Board of Directors of the Holding Company (each, a “Committee”), in order to prevent dilution or enlargement of participants’ rights under the applicable plan, shall in its sole discretion substitute or adjust, as applicable, the number and kind of Shares that may be issued under that plan and shall adjust the number and kind of Shares subject to outstanding awards. Any Shares related to awards under either plan which: (i) terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of Shares; (ii) are settled in cash either in lieu of Shares or otherwise; or (iii) are exchanged with the appropriate Committee’s permission for awards not involving Shares, are available again for grant under the applicable plan. If the option price of any Stock Option granted under either plan or the tax withholding requirements with respect to any award granted under either plan are satisfied by tendering Shares to the Holding Company (by either actual delivery or by attestation), or if a Stock Appreciation Right is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for issuance under that plan. The maximum number of Shares available for issuance under either plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock, Restricted Stock Units, or Stock-Based Awards. |
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Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Item 14. | Principal Accountant Fees and Services |
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Item 15. | Exhibits and Financial Statement Schedules |
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By | /s/ C. Robert Henrikson |
Title: | Chairman of the Board, President |
Signature | Title | Date | ||||
/s/ Sylvia Mathews Burwell Sylvia Mathews Burwell | Director | February 26, 2010 | ||||
/s/ Eduardo Castro-Wright Eduardo Castro-Wright | Director | February 26, 2010 | ||||
/s/ Burton A. Dole, Jr. Burton A. Dole, Jr. | Director | February 26, 2010 | ||||
/s/ Cheryl W. Grisé Cheryl W. Grisé | Director | February 26, 2010 | ||||
/s/ R. Glenn Hubbard R. Glenn Hubbard | Director | February 26, 2010 | ||||
/s/ John M. Keane John M. Keane | Director | February 26, 2010 | ||||
/s/ Alfred F. Kelly, Jr. Alfred F. Kelly, Jr. | Director | February 26, 2010 | ||||
/s/ James M. Kilts James M. Kilts | Director | February 26, 2010 | ||||
/s/ Catherine R. Kinney Catherine R. Kinney | Director | February 26, 2010 | ||||
/s/ Hugh B. Price Hugh B. Price | Director | February 26, 2010 |
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Signature | Title | Date | ||||
/s/ David Satcher, M.D. David Satcher, M.D. | Director | February 26, 2010 | ||||
/s/ Kenton J. Sicchitano Kenton J. Sicchitano | Director | February 26, 2010 | ||||
/s/ William C. Steere, Jr. William C. Steere, Jr. | Director | February 26, 2010 | ||||
/s/ Lulu C. Wang Lulu C. Wang | Director | February 26, 2010 | ||||
/s/ C. Robert Henrikson C. Robert Henrikson | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | February 26, 2010 | ||||
/s/ William J. Wheeler William J. Wheeler | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 26, 2010 | ||||
/s/ Peter M. Carlson Peter M. Carlson | Executive Vice President, Finance Operations and Chief Accounting Officer (Principal Accounting Officer) | February 26, 2010 |
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Exhibit | |||||||
No. | Description | ||||||
2 | .1 | Plan of Reorganization (Incorporated by reference to Exhibit 2.1 to MetLife, Inc.’s Registration Statement on Form S-1 (No. 333-91517) (the “S-1 Registration Statement”)). | |||||
2 | .2 | Amendment to Plan of Reorganization dated as of March 9, 2000 (Incorporated by reference to Exhibit 2.2 to the S-1 Registration Statement). | |||||
2 | .3 | Acquisition Agreement between MetLife, Inc. and Citigroup Inc., dated as of January 31, 2005. | |||||
3 | .1 | Amended and Restated Certificate of Incorporation of MetLife, Inc. (Incorporated by reference to Exhibit 3.1 to MetLife, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the “2006 Annual Report”)). | |||||
3 | .2 | Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of MetLife, Inc., filed with the Secretary of State of Delaware on April 7, 2000 (Incorporated by reference to Exhibit 3.2 to the 2006 Annual Report). | |||||
3 | .3 | Certificate of Designations of Floating Rate Non-Cumulative Preferred Stock, Series A, of MetLife, Inc., filed with the Secretary of State of Delaware on June 10, 2005 (Incorporated by reference to Exhibit 99.5 to MetLife, Inc.’s Registration Statement on Form 8-A filed on June 10, 2005). | |||||
3 | .4 | Certificate of Designations of 6.50% Non-Cumulative Preferred Stock, Series B, of MetLife, Inc., filed with the Secretary of State of Delaware on June 14, 2005 (Incorporated by reference to Exhibit 99.5 to MetLife, Inc.’s Registration Statement on Form 8-A filed on June 15, 2005). | |||||
3 | .5 | MetLife, Inc. Amended and Restated By-Laws effective January 26, 2010 (Incorporated by reference to Exhibit 3.1 to MetLife, Inc.’s Current Report on Form 8-K dated January 29, 2010). | |||||
4 | .1(a) | Indenture dated as of November 9, 2001 between MetLife, Inc. and Bank One Trust Company, N.A. (predecessor to The Bank of New York Trust Company, N.A.) relating to Senior Debt Securities (Incorporated by reference to Exhibit 4.1(a) to the 2006 Annual Report). | |||||
4 | .1(b) | Form of Indenture for Senior Debt Securities between MetLife, Inc. and one or more banking institutions to be qualified as Trustee pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939 (Included in Exhibit 4.1(a) incorporated by reference to Exhibit 4.1(a) to the 2006 Annual Report, except for the name of the trustee). | |||||
4 | .2 | Second Supplemental Indenture dated as of November 27, 2001 between MetLife, Inc. and Bank One Trust Company, N.A. (predecessor to The Bank of New York Trust Company, N.A.) relating to the 6.125% Senior Notes due December 1, 2011 (Incorporated by reference to Exhibit 4.3 to the 2006 Annual Report). |
E-1
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
4 | .3 | Third Supplemental Indenture dated as of December 10, 2002 between MetLife, Inc. and Bank One Trust Company, N.A. (predecessor to The Bank of New York Trust Company, N.A.) relating to the 5.375% Senior Notes due December 15, 2012 (Incorporated by reference to Exhibit 4.3 to MetLife, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (the “2007 Annual Report”)). | |||||
4 | .4 | Fourth Supplemental Indenture dated as of December 10, 2002 between MetLife, Inc. and Bank One Trust Company, N.A. (predecessor to The Bank of New York Trust Company, N.A.) relating to the 6.50% Senior Notes due December 15, 2032 (Incorporated by reference to Exhibit 4.4 to the 2007 Annual Report). | |||||
4 | .5 | Fifth Supplemental Indenture dated as of November 21, 2003 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.) relating to the 5.875% Senior Notes due November 21, 2033 (Incorporated by reference to Exhibit 4.5 to MetLife, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the “2008 Annual Report”)). | |||||
4 | .6 | Sixth Supplemental Indenture dated as of November 24, 2003 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.) relating to the 5.00% Senior Notes due November 24, 2013 (Incorporated by reference to Exhibit 4.6 to the 2008 Annual Report). | |||||
4 | .7 | Seventh Supplemental Indenture dated as of June 3, 2004 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 5.50% Senior Notes due June 15, 2014. | |||||
4 | .8 | Eighth Supplemental Indenture dated as of June 3, 2004 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 6.375% Senior Notes due June 15, 2034. | |||||
4 | .9 | Ninth Supplemental Indenture dated as of July 23, 2004 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 5.50% Senior Notes due June 15, 2014. | |||||
4 | .10 | Tenth Supplemental Indenture dated as of July 23, 2004 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 6.375% Senior Notes due June 15, 2034. | |||||
4 | .11 | Eleventh Supplemental Indenture dated as of December 9, 2004 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 5.375% Senior Notes due December 9, 2024. | |||||
4 | .12 | Twelfth Supplemental Indenture dated as of June 23, 2005 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 5.00% Senior Notes due June 15, 2015 (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated June 23, 2005 (the “June 23, 2005 Form 8-K”)). | |||||
4 | .13 | Thirteenth Supplemental Indenture dated as of June 23, 2005 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 5.70% Senior Notes due June 15, 2035 (Incorporated by reference to Exhibit 4.3 to the June 23, 2005 Form 8-K). | |||||
4 | .14 | Fourteenth Supplemental Indenture dated as of June 29, 2005 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as trustee, relating to the 5.25% Senior Notes due June 29, 2020 (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated June 29, 2005 (the “June 29, 2005 Form 8-K”)). | |||||
4 | .15 | Fifteenth Supplemental Indenture, dated May 29, 2009, between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor in interest to J.P. Morgan Trust Company, National Association (as successor to Bank One Trust Company, N.A.)), as trustee, relating to the 6.75% Senior Notes due June 1, 2016 (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated May 29, 2009 (the “May 2009 Form 8-K”)). |
E-2
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
4 | .16 | Form of 6.125% Senior Note due December 1, 2011 (Included in Exhibit 4.2 incorporated by reference to Exhibit 4.3 to the 2006 Annual Report). | |||||
4 | .17 | Form of 5.375% Senior Note due December 15, 2012 (Included in Exhibit 4.3 incorporated by reference to Exhibit 4.3 to the 2007 Annual Report). | |||||
4 | .18 | Form of 6.50% Senior Note due December 15, 2032 (Included in Exhibit 4.4 incorporated by reference to Exhibit 4.4 to the 2007 Annual Report). | |||||
4 | .19 | Form of 5.875% Senior Note due November 21, 2033 (Included in Exhibit 4.5 incorporated by reference to Exhibit 4.5 to the 2008 Annual Report). | |||||
4 | .20 | Form of 5.00% Senior Note due November 24, 2013 (Included in Exhibit 4.6 incorporated by reference to Exhibit 4.6 to the 2008 Annual Report). | |||||
4 | .21 | Form of 5.50% Senior Note due June 15, 2014 (Included in Exhibit 4.7). | |||||
4 | .22 | Form of 6.375% Senior Note due June 15, 2034 (Included in Exhibit 4.8). | |||||
4 | .23 | Form of 5.50% Senior Note due June 15, 2014 (Included in Exhibit 4.9). | |||||
4 | .24 | Form of 6.375% Senior Note due June 15, 2034 (Included in Exhibit 4.10). | |||||
4 | .25 | Form of 5.375% Senior Note due December 9, 2024 (Included in Exhibit 4.11). | |||||
4 | .26 | Form of 5.00% Senior Note due June 15, 2015 (Included in Exhibit 4.12 incorporated by reference to Exhibit 4.1 to the June 23, 2005 Form 8-K). | |||||
4 | .27 | Form of 5.70% Senior Note due June 15, 2035 (Included in Exhibit 4.13 incorporated by reference to Exhibit 4.3 to the June 23, 2005 Form 8-K). | |||||
4 | .28 | Form of 5.25% Senior Note due June 29, 2020 (Included in Exhibit 4.14 incorporated by reference to Exhibit 4.1 to the June 29, 2005 Form 8-K). | |||||
4 | .29 | Form of 6.75% Senior Note due June 1, 2016 (Included in Exhibit 4.15 incorporated by reference to Exhibit 4.1 to the May 2009 Form 8-K). | |||||
4 | .30(a) | Indenture dated as of June 21, 2005 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.) relating to Subordinated Debt Securities (the “Subordinated Indenture”) (Incorporated by reference to Exhibit 4.5 to MetLife, Inc.’s Current Report on Form 8-K dated June 22, 2005 (the “June 22, 2005 Form 8-K”)). | |||||
4 | .30(b) | Form of Indenture for Subordinated Debt Securities between MetLife, Inc. and one or more banking institutions to be qualified as Trustee pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939 (Incorporated by reference to Exhibit 4.30(a), except for the name of the trustee). | |||||
4 | .31 | First Supplemental Indenture dated as of June 21, 2005 to the Subordinated Indenture between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.) (Incorporated by reference to Exhibit 4.6 to the June 22, 2005 Form 8-K). | |||||
4 | .32 | Second Supplemental Indenture dated as of June 21, 2005 to the Subordinated Indenture between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.) (Incorporated by reference to Exhibit 4.8 to the June 22, 2005 Form 8-K). | |||||
4 | .33 | Third Supplemental Indenture dated as of December 21, 2006 to the Subordinated Indenture between MetLife, Inc. and The Bank of New York Trust Company, N.A. (as successor to J.P. Morgan Trust Company, National Association) (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated December 22, 2006 (the “December 2006 Form 8-K”)). | |||||
4 | .34 | Sixth Supplemental Indenture dated as of August 7, 2008 to the Subordinated Indenture between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor in interest to J.P. Morgan Trust Company, National Association), as trustee (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated August 8, 2008). |
E-3
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
4 | .35 | Seventh Supplemental Indenture dated February 6, 2009 for the Subordinated Indenture between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor in interest to J.P. Morgan Trust Company, National Association), as trustee (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated February 9, 2009). | |||||
4 | .36 | Eighth Supplemental Indenture dated July 8, 2009 to the Subordinated Indenture between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor in interest to J.P. Morgan Trust Company, National Association), as trustee (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated July 8, 2009 (the “July 2009 Form 8-K”)). | |||||
4 | .37 | Form of Series A Debenture (Incorporated by reference to Exhibit 4.7 to the June 22, 2005 Form 8-K). | |||||
4 | .38 | Form of Series B Debenture (Incorporated by reference to Exhibit 4.9 to the June 22, 2005 Form 8-K). | |||||
4 | .39 | Form of junior subordinated debenture (Included in Exhibit 4.33 incorporated by reference to Exhibit 4.1 to the December 2006 Form 8-K). | |||||
4 | .40 | Form of security certificate representing MetLife, Inc.’s 6.817% Senior Debt Securities, Series A, due 2018 (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated August 15, 2008). | |||||
4 | .41 | Form of security certificate representing MetLife, Inc.’s 7.717% Senior Debt Securities, Series B, due 2019 (Incorporated by reference to Exhibit 4.1 to MetLife Inc.’s Current Report onForm 8-K dated February 18, 2009). | |||||
4 | .42 | Form of security certificate representing MetLife, Inc.’s 10.750% Fixed-to-Floating Rate Junior Subordinated Debentures due 2069 (Included in Exhibit 4.36 incorporated by reference to Exhibit 4.1 to the July 2009 Form 8-K). | |||||
4 | .43 | Certificate of Trust of MetLife Capital Trust III (Incorporated by reference to Exhibit 4.7 to MetLife, Inc.’s, MetLife Capital Trust II’s and MetLife Capital Trust III’s Registration Statement on Form S-3 (Nos. 333-61282, 333-61282-01 and 333-61282-02) (the “2001 S-3 Registration Statement”)). | |||||
4 | .44 | Certificate of Amendment to Certificate of Trust of MetLife Capital Trust III (Incorporated by reference to Exhibit 4.6 to MetLife, Inc.’s., MetLife Capital Trust II’s and MetLife Capital Trust III’s Registration Statement on Form S-3 (Nos. 333-112073, 333-112073-01 and333-112073-02) (the “2004 S-3 Registration Statement”)). | |||||
4 | .45 | Certificate of Trust of MetLife Capital Trust V (Incorporated by reference to Exhibit 4.3 to MetLife, Inc.’s, MetLife Capital Trust V’s, MetLife Capital Trust VI’s, MetLife Capital Trust VII’s, MetLife Capital Trust VIII’s and MetLife Capital Trust IX’s Registration Statement on Form S-3 (Nos. 333-147180, 333-147180-01, 333-147180-02, 333-147180-03, 333-147180-04 and 333-147180-05) (the “2007 S-3 Registration Statement”)). | |||||
4 | .46 | Certificate of Trust of MetLife Capital Trust VI (Incorporated by reference to Exhibit 4.4 to the 2007 S-3 Registration Statement). | |||||
4 | .47 | Certificate of Trust of MetLife Capital Trust VII (Incorporated by reference to Exhibit 4.5 to the 2007 S-3 Registration Statement). | |||||
4 | .48 | Certificate of Trust of MetLife Capital Trust VIII (Incorporated by reference to Exhibit 4.6 to the 2007 S-3 Registration Statement). | |||||
4 | .49 | Certificate of Trust of MetLife Capital Trust IX (Incorporated by reference to Exhibit 4.7 to the 2007 S-3 Registration Statement). | |||||
4 | .50 | Amended and Restated Declaration of Trust of MetLife Capital Trust III dated as of June 21, 2005 (Incorporated by reference to Exhibit 4.17 to the June 22, 2005 Form 8-K). | |||||
4 | .51 | Declaration of Trust of MetLife Capital Trust V (Incorporated by reference to Exhibit 4.8 to the 2007 S-3 Registration Statement). |
E-4
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
4 | .52 | Declaration of Trust of MetLife Capital Trust VI (Incorporated by reference to Exhibit 4.9 to the 2007 S-3 Registration Statement). | |||||
4 | .53 | Declaration of Trust of MetLife Capital Trust VII (Incorporated by reference to Exhibit 4.10 to the 2007 S-3 Registration Statement). | |||||
4 | .54 | Declaration of Trust of MetLife Capital Trust VIII (Incorporated by reference to Exhibit 4.11 to the 2007 S-3 Registration Statement). | |||||
4 | .55 | Declaration of Trust of MetLife Capital Trust IX (Incorporated by reference to Exhibit 4.12 to the 2007 S-3 Registration Statement). | |||||
4 | .56 | Form of Amended and Restated Declaration of Trust (substantially identical, except for names and dates, for MetLife Capital Trust V, MetLife Capital Trust VI, MetLife Capital Trust VII, MetLife Capital Trust VIII and MetLife Capital Trust IX) (Incorporated by reference to Exhibit 4.13 to the 2007 S-3 Registration Statement). | |||||
4 | .57 | Form of Trust Preferred Security Certificate (substantially identical, except for names and dates, for MetLife Capital Trust V, MetLife Capital Trust VI, MetLife Capital Trust VII, MetLife Capital Trust VIII and MetLife Capital Trust IX) (Included in Exhibit 4.56 incorporated by reference to Exhibit 4.13 to the 2007 S-3 Registration Statement). | |||||
4 | .58 | Guarantee Agreement dated June 21, 2005 by and between MetLife, Inc., as Guarantor, and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as Guarantee Trustee, relating to MetLife Capital Trust III (Incorporated by reference to Exhibit 4.19 to the June 22, 2005 Form 8-K). | |||||
4 | .59 | Form of Trust Preferred Securities Guarantee Agreement (substantially identical, except for names and dates, for MetLife Capital Trust V, MetLife Capital Trust VI, MetLife Capital Trust VII, MetLife Capital Trust VIII and MetLife Capital Trust IX) (Incorporated by reference to Exhibit 4.15 to the 2007 S-3 Registration Statement). | |||||
4 | .60 | Form of Common Securities Guarantee Agreement (substantially identical, except for names and dates, for MetLife Capital Trust V, MetLife Capital Trust VI, MetLife Capital Trust VII, MetLife Capital Trust VIII and MetLife Capital Trust IX) (Incorporated by reference to Exhibit 4.16 to the 2007 S-3 Registration Statement). | |||||
4 | .61 | Removal and Appointment of Trustees of MetLife Capital Trust III (Incorporated by reference to Exhibit 4.10 to the 2004 S-3 Registration Statement). | |||||
4 | .62 | Form of Certificate for Common Stock, par value $0.01 per share (Incorporated by reference to Exhibit 4.1 to the S-1 Registration Statement). | |||||
4 | .63 | Rights Agreement dated as of April 4, 2000 between MetLife, Inc. and ChaseMellon Shareholder Services, L.L.C. (predecessor to Mellon Investor Services LLC) (Incorporated by reference to Exhibit 4.48 to the 2006 Annual Report). | |||||
4 | .64 | Certificate of Designation, Preferences and Rights of Series A Junior Participating Preferred Stock of MetLife, Inc., filed with the Secretary of State of Delaware on April 7, 2000 (See Exhibit 3.2 above). | |||||
4 | .65 | Form of Right Certificate (Included as Exhibit B of Exhibit 4.63 incorporated by reference to Exhibit 4.48 to the 2006 Annual Report). | |||||
4 | .66 | Form of Warrant Agreement (Incorporated by reference to Exhibit 4.21 to the 2007 S-3 Registration Statement)**. | |||||
4 | .67 | Form of Deposit Agreement (Incorporated by reference to Exhibit 4.22 to the 2007 S-3 Registration Statement)**. | |||||
4 | .68 | Form of Depositary Receipt (Included in Exhibit 4.67 incorporated by reference to Exhibit 4.22 to the 2007 S-3 Registration Statement)**. | |||||
4 | .69 | Form of Purchase Contract Agreement (Incorporated by reference to Exhibit 4.24 to the 2007 S-3 Registration Statement)**. | |||||
4 | .70 | Form of Pledge Agreement (Incorporated by reference to Exhibit 4.25 to the 2007 S-3 Registration Statement)**. |
E-5
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
4 | .71 | Form of Unit Agreement (Incorporated by reference to Exhibit 4.26 to the 2007 S-3 Registration Statement)**. | |||||
4 | .72 | Stock Purchase Contract Agreement dated June 21, 2005 between MetLife, Inc. and J.P. Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as Stock Purchase Contract Agent (Incorporated by reference to Exhibit 4.1 to the June 22, 2005 Form 8-K). | |||||
4 | .73 | Form of Normal Common Equity Unit Certificate (Incorporated by reference to Exhibit 4.2 to the June 22, 2005 Form 8-K). | |||||
4 | .74 | Form of Stripped Common Equity Unit Certificate (Incorporated by reference to Exhibit 4.3 to the June 22, 2005 Form 8-K). | |||||
4 | .75 | Pledge Agreement dated as of June 21, 2005 among MetLife, Inc., JP Morgan Chase Bank, National Association (predecessor to The Bank of New York Trust Company, N.A.), as Collateral Agent, Custodial Agent and Securities Intermediary, and J.P Morgan Trust Company, National Association (predecessor to The Bank of New York Trust Company, N.A.), as Stock Purchase Contract Agent (Incorporated by reference to Exhibit 4.4 to the June 22, 2005 Form 8-K). | |||||
4 | .76 | Certificate of Designations of Floating Rate Non-Cumulative Preferred Stock, Series A, of MetLife, Inc., filed with the Secretary of State of Delaware on June 10, 2005 (See Exhibit 3.3 above). | |||||
4 | .77 | Form of Stock Certificate, Floating Rate Non-Cumulative Preferred Stock, Series A, of MetLife, Inc. (Incorporated by reference of Exhibit 99.6 to MetLife, Inc.’s Registration Statement on Form 8-A filed on June 10, 2005). | |||||
4 | .78 | Certificate of Designations of 6.50% Non-Cumulative Preferred Stock, Series B, of MetLife, Inc., filed with the Secretary of State of Delaware on June 14, 2005 (See Exhibit 3.4 above). | |||||
4 | .79 | Form of Stock Certificate, 6.50% Non-Cumulative Preferred Stock, Series B, of MetLife, Inc. (Incorporated by reference to Exhibit 99.6 to MetLife, Inc.’s Registration Statement onForm 8-A filed on June 15, 2005). | |||||
4 | .80 | Replacement Capital Covenant, dated as of December 21, 2006 (Incorporated by reference to Exhibit 4.2 to the December 2006 Form 8-K). | |||||
4 | .81 | Replacement Capital Covenant, dated as of December 12, 2007 (Incorporated by reference to Exhibit 4.2 to MetLife, Inc.’s Current Report on Form 8-K dated December 12, 2007). | |||||
4 | .82 | Replacement Capital Covenant, dated as of April 8, 2008 (Incorporated by reference to Exhibit 4.2 to MetLife, Inc.’s Current Report on Form 8-K dated April 8, 2008). | |||||
4 | .83 | Replacement Capital Covenant, dated as of December 30, 2008 (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report on Form 8-K dated December 30, 2008 (the “December 2008 Form 8-K”)). | |||||
4 | .84 | Replacement Capital Covenant, dated as of July 8, 2009 (Incorporated by reference to Exhibit 4.2 to the July 2009 Form 8-K). | |||||
10 | .1 | MetLife Executive Severance Plan (effective as of December 17, 2007) (Incorporated by reference to Exhibit 10.2 to MetLife, Inc.’s Current Report on Form 8-K dated December 13, 2007)*. | |||||
10 | .2 | MetLife Executive Severance Plan (as amended and restated effective June 14, 2010) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated December 21, 2009 (the “December 2009 Form 8-K”))*. | |||||
10 | .3 | Separation Agreement, Waiver and General Release dated as of February 27, 2009 between Ruth A. Fattori and MetLife Group, Inc. (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009)*. | |||||
10 | .4 | Separation Agreement, Waiver and General Release dated August 17, 2009 between Lisa M. Weber and MetLife Group, Inc. (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated September 3, 2009).* |
E-6
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
10 | .5 | MetLife, Inc. 2000 Stock Incentive Plan, as amended and restated March 28, 2000 (Incorporated by reference to Exhibit 10.7 to the S-1 Registration Statement)*. | |||||
10 | .6 | MetLife, Inc. 2000 Stock Incentive Plan, as amended, effective February 8, 2002 (Incorporated by reference to Exhibit 10.13 to the 2007 Annual Report)*. | |||||
10 | .7 | Form of Management Stock Option Agreement under the MetLife, Inc. 2000 Stock Incentive Plan (Incorporated by reference to Exhibit 10.4 to the 2008 Annual Report)*. | |||||
10 | .8 | Form of Management Stock Option Agreement under the 2005 SIC Plan (effective December 15, 2009) (Incorporated by reference to Exhibit 10.3 to the December 2009Form 8-K)*. | |||||
10 | .9 | MetLife, Inc. 2000 Directors Stock Plan, as amended and restated March 28, 2000 (Incorporated by reference to Exhibit 10.8 to the S-1 Registration Statement)*. | |||||
10 | .10 | MetLife, Inc. 2000 Directors Stock Plan, as amended effective February 8, 2002 (Incorporated by reference to Exhibit 10.17 to the 2007 Annual Report)*. | |||||
10 | .11 | Form of Director Stock Option Agreement under the MetLife, Inc. 2000 Directors Stock Plan (Incorporated by reference to Exhibit 10.7 to the 2008 Annual Report)*. | |||||
10 | .12 | MetLife, Inc. 2005 Stock and Incentive Compensation Plan, effective April 15, 2005 (the “2005 SIC Plan”)*. | |||||
10 | .13 | MetLife, Inc. 2005 Non-Management Director Stock Compensation Plan, effective April 15, 2005*. | |||||
10 | .14 | Form of Management Stock Option Agreement under the 2005 SIC Plan*. | |||||
10 | .15 | Form of Management Stock Option Agreement under the 2005 SIC Plan (effective as of April 25, 2007) (Incorporated by reference to Exhibit 10.4 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 (the “First Quarter 2007 10-Q”))*. | |||||
10 | .16 | Amendment to Stock Option Agreements under the 2005 SIC Plan (effective as of April 25, 2007) (Incorporated by reference to Exhibit 10.1 to the First Quarter 2007 10-Q)*. | |||||
10 | .17 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan (Incorporated by reference to Exhibit 10.19 to MetLife, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004)*. | |||||
10 | .18 | Amendment to Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective December 31, 2005) (Incorporated by reference to Exhibit 10.2 to MetLife, Inc.’s Current Report on Form 8-K dated January 10, 2006 (the “January 10, 2006 Form 8-K”))*. | |||||
10 | .19 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective December 31, 2005) (Incorporated by reference to Exhibit 10.4 to the January 10, 2006Form 8-K)*. | |||||
10 | .20 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective as of April 25, 2007) (Incorporated by reference to Exhibit 10.6 to the First Quarter 2007 10-Q)*. | |||||
10 | .21 | Amendment to Restricted Stock Unit Agreements under the 2005 SIC Plan (effective as of April 25, 2007) (Incorporated by reference to Exhibit 10.3 to the First Quarter 2007 10-Q)*. | |||||
10 | .22 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective December 11, 2007) (Incorporated by reference to Exhibit 10.5 to MetLife, Inc.’s Current Report on Form 8-K dated December 13, 2007 (the “December 13, 2007 Form 8-K”))*. | |||||
10 | .23 | Amendment to Restricted Stock Unit Agreements under the 2005 SIC Plan (effective as of December 31, 2007) (Incorporated by reference to Exhibit 10.29 to the 2007 Annual Report)*. | |||||
10 | .24 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective December 15, 2009) (Incorporated by reference to Exhibit 10.4 to the December 2009Form 8-K)*. | |||||
10 | .25 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective January 27, 2009) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated January 30, 2009)*. |
E-7
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
10 | .26 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective February 24, 2009) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated March 13, 2009)*. | |||||
10 | .27 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective December 15, 2009) (Incorporated by reference to Exhibit 10.2 to the December 2009Form 8-K)*. | |||||
10 | .28 | Clarification of Management Performance Share Agreement under the 2005 SIC Plan (Incorporated by reference to Exhibit 10.3 to MetLife, Inc.’s Current Report on Form 8-K dated December 19, 2005 (the “December 2005 Form 8-K”))*. | |||||
10 | .29 | Amendment to Management Performance Share Agreement under the 2005 SIC Plan (effective December 31, 2005) (Incorporated by reference to Exhibit 10.1 to the January 10, 2006Form 8-K))*. | |||||
10 | .30 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective December 31, 2005) (Incorporated by reference to Exhibit 10.3 to the January 10, 2006Form 8-K)*. | |||||
10 | .31 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective February 27, 2007) (Incorporated by reference to Exhibit 10.27 to the 2006 Annual Report)*. | |||||
10 | .32 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective as of April 25, 2007) (Incorporated by reference to Exhibit 10.5 to the First Quarter 2007 10-Q)*. | |||||
10 | .33 | Amendment to Management Performance Share Agreements under the 2005 SIC Plan (effective as of April 25, 2007) (Incorporated by reference to Exhibit 10.2 to the First Quarter 200710-Q)*. | |||||
10 | .34 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective December 11, 2007) (Incorporated by reference to Exhibit 10.4 to the December 13, 2007 Form 8-K)*. | |||||
10 | .35 | Amendment to Management Performance Share Agreements under the 2005 SIC Plan (effective as of December 31, 2007) (Incorporated by reference to Exhibit 10.3 to the December 13, 2007 Form 8-K)*. | |||||
10 | .36 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective as of January 27, 2009) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated January 30, 2009)*. | |||||
10 | .37 | MetLife Policyholder Trust Agreement (Incorporated by reference to Exhibit 10.12 to the S-1 Registration Statement). | |||||
10 | .38 | Amendment to MetLife Policyholder Trust Agreement (Incorporated by reference to Exhibit 3.2 to the MetLife Policyholder Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007). | |||||
10 | .39 | Five-Year $3,000,000,000 Credit Agreement, dated as of June 20, 2007, among MetLife, Inc. and MetLife Funding, Inc., as borrowers, and other parties signatory thereto (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated June 25, 2007). | |||||
10 | .40 | Amended and Restated $2,850,000 Five-Year Credit Agreement, dated as of June 20, 2007 and amended and restated as of December 23, 2008, among MetLife, Inc. and MetLife Funding, Inc., as borrowers, and other parties signatory thereto (Incorporated by reference to Exhibit 10.1 to the December 2008 Form 8-K). | |||||
10 | .41 | MetLife Annual Variable Incentive Plan (“AVIP”)*. | |||||
10 | .42 | Amendment Number One to the AVIP (Incorporated by reference to Exhibit 10.2 to the December 2005 Form 8-K)*. | |||||
10 | .43 | Resolutions of the MetLife, Inc. Board of Directors (adopted December 11, 2007) regarding the selection of performance measures for 2008 awards under the AVIP (Incorporated by reference to Exhibit 10.54 to the 2007 Annual Report)*. | |||||
10 | .44 | Resolutions of the MetLife, Inc. Board of Directors (adopted January 27, 2009) regarding the selection of performance measures for 2009 awards under the AVIP (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009)*. |
E-8
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
10 | .45 | Metropolitan Life Auxiliary Savings and Investment Plan (as amended and restated, effective January 1, 2008) (Incorporated by reference to Exhibit 10.57 to the 2007 Annual Report)*. | |||||
10 | .46 | Amendment 1 to the Metropolitan Life Auxiliary Savings and Investment Plan (as amended and restated, effective January 1, 2008)*. | |||||
10 | .47 | MetLife Deferred Compensation Plan for Officers, as amended and restated, effective November 1, 2003 (Incorporated by reference to Exhibit 10.41 to the 2008 Annual Report)*. | |||||
10 | .48 | Amendment Number One to the MetLife Deferred Compensation Plan for Officers, dated May 4, 2005 (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2005)*. | |||||
10 | .49 | Amendment Number Two to The MetLife Deferred Compensation Plan for Officers, effective December 14, 2005 (Incorporated by reference to Exhibit 10.7 to the December 2005 Form 8-K)*. | |||||
10 | .50 | Amendment Number Three to The MetLife Deferred Compensation Plan for Officers (as amended and restated as of November 1, 2003, effective February 26, 2007) (Incorporated by reference to Exhibit 10.48 to the 2006 Annual Report)*. | |||||
10 | .51 | MetLife Leadership Deferred Compensation Plan, dated November 2, 2006 (as amended and restated effective with respect to salary and cash incentive compensation, January 1, 2005, and with respect to stock compensation, April 15, 2005) (Incorporated by reference to Exhibit 10.3 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006 (the “Third Quarter 2006 10-Q”))*. | |||||
10 | .52 | Amendment Number One to The MetLife Leadership Deferred Compensation Plan, dated December 13, 2007 (effective as of December 31, 2007) (Incorporated by reference to Exhibit 10.63 to the 2007 Annual Report)*. | |||||
10 | .53 | Amendment Number Two to The MetLife Leadership Deferred Compensation Plan, dated December 11, 2008 (effective December 31, 2008) (Incorporated by reference to Exhibit 10.47 to the 2008 Annual Report)*. | |||||
10 | .54 | Amendment Number Three to The MetLife Leadership Deferred Compensation Plan, dated December 11, 2009 (effective January 1, 2010)*. | |||||
10 | .55 | Amendment Number Four to The MetLife Leadership Deferred Compensation Plan, dated December 11, 2009 (effective December 31, 2009)*. | |||||
10 | .56 | MetLife Deferred Compensation Plan for Outside Directors (effective December 9, 2003) (Incorporated by reference to Exhibit 10.48 to the 2008 Annual Report)*. | |||||
10 | .57 | Amendment Number One to The MetLife Deferred Compensation Plan for Outside Directors (as amended and restated as of December, 2003, effective February 26, 2007) (Incorporated by reference to Exhibit 10.51 to the 2006 Annual Report)*. | |||||
10 | .58 | MetLife Non-Management Director Deferred Compensation Plan, dated November 2, 2006 (as amended and restated, effective January 1, 2005) (Incorporated by reference to Exhibit 10.4 to the Third Quarter 2006 10-Q)*. | |||||
10 | .59 | Amendment Number One to The MetLife Non-Management Director Deferred Compensation Plan (as amended and restated as of December, 2006, effective February 26, 2007) (Incorporated by reference to Exhibit 10.53 to the 2006 Annual Report)*. | |||||
10 | .60 | MetLife Non-Management Director Deferred Compensation Plan, dated December 5, 2007 (as amended and restated, effective January 1, 2005) (Incorporated by reference to Exhibit 10.68 to the 2007 Annual Report)*. | |||||
10 | .61 | The MetLife Non-Management Director Deferred Compensation Plan, dated December 9, 2008 (as amended and restated effective January 1, 2005) (Incorporated by reference to Exhibit 10.53 to the 2008 Annual Report)*. | |||||
10 | .62 | MetLife, Inc. Director Indemnity Plan (dated and effective July 22, 2008) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated July 25, 2008)*. | |||||
10 | .63 | MetLife Auxiliary Pension Plan dated August 7, 2006 (as amended and restated, effective June 30, 2006) (Incorporated by reference to Exhibit 10.3 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 (the “Second Quarter 2006 10-Q”))*. |
E-9
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
10 | .64 | MetLife Auxiliary Pension Plan dated December 21, 2006 (amending and restating Part I thereof, effective January 1, 2007) (Incorporated by reference to Exhibit 10.57 to the 2006 Annual Report)*. | |||||
10 | .65 | MetLife Auxiliary Pension Plan dated December 21, 2007 (amending and restating Part I thereof, effective January 1, 2008) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated December 28, 2007)*. | |||||
10 | .66 | Amendment #1 to the MetLife Auxiliary Pension Plan (as amended and restated effective January 1, 2008) dated October 24, 2008 (effective October 1, 2008) (Incorporated by reference to Exhibit 10.58 to the 2008 Annual Report)*. | |||||
10 | .67 | Amendment Number Two to the MetLife Auxiliary Pension Plan (as amended and restated effective January 1, 2008) dated December 12, 2008 (effective December 31, 2008) (Incorporated by reference to Exhibit 10.59 to the 2008 Annual Report)*. | |||||
10 | .68 | Amendment Number Three to the MetLife Auxiliary Pension Plan (as amended and restated effective January 1, 2008) dated March 25, 2009 (effective January 1, 2009) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated March 31, 2009)*. | |||||
10 | .69 | Amendment Number Four to the MetLife Auxiliary Pension Plan (as amended and restated effective January 1, 2008) (effective January 1, 2010) (Incorporated by reference to Exhibit 10.5 to the December 2009 Form 8-K)*. | |||||
10 | .70 | MetLife Plan for Transition Assistance for Officers, dated January 7, 2000, as amended (the “MPTA”)*. | |||||
10 | .71 | Amendment Number Ten to the MPTA, dated January 26, 2005* (Incorporated by reference to Exhibit 10.55 to MetLife, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the “2005 Annual Report”))*. | |||||
10 | .72 | Amendment Number Eleven to the MPTA, dated February 28, 2006 (Incorporated by reference to Exhibit 10.56 to the 2005 Annual Report)*. | |||||
10 | .73 | Amendment Number Twelve to the MPTA, dated August 7, 2006 (Incorporated by reference to Exhibit 10.1 to the Second Quarter 2006 10-Q)*. | |||||
10 | .74 | Amendment Number Thirteen to the MPTA, dated August 7, 2006 (Incorporated by reference to Exhibit 10.2 to the Second Quarter 2006 10-Q)*. | |||||
10 | .75 | Amendment Number Fourteen to the MPTA, dated January 26, 2007 (Incorporated by reference to Exhibit 10.63 to the 2006 Annual Report)*. | |||||
10 | .76 | Amendment Number Fifteen to the MPTA, dated June 1, 2007 (Incorporated by reference to Exhibit 10.2 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007)*. | |||||
10 | .77 | Amendment Number Sixteen to the MPTA, dated December 12, 2007 (Incorporated by reference to Exhibit 10.81 to the 2007 Annual Report)*. | |||||
10 | .78 | Amendment Number Seventeen to the MPTA, dated June 3, 2008 (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008)*. | |||||
10 | .79 | Amendment Number Eighteen to the MPTA, dated August 13, 2008 (Incorporated by reference to Exhibit 10.69 to the 2008 Annual Report)*. | |||||
10 | .80 | Amendment Number Nineteen to the MPTA, dated December 8, 2008 (Incorporated by reference to Exhibit 10.70 to the 2008 Annual Report)*. | |||||
10 | .81 | Amendment Number Twenty to the MPTA, dated December 16, 2008 (Incorporated by reference to Exhibit 10.71 to the 2008 Annual Report)*. | |||||
10 | .82 | Amendment Number Twenty-One to the MPTA, dated December 18, 2008 (Incorporated by reference to Exhibit 10.72 to the 2008 Annual Report)*. | |||||
10 | .83 | Amendment Number Twenty-Two to the MPTA, dated December 21, 2009*. |
E-10
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
10 | .84 | MetLife Plan for Transition Assistance for Officers, dated December 28, 2009 (as amended and restated, effective January 1, 2010)*. | |||||
10 | .85 | One Madison Avenue Purchase and Sale Agreement, dated as of March 29, 2005, between Metropolitan Life Insurance Company, as Seller, and 1 Madison Venture LLC and Column Financial, Inc., collectively, as Purchaser (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated April 4, 2005 (the “April 4, 2005 Form 8-K”)). | |||||
10 | .86 | MetLife Building, 200 Park Avenue, New York, NY Purchase and Sale Agreement, dated as of April 1, 2005, between Metropolitan Tower Life Insurance Company, as Seller, and Tishman Speyer Development, L.L.C., as Purchaser (Incorporated by reference to Exhibit 10.2 to the April 4, 2005 Form 8-K). | |||||
10 | .87 | Stuyvesant Town, New York, New York, Purchase and Sale Agreement between Metropolitan Tower Life Insurance Company, as Seller, and Tishman Speyer Development Corp., as Purchaser, dated as of October 17, 2006 (Incorporated by reference to Exhibit 10.1 to the Third Quarter 2006 10-Q). | |||||
10 | .88 | Peter Cooper Village, New York, New York, Purchase and Sale Agreement between Metropolitan Tower Life Insurance Company, as Seller, and Tishman Speyer Development Corp., as Purchaser, dated as of October 17, 2006 (Incorporated by reference to Exhibit 10.2 to the Third Quarter 2006 10-Q). | |||||
10 | .89 | International Distribution Agreement dated as of July 1, 2005 between MetLife, Inc. and Citigroup Inc. (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report on Form 8-K dated July 8, 2005 (the “July 8, 2005 Form 8-K”)). | |||||
10 | .90 | Domestic Distribution Agreement dated as of July 1, 2005 between MetLife, Inc. and Citigroup Inc. (Incorporated by reference to Exhibit 10.2 to the July 8, 2005 Form 8-K). | |||||
12 | .1 | Statement re: Computation of Ratios of Earnings to Fixed Charges. | |||||
21 | .1 | Subsidiaries of the Registrant. | |||||
23 | .1 | Consent of Deloitte & Touche LLP. | |||||
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. |
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
* | Indicates management contracts or compensatory plans or arrangements. | |
** | Indicates document to be filed as an exhibit to a Current Report onForm 8-K or Quarterly Report onForm 10-Q pursuant to Item 601 ofRegulation S-K and incorporated herein by reference. |
E-11