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(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, 2010 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
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 |
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• | Strengthen our growth platform |
• | Optimize our delivery and operations |
• | Protect and extend our risk management |
• | Enhance organizational effectiveness |
• | Capitalize on innovation |
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For the Year Ended December 31, 2010 | ||||||||
(In millions) | Percent | |||||||
New York | $ | 391 | 13 | % | ||||
Massachusetts | $ | 258 | 9 | % | ||||
Illinois | $ | 203 | 7 | % | ||||
Florida | $ | 164 | 5 | % | ||||
Connecticut | $ | 153 | 5 | % | ||||
Texas | $ | 142 | 5 | % |
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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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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; |
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• | 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. |
• | chartering to carry on business as a bank; | |
• | the permissibility of certain activities; | |
• | maintaining minimum capital ratios; |
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• | capital management in relation to the bank’s assets; | |
• | dividend payments; | |
• | 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 (and, in addition, Dodd-Frank includes the credit exposures arising from securities lending by MetLife Bank within lending limits otherwise applicable to loans); | |
• | payment of interest; | |
• | unfair or deceptive acts or practices; | |
• | privacy; and | |
• | bank holding company and bank change of control. |
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• | As a large, interconnected bank holding company with assets of $50 billion or more, or possibly as an otherwise systemically important financial company, MetLife, Inc. will be subject to enhanced prudential standards imposed on systemically significant financial companies. Enhanced standards will be applied to RBC, liquidity, leverage (unless another, similar, standard is appropriate), resolution plan and credit exposure reporting, concentration limits, and risk management. Off-balance sheet activities are required to be accounted for in meeting capital requirements. In addition, if it were determined that MetLife posed a substantial threat to U.S. financial stability, the applicable federal regulators would have the right to require it to take one or more other mitigating actions to reduce that risk, including limiting its ability to merge with or acquire another company, terminating activities, restricting its ability to offer financial products or requiring it to sell assets or off-balance sheet items to unaffiliated entities. Enhanced standards would also permit, but not require, regulators to establish requirements with respect to contingent capital, enhanced public disclosures and short-term debt limits. These standards are described as being more stringent than those otherwise imposed on bank holding companies; however, the Federal Reserve Board is permitted to apply them on aninstitution-by-institution basis, depending on its determination of the institution’s riskiness. In addition, under Dodd-Frank, all bank holding companies that have elected to be treated as financial holding companies, such as MetLife, Inc. will be required to be “well capitalized” and “well managed” as defined by the Federal Reserve Board, on a consolidated basis and not just at their depository institution(s), a higher standard than was applicable to financial holding companies beforeDodd-Frank. | |
• | MetLife, Inc., as a bank holding company, will have to meet minimum leverage ratio and RBC requirements on a consolidated basis to be established by the Federal Reserve Board that are not less than those applicable to insured depository institutions under so-called prompt corrective action regulations as in effect on the date of the enactment of Dodd-Frank. One consequence of these new rules will ultimately be the inability of bank holding companies to include trust-preferred securities as part of their Tier 1 capital. Because of the phase-in period for these new rules, they should have little practical effect on MetLife’s ability to treat its currently outstanding trust-preferred securities as part of its Tier 1 capital, but they do prevent MetLife, Inc. from treating the common equity units issued as part of the consideration for the Acquisition as Tier I capital, since the new rules apply immediately to instruments issued after May 19, 2010. | |
• | Under the provisions of Dodd-Frank relating to the resolution or liquidation of certain types of financial institutions, including bank holding companies, if MetLife, Inc. were to become insolvent or were in danger of defaulting on its obligations, it could be compelled to undergo liquidation with the FDIC as receiver. For this new regime to be applicable, a number of determinations would have to be made, including that a default by the affected company would have serious adverse effects on financial stability in the U.S. If the FDIC were to be appointed as the receiver for such a company, the liquidation of that company would occur under the provisions of the new liquidation authority, and not under the Bankruptcy Code. In such a liquidation, the holders of such company’s debt could in certain a respects be treated differently than under the Bankruptcy Code. In particular, unsecured creditors and shareholders are intended to bear the losses of the company being liquidated. The FDIC is authorized to establish rules for the priority of creditors’ claims and, under certain circumstances, to treat similarly situated creditors differently. These provisions could apply to some financial institutions whose outstanding debt securities we hold in our investment portfolios. Dodd-Frank also provides for the assessment of bank holding companies with assets of $50.0 billion or more, non-bank financial companies supervised by the Federal Reserve Bank, and other financial companies with assets of $50.0 billion or more to cover the costs of liquidating any financial company subject to the new liquidation authority. Although it is not possible to assess the full impact of the liquidation authority at this time, it could affect the funding costs of large bank holding companies or financial companies that might be viewed as systemically significant. It could also lead to an increase in secured financings. | |
• | Dodd-Frank also includes a new framework of regulation of the OTC derivatives markets which will require clearing of certain types of transactions currently traded OTC and could potentially impose additional costs, |
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including new capital, reporting and margin requirements and additional regulation on the Company. Increased margin requirements on MetLife, Inc.’s part and a smaller universe of securities that will qualify as eligible collateral could reduce its liquidity and require an increase in its holdings of cash and government securities with lower yields causing a reduction in income. However, increased margin requirements and the expanded ability to transfer trades between MetLife, Inc.’s counterparties could reduce MetLife, Inc.’s exposure to its counterparties’ default. MetLife, Inc. uses derivatives to mitigate a wide range of risks in connection with its businesses, including the impact of increased benefit exposures from our annuity products that offer guaranteed benefits. The derivative clearing requirements ofDodd-Frank could increase the cost of our risk mitigation and expose us to the risk of a default by a clearinghouse or one of its members. In addition, we are subject to the risk that hedging and other management procedures prove ineffective in reducing the risks to which insurance policies expose us or that unanticipated policyholder behavior or mortality, combined with adverse market events, produces economic losses beyond the scope of the risk management techniques employed. Any such losses could be increased by any higher costs of writing derivatives (including customized derivatives) that might result from the enactment of Dodd-Frank. |
• | Dodd-Frank restricts the ability of insured depository institutions and of companies, such as MetLife, Inc., that control an insured depository institution and their affiliates, to engage in proprietary trading and to sponsor or invest in funds (hedge funds and private equity funds) that rely on certain exemptions from the Investment Company Act. Dodd-Frank provides an exemption for investment activity by a regulated insurance company or its affiliate solely for the general account of such insurance company if such activity is in compliance with the insurance company investments laws of the state or jurisdiction in which such company is domiciled and the appropriate Federal regulators after consultation with relevant insurance commissioners have not jointly determined such laws to be insufficient to protect the safety and soundness of the institution or the financial stability of the U.S. Notwithstanding the foregoing, the appropriate Federal regulatory authorities are permitted under the legislation to impose, as part of rulemaking, additional capital requirements and other restrictions on any exempted activity. Dodd-Frank provides for a period of study and rule making during which the effects of the statutory language may be clarified. Among other considerations, the study is to assess and include recommendations so as to appropriately accommodate the business of insurance within an insurance company subject to regulation in accordance with relevant insurance company investments laws. While these provisions of Dodd-Frank are supposed to accommodate the business of insurance, until the related study and rulemaking are complete, it is unclear whether MetLife, Inc. may have to alter any of its future investment activities to comply. | |
• | Until various studies are completed and final regulations are promulgated pursuant to Dodd-Frank, the full impact of Dodd-Frank on the investments and investment activities and insurance and annuity products of MetLife, Inc. and its subsidiaries remains unclear. For example, besides directly limiting our future investment activities, Dodd-Frank could potentially negatively impact the market for, the returns from, or liquidity in, primary and secondary investments in private equity funds and hedge funds that are connected to (either through a fund sponsorship or investor relationship) an insured depository institution. The number of sponsors of such funds going forward may diminish, which may impact our available fund investment opportunities. Although Dodd-Frank provides for various transition periods for coming into compliance, fund sponsors that are subject to Dodd-Frank, and whose funds we have invested in, may have to spin off their funds business or reduce their ownership stakes in their funds, thereby potentially impacting our related investments in such funds. In addition, should such funds be required or choose to liquidate or sell their underlying assets, the market value and liquidity of such assets or the broader related asset classes could negatively be affected, including securities and real estate assets that MetLife, Inc. and its subsidiaries hold or may plan to sell. Secondary sales of fund interests at significant discounts by banking institutions and their affiliates, which are not fund sponsors but nevertheless are subject to the divestment requirements ofDodd-Frank, could reduce the returns realized by investors such as MetLife, Inc. and its subsidiaries seeking to access liquidity by selling their fund interests. In addition, our existing derivatives counterparties and the financial institutions subject to Dodd-Frank in which we have invested also could be negatively impacted by Dodd-Frank. See also “— New and Impending Compensation and Corporate Governance Regulations Could Hinder or Prevent Us From Attracting and Retaining Management and Other Employees with the Talent and Experience to Manage and Conduct Our Business Effectively.” |
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• | In addition, Dodd-Frank statutorily imposes the requirement that MetLife, Inc. serve as a source of strength for MetLife Bank. |
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• | Loss of key personnel or higher than expected employee attrition rates could adversely affect the performance of the acquired business and our ability to integrate it successfully. | |
• | Customers of the acquired business may reduce, delay or defer decisions concerning their use of its products and services as a result of the acquisition or uncertainty related to the consummation of the acquisition, including, for example, potential unfamiliarity with the MetLife brand in regions where MetLife did not have a market presence prior to the acquisition. | |
• | If the acquired business relies upon independent distributors to distribute its products, these distributors may not continue to generate the same volume of business for MetLife after the acquisition. Independent distributors may reexamine the scope of their relationship with the acquired business or MetLife as a result of the acquisition and decide to curtail or eliminate distribution of our products. | |
• | Integrating acquired operations with our existing operations may require us to coordinate geographically separated organizations, address possible differences in corporate culture and management philosophies, merge financial processes and risk and compliance procedures, combine separate information technology platforms and integrate operations that were previously closely tied to the former parent of the acquired business or other service providers. | |
• | In cases where we or an acquired business operates in certain markets through joint ventures, the acquisition may affect the continued success and prospects of the joint venture. Our ability to exercise management control or influence over these joint venture operations and our investment in them will depend on the continued cooperation between the joint venture participants and on the terms of the joint venture agreements, which allocate control among the joint venture participants. We may face financial or other exposure in the event that any of these joint venture partners fail to meet their obligations under the joint venture, encounter financial difficulty or elect to alter, modify or terminate the relationship. | |
• | We may incur significant costs in connection with any acquisition and the related integration. The costs and liabilities actually incurred in connection with an acquisition and subsequent integration process may exceed those anticipated. |
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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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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 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 the estimated 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; |
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• | 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 MetLife, Inc.’s 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. MetLife, Inc. does not currently have a stockholder rights plan. |
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Item 1B. | Unresolved Staff Comments |
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Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | (Removed and Reserved) |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
2010 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
Common Stock Price | ||||||||||||||||
High | $ | 43.34 | $ | 47.10 | $ | 42.73 | $ | 44.92 | ||||||||
Low | $ | 33.64 | $ | 37.76 | $ | 36.49 | $ | 37.74 |
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 |
Dividend | ||||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | ||||||||||
(In millions, | ||||||||||||||
except per share data) | ||||||||||||||
October 26, 2010 | November 9, 2010 | December 14, 2010 | $ | 0.74 | $ | 784 | (1) | |||||||
October 29, 2009 | November 9, 2009 | December 14, 2009 | $ | 0.74 | $ | 610 |
(1) | Includes dividends paid on Series B Contingent Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock (the “Convertible Preferred Stock”). |
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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, 2010 | 1,241 | $ | 38.92 | — | $ | 1,260,735,127 | ||||||||||
November 1- November 30, 2010 | 160 | $ | 42.90 | — | $ | 1,260,735,127 | ||||||||||
December 1- December 31, 2010 | 987 | $ | 43.90 | — | $ | 1,260,735,127 |
(1) | During the periods October 1 through October 31, 2010, November 1 through November 30, 2010 and December 1 through December 31, 2010, separate account affiliates of the Company purchased 1,241 shares, 160 shares and 987 shares, respectively, of common stock on the open market in nondiscretionary transactions to rebalance index funds. Except as disclosed above, no shares of common stock were repurchased by the Company. | |
(2) | At December 31, 2010, 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 $1.0 billion common stock repurchase program, which will begin after the completion of the January 2008 $1.0 billion common stock repurchase program, of which $261 million remained outstanding at December 31, 2010. 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. Whether or not to purchase any common stock and the size and timing of any such purchases will be determined in the Company’s complete discretion. |
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Item 6. | Selected Financial Data |
Years Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Statement of Operations Data (1) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Premiums | $ | 27,394 | $ | 26,460 | $ | 25,914 | $ | 22,970 | $ | 22,052 | ||||||||||
Universal life and investment-type product policy fees | 6,037 | 5,203 | 5,381 | 5,238 | 4,711 | |||||||||||||||
Net investment income | 17,615 | 14,837 | 16,289 | 18,055 | 16,239 | |||||||||||||||
Other revenues | 2,328 | 2,329 | 1,586 | 1,465 | 1,301 | |||||||||||||||
Net investment gains (losses) | (392 | ) | (2,906 | ) | (2,098 | ) | (318 | ) | (1,174 | ) | ||||||||||
Net derivative gains (losses) | (265 | ) | (4,866 | ) | 3,910 | (260 | ) | (208 | ) | |||||||||||
Total revenues | 52,717 | 41,057 | 50,982 | 47,150 | 42,921 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Policyholder benefits and claims | 29,545 | 28,336 | 27,437 | 23,783 | 22,869 | |||||||||||||||
Interest credited to policyholder account balances | 4,925 | 4,849 | 4,788 | 5,461 | 4,899 | |||||||||||||||
Policyholder dividends | 1,486 | 1,650 | 1,751 | 1,723 | 1,698 | |||||||||||||||
Other expenses | 12,803 | 10,556 | 11,947 | 10,405 | 9,514 | |||||||||||||||
Total expenses | 48,759 | 45,391 | 45,923 | 41,372 | 38,980 | |||||||||||||||
Income (loss) from continuing operations before provision for income tax | 3,958 | (4,334 | ) | 5,059 | 5,778 | 3,941 | ||||||||||||||
Provision for income tax expense (benefit) | 1,181 | (2,015 | ) | 1,580 | 1,675 | 1,027 | ||||||||||||||
Income (loss) from continuing operations, net of income tax | 2,777 | (2,319 | ) | 3,479 | 4,103 | 2,914 | ||||||||||||||
Income (loss) from discontinued operations, net of income tax | 9 | 41 | (201 | ) | 362 | 3,526 | ||||||||||||||
Net income (loss) | 2,786 | (2,278 | ) | 3,278 | 4,465 | 6,440 | ||||||||||||||
Less: Net income (loss) attributable to noncontrolling interests | (4 | ) | (32 | ) | 69 | 148 | 147 | |||||||||||||
Net income (loss) attributable to MetLife, Inc. | 2,790 | (2,246 | ) | 3,209 | 4,317 | 6,293 | ||||||||||||||
Less: Preferred stock dividends | 122 | 122 | 125 | 137 | 134 | |||||||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 2,668 | $ | (2,368 | ) | $ | 3,084 | $ | 4,180 | $ | 6,159 | |||||||||
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December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Balance Sheet Data (1) | ||||||||||||||||||||
Assets: | ||||||||||||||||||||
General account assets (2) | $ | 547,569 | $ | 390,273 | $ | 380,839 | $ | 399,007 | $ | 383,758 | ||||||||||
Separate account assets | 183,337 | 149,041 | 120,839 | 160,142 | 144,349 | |||||||||||||||
Total assets | $ | 730,906 | $ | 539,314 | $ | 501,678 | $ | 559,149 | $ | 528,107 | ||||||||||
Liabilities: | ||||||||||||||||||||
Policyholder liabilities and other policy-related balances (3) | $ | 401,905 | $ | 283,759 | $ | 282,261 | $ | 261,442 | $ | 252,099 | ||||||||||
Payables for collateral under securities loaned and other transactions | 27,272 | 24,196 | 31,059 | 44,136 | 45,846 | |||||||||||||||
Bank deposits | 10,316 | 10,211 | 6,884 | 4,534 | 4,638 | |||||||||||||||
Short-term debt | 306 | 912 | 2,659 | 667 | 1,449 | |||||||||||||||
Long-term debt (2) | 27,586 | 13,220 | 9,667 | 9,100 | 8,822 | |||||||||||||||
Collateral financing arrangements | 5,297 | 5,297 | 5,192 | 4,882 | — | |||||||||||||||
Junior subordinated debt securities | 3,191 | 3,191 | 3,758 | 4,075 | 3,381 | |||||||||||||||
Other (2) | 22,583 | 15,989 | 15,374 | 33,186 | 32,277 | |||||||||||||||
Separate account liabilities | 183,337 | 149,041 | 120,839 | 160,142 | 144,349 | |||||||||||||||
Total liabilities | 681,793 | 505,816 | 477,693 | 522,164 | 492,861 | |||||||||||||||
Redeemable noncontrolling interests in partially owned consolidated securities | 117 | — | — | — | — | |||||||||||||||
Equity: | ||||||||||||||||||||
MetLife, Inc.’s stockholders’ equity: | ||||||||||||||||||||
Preferred stock, at par value | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Convertible preferred stock, at par value | — | — | — | — | — | |||||||||||||||
Common stock, at par value | 10 | 8 | 8 | 8 | 8 | |||||||||||||||
Additional paid-in capital | 26,423 | 16,859 | 15,811 | 17,098 | 17,454 | |||||||||||||||
Retained earnings | 21,363 | 19,501 | 22,403 | 19,884 | 16,574 | |||||||||||||||
Treasury stock, at cost | (172 | ) | (190 | ) | (236 | ) | (2,890 | ) | (1,357 | ) | ||||||||||
Accumulated other comprehensive income (loss) | 1,000 | (3,058 | ) | (14,253 | ) | 1,078 | 1,118 | |||||||||||||
Total MetLife, Inc.’s stockholders’ equity | 48,625 | 33,121 | 23,734 | 35,179 | 33,798 | |||||||||||||||
Noncontrolling interests | 371 | 377 | 251 | 1,806 | 1,448 | |||||||||||||||
Total equity | 48,996 | 33,498 | 23,985 | 36,985 | 35,246 | |||||||||||||||
Total liabilities and equity | $ | 730,906 | $ | 539,314 | $ | 501,678 | $ | 559,149 | $ | 528,107 | ||||||||||
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Years Ended December 31, | |||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||
(In millions, except per share data) | |||||||||||||||
Other Data (1), (4) | |||||||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 2,668 | $ | (2,368) | $ | 3,084 | $ | 4,180 | $ | 6,159 | |||||
Return on MetLife, Inc.’s common equity | 6.9% | (9.0)% | 11.2% | 12.9% | 20.9% | ||||||||||
Return on MetLife, Inc.’s common equity, excluding accumulated other comprehensive income (loss) | 7.0% | (6.8)% | 9.1% | 13.3% | 22.1% | ||||||||||
EPS Data (1), (5) | |||||||||||||||
Income (Loss) from Continuing Operations Available to MetLife, Inc.’s Common Shareholders Per Common Share: | |||||||||||||||
Basic | $ | 3.01 | $ | (2.94) | $ | 4.60 | $ | 5.32 | $ | 3.64 | |||||
Diluted | $ | 2.99 | $ | (2.94) | $ | 4.54 | $ | 5.19 | $ | 3.59 | |||||
Income (Loss) from Discontinued Operations Per Common Share: | |||||||||||||||
Basic | $ | 0.01 | $ | 0.05 | $ | (0.41) | $ | 0.30 | $ | 4.45 | |||||
Diluted | $ | 0.01 | $ | 0.05 | $ | (0.40) | $ | 0.29 | $ | 4.40 | |||||
Net Income (Loss) Available to MetLife, Inc.’s Common Shareholders Per Common Share: | |||||||||||||||
Basic | $ | 3.02 | $ | (2.89) | $ | 4.19 | $ | 5.62 | $ | 8.09 | |||||
Diluted | $ | 3.00 | $ | (2.89) | $ | 4.14 | $ | 5.48 | $ | 7.99 | |||||
Cash Dividends Declared Per Common Share | $ | 0.74 | $ | 0.74 | $ | 0.74 | $ | 0.74 | $ | 0.59 |
(1) | On November 1, 2010, the Holding Company acquired ALICO. The results of the Acquisition are reflected in the 2010 selected financial data. See Note 2 of the Notes to the Consolidated Financial Statements. | |
(2) | At December 31, 2010, general account assets, long-term debt and other liabilities include amounts relating to variable interest entities of $11,080 million, $6,902 million and $93 million, respectively. | |
(3) | Policyholder liabilities and other policy-related balances include future policy benefits, policyholder account balances, other policy-related balances, policyholder dividends payable and the policyholder dividend obligation. | |
(4) | Return on MetLife, Inc.’s common equity is defined as net income (loss) available to MetLife, Inc.’s common shareholders divided by MetLife, Inc.’s average common stockholders’ equity. | |
(5) | For the year ended December 31, 2009, shares related to the assumed exercise or issuance of stock-based awards have been excluded from the calculation of diluted earnings per common share as these assumed shares are anti-dilutive. |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 2,777 | $ | (2,319 | ) | $ | 3,479 | |||||
Less: Net investment gains (losses) | (392 | ) | (2,906 | ) | (2,098 | ) | ||||||
Less: Net derivative gains (losses) | (265 | ) | (4,866 | ) | 3,910 | |||||||
Less: Adjustments to continuing operations (1) | (981 | ) | 283 | (664 | ) | |||||||
Less: Provision for income tax (expense) benefit | 401 | 2,683 | (488 | ) | ||||||||
Operating earnings | 4,014 | 2,487 | 2,819 | |||||||||
Less: Preferred stock dividends | 122 | 122 | 125 | |||||||||
Operating earnings available to common shareholders | $ | 3,892 | $ | 2,365 | $ | 2,694 | ||||||
(1) | See definitions of operating revenues and operating expenses for the components of such adjustments. |
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• | Premiums, fees and other revenues growth in 2011 of approximately 30%, of which 27% is directly attributable to the Acquisition. The remaining 3% increase is driven by: |
• | Increases in ournon-U.S. businesses from continuing organic growth throughout our various geographic regions; | |
• | Higher fees earned on separate accounts, as the equity markets continue to improve, thereby increasing the value of those separate accounts. In addition, net flows of variable annuities are expected to continue to be strong in 2011, which also increases the account values upon which these fees are earned; | |
• | Increased sales in the pension closeout business, both in the U.S. and the United Kingdom (“U.K.”), as we expect the demand for these products to return to a more normal level in 2011. |
• | Focus on disciplined underwriting. We see no significant changes to the underlying trends that drive underwriting results and anticipate solid results in 2011. | |
• | Focus on expense management. We continue to focus on expense control throughout the Company, specifically managing the costs associated with the integration of ALICO. We also expect to begin realizing cost synergies later in 2011. | |
• | Returns on investment portfolio. Although the market environment remains challenging, we expect the returns on our investment portfolio in 2011, with respect to both income and realized gains and losses, will be in line with the results achieved in 2010. |
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(i) | the estimated fair value of investments in the absence of quoted market values; | |
(ii) | investment impairments; |
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(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. |
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 |
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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 projected cash flows on mortgage-backed and asset-backed securities (“ABS”); and | |
(ix) | other subjective factors, including concentrations and information obtained from regulators and rating agencies. |
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Carrying Value | ||||||||
At December 31, 2010 | ||||||||
DAC and | ||||||||
PABs | VOBA | |||||||
(In millions) | ||||||||
100% increase in the Company’s credit spread | $ | 1,551 | $ | 79 | ||||
As reported | $ | 2,357 | $ | 110 | ||||
50% decrease in the Company’s credit spread | $ | 2,852 | $ | 130 |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Investment return | $ | 3 | $ | 141 | $ | 70 | ||||||
Separate account balances | 21 | (32 | ) | (708 | ) | |||||||
Net investment gain (loss) | (124 | ) | 712 | (521 | ) | |||||||
Expense | 89 | 60 | 61 | |||||||||
In-force/Persistency | 17 | (87 | ) | (159 | ) | |||||||
Policyholder dividends and other | (192 | ) | 174 | (30 | ) | |||||||
Total | $ | (186 | ) | $ | 968 | $ | (1,287 | ) | ||||
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• | 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 $197 million, excluding the impact from the Company’s nonperformance risk 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 $88 million. | |
– | The narrowing of the Company’s nonperformance risk adjustment increased the valuation of guarantee liabilities, decreased actual gross profits and decreased DAC and VOBA amortization by $96 million. In addition, higher risk margins which increased the guarantee liability valuations, decreased actual gross profits and decreased DAC and VOBA amortization by $18 million. | |
– | The remainder of the impact of net investment gains (losses), which increased DAC amortization by $129 million, was primarily attributable to current period investment activities. |
• | Included in policyholder dividends and other was an increase in DAC and VOBA amortization of $42 million as a result of changes to long-term assumptions. In addition, amortization increased by $39 million as a result of favorable gross margin variances. The remainder of the increase was due to various immaterial items. |
• | 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 nonperformance risk 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 nonperformance risk adjustment 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 DAC and VOBA 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 led 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. |
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• | 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 nonperformance risk adjustment 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) on DAC amortization of $129 million was attributable to numerous immaterial items. |
• | Increases in DAC and VOBA 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, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Premiums | $ | 27,394 | $ | 26,460 | $ | 934 | 3.5 | % | ||||||||
Universal life and investment-type product policy fees | 6,037 | 5,203 | 834 | 16.0 | % | |||||||||||
Net investment income | 17,615 | 14,837 | 2,778 | 18.7 | % | |||||||||||
Other revenues | 2,328 | 2,329 | (1 | ) | — | % | ||||||||||
Net investment gains (losses) | (392 | ) | (2,906 | ) | 2,514 | 86.5 | % | |||||||||
Net derivative gains (losses) | (265 | ) | (4,866 | ) | 4,601 | 94.6 | % | |||||||||
Total revenues | 52,717 | 41,057 | 11,660 | 28.4 | % | |||||||||||
Expenses | ||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 31,031 | 29,986 | 1,045 | 3.5 | % | |||||||||||
Interest credited to policyholder account balances | 4,925 | 4,849 | 76 | 1.6 | % | |||||||||||
Interest credited to bank deposits | 137 | 163 | (26 | ) | (16.0 | )% | ||||||||||
Capitalization of DAC | (3,343 | ) | (3,019 | ) | (324 | ) | (10.7 | )% | ||||||||
Amortization of DAC and VOBA | 2,801 | 1,307 | 1,494 | 114.3 | % | |||||||||||
Interest expense on debt | 1,550 | 1,044 | 506 | 48.5 | % | |||||||||||
Other expenses | 11,658 | 11,061 | 597 | 5.4 | % | |||||||||||
Total expenses | 48,759 | 45,391 | 3,368 | 7.4 | % | |||||||||||
Income (loss) from continuing operations before provision for income tax | 3,958 | (4,334 | ) | 8,292 | 191.3 | % | ||||||||||
Provision for income tax expense (benefit) | 1,181 | (2,015 | ) | 3,196 | 158.6 | % | ||||||||||
Income (loss) from continuing operations, net of income tax | 2,777 | (2,319 | ) | 5,096 | 219.7 | % | ||||||||||
Income (loss) from discontinued operations, net of income tax | 9 | 41 | (32 | ) | (78.0 | )% | ||||||||||
Net income (loss) | 2,786 | (2,278 | ) | 5,064 | 222.3 | % | ||||||||||
Less: Net income (loss) attributable to noncontrolling interests | (4 | ) | (32 | ) | 28 | 87.5 | % | |||||||||
Net income (loss) attributable to MetLife, Inc. | 2,790 | (2,246 | ) | 5,036 | 224.2 | % | ||||||||||
Less: Preferred stock dividends | 122 | 122 | — | — | % | |||||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 2,668 | $ | (2,368 | ) | $ | 5,036 | 212.7 | % | |||||||
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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 | $ | 1,371 | $ | 813 | $ | 1,002 | $ | 295 | $ | (131 | ) | $ | (573 | ) | $ | 2,777 | ||||||||||||
Less: Net investment gains (losses) | 103 | 139 | 176 | (7 | ) | (273 | ) | (530 | ) | (392 | ) | |||||||||||||||||
Less: Net derivative gains (losses) | 215 | 266 | (193 | ) | (1 | ) | (491 | ) | (61 | ) | (265 | ) | ||||||||||||||||
Less: Adjustments to continuing operations (1) | (237 | ) | (282 | ) | 143 | — | (427 | ) | (178 | ) | (981 | ) | ||||||||||||||||
Less: Provision for income tax (expense) benefit | (31 | ) | (49 | ) | (44 | ) | 3 | 268 | 254 | 401 | ||||||||||||||||||
Operating earnings | $ | 1,321 | $ | 739 | $ | 920 | $ | 300 | $ | 792 | (58 | ) | 4,014 | |||||||||||||||
Less: Preferred stock dividends | 122 | 122 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (180 | ) | $ | 3,892 | |||||||||||||||||||||||
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 | ) | $ | (628 | ) | $ | (581 | ) | $ | 321 | $ | (280 | ) | $ | (733 | ) | $ | (2,319 | ) | ||||||||
Less: Net investment gains (losses) | (472 | ) | (533 | ) | (1,486 | ) | (41 | ) | (105 | ) | (269 | ) | (2,906 | ) | ||||||||||||||
Less: Net derivative gains (losses) | (1,786 | ) | (1,426 | ) | (421 | ) | 39 | (798 | ) | (474 | ) | (4,866 | ) | |||||||||||||||
Less: Adjustments to continuing operations (1) | (139 | ) | 519 | 125 | — | (206 | ) | (16 | ) | 283 | ||||||||||||||||||
Less: Provision for income tax (expense) benefit | 837 | 504 | 621 | 1 | 366 | 354 | 2,683 | |||||||||||||||||||||
Operating earnings | $ | 1,142 | $ | 308 | $ | 580 | $ | 322 | $ | 463 | (328 | ) | 2,487 | |||||||||||||||
Less: Preferred stock dividends | 122 | 122 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (450 | ) | $ | 2,365 | |||||||||||||||||||||||
(1) | See definitions of operating revenues and operating expenses for the components of such adjustments. |
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Corporate | Banking, | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 26,451 | $ | 6,881 | $ | 7,540 | $ | 3,146 | $ | 6,794 | $ | 1,905 | $ | 52,717 | ||||||||||||||
Less: Net investment gains (losses) | 103 | 139 | 176 | (7 | ) | (273 | ) | (530 | ) | (392 | ) | |||||||||||||||||
Less: Net derivative gains (losses) | 215 | 266 | (193 | ) | (1 | ) | (491 | ) | (61 | ) | (265 | ) | ||||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
Less: Other adjustments to revenues (1) | (144 | ) | (248 | ) | 193 | — | 44 | 449 | 294 | |||||||||||||||||||
Total operating revenues | $ | 26,276 | $ | 6,724 | $ | 7,364 | $ | 3,154 | $ | 7,514 | $ | 2,047 | $ | 53,079 | ||||||||||||||
Total expenses | $ | 24,338 | $ | 5,622 | $ | 5,999 | $ | 2,781 | $ | 6,987 | $ | 3,032 | $ | 48,759 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | 90 | 35 | — | — | (7 | ) | — | 118 | ||||||||||||||||||||
Less: Other adjustments to expenses (1) | 4 | (1 | ) | 50 | — | 478 | 627 | 1,158 | ||||||||||||||||||||
Total operating expenses | $ | 24,244 | $ | 5,588 | $ | 5,949 | $ | 2,781 | $ | 6,516 | $ | 2,405 | $ | 47,483 | ||||||||||||||
Corporate | Banking, | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 23,483 | $ | 3,725 | $ | 5,486 | $ | 3,113 | $ | 4,383 | $ | 867 | $ | 41,057 | ||||||||||||||
Less: Net investment gains (losses) | (472 | ) | (533 | ) | (1,486 | ) | (41 | ) | (105 | ) | (269 | ) | (2,906 | ) | ||||||||||||||
Less: Net derivative gains (losses) | (1,786 | ) | (1,426 | ) | (421 | ) | 39 | (798 | ) | (474 | ) | (4,866 | ) | |||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | (27 | ) | — | — | — | — | — | (27 | ) | |||||||||||||||||||
Less: Other adjustments to revenues (1) | (74 | ) | (219 | ) | 188 | — | (169 | ) | 22 | (252 | ) | |||||||||||||||||
Total operating revenues | $ | 25,842 | $ | 5,903 | $ | 7,205 | $ | 3,115 | $ | 5,455 | $ | 1,588 | $ | 49,108 | ||||||||||||||
Total expenses | $ | 24,165 | $ | 4,690 | $ | 6,400 | $ | 2,697 | $ | 4,868 | $ | 2,571 | $ | 45,391 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | 39 | (739 | ) | — | — | — | — | (700 | ) | |||||||||||||||||||
Less: Other adjustments to expenses (1) | (1 | ) | 1 | 63 | — | 37 | 38 | 138 | ||||||||||||||||||||
Total operating expenses | $ | 24,127 | $ | 5,428 | $ | 6,337 | $ | 2,697 | $ | 4,831 | $ | 2,533 | $ | 45,953 | ||||||||||||||
(1) | See definitions of operating revenues and operating expenses for the components of such adjustments. |
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 17,200 | $ | 17,168 | $ | 32 | 0.2 | % | ||||||||
Universal life and investment-type product policy fees | 2,247 | 2,281 | (34 | ) | (1.5 | )% | ||||||||||
Net investment income | 6,068 | 5,614 | 454 | 8.1 | % | |||||||||||
Other revenues | 761 | 779 | (18 | ) | (2.3 | )% | ||||||||||
Total operating revenues | 26,276 | 25,842 | 434 | 1.7 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 19,075 | 19,111 | (36 | ) | (0.2 | )% | ||||||||||
Interest credited to policyholder account balances | 963 | 952 | 11 | 1.2 | % | |||||||||||
Capitalization of DAC | (841 | ) | (873 | ) | 32 | 3.7 | % | |||||||||
Amortization of DAC and VOBA | 966 | 725 | 241 | 33.2 | % | |||||||||||
Interest expense on debt | 1 | 6 | (5 | ) | (83.3 | )% | ||||||||||
Other expenses | 4,080 | 4,206 | (126 | ) | (3.0 | )% | ||||||||||
Total operating expenses | 24,244 | 24,127 | 117 | 0.5 | % | |||||||||||
Provision for income tax expense (benefit) | 711 | 573 | 138 | 24.1 | % | |||||||||||
Operating earnings | $ | 1,321 | $ | 1,142 | $ | 179 | 15.7 | % | ||||||||
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 875 | $ | 920 | $ | (45 | ) | (4.9 | )% | |||||||
Universal life and investment-type product policy fees | 2,234 | 1,712 | 522 | 30.5 | % | |||||||||||
Net investment income | 3,395 | 3,098 | 297 | 9.6 | % | |||||||||||
Other revenues | 220 | 173 | 47 | 27.2 | % | |||||||||||
Total operating revenues | 6,724 | 5,903 | 821 | 13.9 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 1,879 | 1,950 | (71 | ) | (3.6 | )% | ||||||||||
Interest credited to policyholder account balances | 1,612 | 1,688 | (76 | ) | (4.5 | )% | ||||||||||
Capitalization of DAC | (1,067 | ) | (1,067 | ) | — | — | % | |||||||||
Amortization of DAC and VOBA | 724 | 424 | 300 | 70.8 | % | |||||||||||
Interest expense on debt | 3 | — | 3 | — | ||||||||||||
Other expenses | 2,437 | 2,433 | 4 | 0.2 | % | |||||||||||
Total operating expenses | 5,588 | 5,428 | 160 | 2.9 | % | |||||||||||
Provision for income tax expense (benefit) | 397 | 167 | 230 | 137.7 | % | |||||||||||
Operating earnings | $ | 739 | $ | 308 | $ | 431 | 139.9 | % | ||||||||
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 1,938 | $ | 2,264 | $ | (326 | ) | (14.4 | )% | |||||||
Universal life and investment-type product policy fees | 226 | 176 | 50 | 28.4 | % | |||||||||||
Net investment income | 4,954 | 4,527 | 427 | 9.4 | % | |||||||||||
Other revenues | 246 | 238 | 8 | 3.4 | % | |||||||||||
Total operating revenues | 7,364 | 7,205 | 159 | 2.2 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 4,041 | 4,245 | (204 | ) | (4.8 | )% | ||||||||||
Interest credited to policyholder account balances | 1,445 | 1,632 | (187 | ) | (11.5 | )% | ||||||||||
Capitalization of DAC | (19 | ) | (14 | ) | (5 | ) | (35.7 | )% | ||||||||
Amortization of DAC and VOBA | 16 | 15 | 1 | 6.7 | % | |||||||||||
Interest expense on debt | 6 | 3 | 3 | 100.0 | % | |||||||||||
Other expenses | 460 | 456 | 4 | 0.9 | % | |||||||||||
Total operating expenses | 5,949 | 6,337 | (388 | ) | (6.1 | )% | ||||||||||
Provision for income tax expense (benefit) | 495 | 288 | 207 | 71.9 | % | |||||||||||
Operating earnings | $ | 920 | $ | 580 | $ | 340 | 58.6 | % | ||||||||
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 2,923 | $ | 2,902 | $ | 21 | 0.7 | % | ||||||||
Net investment income | 209 | 180 | 29 | 16.1 | % | |||||||||||
Other revenues | 22 | 33 | (11 | ) | (33.3 | )% | ||||||||||
Total operating revenues | 3,154 | 3,115 | 39 | 1.3 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 2,021 | 1,932 | 89 | 4.6 | % | |||||||||||
Capitalization of DAC | (448 | ) | (435 | ) | (13 | ) | (3.0 | )% | ||||||||
Amortization of DAC and VOBA | 439 | 436 | 3 | 0.7 | % | |||||||||||
Other expenses | 769 | 764 | 5 | 0.7 | % | |||||||||||
Total operating expenses | 2,781 | 2,697 | 84 | 3.1 | % | |||||||||||
Provision for income tax expense (benefit) | 73 | 96 | (23 | ) | (24.0 | )% | ||||||||||
Operating earnings | $ | 300 | $ | 322 | $ | (22 | ) | (6.8 | )% | |||||||
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 4,447 | $ | 3,187 | $ | 1,260 | 39.5 | % | ||||||||
Universal life and investment-type product policy fees | 1,329 | 1,061 | 268 | 25.3 | % | |||||||||||
Net investment income | 1,703 | 1,193 | 510 | 42.7 | % | |||||||||||
Other revenues | 35 | 14 | 21 | 150.0 | % | |||||||||||
Total operating revenues | 7,514 | 5,455 | 2,059 | 37.7 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 3,723 | 2,660 | 1,063 | 40.0 | % | |||||||||||
Interest credited to policyholder account balances | 683 | 581 | 102 | 17.6 | % | |||||||||||
Capitalization of DAC | (968 | ) | (630 | ) | (338 | ) | (53.7 | )% | ||||||||
Amortization of DAC and VOBA | 537 | 415 | 122 | 29.4 | % | |||||||||||
Interest expense on debt | 3 | 8 | (5 | ) | (62.5 | )% | ||||||||||
Other expenses | 2,538 | 1,797 | 741 | 41.2 | % | |||||||||||
Total operating expenses | 6,516 | 4,831 | 1,685 | 34.9 | % | |||||||||||
Provision for income tax expense (benefit) | 206 | 161 | 45 | 28.0 | % | |||||||||||
Operating earnings | $ | 792 | $ | 463 | $ | 329 | 71.1 | % | ||||||||
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Years Ended December 31, | ||||||||||||||||
2010 | 2009 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 11 | $ | 19 | $ | (8 | ) | (42.1 | )% | |||||||
Net investment income | 992 | 477 | 515 | 108.0 | % | |||||||||||
Other revenues | 1,044 | 1,092 | (48 | ) | (4.4 | )% | ||||||||||
Total operating revenues | 2,047 | 1,588 | 459 | 28.9 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | (14 | ) | 4 | (18 | ) | (450.0 | )% | |||||||||
Interest credited to bank deposits | 137 | 163 | (26 | ) | (16.0 | )% | ||||||||||
Amortization of DAC and VOBA | 1 | 3 | (2 | ) | (66.7 | )% | ||||||||||
Interest expense on debt | 1,126 | 1,027 | 99 | 9.6 | % | |||||||||||
Other expenses | 1,155 | 1,336 | (181 | ) | (13.5 | )% | ||||||||||
Total operating expenses | 2,405 | 2,533 | (128 | ) | (5.1 | )% | ||||||||||
Provision for income tax expense (benefit) | (300 | ) | (617 | ) | 317 | 51.4 | % | |||||||||
Operating earnings | (58 | ) | (328 | ) | 270 | 82.3 | % | |||||||||
Less: Preferred stock dividends | 122 | 122 | — | — | % | |||||||||||
Operating earnings available to common shareholders | $ | (180 | ) | $ | (450 | ) | $ | 270 | 60.0 | % | ||||||
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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 | 14,837 | 16,289 | (1,452 | ) | (8.9 | )% | ||||||||||
Other revenues | 2,329 | 1,586 | 743 | 46.8 | % | |||||||||||
Net investment gains (losses) | (2,906 | ) | (2,098 | ) | (808 | ) | (38.5 | )% | ||||||||
Net derivative gains (losses) | (4,866 | ) | 3,910 | (8,776 | ) | (224.5 | )% | |||||||||
Total revenues | 41,057 | 50,982 | (9,925 | ) | (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 on debt | 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 | (4,334 | ) | 5,059 | (9,393 | ) | (185.7 | )% | |||||||||
Provision for income tax expense (benefit) | (2,015 | ) | 1,580 | (3,595 | ) | (227.5 | )% | |||||||||
Income (loss) from continuing operations, net of income tax | (2,319 | ) | 3,479 | (5,798 | ) | (166.7 | )% | |||||||||
Income (loss) from discontinued operations, net of income tax | 41 | (201 | ) | 242 | 120.4 | % | ||||||||||
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 | ) | $ | (628 | ) | $ | (581 | ) | $ | 321 | $ | (280 | ) | $ | (733 | ) | $ | (2,319 | ) | ||||||||
Less: Net investment gains (losses) | (472 | ) | (533 | ) | (1,486 | ) | (41 | ) | (105 | ) | (269 | ) | (2,906 | ) | ||||||||||||||
Less: Net derivative gains (losses) | (1,786 | ) | (1,426 | ) | (421 | ) | 39 | (798 | ) | (474 | ) | (4,866 | ) | |||||||||||||||
Less: Adjustments to continuing operations (1) | (139 | ) | 519 | 125 | — | (206 | ) | (16 | ) | 283 | ||||||||||||||||||
Less: Provision for income tax (expense) benefit | 837 | 504 | 621 | 1 | 366 | 354 | 2,683 | |||||||||||||||||||||
Operating earnings | $ | 1,142 | $ | 308 | $ | 580 | $ | 322 | $ | 463 | (328 | ) | 2,487 | |||||||||||||||
Less: Preferred stock dividends | 122 | 122 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (450 | ) | $ | 2,365 | |||||||||||||||||||||||
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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 | $ | 539 | $ | (256 | ) | $ | 275 | $ | 553 | $ | 173 | $ | 3,479 | |||||||||||||
Less: Net investment gains (losses) | (1,219 | ) | (669 | ) | (1,682 | ) | (89 | ) | (91 | ) | 1,652 | (2,098 | ) | |||||||||||||||
Less: Net derivative gains (losses) | 2,777 | 1,842 | (219 | ) | (45 | ) | 260 | (705 | ) | 3,910 | ||||||||||||||||||
Less: Adjustments to continuing operations (1) | (193 | ) | (622 | ) | 82 | — | 52 | 17 | (664 | ) | ||||||||||||||||||
Less: Provision for income tax (expense) benefit | (480 | ) | (192 | ) | 637 | 46 | (147 | ) | (352 | ) | (488 | ) | ||||||||||||||||
Operating earnings | $ | 1,310 | $ | 180 | $ | 926 | $ | 363 | $ | 479 | (439 | ) | 2,819 | |||||||||||||||
Less: Preferred stock dividends | 125 | 125 | ||||||||||||||||||||||||||
Operating earnings available to common shareholders | $ | (564 | ) | $ | 2,694 | |||||||||||||||||||||||
(1) | See definitions of operating revenues and operating expenses for the components of such adjustments. |
Corporate | Banking, | |||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 23,483 | $ | 3,725 | $ | 5,486 | $ | 3,113 | $ | 4,383 | $ | 867 | $ | 41,057 | ||||||||||||||
Less: Net investment gains (losses) | (472 | ) | (533 | ) | (1,486 | ) | (41 | ) | (105 | ) | (269 | ) | (2,906 | ) | ||||||||||||||
Less: Net derivative gains (losses) | (1,786 | ) | (1,426 | ) | (421 | ) | 39 | (798 | ) | (474 | ) | (4,866 | ) | |||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | (27 | ) | — | — | — | — | — | (27 | ) | |||||||||||||||||||
Less: Other adjustments to revenues (1) | (74 | ) | (219 | ) | 188 | — | (169 | ) | 22 | (252 | ) | |||||||||||||||||
Total operating revenues | $ | 25,842 | $ | 5,903 | $ | 7,205 | $ | 3,115 | $ | 5,455 | $ | 1,588 | $ | 49,108 | ||||||||||||||
Total expenses | $ | 24,165 | $ | 4,690 | $ | 6,400 | $ | 2,697 | $ | 4,868 | $ | 2,571 | $ | 45,391 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | 39 | (739 | ) | — | — | — | — | (700 | ) | |||||||||||||||||||
Less: Other adjustments to expenses (1) | (1 | ) | 1 | 63 | — | 37 | 38 | 138 | ||||||||||||||||||||
Total operating expenses | $ | 24,127 | $ | 5,428 | $ | 6,337 | $ | 2,697 | $ | 4,831 | $ | 2,533 | $ | 45,953 | ||||||||||||||
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Insurance | Retirement | Benefit | Auto & | Corporate | ||||||||||||||||||||||||
Products | Products | Funding | Home | International | & Other | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Total revenues | $ | 26,754 | $ | 6,487 | $ | 6,700 | $ | 3,061 | $ | 6,001 | $ | 1,979 | $ | 50,982 | ||||||||||||||
Less: Net investment gains (losses) | (1,219 | ) | (669 | ) | (1,682 | ) | (89 | ) | (91 | ) | 1,652 | (2,098 | ) | |||||||||||||||
Less: Net derivative gains (losses) | 2,777 | 1,842 | (219 | ) | (45 | ) | 260 | (705 | ) | 3,910 | ||||||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | 18 | — | — | — | — | — | 18 | |||||||||||||||||||||
Less: Other adjustments to revenues (1) | (1 | ) | (45 | ) | 53 | — | 69 | 13 | 89 | |||||||||||||||||||
Total operating revenues | $ | 25,179 | $ | 5,359 | $ | 8,548 | $ | 3,195 | $ | 5,763 | $ | 1,019 | $ | 49,063 | ||||||||||||||
Total expenses | $ | 23,418 | $ | 5,665 | $ | 7,119 | $ | 2,728 | $ | 5,044 | $ | 1,949 | $ | 45,923 | ||||||||||||||
Less: Adjustments related to net investment gains (losses) and net derivative gains (losses) | 262 | 577 | — | — | — | — | 839 | |||||||||||||||||||||
Less: Other adjustments to expenses (1) | (52 | ) | — | (29 | ) | — | 17 | (4 | ) | (68 | ) | |||||||||||||||||
Total operating expenses | $ | 23,208 | $ | 5,088 | $ | 7,148 | $ | 2,728 | $ | 5,027 | $ | 1,953 | $ | 45,152 | ||||||||||||||
(1) | See definitions of operating revenues and operating expenses for the components of such adjustments. |
• | 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 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 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 on debt | 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 | $ | 920 | $ | 696 | $ | 224 | 32.2 | % | ||||||||
Universal life and investment-type product policy fees | 1,712 | 1,870 | (158 | ) | (8.4 | )% | ||||||||||
Net investment income | 3,098 | 2,624 | 474 | 18.1 | % | |||||||||||
Other revenues | 173 | 169 | 4 | 2.4 | % | |||||||||||
Total operating revenues | 5,903 | 5,359 | 544 | 10.2 | % | |||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 1,950 | 1,271 | 679 | 53.4 | % | |||||||||||
Interest credited to policyholder account balances | 1,688 | 1,338 | 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 on debt | — | 2 | (2 | ) | (100.0 | )% | ||||||||||
Other expenses | 2,433 | 2,101 | 332 | 15.8 | % | |||||||||||
Total operating expenses | 5,428 | 5,088 | 340 | 6.7 | % | |||||||||||
Provision for income tax expense (benefit) | 167 | 91 | 76 | 83.5 | % | |||||||||||
Operating earnings | $ | 308 | $ | 180 | $ | 128 | 71.1 | % | ||||||||
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Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
OPERATING REVENUES | ||||||||||||||||
Premiums | $ | 2,264 | $ | 2,348 | $ | (84 | ) | (3.6 | )% | |||||||
Universal life and investment-type product policy fees | 176 | 227 | (51 | ) | (22.5 | )% | ||||||||||
Net investment income | 4,527 | 5,615 | (1,088 | ) | (19.4 | )% | ||||||||||
Other revenues | 238 | 358 | (120 | ) | (33.5 | )% | ||||||||||
Total operating revenues | 7,205 | 8,548 | (1,343 | ) | (15.7 | )% | ||||||||||
OPERATING EXPENSES | ||||||||||||||||
Policyholder benefits and dividends | 4,245 | 4,398 | (153 | ) | (3.5 | )% | ||||||||||
Interest credited to policyholder account balances | 1,632 | 2,297 | (665 | ) | (29.0 | )% | ||||||||||
Capitalization of DAC | (14 | ) | (18 | ) | 4 | 22.2 | % | |||||||||
Amortization of DAC and VOBA | 15 | 29 | (14 | ) | (48.3 | )% | ||||||||||
Interest expense on debt | 3 | 2 | 1 | 50.0 | % | |||||||||||
Other expenses | 456 | 440 | 16 | 3.6 | % | |||||||||||
Total operating expenses | 6,337 | 7,148 | (811 | ) | (11.3 | )% | ||||||||||
Provision for income tax expense (benefit) | 288 | 474 | (186 | ) | (39.2 | )% | ||||||||||
Operating earnings | $ | 580 | $ | 926 | $ | (346 | ) | (37.4 | )% | |||||||
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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 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 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 on debt | 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 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 on debt | 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 | % | |||||||||
Less: Preferred stock dividends | 122 | 125 | (3 | ) | (2.4 | )% | ||||||||||
Operating earnings available to common shareholders | $ | (450 | ) | $ | (564 | ) | $ | 114 | 20.2 | % | ||||||
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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; |
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• | 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, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Fixed Maturity Securities: | ||||||||||||
Yield (1) | 5.53 | % | 5.77 | % | 6.40 | % | ||||||
Investment income (2), (3), (4) | $ | 12,650 | $ | 11,899 | $ | 12,403 | ||||||
Investment gains (losses) (3) | $ | (255 | ) | $ | (1,663 | ) | $ | (1,953 | ) | |||
Ending carrying value (2), (3) | $ | 327,878 | $ | 230,026 | $ | 189,197 | ||||||
Mortgage Loans: | ||||||||||||
Yield (1) | 5.51 | % | 5.38 | % | 6.08 | % | ||||||
Investment income (3), (4) | $ | 2,823 | $ | 2,735 | $ | 2,774 | ||||||
Investment gains (losses) (3) | $ | 22 | $ | (442 | ) | $ | (136 | ) | ||||
Ending carrying value (3) | $ | 55,536 | $ | 50,909 | $ | 51,364 | ||||||
Real Estate and Real Estate Joint Ventures: | ||||||||||||
Yield (1) | 1.10 | % | (7.47 | )% | 2.98 | % | ||||||
Investment income | $ | 77 | $ | (541 | ) | $ | 217 | |||||
Investment gains (losses) | $ | (40 | ) | $ | (156 | ) | $ | (9 | ) | |||
Ending carrying value | $ | 8,030 | $ | 6,896 | $ | 7,586 | ||||||
Policy Loans: | ||||||||||||
Yield (1) | 6.37 | % | 6.54 | % | 6.22 | % | ||||||
Investment income | $ | 657 | $ | 648 | $ | 601 | ||||||
Ending carrying value | $ | 11,914 | $ | 10,061 | $ | 9,802 | ||||||
Equity Securities: | ||||||||||||
Yield (1) | 4.39 | % | 5.12 | % | 5.25 | % | ||||||
Investment income | $ | 128 | $ | 175 | $ | 249 | ||||||
Investment gains (losses) | $ | 104 | $ | (399 | ) | $ | (253 | ) | ||||
Ending carrying value | $ | 3,606 | $ | 3,084 | $ | 3,197 | ||||||
Other Limited Partnership Interests: | ||||||||||||
Yield (1) | 14.99 | % | 3.22 | % | (2.77 | )% | ||||||
Investment income | $ | 879 | $ | 173 | $ | (170 | ) | |||||
Investment gains (losses) | $ | (18 | ) | $ | (356 | ) | $ | (140 | ) | |||
Ending carrying value | $ | 6,416 | $ | 5,508 | $ | 6,039 | ||||||
Cash and Short-Term Investments: | ||||||||||||
Yield (1) | 0.46 | % | 0.44 | % | 1.62 | % | ||||||
Investment income | $ | 81 | $ | 94 | $ | 307 | ||||||
Investment gains (losses) | $ | 2 | $ | 6 | $ | 3 | ||||||
Ending carrying value (3) | $ | 22,394 | $ | 18,486 | $ | 38,085 | ||||||
Other Invested Assets: (5) | ||||||||||||
Investment income | $ | 491 | $ | 339 | $ | 279 | ||||||
Investment gains (losses) | $ | (8 | ) | $ | (32 | ) | $ | 313 | ||||
Ending carrying value | $ | 15,430 | $ | 12,709 | $ | 17,248 | ||||||
Total Investments: | ||||||||||||
Gross investment income yield (1) | 5.29 | % | 4.90 | % | 5.68 | % | ||||||
Investment fees and expenses yield | (0.14 | ) | (0.14 | ) | (0.16 | ) | ||||||
Investment Income Yield (3) | 5.15 | % | 4.76 | % | 5.52 | % | ||||||
Gross investment income | $ | 17,786 | $ | 15,522 | $ | 16,660 | ||||||
Investment fees and expenses | (465 | ) | (433 | ) | (460 | ) | ||||||
Investment Income (3), (6) | $ | 17,321 | $ | 15,089 | $ | 16,200 | ||||||
Ending Carrying Value (3) | $ | 451,204 | $ | 337,679 | $ | 322,518 | ||||||
Gross investment gains (3) | $ | 1,200 | $ | 1,232 | $ | 1,802 | ||||||
Gross investment losses (3) | (848 | ) | (1,429 | ) | (1,935 | ) | ||||||
Writedowns | (545 | ) | (2,845 | ) | (2,042 | ) | ||||||
Investment Portfolio Gains (Losses) (3), (6) | $ | (193 | ) | $ | (3,042 | ) | $ | (2,175 | ) | |||
Investment portfolio gains (losses) income tax (expense) benefit | 53 | 1,121 | 795 | |||||||||
Investment Portfolio Gains (Losses), Net of Income Tax | $ | (140 | ) | $ | (1,921 | ) | $ | (1,380 | ) | |||
Derivative Gains (Losses) (6) | $ | (614 | ) | $ | (5,106 | ) | $ | 3,782 | ||||
Derivative gains (losses) income tax (expense) benefit | $ | 160 | $ | 1,803 | $ | (1,438 | ) | |||||
Derivative Gains (Losses), Net of Income Tax | $ | (454 | ) | $ | (3,303 | ) | $ | 2,344 | ||||
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As described in the footnotes below, the yield table reflects certain differences from the presentation of invested assets, net investment income, net investment gains (losses) and net derivative gains (losses) as presented in the consolidated balance sheets and consolidated statements of operations, including the exclusion of contractholder-directed unit-linked investments classified within trading and other securities, as the contractholder, not the Company, directs the investment of the funds; and the exclusion of the effects of consolidating under GAAP certain VIEs that are consolidated securitization entities (“CSEs”). We believe this yield table presentation is consistent with how we measure our investment performance for management purposes enhances understanding. |
(1) | Yields are based on average of quarterly average asset carrying values, excluding recognized and unrealized investment gains (losses), collateral received from counterparties associated with our securities lending program, the effects of consolidating under GAAP certain VIEs that are treated as CSEs and, effective October 1, 2010, contractholder-directed unit-linked investments. Yields also exclude investment income recognized on mortgage loans and securities held by CSEs and, effective October 1, 2010, contractholder-directed unit-linked investments. | |
(2) | Fixed maturity securities include $594 million, $2,384 million and $946 million at estimated fair value of trading and other securities at December 31, 2010, 2009 and 2008, respectively. Fixed maturity securities include $234 million, $400 million and ($193) million of investment income related to trading and other securities for the years ended December 31, 2010, 2009 and 2008, respectively. | |
(3) | (a) Fixed maturity securities ending carrying values as presented herein, exclude (i) contractholder-directed unit-linked investments — reported within trading and other securities of $17,794 million, and (ii) securities held by CSEs that are consolidated under GAAP — reported within trading and other securities of $201 million at December 31, 2010. Net investment income as presented herein, excludes investment income on contractholder-directed unit-linked investments — reported within trading and other securities effective October 1, 2010 as shown in footnote (6) to this yield table. |
(b) Ending carrying values, investment income and investment gains (losses) as presented herein, exclude the effects of consolidating under GAAP certain VIEs that are treated as CSEs. The adjustment to investment income and investment gains (losses) in the aggregate are as shown in footnote (6) to this yield table. The adjustments to ending carrying value, investment income and investment gains (losses) by invested asset class are presented below. Both the invested assets and long-term debt of the CSEs are accounted for under the FVO. The adjustment to investment gains (losses) presented below and in footnote (6) to this yield table includes the effects of remeasuring both the invested assets and long-term debt in accordance with the FVO. |
At or for the Year Ended December 31, 2010 | ||||||||||||
Impact of Excluding | Total — With all | |||||||||||
As Reported in the | Trading and Other | Trading and Other | ||||||||||
Yield Table | Securities and CSEs | Securities and CSEs | ||||||||||
(In millions) | ||||||||||||
Trading and Other Securities (included within Fixed Maturity Securities): | ||||||||||||
Ending carrying value | $ | 594 | $ | 17,995 | $ | 18,589 | ||||||
Investment income | $ | 234 | $ | 226 | $ | 460 | ||||||
Investment gains (losses) | $ | — | $ | (30 | ) | $ | (30 | ) | ||||
Mortgage Loans: | ||||||||||||
Ending carrying value | $ | 55,536 | $ | 6,840 | $ | 62,376 | ||||||
Investment income | $ | 2,823 | $ | 396 | $ | 3,219 | ||||||
Investment gains (losses) | $ | 22 | $ | 36 | $ | 58 | ||||||
Cash and Short-Term Investments: | ||||||||||||
Ending carrying value | $ | 22,394 | $ | 39 | $ | 22,433 | ||||||
Total Investments: | ||||||||||||
Ending carrying value | $ | 451,204 | $ | 24,874 | $ | 476,078 |
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(4) | Investment income from fixed maturity securities and mortgage loans includes prepayment fees. | |
(5) | Other invested assets are principally comprised of freestanding derivatives with positive estimated fair values and leveraged leases. Freestanding derivatives with negative estimated fair values are included within other liabilities. However, the accruals of settlement payments in other liabilities are included in net investment income as shown in Note 4 of the Notes to the Consolidated Financial Statements. As yield is not considered a meaningful measure of performance for other invested assets, it has been excluded from the yield table. | |
(6) | Investment income, investment portfolio gains (losses) and derivative gains (losses) presented in this yield table vary from the most directly comparable measures presented in the GAAP consolidated statements of operations due to certain reclassifications affecting net investment income, net investment gains (losses), net derivative gains (losses), and interest credited to PABs and to exclude the effects of consolidating under GAAP certain VIEs that are treated as CSEs. Such reclassifications are presented in the tables below. |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Investment income — in the above yield table | $ | 17,321 | $ | 15,089 | $ | 16,200 | ||||||
Real estate discontinued operations — deduct from net investment income | 10 | (8 | ) | (11 | ) | |||||||
Scheduled periodic settlement payments on derivatives not qualifying for hedge accounting — deduct from net investment income, add to net derivative gains (losses) | (208 | ) | (88 | ) | (5 | ) | ||||||
Equity method operating joint ventures — add to net investment income, deduct from net derivative gains (losses) | (130 | ) | (156 | ) | 105 | |||||||
Net investment income on contractholder-directed unit-linked investments — reported within trading and other securities — add to net investment income | 211 | — | — | |||||||||
Incremental net investment income from CSEs— add to net investment income | 411 | — | — | |||||||||
Net investment income — GAAP consolidated statements of operations | $ | 17,615 | $ | 14,837 | $ | 16,289 | ||||||
Investment portfolio gains (losses) — in the above yield table | $ | (193 | ) | $ | (3,042 | ) | $ | (2,175 | ) | |||
Real estate discontinued operations — deduct from net investment gains (losses) | (14 | ) | (8 | ) | (8 | ) | ||||||
Investment gains (losses) related to CSEs — add to net investment gains (losses) | 6 | — | — | |||||||||
Purchased credit default swaps that offset losses incurred on certain fixed maturity securities — deduct from net investment gains (losses) | — | — | (183 | ) | ||||||||
Other gains (losses) — add to net investment gains (losses) | (191 | ) | 144 | 268 | ||||||||
Net investment gains (losses) — GAAP consolidated statements of operations | $ | (392 | ) | $ | (2,906 | ) | $ | (2,098 | ) | |||
Derivative gains (losses) — in the above yield table | $ | (614 | ) | $ | (5,106 | ) | $ | 3,782 | ||||
Scheduled periodic settlement payments on derivatives not qualifying for hedge accounting — add to net derivative gains (losses), deduct from net investment income | 208 | 88 | 5 | |||||||||
Scheduled periodic settlement payments on derivatives not qualifying for hedge accounting — add to net derivative gains (losses), deduct from interest credited to PABs | 11 | (4 | ) | 45 | ||||||||
Purchased credit default swaps that offset losses incurred on certain fixed maturity securities — add to net derivative gains (losses) | — | — | 183 | |||||||||
Equity method operating joint ventures — add to net investment income, deduct from net derivative gains (losses) | 130 | 156 | (105 | ) | ||||||||
Net derivative gains (losses) — GAAP consolidated statements of operations | $ | (265 | ) | $ | (4,866 | ) | $ | 3,910 | ||||
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December 31, 2010 | ||||||||||||||||
Fixed Maturity | Equity | |||||||||||||||
Securities | Securities | |||||||||||||||
(In millions) | ||||||||||||||||
Level 1: | ||||||||||||||||
Quoted prices in active markets for identical assets | $ | 15,025 | 4.6 | % | $ | 832 | 23.1 | % | ||||||||
Level 2: | ||||||||||||||||
Independent pricing source | 257,625 | 78.7 | 616 | 17.1 | ||||||||||||
Internal matrix pricing or discounted cash flow techniques | 31,839 | 9.8 | 985 | 27.3 | ||||||||||||
Significant other observable inputs | 289,464 | 88.5 | 1,601 | 44.4 | ||||||||||||
Level 3: | ||||||||||||||||
Independent pricing source | 10,481 | 3.2 | 1,011 | 28.0 | ||||||||||||
Internal matrix pricing or discounted cash flow techniques | 9,872 | 3.0 | 149 | 4.1 | ||||||||||||
Independent broker quotations | 2,442 | 0.7 | 13 | 0.4 | ||||||||||||
Significant unobservable inputs | 22,795 | 6.9 | 1,173 | 32.5 | ||||||||||||
Total estimated fair value | $ | 327,284 | 100.0 | % | $ | 3,606 | 100.0 | % | ||||||||
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December 31, 2010 | ||||||||||||||||
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 | $ | — | $ | 85,419 | $ | 7,149 | $ | 92,568 | ||||||||
Foreign corporate securities | — | 62,401 | 5,777 | 68,178 | ||||||||||||
Residential mortgage-backed securities | 274 | 43,037 | 1,422 | 44,733 | ||||||||||||
Foreign government securities | 149 | 40,092 | 3,159 | 43,400 | ||||||||||||
U.S. Treasury, agency and government guaranteed securities | 14,602 | 18,623 | 79 | 33,304 | ||||||||||||
Commercial mortgage-backed securities (“CMBS”) | — | 19,664 | 1,011 | 20,675 | ||||||||||||
Asset-backed securities | — | 10,142 | 4,148 | 14,290 | ||||||||||||
State and political subdivision securities | — | 10,083 | 46 | 10,129 | ||||||||||||
Other fixed maturity securities | — | 3 | 4 | 7 | ||||||||||||
Total fixed maturity securities | $ | 15,025 | $ | 289,464 | $ | 22,795 | $ | 327,284 | ||||||||
Equity Securities: | ||||||||||||||||
Common stock | $ | 832 | $ | 1,094 | $ | 268 | $ | 2,194 | ||||||||
Non-redeemable preferred stock | — | 507 | 905 | 1,412 | ||||||||||||
Total equity securities | $ | 832 | $ | 1,601 | $ | 1,173 | $ | 3,606 | ||||||||
�� |
• | The majority of the Level 3 fixed maturity and equity securities (84%, as presented above) were concentrated in four sectors: U.S. and foreign corporate securities, ABS and foreign government securities. | |
• | Level 3 fixed maturity securities are priced principally through market standard valuation methodologies, independent pricing services and independent non-binding broker quotations 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 alternative residential mortgage loan RMBS and less liquid prime RMBS, certain 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, 2010, Level 3 fixed maturity securities increased by $371 million, or 2%, excluding the impact of the Acquisition, and $5,605 million, or 33%, including the impact of the Acquisition. The Level 3 fixed maturity securities acquired from ALICO of $5,435 million have been included in purchases, sales, issuances and settlements in the table below. The increase was driven by net purchases in excess of sales and increases in estimated fair value recognized in other comprehensive income (loss). Net purchases in excess of sales of fixed maturity securities were concentrated in foreign government and ABS. 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 or stabilizing market conditions including an improvement in liquidity coupled with the effect of decreased interest rates on such securities. |
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Year Ended December 31, 2010 | ||||||||
Fixed Maturity | Equity | |||||||
Securities | Securities | |||||||
(In millions) | ||||||||
Balance, beginning of year | $ | 17,190 | $ | 1,240 | ||||
Total realized/unrealized gains (losses) included in: | ||||||||
Earnings | (39 | ) | 51 | |||||
Other comprehensive income (loss) | 1,072 | 19 | ||||||
Purchases, sales, issuances and settlements (1) | 4,519 | (122 | ) | |||||
Transfers into and/or out of Level 3 | 53 | (15 | ) | |||||
Balance, end of year | $ | 22,795 | $ | 1,173 | ||||
(1) | Includes securities acquired from ALICO of $5,435 million for fixed maturity securities and $68 million for equity securities. |
• | 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 ($2) million and other comprehensive income (loss) of $19 million respectively, were incurred for transfers subsequent to their transfer to Level 3, for the year ended December 31, 2010. | |
• | Net transfers intoand/or out of Level 3 for fixed maturity securities were $53 million for the year ended December 31, 2010, and were comprised of transfers in of $1,736 million and transfers out of ($1,683) million, respectively. |
• | During the year ended December 31, 2010, fixed maturity securities transfers into Level 3 of $1,736 million resulted primarily from current market conditions characterized by a lack of trading activity, decreased liquidity and credit ratings downgrades (e.g., from investment grade to below investment grade). These current market conditions have resulted in decreased transparency of valuations and an increased use of broker quotations and unobservable inputs to determine estimated fair value principally for certain private placements included in U.S. and foreign corporate securities and certain CMBS. | |
• | During the year ended December 31, 2010, fixed maturity securities transfers out of Level 3 of ($1,683) million resulted primarily from increased transparency of both new issuances that subsequent to issuance and establishment of trading activity, became priced by independent pricing services and existing issuances that, over time, the Company was able to corroborate pricing received from independent pricing services with observable inputs, or there were increases in market activity and upgraded credit ratings primarily for certain U.S. and foreign corporate securities, RMBS and ABS. |
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December 31, | ||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||||
NAIC | Amortized | Fair | % of | Amortized | Fair | % of | ||||||||||||||||||||
Rating | Rating Agency Designation: | Cost | Value | Total | Cost | Value | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
1 | Aaa/Aa/A | $ | 228,875 | $ | 233,540 | 71.4 | % | $ | 151,391 | $ | 151,136 | 66.4 | % | |||||||||||||
2 | Baa | 65,550 | 68,858 | 21.0 | 55,508 | 56,305 | 24.7 | |||||||||||||||||||
3 | Ba | 15,335 | 15,294 | 4.7 | 13,184 | 12,003 | 5.3 | |||||||||||||||||||
4 | B | 8,752 | 8,316 | 2.5 | 7,474 | 6,461 | 2.9 | |||||||||||||||||||
5 | Caa and lower | 1,343 | 1,146 | 0.4 | 1,809 | 1,425 | 0.6 | |||||||||||||||||||
6 | In or near default | 153 | 130 | — | 343 | 312 | 0.1 | |||||||||||||||||||
Total fixed maturity securities | $ | 320,008 | $ | 327,284 | 100.0 | % | $ | 229,709 | $ | 227,642 | 100.0 | % | ||||||||||||||
Fixed Maturity Securities — by Sector & Credit Quality Rating at December 31, 2010 | ||||||||||||||||||||||||||||
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 | $ | 46,754 | $ | 34,326 | $ | 7,635 | $ | 3,460 | $ | 353 | $ | 40 | $ | 92,568 | ||||||||||||||
Foreign corporate securities | 39,652 | 24,414 | 2,476 | 1,454 | 173 | 9 | 68,178 | |||||||||||||||||||||
RMBS (1) | 38,984 | 1,109 | 2,271 | 1,993 | 331 | 45 | 44,733 | |||||||||||||||||||||
Foreign government securities | 32,957 | 7,184 | 2,179 | 1,080 | — | — | 43,400 | |||||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 33,304 | — | — | — | — | — | 33,304 | |||||||||||||||||||||
CMBS (1) | 19,385 | 665 | 363 | 205 | 56 | 1 | 20,675 | |||||||||||||||||||||
ABS (1) | 13,136 | 435 | 338 | 120 | 226 | �� | 35 | 14,290 | ||||||||||||||||||||
State and political subdivision securities | 9,368 | 722 | 32 | — | 7 | — | 10,129 | |||||||||||||||||||||
Other fixed maturity securities | — | 3 | — | 4 | — | — | 7 | |||||||||||||||||||||
Total fixed maturity securities | $ | 233,540 | $ | 68,858 | $ | 15,294 | $ | 8,316 | $ | 1,146 | $ | 130 | $ | 327,284 | ||||||||||||||
Percentage of total | 71.4 | % | 21.0 | % | 4.7 | % | 2.5 | % | 0.4 | % | — | % | 100.0 | % |
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Fixed Maturity Securities — by Sector & Credit Quality Rating at December 31, 2009 | ||||||||||||||||||||||||||||
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 | $ | 31,848 | $ | 30,266 | $ | 6,319 | $ | 2,965 | $ | 616 | $ | 173 | $ | 72,187 | ||||||||||||||
Foreign corporate securities | 16,678 | 17,393 | 2,067 | 1,530 | 281 | 81 | 38,030 | |||||||||||||||||||||
RMBS (1) | 38,464 | 1,563 | 2,260 | 1,391 | 339 | 3 | 44,020 | |||||||||||||||||||||
Foreign government securities | 5,786 | 4,841 | 890 | 415 | — | 15 | 11,947 | |||||||||||||||||||||
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 | |||||||||||||||||||||
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 | % |
(1) | Presented using the final rating from revised NAIC rating methodologies. |
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
RMBS | $ | 44,733 | 56.1 | % | $ | 44,020 | 60.5 | % | ||||||||
CMBS | 20,675 | 26.0 | 15,622 | 21.4 | ||||||||||||
ABS | 14,290 | 17.9 | 13,162 | 18.1 | ||||||||||||
Total structured securities | $ | 79,698 | 100.0 | % | $ | 72,804 | 100.0 | % | ||||||||
Ratings profile: | ||||||||||||||||
RMBS rated Aaa/AAA | $ | 36,085 | 80.7 | % | $ | 35,626 | 80.9 | % | ||||||||
RMBS rated NAIC 1 | $ | 38,984 | 87.1 | % | $ | 38,464 | 87.4 | % | ||||||||
CMBS rated Aaa/AAA | $ | 16,901 | 81.7 | % | $ | 13,355 | 85.5 | % | ||||||||
CMBS rated NAIC 1 | $ | 19,385 | 93.7 | % | $ | 15,000 | 96.0 | % | ||||||||
ABS rated Aaa/AAA | $ | 10,411 | 72.9 | % | $ | 9,354 | 71.1 | % | ||||||||
ABS rated NAIC 1 | $ | 13,136 | 91.9 | % | $ | 11,573 | 87.9 | % |
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• | Year Ended December 31, 2010 compared to the Year Ended December 31, 2009 —Overall OTTI losses recognized in earnings on fixed maturity and equity securities were $484 million for the current year as compared to $1.9 billion in the prior year. Improving or stabilizing market conditions across all sectors and industries, particularly the financial services industry, as compared to the prior year when there was significant stress in the global financial markets, resulted in a higher level of impairments in fixed maturity and equity securities in the prior year. The most significant decrease in the current year, as compared to the prior year, was in the Company’s financial services industry holdings which comprised $799 million in fixed maturity and equity security impairments in the prior year, as compared to $129 million in impairments in the current year. Of the $799 million in financial services industry impairments in the year, $340 million were in equity securities, of which $310 million were in financial services industry perpetual hybrid securities which were impaired as 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 on these securities. Impairments |
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in the current year were concentrated in the RMBS, ABS and CMBS sectors reflecting current economic conditions including higher unemployment levels and continued weakness within the real estate markets. Of the fixed maturity and equity securities impairments of $484 million and $1,900 million in the years ended December 31, 2010 and 2009, respectively, $287 million and $449 million, or 59% and 24% respectively, were in the Company’s RMBS, ABS and CMBS holdings. |
• | 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, 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. |
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December 31, 2010 | ||||||||||||||||
Trading and Other Securities | Trading Liabilities | |||||||||||||||
(In millions) | ||||||||||||||||
Quoted prices in active markets for identical assets and liabilities (Level 1) | $ | 6,270 | 33.7 | % | $ | 46 | 100.0 | % | ||||||||
Significant other observable inputs (Level 2) (1) | 11,497 | 61.9 | — | — | ||||||||||||
Significant unobservable inputs (Level 3) | 822 | 4.4 | — | — | ||||||||||||
Total estimated fair value | $ | 18,589 | 100.0 | % | $ | 46 | 100.0 | % | ||||||||
(1) | All FVO Securities held by CSEs are classified as Level 2. |
Year Ended December 31, 2010 | ||||
(In millions) | ||||
Balance, at January 1, | $ | 83 | ||
Total realized/unrealized gains (losses) included in: | ||||
Earnings | (7 | ) | ||
Purchases, sales, issuances and settlements (1) | 727 | |||
Transfer in and/or out of Level 3 | 19 | |||
Balance, at December 31, | $ | 822 | ||
(1) | Includes securities acquired from ALICO of $582 million. |
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Total | Amount | Total | |||||||||||||
(In millions) | ||||||||||||||||
Region: | ||||||||||||||||
Pacific | $ | 8,974 | 23.7 | % | $ | 8,822 | 25.1 | % | ||||||||
South Atlantic | 8,016 | 21.2 | 7,460 | 21.2 | ||||||||||||
Middle Atlantic | 6,484 | 17.1 | 6,042 | 17.2 | ||||||||||||
International | 4,216 | 11.2 | 3,620 | 10.3 | ||||||||||||
West South Central | 3,266 | 8.6 | 2,916 | 8.3 | ||||||||||||
East North Central | 3,066 | 8.1 | 2,531 | 7.2 | ||||||||||||
New England | 1,531 | 4.1 | 1,448 | 4.1 | ||||||||||||
Mountain | 884 | 2.3 | 959 | 2.7 | ||||||||||||
West North Central | 666 | 1.8 | 675 | 1.9 | ||||||||||||
East South Central | 461 | 1.2 | 449 | 1.3 | ||||||||||||
Other | 256 | 0.7 | 254 | 0.7 | ||||||||||||
Total recorded investment | 37,820 | 100.0 | % | 35,176 | 100.0 | % | ||||||||||
Less valuation allowances | 562 | 589 | ||||||||||||||
Carrying value, net of valuation allowances | $ | 37,258 | $ | 34,587 | ||||||||||||
Property Type: | ||||||||||||||||
Office | $ | 16,857 | 44.6 | % | $ | 15,205 | 43.2 | % | ||||||||
Retail | 9,215 | 24.3 | 7,964 | 22.6 | ||||||||||||
Apartments | 3,630 | 9.6 | 3,731 | 10.6 | ||||||||||||
Hotel | 3,089 | 8.2 | 3,117 | 8.9 | ||||||||||||
Industrial | 2,910 | 7.7 | 2,797 | 8.0 | ||||||||||||
Other | 2,119 | 5.6 | 2,362 | 6.7 | ||||||||||||
Total recorded investment | 37,820 | 100.0 | % | 35,176 | 100.0 | % | ||||||||||
Less valuation allowances | 562 | 589 | ||||||||||||||
Carrying value, net of valuation allowances | $ | 37,258 | $ | 34,587 | ||||||||||||
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December 31, | ||||||||||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||||||||
% of | % of | |||||||||||||||||||||||||||||||||
Recorded | % of | Valuation | Recorded | Recorded | % of | Valuation | Recorded | |||||||||||||||||||||||||||
Investment | Total | Allowance | Investment | Investment | Total | Allowance | Investment | |||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||||||||
Performing | $ | 37,489 | 99.1 | % | $ | 528 | 1.4 | % | $ | 35,066 | 99.7 | % | $ | 548 | 1.6 | % | ||||||||||||||||||
Restructured | 93 | 0.2 | 6 | 6.5 | % | — | — | — | — | % | ||||||||||||||||||||||||
Potentially delinquent | 180 | 0.5 | 28 | 15.6 | % | 102 | 0.3 | 41 | 40.2 | % | ||||||||||||||||||||||||
Delinquent or under foreclosure | 58 | 0.2 | — | — | % | 8 | — | — | — | % | ||||||||||||||||||||||||
Total | $ | 37,820 | 100.0 | % | $ | 562 | 1.5 | % | $ | 35,176 | 100.0 | % | $ | 589 | 1.7 | % | ||||||||||||||||||
Agricultural (1): | ||||||||||||||||||||||||||||||||||
Performing | $ | 12,486 | 97.9 | % | $ | 35 | 0.3 | % | $ | 11,950 | 97.5 | % | $ | 33 | 0.3 | % | ||||||||||||||||||
Restructured | 33 | 0.3 | 8 | 24.2 | % | 36 | 0.3 | 10 | 27.8 | % | ||||||||||||||||||||||||
Potentially delinquent | 62 | 0.5 | 11 | 17.7 | % | 128 | 1.0 | 34 | 26.6 | % | ||||||||||||||||||||||||
Delinquent or under foreclosure | 170 | 1.3 | 34 | 20.0 | % | 141 | 1.2 | 38 | 27.0 | % | ||||||||||||||||||||||||
Total | $ | 12,751 | 100.0 | % | $ | 88 | 0.7 | % | $ | 12,255 | 100.0 | % | $ | 115 | 0.9 | % | ||||||||||||||||||
Residential (2): | ||||||||||||||||||||||||||||||||||
Performing | $ | 2,221 | 96.2 | % | $ | 12 | 0.5 | % | $ | 1,389 | 94.4 | % | $ | 16 | 1.2 | % | ||||||||||||||||||
Restructured | 4 | 0.2 | — | — | % | 1 | 0.1 | — | — | % | ||||||||||||||||||||||||
Potentially delinquent | 4 | 0.2 | — | — | % | 10 | 0.7 | — | — | % | ||||||||||||||||||||||||
Delinquent or under foreclosure | 79 | 3.4 | 2 | 2.5 | % | 71 | 4.8 | 1 | 1.4 | % | ||||||||||||||||||||||||
Total | $ | 2,308 | 100.0 | % | $ | 14 | 0.6 | % | $ | 1,471 | 100.0 | % | $ | 17 | 1.2 | % | ||||||||||||||||||
(1) | Of the $12.8 billion of agricultural mortgage loans outstanding at December 31, 2010, 53% were subject to rate resets prior to maturity. A substantial portion of these mortgage loans have been successfully renegotiated and remain outstanding to maturity. | |
(2) | Residential mortgage loansheld-for-investment consist primarily of first lien residential mortgage loans, and to a much lesser extent, second lien residential mortgage loans and home equity lines of credit. |
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• | A comprehensive description of the nature of the Company’s derivative instruments, including the strategies for which derivatives are used in managing various risks. | |
• | Information about the notional amount, estimated fair value, and primary underlying risk exposure of the Company’s derivative financial instruments, excluding embedded derivatives held at December 31, 2010 and 2009. |
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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, 2010 and 2009. | |
• | 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, 2010 and 2009. | |
• | The statement of operations effects of derivatives in cash flow, fair value, or non-qualifying hedge relationships for the years ended December 31, 2010, 2009, and 2008. |
December 31, 2010 | ||||||||||||||||
Derivative | Derivative | |||||||||||||||
Assets | Liabilities | |||||||||||||||
(In millions) | ||||||||||||||||
Quoted prices in active markets for identical assets and liabilities (Level 1) | $ | 156 | 2 | % | $ | 45 | 1 | % | ||||||||
Significant other observable inputs (Level 2) | 7,176 | 92 | 4,245 | 93 | ||||||||||||
Significant unobservable inputs (Level 3) | 445 | 6 | 272 | 6 | ||||||||||||
Total estimated fair value | $ | 7,777 | 100 | % | $ | 4,562 | 100 | % | ||||||||
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Year Ended December 31, 2010 | ||||
(In millions) | ||||
Balance, at January 1, | $ | 356 | ||
Total realized/unrealized gains (losses) included in: | ||||
Earnings | (5 | ) | ||
Other comprehensive income (loss) | (81 | ) | ||
Purchases, sales, issuances and settlements | (75 | ) | ||
Transfer in and/or out of Level 3 | (22 | ) | ||
Balance, at December 31, | $ | 173 | ||
December 31, 2010 | ||||||||||||||||
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) | — | — | 11 | — | ||||||||||||
Significant unobservable inputs (Level 3) | 185 | 100 | 2,623 | 100 | ||||||||||||
Total estimated fair value | $ | 185 | 100 | % | $ | 2,634 | 100 | % | ||||||||
Year Ended December 31, 2010 | ||||
(In millions) | ||||
Balance, at January 1, | $ | (1,455 | ) | |
Total realized/unrealized gains (losses) included in: | ||||
Earnings | (335 | ) | ||
Other comprehensive income (loss) | (226 | ) | ||
Purchases, sales, issuances and settlements | (422 | ) | ||
Transfer in and/or out of Level 3 | — | |||
Balance, at December 31, | $ | (2,438 | ) | |
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
U.S. Business: | ||||||||
Guaranteed minimum accumulation benefit | $ | 44 | $ | 60 | ||||
Guaranteed minimum withdrawal benefit | 173 | 154 | ||||||
Guaranteed minimum income benefit | (51 | ) | 66 | |||||
International: | ||||||||
Guaranteed minimum accumulation benefit | 454 | 195 | ||||||
Guaranteed minimum withdrawal benefit | 1,936 | 1,025 | ||||||
Total | $ | 2,556 | $ | 1,500 | ||||
December 31, | ||||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||||
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 | $ | 13,762 | $ | 401 | $ | 193 | $ | 8,847 | $ | 194 | $ | 275 | |||||||||||||||
Interest rate futures | 5,822 | 32 | 10 | 4,997 | 5 | 4 | ||||||||||||||||||||||
Interest rate options | 614 | 15 | — | — | — | — | ||||||||||||||||||||||
Foreign currency | Foreign currency forwards | 2,320 | 46 | 1 | 2,016 | 4 | 30 | |||||||||||||||||||||
Currency options | — | — | — | 327 | 14 | — | ||||||||||||||||||||||
Equity market | Equity futures | 6,959 | 17 | 9 | 6,033 | 31 | 20 | |||||||||||||||||||||
Equity options | 32,942 | 1,720 | 1,196 | 26,661 | 1,596 | 1,018 | ||||||||||||||||||||||
Variance swaps | 17,635 | 190 | 118 | 13,267 | 174 | 58 | ||||||||||||||||||||||
Total rate of return swaps | 1,547 | — | — | 126 | — | — | ||||||||||||||||||||||
Total | $ | 81,601 | $ | 2,421 | $ | 1527 | $ | 62,274 | $ | 2,018 | $ | 1,405 | ||||||||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
U.S. Business: | ||||||||
Guaranteed minimum death benefit | $ | 167 | $ | 137 | ||||
Guaranteed minimum income benefit | 507 | 394 | ||||||
International: | ||||||||
Guaranteed minimum death benefit | 66 | 23 | ||||||
Guaranteed minimum income benefit | 116 | — | ||||||
Total | $ | 856 | $ | 554 | ||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Sources: | ||||||||||||
Net cash provided by operating activities | $ | 7,996 | $ | 3,803 | $ | 10,702 | ||||||
Net cash provided by changes in policyholder account balances | 4,557 | — | 13,645 | |||||||||
Net cash provided by changes in payables for collateral under securities loaned and other transactions | 3,076 | — | — | |||||||||
Net cash provided by changes in bank deposits | — | 3,164 | 2,185 | |||||||||
Net cash provided by short-term debt issuances | — | — | 1,992 | |||||||||
Long-term debt issued, net of issuance costs | 5,076 | 2,931 | 305 | |||||||||
Collateral financing arrangements issued | — | 105 | 310 | |||||||||
Net cash received in connection with collateral financing arrangements | — | 375 | — | |||||||||
Junior subordinated debt securities issued | — | 500 | 750 | |||||||||
Common stock issued, net of issuance costs | 3,576 | — | 290 | |||||||||
Common stock issued to settle stock forward contracts | — | 1,035 | — | |||||||||
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 | |||||||||
Cash provided by other, net | — | — | 7 | |||||||||
Cash provided by the effect of change in foreign currency exchange rates | — | 108 | — | |||||||||
Total sources | 24,281 | 12,021 | 33,157 | |||||||||
Uses: | ||||||||||||
Net cash used in investing activities | 18,314 | 13,935 | 2,671 | |||||||||
Net cash used for changes in policyholder account balances | — | 2,282 | — | |||||||||
Net cash used for changes in payables for collateral under securities loaned and other transactions | — | 6,863 | 13,077 | |||||||||
Net cash used for changes in bank deposits | 32 | — | — | |||||||||
Net cash used for short-term debt repayments | 606 | 1,747 | — | |||||||||
Long-term debt repaid | 1,061 | 555 | 422 | |||||||||
Net cash paid in connection with collateral financing arrangements | — | — | 800 | |||||||||
Treasury stock acquired in connection with share repurchase agreements | — | — | 1,250 | |||||||||
Dividends on preferred stock | 122 | 122 | 125 | |||||||||
Dividends on common stock | 784 | 610 | 592 | |||||||||
Cash used in other, net | 299 | 34 | — | |||||||||
Cash used in the effect of change in foreign currency exchange rates | 129 | — | 349 | |||||||||
Total uses | 21,347 | 26,148 | 19,286 | |||||||||
Net increase (decrease) in cash and cash equivalents | $ | 2,934 | $ | (14,127 | ) | $ | 13,871 | |||||
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• | The Holding Company and MetLife Funding, Inc. (“MetLife Funding”) each have commercial paper programs supported by $4.0 billion in general corporate credit facilities (see “— The Company — Liquidity and Capital Sources — Credit and Committed Facilities”). MetLife Funding, a subsidiary of MLIC, serves as a centralized finance unit for the Company. MetLife Funding raises cash from its commercial paper program and uses the proceeds to extend loans, through MetLife Credit Corp., another subsidiary of MLIC, to the Holding Company, MLIC and other affiliates in order to enhance the financial flexibility and liquidity of these companies. Outstanding balances for the commercial paper program fluctuate in line with changes to affiliates’ financing arrangements. 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, 2010 and 2009, MetLife Funding had a tangible net worth of $12 million. At December 31, 2010 and 2009, MetLife Funding had total outstanding liabilities for its commercial paper program, including accrued interest payable, of $102 million and $319 million, respectively. | |
• | MetLife Bank is a depository institution that is approved to use the Federal Reserve Bank of New York Discount Window borrowing privileges. To utilize these privileges, MetLife Bank has pledged qualifying loans and investment securities to the Federal Reserve Bank of New York as collateral. At both December 31, 2010 and 2009, MetLife Bank had no liability for advances from the Federal Reserve Bank of New York under this facility. | |
• | MetLife Bank has a cash need to fund residential mortgage loans that it originates and generally holds for a relatively short period before selling them to one of the government-sponsored enterprises such as FNMA or FHLMC. The outstanding volume of residential mortgage originations varies from month to month and is cyclical within a month. To meet the variable funding requirements from this mortgage activity, as well as to increase overall liquidity from time to time, MetLife Bank takes advantage of short-term collateralized borrowing opportunities with the Federal Home Loan Bank of New York (“FHLB of NY”). MetLife Bank has entered into advances agreements with the FHLB of NY whereby MetLife Bank has received cash advances and under which the FHLB of NY has been granted a blanket lien on certain of MetLife Bank’s residential mortgages, mortgage loansheld-for-sale, commercial mortgages and mortgage-backed securities to collateralize MetLife Bank’s repayment obligations. Upon any event of default by MetLife Bank, the |
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FHLB of NY’s recovery is limited to the amount of MetLife Bank’s liability under the advances agreement. MetLife Bank has received advances from the FHLB of NY on both short- and long-term bases, with a total liability of $3.8 billion and $2.4 billion at December 31, 2010 and 2009, respectively. |
• | The Company also had obligations under funding agreements with the FHLB of NY of $12.6 billion and $13.7 billion at December 31, 2010 and 2009, respectively, for MLIC, and with the Federal Home Loan Bank of Boston (“FHLB of Boston”) of $100 million and $326 million at December 31, 2010 and 2009, respectively, for MICC. See Note 8 of the Notes to the Consolidated Financial Statements. In September 2010, MetLife Investors Insurance Company and General American Life Insurance Company, subsidiaries of MetLife, Inc., each became a member of the Federal Home Loan Bank of Des Moines (“FHLB of Des Moines”), and each purchased $10 million of FHLB of Des Moines common stock. Membership in the FHLB of Des Moines provides an additional source of contingent liquidity for the Company. There were no funding agreements with the FHLB of Des Moines at December 31, 2010. | |
• | The Company issues fixed and floating rate funding agreements, which are denominated in either U.S. dollars or foreign currencies, to certain special purpose entities (“SPEs”) that have issued either debt securities or commercial paper for which payment of interest and principal is secured by such funding agreements. During the years ended December 31, 2010, 2009 and 2008, the Company issued $34.1 billion, $28.6 billion and $20.9 billion, respectively, and repaid $30.9 billion, $32.0 billion and $19.8 billion, respectively, of such funding agreements. At December 31, 2010 and 2009, funding agreements outstanding, which are included in policyholder account balances, were $27.2 billion and $23.3 billion, respectively. | |
• | MLIC and MICC have each issued funding agreements to certain SPEs that have issued debt securities for which payment of interest and principal is secured by such funding agreements, and such debt securities are also guaranteed as to payment of interest and principal by the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the U.S. The obligations under these funding agreements are secured by a pledge of certain eligible agricultural real estate mortgage loans and may, under certain circumstances, be secured by other qualified collateral. The amount of the Company’s liability for funding agreements issued to such SPEs was $2.8 billion and $2.5 billion at December 31, 2010 and 2009, respectively, which is included in policyholder account balances. The obligations under these funding agreements are collateralized by designated agricultural real estate mortgage loans with estimated fair values of $3.2 billion and $2.9 billion at December 31, 2010 and 2009, respectively. |
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Short-term debt | $ | 306 | $ | 912 | ||||
Long-term debt (1) | $ | 20,766 | $ | 13,156 | ||||
Collateral financing arrangements | $ | 5,297 | $ | 5,297 | ||||
Junior subordinated debt securities | $ | 3,191 | $ | 3,191 |
(1) | Excludes $6,820 million at December 31, 2010 of long-term debt relating to CSEs. |
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• | $1,000 million senior notes due February 6, 2014, which bear interest at a fixed rate of 2.375%, payable semi-annually; | |
• | $1,000 million senior notes due February 8, 2021, which bear interest at a fixed rate of 4.75%, payable semi-annually; | |
• | $750 million senior notes due February 6, 2041, which bear interest at a fixed rate of 5.875%, payable semi-annually; and | |
• | $250 million floating rate senior notes due August 6, 2013, which bear interest at a rate equal to three-month LIBOR, reset quarterly, plus 1.25%, payable quarterly. |
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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 the 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 2010, no payments were made or received by the Holding Company. 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. 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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November 1, 2010 | ||||
(In millions) | ||||
Cash (includes $396 million of contractual purchase price adjustments) | $ | 7,196 | ||
MetLife, Inc.’s common stock (78,239,712 shares at $40.90 per share) | 3,200 | |||
MetLife, Inc.’s Convertible Preferred Stock | 2,805 | |||
MetLife, Inc.’s Equity Units ($3.0 billion aggregate stated amount) | 3,189 | |||
Total purchase price | $ | 16,390 | ||
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Dividend | ||||||||||||||||
Declaration Date | Record Date | Payment Date | Per Share | Aggregate | ||||||||||||
(In millions, except per share data) | ||||||||||||||||
October 26, 2010 | November 9, 2010 | December 14, 2010 | $ | 0.74 | $ | 784 | (1) | |||||||||
October 29, 2009 | November 9, 2009 | December 14, 2009 | $ | 0.74 | $ | 610 | ||||||||||
October 28, 2008 | November 10, 2008 | December 15, 2008 | $ | 0.74 | $ | 592 |
(1) | Includes dividends on Convertible Preferred Stock issued in November 2010. See “— The Company — Liquidity and Capital Sources — Convertible Preferred Stock.” |
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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 15, 2010 | November 30, 2010 | December 15, 2010 | $ | 0.2527777 | $ | 7 | $ | 0.4062500 | $ | 24 | ||||||||||
August 16, 2010 | August 31, 2010 | September 15, 2010 | $ | 0.2555555 | 6 | $ | 0.4062500 | 24 | ||||||||||||
May 17, 2010 | May 31, 2010 | June 15, 2010 | $ | 0.2555555 | 7 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2010 | February 28, 2010 | March 15, 2010 | $ | 0.2500000 | 6 | $ | 0.4062500 | 24 | ||||||||||||
$ | 26 | $ | 96 | |||||||||||||||||
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 | |||||||||||||||||
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More Than | More Than | |||||||||||||||||||
One Year | One Year to | Three Years | More Than | |||||||||||||||||
Contractual Obligations | Total | or Less | Three Years | to Five Years | Five Years | |||||||||||||||
(In millions) | ||||||||||||||||||||
Future policy benefits | $ | 319,565 | $ | 6,271 | $ | 10,295 | $ | 12,205 | $ | 290,794 | ||||||||||
Policyholder account balances | 289,823 | 35,981 | 46,274 | 35,280 | 172,288 | |||||||||||||||
Other policyholder liabilities | 9,983 | 7,995 | 485 | 124 | 1,379 | |||||||||||||||
Payables for collateral under securities loaned and other transactions | 27,272 | 27,272 | — | — | — | |||||||||||||||
Bank deposits | 10,406 | 8,879 | 1,499 | 28 | — | |||||||||||||||
Short-term debt | 306 | 306 | — | — | — | |||||||||||||||
Long-term debt | 31,184 | 2,340 | 4,773 | 5,932 | 18,139 | |||||||||||||||
Collateral financing arrangements | 6,696 | 64 | 127 | 127 | 6,378 | |||||||||||||||
Junior subordinated debt securities | 10,191 | 258 | 517 | 516 | 8,900 | |||||||||||||||
Commitments to lend funds | 12,537 | 11,215 | 710 | 55 | 557 | |||||||||||||||
Operating leases | 2,151 | 366 | 517 | 303 | 965 | |||||||||||||||
Other | 15,356 | 14,873 | 52 | 3 | 428 | |||||||||||||||
Total | $ | 735,470 | $ | 115,820 | $ | 65,249 | $ | 54,573 | $ | 499,828 | ||||||||||
Future policy benefits — Future policy 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 policy 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 |
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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 $1.4 billion 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. | ||
The sum of the estimated cash flows shown for all years in the table of $319.6 billion exceeds the liability amount of $173.4 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 GAAP. (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 $539 million, as well as $2.4 billion relating to embedded derivatives, have been excluded from amounts presented in the table above as they represent accounting conventions and not contractual obligations. |
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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 $289.8 billion exceeds the liability amount of $211.0 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 policy 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 policy-related balances, policyholder dividends payable and the policyholder dividend obligation. Amounts included in the table above related to these balances are as follows: | ||
a. Other policy-related balances includes liabilities for incurred but not reported claims and claims payable on group term life, long-term disability, long-term care 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 and negative VOBA of $2.2 billion and $4.3 billion, respectively, have been excluded from the cash payments presented in the table above because they reflect accounting conventions and not contractual obligations. With the exception of policyholder dividends left on deposit, and those items excluded as noted in the preceding sentence, the contractual obligation presented in the table above related to other policy-related balances is equal to the liability reflected in the consolidated balance sheet. Such amounts are reported in the one year or less 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 one year or less category at the amount of the liability presented in the consolidated balance sheet. | ||
c. The nature of the policyholder dividend obligation is described in Note 18 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. | ||
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 one year or less 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 $984 million at December 31, 2010. | ||
Bank deposits — Bank deposits of $10.4 billion exceed the amount on the balance sheet of $10.3 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 |
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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 one year or less carrying fixed interest rates. The contractual obligation for short-term debt presented in the table above represents the principal amounts due upon maturity plus the related interest for the period from January 1, 2011 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 for the period from January 1, 2011 through maturity. Interest on variable rate debt was computed using prevailing rates at December 31, 2010 and, as such, does not consider the impact of future rate movements. Long-term debt also includes payments under capital lease obligations of $3 million, $2 million, $0 and $27 million, in the one year or less, more than one year to three years, more than three years to five years and more than five years categories, respectively. Long-term debt presented in the table above excludes $6,820 million at December 31, 2010 of long-term debt relating to CSEs. | ||
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 for the period from January 1, 2011 through maturity. Interest on variable rate debt was computed using prevailing rates at December 31, 2010 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 for the period from January 1, 2011 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 $7.7 billion. | ||
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 one year or less category in the table above. Commitments to fund bridge loans are short-term obligations and, as a result, are presented in the one year or less 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 $32 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 one year or less category. | ||
The other liabilities presented in the table above differ from the amount presented in the consolidated balance sheet by $5.0 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. |
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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 $175 million to be made by the Company to our pension plan in 2011 and the discretionary contributions of $120 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 2011. 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 related accrued interest of $810 million and $221 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 | ||||||||||||||
2010 | 2009 | Minimum | “Well Capitalized” | |||||||||||||
Total RBC Ratio | 8.52 | % | 9.88 | % | 8.00 | % | 10.00 | % | ||||||||
Tier 1 RBC Ratio | 8.21 | % | 9.44 | % | 4.00 | % | 6.00 | % | ||||||||
Tier 1 Leverage Ratio | 5.11 | % | 5.71 | % | 4.00 | % | n/a |
RBC Ratios — Bank
Regulatory | Regulatory | |||||||||||||||
December 31, | Requirements | Requirements | ||||||||||||||
2010 | 2009 | Minimum | “Well Capitalized” | |||||||||||||
Total RBC Ratio | 15.00 | % | 13.41 | % | 8.00 | % | 10.00 | % | ||||||||
Tier 1 RBC Ratio | 14.16 | % | 12.16 | % | 4.00 | % | 6.00 | % | ||||||||
Tier 1 Leverage Ratio | 7.14 | % | 6.64 | % | 4.00 | % | 5.00 | % |
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2011 | 2010 | 2009 | 2008 | |||||||||||||||||||||||||
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 | $ | 1,321 | $ | 631 | (4) | $ | 1,262 | $ | — | $ | 552 | $ | 1,318 | (5) | $ | 1,299 | ||||||||||||
American Life Insurance Company (6) | $ | 661 | $ | — | $ | 511 | N/A | N/A | N/A | N/A | ||||||||||||||||||
MetLife Insurance Company of Connecticut | $ | 517 | $ | 330 | $ | 659 | $ | — | $ | 714 | $ | 500 | $ | 1,026 | ||||||||||||||
Metropolitan Property and Casualty Insurance Company | $ | — | $ | 260 | $ | — | $ | 300 | $ | 9 | $ | 300 | $ | — | ||||||||||||||
Metropolitan Tower Life Insurance Company | $ | 80 | $ | 569 | (7) | $ | 93 | $ | — | $ | 88 | $ | 277 | (8) | $ | 113 |
(1) | Reflects dividend amounts that may be paid during 2011 without prior regulatory approval. However, because dividend tests may be based on dividends previously paid over rolling12-month periods, if paid before a specified date during 2011, 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) | Includes securities transferred to the Holding Company of $399 million. | |
(5) | Consists of shares of RGA stock distributed by MLIC to the Holding Company as an in-kind dividend of $1,318 million. | |
(6) | Reflects dividends permitted to be paid and the respective dividends paid since the Acquisition Date. See Note 2 to the Notes to the Consolidated Financial Statements. | |
(7) | Includes shares of an affiliate distributed to the Holding Company as an in-kind dividend of $475 million. |
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(8) | Includes shares of an affiliate distributed to the Holding Company as an in-kind dividend of $164 million. |
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Long-term debt — unaffiliated | $ | 16,258 | $ | 10,458 | ||||
Long-term debt — affiliated | $ | 665 | (1) | $ | 500 | |||
Collateral financing arrangements | $ | 2,797 | $ | 2,797 | ||||
Junior subordinated debt securities | $ | 1,748 | $ | 1,748 |
(1) | Includes $165 million of affiliated senior notes associated with bonds held by ALICO. |
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% | |||
2013 | $ | 250 | 3-month LIBOR + 1.25% | |||
2014 | $ | 350 | 5.50% | |||
2014 | $ | 1,000 | 2.38% | |||
2015 | $ | 1,000 | 5.00% | |||
2016 | $ | 1,250 | 6.75% | |||
2018 | $ | 1,035 | 6.82% | |||
2018 (1) | $ | 500 | 1.56% | |||
2018 (2) | $ | 500 | 2.46% | |||
2019 | $ | 1,035 | 7.72% | |||
2020 | $ | 729 | 5.25% | |||
2021 | $ | 1,000 | 4.75% | |||
2023 (1) | $ | 500 | 1.56% | |||
2024 | $ | 1,000 | 1.92% | |||
2024 | $ | 673 | 5.38% | |||
2032 | $ | 600 | 6.50% | |||
2033 | $ | 200 | 5.88% | |||
2034 | $ | 750 | 6.38% | |||
2035 | $ | 1,000 | 5.70% | |||
2041 | $ | 750 | 5.88% | |||
2045 (2) | $ | 500 | 2.46% |
(1) | Represents one of two tranches comprising the Series C Debt Securities. | |
(2) | Represents one of two tranches comprising the Series E Debt Securities. |
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December 31, | ||||||||||||
Subsidiaries | Interest Rate | Maturity Date | 2010 | 2009 | ||||||||
(In millions) | ||||||||||||
Metropolitan Life Insurance Company | 6-month LIBOR + 1.80% | December 31, 2011 | $ | 775 | $ | 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 | $ | 1,275 | $ | 1,575 | ||||||||
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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• | implementing a 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 Committee of the Company’s Board of Directors; with respect to credit risk, to the Investment Committee of the Company’s Board of Directors; and, reporting on various aspects of risk, to 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. | |
• | Reinvestment Risk in Long Duration Liability Contracts — Derivatives are used to hedge interest rate risk related to certain long duration liability contracts, such as deferred annuities. Hedges include zero coupon interest rate swaps and swaptions. |
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• | 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 U.S. 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; | |
• | for 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. |
December 31, 2010 | ||||
(In millions) | ||||
Non-trading: | ||||
Interest rate risk | $ | 5,358 | ||
Foreign currency exchange rate risk | $ | 3,669 | ||
Equity market risk | $ | 14 | ||
Trading: | ||||
Interest rate risk | $ | 24 | ||
Foreign currency exchange rate risk | $ | 346 |
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December 31, 2010 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in the Yield | ||||||||||
Amount | Value (3) | Curve | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 327,284 | $ | (5,961 | ) | |||||||
Equity securities | 3,606 | — | ||||||||||
Trading and other securities | 18,589 | (25 | ) | |||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | 60,846 | (355 | ) | |||||||||
Held-for-sale | 3,321 | (24 | ) | |||||||||
Mortgage loans, net | 64,167 | (379 | ) | |||||||||
Policy loans | 13,406 | (179 | ) | |||||||||
Real estate joint ventures (1) | 482 | — | ||||||||||
Other limited partnership interests (1) | 1,619 | — | ||||||||||
Short-term investments | 9,387 | (2 | ) | |||||||||
Other invested assets: | ||||||||||||
Mortgage servicing rights | 950 | 70 | ||||||||||
Other | 1,490 | — | ||||||||||
Cash and cash equivalents | 13,046 | (2 | ) | |||||||||
Accrued investment income | 4,381 | — | ||||||||||
Premiums, reinsurance and other receivables | 4,048 | (331 | ) | |||||||||
Other assets | 453 | (9 | ) | |||||||||
Net embedded derivatives within asset host contracts (2) | 185 | (17 | ) | |||||||||
Mortgage loan commitments | $ | 3,754 | (17 | ) | (13 | ) | ||||||
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments | $ | 2,437 | — | — | ||||||||
Total Assets | $ | (6,848 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 152,850 | $ | 849 | ||||||||
Payables for collateral under securities loaned and other transactions | 27,272 | — | ||||||||||
Bank deposits | 10,371 | 5 | ||||||||||
Short-term debt | 306 | — | ||||||||||
Long-term debt | 21,892 | 361 | ||||||||||
Collateral financing arrangements | 4,757 | (9 | ) | |||||||||
Junior subordinated debt securities | 3,461 | 160 | ||||||||||
Other liabilities: | ||||||||||||
Trading liabilities | 46 | 1 | ||||||||||
Other | 2,777 | — | ||||||||||
Net embedded derivatives within liability host contracts (2) | 2,634 | 1,515 | ||||||||||
Total Liabilities | $ | 2,882 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 54,803 | $ | 1,138 | $ | (1,254 | ) | |||||
Interest rate floors | $ | 23,866 | 564 | (67 | ) | |||||||
Interest rate caps | $ | 35,412 | 175 | 57 | ||||||||
Interest rate futures | $ | 9,385 | 26 | 20 | ||||||||
Interest rate options | $ | 8,761 | 121 | (8 | ) | |||||||
Interest rate forwards | $ | 10,374 | (29 | ) | (32 | ) | ||||||
Synthetic GICs | $ | 4,397 | — | — | ||||||||
Foreign currency swaps | $ | 17,626 | 334 | (12 | ) | |||||||
Foreign currency forwards | $ | 10,443 | 28 | 1 | ||||||||
Currency futures | $ | 493 | 2 | — | ||||||||
Currency options | $ | 5,426 | 50 | — | ||||||||
Non-derivative hedging instruments | $ | 169 | (185 | ) | — | |||||||
Credit default swaps | $ | 10,957 | 69 | — | ||||||||
Credit forwards | $ | 90 | (1 | ) | — | |||||||
Equity futures | $ | 8,794 | 12 | — | ||||||||
Equity options | $ | 33,688 | 646 | (96 | ) | |||||||
Variance swaps | $ | 18,022 | 80 | (9 | ) | |||||||
Total rate of return swaps | $ | 1,547 | — | (16 | ) | |||||||
Total Derivative Instruments | $ | (1,416 | ) | |||||||||
Net Change | $ | (5,382 | ) | |||||||||
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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, 2010 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in the Foreign | ||||||||||
Amount | Value (1) | Exchange Rate | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 327,284 | $ | (6,516 | ) | |||||||
Equity securities | 3,606 | (74 | ) | |||||||||
Trading and other securities | 18,589 | (346 | ) | |||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | 60,846 | (414 | ) | |||||||||
Held-for-sale | 3,321 | — | ||||||||||
Mortgage loans, net | 64,167 | (414 | ) | |||||||||
Policy loans | 13,406 | (199 | ) | |||||||||
Short-term investments | 9,387 | (200 | ) | |||||||||
Other invested assets: | ||||||||||||
Mortgage servicing rights | 950 | — | ||||||||||
Other | 1,490 | (143 | ) | |||||||||
Cash and cash equivalents | 13,046 | (139 | ) | |||||||||
Accrued investment income | 4,381 | (11 | ) | |||||||||
Premiums, reinsurance and other receivables | 4,048 | (16 | ) | |||||||||
Total Assets | $ | (8,058 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 152,850 | $ | 3,255 | ||||||||
Bank deposits | 10,371 | — | ||||||||||
Long-term debt | 21,892 | 37 | ||||||||||
Other liabilities | 2,777 | 9 | ||||||||||
Net embedded derivatives within liability host contracts (2) | 2,634 | 437 | ||||||||||
Total Liabilities | $ | 3,738 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 54,083 | $ | 1,138 | $ | (17 | ) | |||||
Interest rate floors | $ | 23,866 | 564 | — | ||||||||
Interest rate caps | $ | 35,412 | 175 | — | ||||||||
Interest rate futures | $ | 9,385 | 26 | (2 | ) | |||||||
Interest rate options | $ | 8,761 | 121 | (2 | ) | |||||||
Interest rate forwards | $ | 10,374 | (29 | ) | — | |||||||
Synthetic GICs | $ | 4,397 | — | — | ||||||||
Foreign currency swaps | $ | 17,626 | 334 | 271 | ||||||||
Foreign currency forwards | $ | 10,443 | 28 | 73 | ||||||||
Currency futures | $ | 493 | 2 | (49 | ) | |||||||
Currency options | $ | 5,426 | 50 | 107 | ||||||||
Non-derivative hedging instruments | $ | 169 | (185 | ) | — | |||||||
Credit default swaps | $ | 10,957 | 69 | — | ||||||||
Credit forwards | $ | 90 | (1 | ) | — | |||||||
Equity futures | $ | 8,794 | 12 | 2 | ||||||||
Equity options | $ | 33,688 | 646 | (77 | ) | |||||||
Variance swaps | $ | 18,022 | 80 | (1 | ) | |||||||
Total rate of return swaps | $ | 1,547 | — | — | ||||||||
Total Derivative Instruments | $ | 305 | ||||||||||
Net Change | $ | (4,015 | ) | |||||||||
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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. |
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December 31, 2010 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Decrease | |||||||||||
Notional | Fair | in Equity | ||||||||||
Amount | Value (1) | Prices | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Equity securities | $ | 3,606 | $ | (355 | ) | |||||||
Other invested assets: | ||||||||||||
Net embedded derivatives within asset host contracts (2) | 185 | 11 | ||||||||||
Total Assets | $ | (344 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 152,850 | $ | — | ||||||||
Bank deposits | 10,371 | — | ||||||||||
Other liabilities: | ||||||||||||
Net embedded derivatives within liability host contracts (2) | 2,634 | (456 | ) | |||||||||
Total Liabilities | $ | (456 | ) | |||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 54,803 | $ | 1,138 | $ | — | ||||||
Interest rate floors | $ | 23,866 | 564 | — | ||||||||
Interest rate caps | $ | 35,412 | 175 | — | ||||||||
Interest rate futures | $ | 9,385 | 26 | — | ||||||||
Interest rate options | $ | 8,761 | 121 | — | ||||||||
Interest rate forwards | $ | 10,374 | (29 | ) | — | |||||||
Synthetic GICs | $ | 4,397 | — | — | ||||||||
Foreign currency swaps | $ | 17,626 | 334 | — | ||||||||
Foreign currency forwards | $ | 10,443 | 28 | — | ||||||||
Currency futures | $ | 493 | 2 | — | ||||||||
Currency options | $ | 5,426 | 50 | — | ||||||||
Non-derivative hedging instruments | $ | 169 | (185 | ) | — | |||||||
Credit default swaps | $ | 10,957 | 69 | — | ||||||||
Credit forwards | $ | 90 | (1 | ) | — | |||||||
Equity futures | $ | 8,794 | 12 | 3 | ||||||||
Equity options | $ | 33,688 | 646 | 628 | ||||||||
Variance swaps | $ | 18,022 | 80 | — | ||||||||
Total rate of return swaps | $ | 1,547 | — | 155 | ||||||||
Total Derivative Instruments | $ | 786 | ||||||||||
Net Change | $ | (14 | ) | |||||||||
(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 market risk. | |
(2) | Embedded derivatives are recognized in the consolidated balance sheet in the same caption as the host contract. |
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(3) | During the fourth quarter of 2010, the analysis of the impact of a 10% change (increase or decrease) in equity market rates determined that due to the inclusion of ALICO, a decrease of 10% had the most adverse effect on our equity risk while the prior year end’s analysis of equity market rates shows an increase of 10% had the most adverse effect. |
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Item 8. | Financial Statements and Supplementary Data |
Page | ||||
F-1 | ||||
Financial Statements at December 31, 2010 and 2009 and for the Years Ended December 31, 2010, 2009, and 2008: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-7 | ||||
F-9 | ||||
Financial Statement Schedules at December 31, 2010 and 2009 and for the Years Ended December 31, 2010, 2009, and 2008: | ||||
F-212 | ||||
F-213 | ||||
F-221 | ||||
F-223 |
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F-1
Table of Contents
Consolidated Balance Sheets
December 31, 2010 and 2009
(In millions, except share and per share data)
2010 | 2009 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $320,008 and $229,709, respectively; includes $3,330 and $3,171, respectively, relating to variable interest entities) | $ | 327,284 | $ | 227,642 | ||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $3,625 and $3,187, respectively) | 3,606 | 3,084 | ||||||
Trading and other securities, at estimated fair value (includes $463 and $420 of actively traded securities, respectively; and $387 and $0, respectively, relating to variable interest entities) | 18,589 | 2,384 | ||||||
Mortgage loans: | ||||||||
Held-for-investment, principally at amortized cost (net of valuation allowances of $664 and $721, respectively; includes $6,840 and $0, respectively, at estimated fair value, relating to variable interest entities) | 59,055 | 48,181 | ||||||
Held-for-sale, principally at estimated fair value | 3,321 | 2,728 | ||||||
Mortgage loans, net | 62,376 | 50,909 | ||||||
Policy loans | 11,914 | 10,061 | ||||||
Real estate and real estate joint ventures (includes $10 and $18, respectively, relating to variable interest entities) | 8,030 | 6,896 | ||||||
Other limited partnership interests (includes $298 and $236, respectively, relating to variable interest entities) | 6,416 | 5,508 | ||||||
Short-term investments, principally at estimated fair value | 9,387 | 8,374 | ||||||
Other invested assets, principally at estimated fair value (includes $104 and $137, respectively, relating to variable interest entities) | 15,430 | 12,709 | ||||||
Total investments | 463,032 | 327,567 | ||||||
Cash and cash equivalents, principally at estimated fair value (includes $69 and $68, respectively, relating to variable interest entities) | 13,046 | 10,112 | ||||||
Accrued investment income (includes $34 and $0, respectively, relating to variable interest entities) | 4,381 | 3,173 | ||||||
Premiums, reinsurance and other receivables (includes $2 and $0, respectively, relating to variable interest entities) | 19,830 | 16,752 | ||||||
Deferred policy acquisition costs and value of business acquired | 27,307 | 19,256 | ||||||
Current income tax recoverable | — | 316 | ||||||
Deferred income tax assets | — | 1,228 | ||||||
Goodwill | 11,781 | 5,047 | ||||||
Other assets (includes $6 and $16, respectively, relating to variable interest entities) | 8,192 | 6,822 | ||||||
Separate account assets | 183,337 | 149,041 | ||||||
Total assets | $ | 730,906 | $ | 539,314 | ||||
Liabilities and Equity | ||||||||
Liabilities | ||||||||
Future policy benefits | $ | 173,373 | $ | 135,879 | ||||
Policyholder account balances | 211,020 | 138,673 | ||||||
Other policy-related balances | 15,806 | 8,446 | ||||||
Policyholder dividends payable | 830 | 761 | ||||||
Policyholder dividend obligation | 876 | — | ||||||
Payables for collateral under securities loaned and other transactions | 27,272 | 24,196 | ||||||
Bank deposits | 10,316 | 10,211 | ||||||
Short-term debt | 306 | 912 | ||||||
Long-term debt (includes $6,902 and $64, respectively, at estimated fair value, relating to variable interest entities) | 27,586 | 13,220 | ||||||
Collateral financing arrangements | 5,297 | 5,297 | ||||||
Junior subordinated debt securities | 3,191 | 3,191 | ||||||
Current income tax payable | 316 | — | ||||||
Deferred income tax liability | 1,881 | — | ||||||
Other liabilities (includes $93 and $26, respectively, relating to variable interest entities) | 20,386 | 15,989 | ||||||
Separate account liabilities | 183,337 | 149,041 | ||||||
Total liabilities | 681,793 | 505,816 | ||||||
Contingencies, Commitments and Guarantees (Note 16) | ||||||||
Redeemable noncontrolling interests in partially owned consolidated subsidiaries | 117 | — | ||||||
Equity | ||||||||
MetLife, Inc.’s stockholders’ equity: | ||||||||
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized: | ||||||||
Preferred stock, 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference | 1 | 1 | ||||||
Convertible preferred stock, 6,857,000 shares issued and outstanding at December 31, 2010 | — | — | ||||||
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 989,031,704 and 822,359,818 shares issued at December 31, 2010 and 2009, respectively; 985,837,817 and 818,833,810 shares outstanding at December 31, 2010 and 2009, respectively | 10 | 8 | ||||||
Additional paid-in capital | 26,423 | 16,859 | ||||||
Retained earnings | 21,363 | 19,501 | ||||||
Treasury stock, at cost; 3,193,887 and 3,526,008 shares at December 31, 2010 and 2009, respectively | (172 | ) | (190 | ) | ||||
Accumulated other comprehensive income (loss) | 1,000 | (3,058 | ) | |||||
Total MetLife, Inc.’s stockholders’ equity | 48,625 | 33,121 | ||||||
Noncontrolling interests | 371 | 377 | ||||||
Total equity | 48,996 | 33,498 | ||||||
Total liabilities and equity | $ | 730,906 | $ | 539,314 | ||||
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Table of Contents
Consolidated Statements of Operations
For the Years Ended December 31, 2010, 2009 and 2008
(In millions, except per share data)
2010 | 2009 | 2008 | ||||||||||
Revenues | ||||||||||||
Premiums | $ | 27,394 | $ | 26,460 | $ | 25,914 | ||||||
Universal life and investment-type product policy fees | 6,037 | 5,203 | 5,381 | |||||||||
Net investment income | 17,615 | 14,837 | 16,289 | |||||||||
Other revenues | 2,328 | 2,329 | 1,586 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (682 | ) | (2,439 | ) | (1,296 | ) | ||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss) | 212 | 939 | — | |||||||||
Other net investment gains (losses) | 78 | (1,406 | ) | (802 | ) | |||||||
Total net investment gains (losses) | (392 | ) | (2,906 | ) | (2,098 | ) | ||||||
Net derivative gains (losses) | (265 | ) | (4,866 | ) | 3,910 | |||||||
Total revenues | 52,717 | 41,057 | 50,982 | |||||||||
Expenses | ||||||||||||
Policyholder benefits and claims | 29,545 | 28,336 | 27,437 | |||||||||
Interest credited to policyholder account balances | 4,925 | 4,849 | 4,788 | |||||||||
Policyholder dividends | 1,486 | 1,650 | 1,751 | |||||||||
Other expenses | 12,803 | 10,556 | 11,947 | |||||||||
Total expenses | 48,759 | 45,391 | 45,923 | |||||||||
Income (loss) from continuing operations before provision for income tax | 3,958 | (4,334 | ) | 5,059 | ||||||||
Provision for income tax expense (benefit) | 1,181 | (2,015 | ) | 1,580 | ||||||||
Income (loss) from continuing operations, net of income tax | 2,777 | (2,319 | ) | 3,479 | ||||||||
Income (loss) from discontinued operations, net of income tax | 9 | 41 | (201 | ) | ||||||||
Net income (loss) | 2,786 | (2,278 | ) | 3,278 | ||||||||
Less: Net income (loss) attributable to noncontrolling interests | (4 | ) | (32 | ) | 69 | |||||||
Net income (loss) attributable to MetLife, Inc. | 2,790 | (2,246 | ) | 3,209 | ||||||||
Less: Preferred stock dividends | 122 | 122 | 125 | |||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 2,668 | $ | (2,368 | ) | $ | 3,084 | |||||
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders per common share: | ||||||||||||
Basic | $ | 3.01 | $ | (2.94 | ) | $ | 4.60 | |||||
Diluted | $ | 2.99 | $ | (2.94 | ) | $ | 4.54 | |||||
Net income (loss) available to MetLife, Inc.’s common shareholders per common share: | ||||||||||||
Basic | $ | 3.02 | $ | (2.89 | ) | $ | 4.19 | |||||
Diluted | $ | 3.00 | $ | (2.89 | ) | $ | 4.14 | |||||
Cash dividends per common share | $ | 0.74 | $ | 0.74 | $ | 0.74 | ||||||
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Accumulated Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Foreign | Defined | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Convertible | Additional | Treasury | Unrealized | Other-Than- | Currency | Benefit | MetLife, Inc.’s | |||||||||||||||||||||||||||||||||||||||||||||
Preferred | Preferred | Common | Paid-in | Retained | Stock | Investment | Temporary | Translation | Plans | Stockholders’ | Noncontrolling | Total | ||||||||||||||||||||||||||||||||||||||||
Stock | Stock | Stock | Capital | Earnings | at Cost | Gains (Losses) | Impairments | Adjustments | Adjustment | Equity | Interests (1) | Equity | ||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2009 | $ | 1 | $ | — | $ | 8 | $ | 16,859 | $ | 19,501 | $ | (190 | ) | $ | (817 | ) | $ | (513 | ) | $ | (183 | ) | $ | (1,545 | ) | $ | 33,121 | $ | 377 | $ | 33,498 | |||||||||||||||||||||
Cumulative effect of change in accounting principle, net of income tax (Note 1) | (12 | ) | 31 | 11 | 30 | 30 | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2010 | 1 | — | 8 | 16,859 | 19,489 | (190 | ) | (786 | ) | (502 | ) | (183 | ) | (1,545 | ) | 33,151 | 377 | 33,528 | ||||||||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle, net of income tax (Note 1) | (10 | ) | 10 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Convertible preferred stock issuance | — | 2,805 | 2,805 | 2,805 | ||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issuance — newly issued shares related to business acquisition | 2 | 6,727 | 6,729 | 6,729 | ||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock purchase contracts related to common equity units | (69 | ) | (69 | ) | (69 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | 101 | 18 | 119 | 119 | ||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on preferred stock | (122 | ) | (122 | ) | (122 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends on common stock | (784 | ) | (784 | ) | (784 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Change in equity of noncontrolling interests | (9 | ) | (9 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | 2,790 | 2,790 | (2 | ) | 2,788 | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | 11 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | 4,121 | 136 | 4,257 | (3 | ) | 4,254 | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | (358 | ) | (358 | ) | 8 | (350 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Defined benefit plans adjustment, net of income tax | 96 | 96 | 96 | |||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | 4,006 | 5 | 4,011 | |||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | 6,796 | 3 | 6,799 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2010 | $ | 1 | $ | — | $ | 10 | $ | 26,423 | $ | 21,363 | $ | (172 | ) | $ | 3,356 | $ | (366 | ) | $ | (541 | ) | $ | (1,449 | ) | $ | 48,625 | $ | 371 | $ | 48,996 | ||||||||||||||||||||||
(1) | Net income (loss) attributable to noncontrolling interests excludes gains (losses) of redeemable noncontrolling interests in partially owned consolidated subsidiaries of ($2) million. |
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Consolidated Statements of Equity — (Continued)
For the Year Ended December 31, 2009
(In millions)
Accumulated Other Comprehensive Income (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 income (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 | |||||||||||||||||||||||
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Consolidated Statements of Equity — (Continued)
For the Year Ended December 31, 2008
(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, 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 | ||||||||||||||||||||||||
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Consolidated Statements of Cash Flows
For the Years Ended December 31, 2010, 2009 and 2008
(In millions)
2010 | 2009 | 2008 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | 2,786 | $ | (2,278 | ) | $ | 3,278 | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization expenses | 585 | 520 | 375 | |||||||||
Amortization of premiums and accretion of discounts associated with investments, net | (1,078 | ) | (967 | ) | (939 | ) | ||||||
(Gains) losses on investments and derivatives and from sales of businesses, net | 854 | 7,715 | (1,127 | ) | ||||||||
Undistributed equity earnings of real estate joint ventures and other limited partnership interests | (430 | ) | 1,118 | 679 | ||||||||
Interest credited to policyholder account balances | 4,925 | 4,852 | 4,911 | |||||||||
Interest credited to bank deposits | 137 | 163 | 166 | |||||||||
Universal life and investment-type product policy fees | (6,037 | ) | (5,218 | ) | (5,462 | ) | ||||||
Change in trading and other securities | (1,369 | ) | (1,152 | ) | (418 | ) | ||||||
Change in residential mortgage loansheld-for-sale, net | (487 | ) | (800 | ) | (1,946 | ) | ||||||
Change in mortgage servicing rights | (165 | ) | (687 | ) | (185 | ) | ||||||
Change in accrued investment income | (206 | ) | (110 | ) | 428 | |||||||
Change in premiums, reinsurance and other receivables | (1,023 | ) | (1,653 | ) | (1,929 | ) | ||||||
Change in deferred policy acquisition costs, net | (541 | ) | (1,837 | ) | 545 | |||||||
Change in income tax recoverable (payable) | 1,292 | (2,614 | ) | 920 | ||||||||
Change in other assets | 1,948 | (660 | ) | 5,737 | ||||||||
Change in insurance-related liabilities and policy-related balances | 6,489 | 6,401 | 5,307 | |||||||||
Change in other liabilities | (315 | ) | 865 | 163 | ||||||||
Other, net | 631 | 145 | 199 | |||||||||
Net cash provided by operating activities | 7,996 | 3,803 | 10,702 | |||||||||
Cash flows from investing activities | ||||||||||||
Sales, maturities and repayments of: | ||||||||||||
Fixed maturity securities | 86,529 | 64,428 | 102,250 | |||||||||
Equity securities | 1,371 | 2,545 | 2,707 | |||||||||
Mortgage loans | 6,361 | 5,769 | 6,077 | |||||||||
Real estate and real estate joint ventures | 322 | 43 | 140 | |||||||||
Other limited partnership interests | 522 | 947 | 593 | |||||||||
Purchases of: | ||||||||||||
Fixed maturity securities | (100,713 | ) | (83,940 | ) | (86,874 | ) | ||||||
Equity securities | (949 | ) | (1,986 | ) | (1,494 | ) | ||||||
Mortgage loans | (8,967 | ) | (4,692 | ) | (10,096 | ) | ||||||
Real estate and real estate joint ventures | (786 | ) | (579 | ) | (1,170 | ) | ||||||
Other limited partnership interests | (1,008 | ) | (803 | ) | (1,643 | ) | ||||||
Cash received in connection with freestanding derivatives | 1,814 | 3,292 | 8,168 | |||||||||
Cash paid in connection with freestanding derivatives | (2,548 | ) | (5,393 | ) | (6,454 | ) | ||||||
Sales of businesses, net of cash and cash equivalents disposed of $0, $180 and $0, respectively | — | (50 | ) | (4 | ) | |||||||
Disposal of subsidiary | — | (19 | ) | (313 | ) | |||||||
Purchases of businesses, net of cash and cash equivalents acquired of $4,175, $0 and $314, respectively | (3,021 | ) | — | (469 | ) | |||||||
Net change in policy loans | (225 | ) | (259 | ) | (467 | ) | ||||||
Net change in short-term investments | 3,033 | 5,534 | (11,269 | ) | ||||||||
Net change in other invested assets | 137 | 1,388 | (2,206 | ) | ||||||||
Other, net | (186 | ) | (160 | ) | (147 | ) | ||||||
Net cash used in investing activities | $ | (18,314 | ) | $ | (13,935 | ) | $ | (2,671 | ) | |||
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Consolidated Statements of Cash Flows — (Continued)
For the Years Ended December 31, 2010, 2009 and 2008
(In millions)
2010 | 2009 | 2008 | ||||||||||
Cash flows from financing activities | ||||||||||||
Policyholder account balances: | ||||||||||||
Deposits | $ | 74,296 | $ | 77,517 | $ | 70,051 | ||||||
Withdrawals | (69,739 | ) | (79,799 | ) | (56,406 | ) | ||||||
Net change in payables for collateral under securities loaned and other transactions | 3,076 | (6,863 | ) | (13,077 | ) | |||||||
Net change in bank deposits | (32 | ) | 3,164 | 2,185 | ||||||||
Net change in short-term debt | (606 | ) | (1,747 | ) | 1,992 | |||||||
Long-term debt issued | 5,090 | 2,961 | 339 | |||||||||
Long-term debt repaid | (1,061 | ) | (555 | ) | (422 | ) | ||||||
Collateral financing arrangements issued | — | 105 | 310 | |||||||||
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 | |||||||||
Debt issuance costs | (14 | ) | (30 | ) | (34 | ) | ||||||
Common stock issued, net of issuance costs | 3,576 | — | 290 | |||||||||
Common stock issued to settle stock forward contracts | — | 1,035 | — | |||||||||
Treasury stock acquired in connection with share repurchase agreements | — | — | (1,250 | ) | ||||||||
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 | ) | (122 | ) | (125 | ) | ||||||
Dividends on common stock | (784 | ) | (610 | ) | (592 | ) | ||||||
Other, net | (299 | ) | (34 | ) | 7 | |||||||
Net cash provided by (used in) financing activities | 13,381 | (4,103 | ) | 6,189 | ||||||||
Effect of change in foreign currency exchange rates on cash and cash equivalents balances | (129 | ) | 108 | (349 | ) | |||||||
Change in cash and cash equivalents | 2,934 | (14,127 | ) | 13,871 | ||||||||
Cash and cash equivalents, beginning of year | 10,112 | 24,239 | 10,368 | |||||||||
Cash and cash equivalents, end of year | $ | 13,046 | $ | 10,112 | $ | 24,239 | ||||||
Cash and cash equivalents, subsidiariesheld-for-sale, beginning of year | $ | — | $ | 32 | $ | 407 | ||||||
Cash and cash equivalents, subsidiariesheld-for-sale, end of year | $ | — | $ | — | $ | 32 | ||||||
Cash and cash equivalents, from continuing operations, beginning of year | $ | 10,112 | $ | 24,207 | $ | 9,961 | ||||||
Cash and cash equivalents, from continuing operations, end of year | $ | 13,046 | $ | 10,112 | $ | 24,207 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Net cash paid (received) during the year for: | ||||||||||||
Interest | $ | 1,489 | $ | 989 | $ | 1,107 | ||||||
Income tax | $ | (23 | ) | $ | 397 | $ | 27 | |||||
Non-cash transactions during the year: | ||||||||||||
Business acquisitions: | ||||||||||||
Assets acquired | $ | 125,689 | $ | — | $ | 2,083 | ||||||
Liabilities assumed | (109,267 | ) | — | (1,300 | ) | |||||||
Redeemable and non-redeemable noncontrolling interests assumed | (130 | ) | — | — | ||||||||
Net assets acquired | 16,292 | — | 783 | |||||||||
Cash paid, excluding transaction costs of $88, $0 and $0, respectively | (7,196 | ) | — | (783 | ) | |||||||
Other purchase price adjustments | 98 | — | — | |||||||||
Securities issued | $ | 9,194 | $ | — | $ | — | ||||||
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 $0, $19 and $43, 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 | ||||||
Purchase money mortgage loans on sales of real estate joint ventures | $ | 2 | $ | 93 | $ | — | ||||||
Fixed maturity securities received in connection with insurance contract commutation | $ | — | $ | — | $ | 115 | ||||||
Real estate and real estate joint ventures acquired in satisfaction of debt | $ | 93 | $ | 211 | $ | 1 | ||||||
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1. | Business, Basis of Presentation and Summary of Significant Accounting Policies |
• | Reclassification from other net investment gains (losses) of ($4,866) million and $3,910 million to net derivative gains (losses) in the consolidated statements of operations for the years ended December 31, 2009 and 2008, respectively; | |
• | Reclassification from net change in other invested assets of $3,292 million and $8,168 million to cash received in connection with freestanding derivatives and ($5,393) million and ($6,454) million to cash paid in connection with freestanding derivatives, all within cash flows from investing activities, in the consolidated statements of cash flows for the years ended December 31, 2009 and 2008, respectively; and | |
• | Realignment that affected assets, liabilities and results of operations on a segment basis with no impact to the consolidated results. See Note 22. |
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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 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 value 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 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 estimate 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 appropriate underlying equity index, such as 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. |
• | 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 |
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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. |
• | Effective December 31, 2008, the Company adopted 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 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 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 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. |
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• | 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. | |
• | 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 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 April 1, 2009, the Company adopted guidance on: (i) estimating the fair value of an asset or liability if there was a significant decrease in the volume and level of trading activity for these assets or |
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liabilities; and (ii) identifying transactions that are not orderly. The Company has provided all of the material disclosures in its consolidated financial statements. |
• | Effective December 31, 2009, the Company adopted 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 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). |
• | 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 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 U.S. Securities and Exchange Commission (“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 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. |
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2. | Acquisitions and Dispositions |
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November 1, 2010 | ||||
(In millions) | ||||
Cash | $ | 6,800 | ||
MetLife, Inc.’s common stock (78,239,712 shares) (1) | 3,200 | |||
MetLife, Inc.’s Convertible Preferred Stock (1),(2) | 2,805 | |||
MetLife, Inc.’s Equity Units ($3.0 billion aggregate stated amount) (3) | 3,189 | |||
Total cash paid and securities issued to ALICO Holdings | $ | 15,994 | ||
Contractual purchase price adjustments (4) | 396 | |||
Total purchase price | $ | 16,390 | ||
Effective settlement of pre-existing relationships (5) | (186 | ) | ||
Contingent consideration (6) | 88 | |||
Total purchase consideration for ALICO | $ | 16,292 | ||
(1) | Fair value is based on the opening price of MetLife, Inc.’s common stock of $40.90 on the New York Stock Exchange (“NYSE”) on November 1, 2010. | |
(2) | Convertible into 68,570,000 shares of MetLife, Inc.’s common stock upon a favorable vote of MetLife, Inc.’s common stockholders before the first anniversary of the Acquisition Date. See Note 18. | |
(3) | The Equity Units include the Debt Securities and the Purchase Contracts that will settle in MetLife, Inc.’s common stock on specified future dates. See Note 14. | |
(4) | Relates to the cash settlement of intercompany balances prior to the Acquisition for amounts in excess of certainagreed-upon thresholds and certain other adjustments. |
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(5) | Effective settlement of debt securities issued by MetLife, Inc. that are owned by ALICO and reduces the total purchase consideration. | |
(6) | Estimated fair value of potential payments related to the adequacy of reserves for guarantees on the fair value of a fund of assets backing certain United Kingdom (“U.K.”) unit-linked contracts. |
November 1, 2010 | ||||
(In millions) | ||||
Assets acquired: | ||||
Total investments | $ | 101,036 | ||
Cash and cash equivalents | 4,175 | |||
Accrued investment income | 948 | |||
Premiums, reinsurance and other receivables | 1,971 | |||
VOBA | 9,210 | |||
Other assets | 1,146 | |||
Separate account assets | 244 | |||
Total assets | $ | 118,730 | ||
Liabilities assumed: | ||||
Future policy benefits | $ | 31,811 | ||
Policyholder account balances | 66,652 | |||
Other policy-related balances | 7,306 | |||
Current and deferred income tax liability | 336 | |||
Other liabilities | 2,918 | |||
Separate account liabilities | 244 | |||
Total liabilities | $ | 109,267 | ||
Redeemable noncontrolling interests in partially owned consolidated subsidiaries assumed | $ | 109 | ||
Noncontrolling interests | (21 | ) | ||
Goodwill | 6,959 | |||
Net assets acquired | $ | 16,292 | ||
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Weighted Average | ||||||||
November 1, 2010 | Amortization Period | |||||||
(In millions) | (In years) | |||||||
VOBA | $ | 9,210 | 8.2 | |||||
VODA and VOCRA | 341 | 10.3 | ||||||
Total value of amortizable intangible assets acquired | $ | 9,551 | 8.6 | |||||
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ALICO’s Operations | ||||
Included in MetLife’s | ||||
Results for the | ||||
Year Ended December 31, 2010 | ||||
(In millions) | ||||
Total revenues | $ | 950 | ||
Income (loss) from continuing operations, net of income tax | $ | (2 | ) |
Years Ended December 31, | ||||||||
2010 | 2009 | |||||||
(In millions, except | ||||||||
per share data) | ||||||||
Total revenues | $ | 64,680 | $ | 54,282 | ||||
Income (loss) from continuing operations, net of income tax, attributable to common shareholders | $ | 3,888 | $ | (1,353 | ) | |||
Income (loss) from continuing operations, net of income tax, attributable to common shareholders per common share: | ||||||||
Basic | $ | 3.60 | $ | (1.29 | ) | |||
Diluted | $ | 3.57 | $ | (1.29 | ) |
• | reduction in net investment income to reflect the amortization or accretion associated with the new cost basis of the acquired fixed maturitiesavailable-for-sale portfolio; | |
• | elimination of amortization associated with the elimination of ALICO’s historical DAC; | |
• | amortization of VOBA, VODA and VOCRA associated with the establishment of VOBA, VODA and VOCRA arising from the Acquisition; | |
• | reduction in other expenses associated with the amortization of negative VOBA; | |
• | reduction in revenues associated with the elimination of ALICO’s historical unearned revenue liability; |
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• | interest expense associated with the issuance of the Debt Securities to ALICO Holdings and the public issuance of senior notes in connection with the financing of the Acquisition; | |
• | certain adjustments to conform to MetLife’s accounting policies; and | |
• | reversal of investment and derivative gains (losses) associated with certain transactions that were completed prior to the Acquisition Date (conditions of closing). |
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• | 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, 2010 | ||||||||||||||||||||||||
Cost or | Gross Unrealized | Estimated | ||||||||||||||||||||||
Amortized | Temporary | OTTI | Fair | % of | ||||||||||||||||||||
Cost | Gain | Loss | Loss | Value | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 89,713 | $ | 4,486 | $ | 1,631 | $ | — | $ | 92,568 | 28.3 | % | ||||||||||||
Foreign corporate securities | 65,784 | 3,333 | 939 | — | 68,178 | 20.8 | ||||||||||||||||||
RMBS | 44,468 | 1,652 | 917 | 470 | 44,733 | 13.7 | ||||||||||||||||||
Foreign government securities | 42,154 | 1,856 | 610 | — | 43,400 | 13.2 | ||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities (1) | 32,469 | 1,394 | 559 | — | 33,304 | 10.2 | ||||||||||||||||||
CMBS | 20,213 | 740 | 266 | 12 | 20,675 | 6.3 | ||||||||||||||||||
ABS | 14,725 | 274 | 590 | 119 | 14,290 | 4.4 | ||||||||||||||||||
State and political subdivision securities | 10,476 | 171 | 518 | — | 10,129 | 3.1 | ||||||||||||||||||
Other fixed maturity securities | 6 | 1 | — | — | 7 | — | ||||||||||||||||||
Total fixed maturity securities (2), (3) | $ | 320,008 | $ | 13,907 | $ | 6,030 | $ | 601 | $ | 327,284 | 100.0 | % | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Common stock | $ | 2,060 | $ | 146 | $ | 12 | $ | — | $ | 2,194 | 60.8 | % | ||||||||||||
Non-redeemable preferred stock (2) | 1,565 | 76 | 229 | — | 1,412 | 39.2 | ||||||||||||||||||
Total equity securities (4) | $ | 3,625 | $ | 222 | $ | 241 | $ | — | $ | 3,606 | 100.0 | % | ||||||||||||
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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 | % | ||||||||||||
Foreign corporate securities | 37,254 | 2,011 | 1,226 | 9 | 38,030 | 16.7 | ||||||||||||||||||
RMBS | 45,343 | 1,234 | 1,957 | 600 | 44,020 | 19.3 | ||||||||||||||||||
Foreign government securities | 11,010 | 1,076 | 139 | — | 11,947 | 5.2 | ||||||||||||||||||
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 | ||||||||||||||||||
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 | % | ||||||||||||
(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 $223 million and $407 million at estimated fair value with unrealized gains of $4 million and $2 million at December 31, 2010 and 2009, respectively. | |
(2) | Upon acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has an interest ratestep-up feature which, when combined with other qualitative factors, indicates that the security has more debt-like characteristics. The Company classifies perpetual securities with an interest ratestep-up feature which, when combined with other qualitative factors, indicates that the security has more equity-like characteristics, as equity securities within non-redeemable preferred stock. Many of such securities have been issued 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, | ||||||||||||
2010 | 2009 | |||||||||||
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 | $ | 1,046 | $ | 988 | ||||||
Equity securities | Non-redeemable preferred stock | U.S. financial institutions | $ | 236 | $ | 349 | ||||||
Fixed maturity securities | Foreign corporate securities | Non-U.S. financial institutions | $ | 2,038 | $ | 2,626 | ||||||
Fixed maturity securities | U.S. corporate securities | U.S. financial institutions | $ | 83 | $ | 91 |
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(3) | The Company’s holdings in redeemable preferred stock with stated maturity dates, commonly referred to as “capital securities”, were primarily issued by U.S. financial institutions and have cumulative interest deferral features. The Company held $2.7 billion and $2.5 billion at estimated fair value of such securities at December 31, 2010 and 2009, respectively, which are included in the U.S. and foreign corporate securities sectors 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 were $1.3 billion and $1.0 billion at estimated fair value at December 31, 2010 and 2009, respectively. |
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Below investment grade or non-rated fixed maturity securities: | ||||||||
Estimated fair value | $ | 24,886 | $ | 20,201 | ||||
Net unrealized gain (loss) | $ | (696 | ) | $ | (2,609 | ) | ||
Non-income producing fixed maturity securities: | ||||||||
Estimated fair value | $ | 130 | $ | 312 | ||||
Net unrealized gain (loss) | $ | (23 | ) | $ | (31 | ) |
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December 31, | ||||||||
2010 | 2009 | |||||||
Estimated Fair Value | ||||||||
(In millions) | ||||||||
Government and agency fixed maturity securities: | ||||||||
United States (1) | $ | 33,304 | $ | 25,447 | ||||
Japan | $ | 15,591 | $ | — | ||||
Mexico | $ | 5,050 | $ | 4,813 |
(1) | Includes certain corporate fixed maturity securities guaranteed by the FDIC Program, as described above. |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Corporate fixed maturity securities — by sector: | ||||||||||||||||
Foreign corporate fixed maturity securities (1) | $ | 68,178 | 42.4 | % | $ | 38,030 | 34.5 | % | ||||||||
U.S. corporate fixed maturity securities — by industry: | ||||||||||||||||
Industrial | 22,314 | 13.9 | 17,246 | 15.6 | ||||||||||||
Consumer | 21,737 | 13.5 | 16,924 | 15.4 | ||||||||||||
Finance | 20,917 | 13.0 | 13,756 | 12.5 | ||||||||||||
Utility | 17,027 | 10.6 | 14,785 | 13.4 | ||||||||||||
Communications | 7,375 | 4.6 | 6,580 | 6.0 | ||||||||||||
Other | 3,198 | 2.0 | 2,896 | 2.6 | ||||||||||||
Total | $ | 160,746 | 100.0 | % | $ | 110,217 | 100.0 | % | ||||||||
(1) | Includes U.S. dollar-denominated debt obligations of foreign obligors and other foreign fixed maturity securities. |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of Total | Fair | % of Total | |||||||||||||
Value | Investments | Value | Investments | |||||||||||||
(In millions) | ||||||||||||||||
Concentrations within corporate fixed maturity securities: | ||||||||||||||||
Largest exposure to a single issuer | $ | 2,291 | 0.5 | % | $ | 1,038 | 0.3 | % | ||||||||
Holdings in ten issuers with the largest exposures | $ | 14,247 | 3.1 | % | $ | 7,506 | 2.3 | % |
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
By security type: | ||||||||||||||||
Pass-through securities | $ | 22,430 | 50.1 | % | $ | 19,540 | 44.4 | % | ||||||||
Collateralized mortgage obligations | 22,303 | 49.9 | 24,480 | 55.6 | ||||||||||||
Total RMBS | $ | 44,733 | 100.0 | % | $ | 44,020 | 100.0 | % | ||||||||
By risk profile: | ||||||||||||||||
Agency | $ | 34,254 | 76.6 | % | $ | 33,334 | 75.7 | % | ||||||||
Prime | 6,258 | 14.0 | 6,775 | 15.4 | ||||||||||||
Alternative residential mortgage loans | 4,221 | 9.4 | 3,911 | 8.9 | ||||||||||||
Total RMBS | $ | 44,733 | 100.0 | % | $ | 44,020 | 100.0 | % | ||||||||
Portion rated Aaa/AAA | $ | 36,085 | 80.7 | % | $ | 35,626 | 80.9 | % | ||||||||
Portion rated NAIC 1 | $ | 38,984 | 87.1 | % | $ | 38,464 | 87.4 | % | ||||||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Vintage Year: | ||||||||||||||||
2004 & Prior | $ | 93 | 2.2 | % | $ | 109 | 2.8 | % | ||||||||
2005 | 1,483 | 35.1 | 1,395 | 35.7 | ||||||||||||
2006 | 1,013 | 24.0 | 811 | 20.7 | ||||||||||||
2007 | 922 | 21.8 | 814 | 20.8 | ||||||||||||
2008 | 7 | 0.2 | — | — | ||||||||||||
2009 (1) | 671 | 15.9 | 782 | 20.0 | ||||||||||||
2010 (1) | 32 | 0.8 | — | — | ||||||||||||
Total | $ | 4,221 | 100.0 | % | $ | 3,911 | 100.0 | % | ||||||||
(1) | All of the Company’s Alt-A RMBS holdings in the 2009 and 2010 vintage years are Re-REMIC Alt-A RMBS that were purchased in 2009 and 2010 and are comprised of original issue vintage year 2005 through 2007 Alt-A RMBS. All of the Company’s Re-REMIC Alt-A RMBS holdings are NAIC 1 rated. |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Total | Amount | Total | |||||||||||||
(In millions) | ||||||||||||||||
Net unrealized gain (loss) | $ | (670 | ) | $ | (1,248 | ) | ||||||||||
Rated Aa/AA or better | 15.9 | % | 26.3 | % | ||||||||||||
Rated NAIC 1 | 39.5 | % | 31.3 | % | ||||||||||||
Distribution of holdings — at estimated fair value — by collateral type: | ||||||||||||||||
Fixed rate mortgage loans collateral | 90.7 | % | 89.3 | % | ||||||||||||
Hybrid adjustable rate mortgage loans collateral | 9.3 | 10.7 | ||||||||||||||
Total Alt-A RMBS | 100.0 | % | 100.0 | % | ||||||||||||
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December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||
Below | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||||||||||||||||||||||
Aaa | Aa | A | Baa | Grade | Total | |||||||||||||||||||||||||||||||||||||||||||
Estimated | Estimated | Estimated | Estimated | Estimated | 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 | $ | 7,411 | $ | 7,640 | $ | 282 | $ | 282 | $ | 228 | $ | 227 | $ | 74 | $ | 71 | $ | 28 | $ | 24 | $ | 8,023 | $ | 8,244 | ||||||||||||||||||||||||
2004 | 3,489 | 3,620 | 277 | 273 | 216 | 209 | 181 | 175 | 91 | 68 | 4,254 | 4,345 | ||||||||||||||||||||||||||||||||||||
2005 | 3,113 | 3,292 | 322 | 324 | 286 | 280 | 263 | 255 | 73 | 66 | 4,057 | 4,217 | ||||||||||||||||||||||||||||||||||||
2006 | 1,463 | 1,545 | 159 | 160 | 168 | 168 | 385 | 398 | 166 | 156 | 2,341 | 2,427 | ||||||||||||||||||||||||||||||||||||
2007 | 840 | 791 | 344 | 298 | 96 | 95 | 119 | 108 | 122 | 133 | 1,521 | 1,425 | ||||||||||||||||||||||||||||||||||||
2008 | 2 | 2 | — | — | — | — | — | — | — | — | 2 | 2 | ||||||||||||||||||||||||||||||||||||
2009 | 3 | 3 | — | — | — | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||||||||||||||
2010 | 8 | 8 | — | — | 4 | 4 | — | — | — | — | 12 | 12 | ||||||||||||||||||||||||||||||||||||
Total | $ | 16,329 | $ | 16,901 | $ | 1,384 | $ | 1,337 | $ | 998 | $ | 983 | $ | 1,022 | $ | 1,007 | $ | 480 | $ | 447 | $ | 20,213 | $ | 20,675 | ||||||||||||||||||||||||
Ratings Distribution | 81.7 | % | 6.4 | % | 4.8 | % | 4.9 | % | 2.2 | % | 100.0 | % | ||||||||||||||||||||||||||||||||||||
December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||
Below | ||||||||||||||||||||||||||||||||||||||||||||||||
Investment | ||||||||||||||||||||||||||||||||||||||||||||||||
Aaa | Aa | A | Baa | Grade | Total | |||||||||||||||||||||||||||||||||||||||||||
Estimated | Estimated | Estimated | Estimated | Estimated | 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 | % | ||||||||||||||||||||||||||||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
NAIC 1 | 93.7 | % | 96.0 | % | ||||
NAIC 2 | 3.2 | % | 2.8 | % | ||||
NAIC 3 | 1.8 | % | 1.0 | % | ||||
NAIC 4 | 1.0 | % | 0.1 | % | ||||
NAIC 5 | 0.3 | % | 0.1 | % | ||||
NAIC 6 | — | % | — | % |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
By collateral type: | ||||||||||||||||
Credit card loans | $ | 6,027 | 42.2 | % | $ | 7,057 | 53.6 | % | ||||||||
Student loans | 2,416 | 16.9 | 1,855 | 14.1 | ||||||||||||
RMBS backed bysub-prime mortgage loans | 1,119 | 7.8 | 1,044 | 7.9 | ||||||||||||
Automobile loans | 605 | 4.2 | 963 | 7.3 | ||||||||||||
Other loans | 4,123 | 28.9 | 2,243 | 17.1 | ||||||||||||
Total | $ | 14,290 | 100.0 | % | $ | 13,162 | 100.0 | % | ||||||||
Portion rated Aaa/AAA | $ | 10,411 | 72.9 | % | $ | 9,354 | 71.1 | % | ||||||||
Portion rated NAIC 1 | $ | 13,136 | 91.9 | % | $ | 11,573 | 87.9 | % | ||||||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(In millions) | ||||||||||||||||
Due in one year or less | $ | 8,593 | $ | 8,715 | $ | 6,845 | $ | 6,924 | ||||||||
Due after one year through five years | 65,378 | 67,040 | 38,408 | 39,399 | ||||||||||||
Due after five years through ten years | 77,054 | 80,163 | 40,448 | 41,568 | ||||||||||||
Due after ten years | 89,577 | 91,668 | 67,838 | 66,947 | ||||||||||||
Subtotal | 240,602 | 247,586 | 153,539 | 154,838 | ||||||||||||
RMBS, CMBS and ABS | 79,406 | 79,698 | 76,170 | 72,804 | ||||||||||||
Total fixed maturity securities | $ | 320,008 | $ | 327,284 | $ | 229,709 | $ | 227,642 | ||||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Fixed maturity securities | $ | 7,817 | $ | (1,208 | ) | $ | (21,246 | ) | ||||
Fixed maturity securities with noncredit OTTI losses in accumulated other comprehensive income (loss) | (601 | ) | (859 | ) | — | |||||||
Total fixed maturity securities | 7,216 | (2,067 | ) | (21,246 | ) | |||||||
Equity securities | (3 | ) | (103 | ) | (934 | ) | ||||||
Derivatives | (59 | ) | (144 | ) | (2 | ) | ||||||
Other | 42 | 71 | 53 | |||||||||
Subtotal | 7,196 | (2,243 | ) | (22,129 | ) | |||||||
Amounts allocated from: | ||||||||||||
Insurance liability loss recognition | (672 | ) | (118 | ) | 42 | |||||||
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss) | 38 | 71 | — | |||||||||
DAC and VOBA | (1,205 | ) | 145 | 3,025 | ||||||||
Policyholder dividend obligation | (876 | ) | — | — | ||||||||
Subtotal | (2,715 | ) | 98 | 3,067 | ||||||||
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss) | 197 | 275 | — | |||||||||
Deferred income tax benefit (expense) | (1,692 | ) | 539 | 6,508 | ||||||||
Net unrealized investment gains (losses) | 2,986 | (1,331 | ) | (12,554 | ) | |||||||
Net unrealized investment gains (losses) attributable to noncontrolling interests | 4 | 1 | (10 | ) | ||||||||
Net unrealized investment gains (losses) attributable to MetLife, Inc. | $ | 2,990 | $ | (1,330 | ) | $ | (12,564 | ) | ||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance, beginning of period | $ | (1,330 | ) | $ | (12,564 | ) | $ | 971 | ||||
Cumulative effect of change in accounting principles, net of income tax | 52 | (76 | ) | (10 | ) | |||||||
Fixed maturity securities on which noncredit OTTI losses have been recognized | 242 | (733 | ) | — | ||||||||
Unrealized investment gains (losses) during the year | 9,117 | 20,745 | (25,536 | ) | ||||||||
Unrealized investment losses of subsidiaries at the date of disposal | — | — | 149 | |||||||||
Unrealized investment gains (losses) relating to: | ||||||||||||
Insurance liability gain (loss) recognition | (554 | ) | (160 | ) | 650 | |||||||
DAC and VOBA related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss) | (33 | ) | 61 | — | ||||||||
DAC and VOBA | (1,350 | ) | (2,880 | ) | 3,370 | |||||||
DAC and VOBA of subsidiary at date of disposal | — | — | (18 | ) | ||||||||
Policyholder dividend obligation | (876 | ) | — | 789 | ||||||||
Deferred income tax benefit (expense) related to noncredit OTTI losses recognized in accumulated other comprehensive income (loss) | (73 | ) | 235 | — | ||||||||
Deferred income tax benefit (expense) | (2,208 | ) | (5,969 | ) | 6,991 | |||||||
Deferred income tax benefit (expense) of subsidiaries at date of disposal | — | — | (60 | ) | ||||||||
Net unrealized investment gains (losses) | 2,987 | (1,341 | ) | (12,704 | ) | |||||||
Net unrealized investment gains (losses) attributable to noncontrolling interests | 3 | 11 | (10 | ) | ||||||||
Net unrealized investment gains (losses) attributable to noncontrolling interests of subsidiary at date of disposal | — | — | 150 | |||||||||
Balance, end of period | $ | 2,990 | $ | (1,330 | ) | $ | (12,564 | ) | ||||
Change in net unrealized investment gains (losses) | $ | 4,317 | $ | 11,223 | $ | (13,665 | ) | |||||
Change in net unrealized investment gains (losses) attributable to noncontrolling interests | 3 | 11 | (10 | ) | ||||||||
Change in net unrealized investment gains (losses) attributable to noncontrolling interests of subsidiary at date of disposal | — | — | 150 | |||||||||
Change in net unrealized investment gains (losses) attributable to MetLife, Inc. | $ | 4,320 | $ | 11,234 | $ | (13,525 | ) | |||||
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December 31, 2010 | ||||||||||||||||||||||||
Equal to or Greater | ||||||||||||||||||||||||
Less than 12 Months | than 12 Months | Total | ||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | |||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
(In millions, except number of securities) | ||||||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 23,309 | $ | 464 | $ | 8,386 | $ | 1,167 | $ | 31,695 | $ | 1,631 | ||||||||||||
Foreign corporate securities | 22,530 | 417 | 4,007 | 522 | 26,537 | 939 | ||||||||||||||||||
RMBS | 7,588 | 212 | 6,700 | 1,175 | 14,288 | 1,387 | ||||||||||||||||||
Foreign government securities | 26,828 | 593 | 189 | 17 | 27,017 | 610 | ||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 13,401 | 530 | 118 | 29 | 13,519 | 559 | ||||||||||||||||||
CMBS | 3,787 | 29 | 1,363 | 249 | 5,150 | 278 | ||||||||||||||||||
ABS | 2,713 | 42 | 3,029 | 667 | 5,742 | 709 | ||||||||||||||||||
State and political subdivision securities | 5,061 | 246 | 988 | 272 | 6,049 | 518 | ||||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | 1 | — | ||||||||||||||||||
Total fixed maturity securities | $ | 105,218 | $ | 2,533 | $ | 24,780 | $ | 4,098 | $ | 129,998 | $ | 6,631 | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Common stock | $ | 89 | $ | 12 | $ | 1 | $ | — | $ | 90 | $ | 12 | ||||||||||||
Non-redeemable preferred stock | 191 | 9 | 824 | 220 | 1,015 | 229 | ||||||||||||||||||
Total equity securities | $ | 280 | $ | 21 | $ | 825 | $ | 220 | $ | 1,105 | $ | 241 | ||||||||||||
Total number of securities in an unrealized loss position | 5,793 | 1,738 | ||||||||||||||||||||||
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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 | ||||||||||||
Foreign corporate securities | 3,786 | 139 | 7,282 | 1,096 | 11,068 | 1,235 | ||||||||||||||||||
RMBS | 5,623 | 119 | 10,268 | 2,438 | 15,891 | 2,557 | ||||||||||||||||||
Foreign government securities | 2,318 | 55 | 507 | 84 | 2,825 | 139 | ||||||||||||||||||
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 | ||||||||||||||||||
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 | ||||||||||||||||||||||
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December 31, 2010 | ||||||||||||||||||||||||
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 | $ | 105,968 | $ | 1,408 | $ | 2,379 | $ | 369 | 5,472 | 125 | ||||||||||||||
Six months or greater but less than nine months | 1,125 | 376 | 29 | 102 | 104 | 29 | ||||||||||||||||||
Nine months or greater but less than twelve months | 375 | 89 | 28 | 27 | 51 | 9 | ||||||||||||||||||
Twelve months or greater | 21,721 | 5,567 | 1,876 | 1,821 | 1,267 | 316 | ||||||||||||||||||
Total | $ | 129,189 | $ | 7,440 | $ | 4,312 | $ | 2,319 | ||||||||||||||||
Percentage of amortized cost | 3 | % | 31 | % | ||||||||||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Less than six months | $ | 247 | $ | 94 | $ | 10 | $ | 22 | 131 | 33 | ||||||||||||||
Six months or greater but less than nine months | 29 | 65 | 5 | 16 | 7 | 2 | ||||||||||||||||||
Nine months or greater but less than twelve months | 6 | 47 | — | 16 | 4 | 2 | ||||||||||||||||||
Twelve months or greater | 518 | 340 | 56 | 116 | 40 | 15 | ||||||||||||||||||
Total | $ | 800 | $ | 546 | $ | 71 | $ | 170 | ||||||||||||||||
Percentage of cost | 9 | % | 31 | % | ||||||||||||||||||||
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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 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, | ||||||||
2010 | 2009 | |||||||
Sector: | ||||||||
U.S. corporate securities | 24 | % | 25 | % | ||||
RMBS | 20 | 24 | ||||||
Foreign corporate securities | 14 | 11 | ||||||
ABS | 10 | 12 | ||||||
Foreign government securities | 9 | 1 | ||||||
U.S. Treasury, agency and government guaranteed securities | 8 | 9 | ||||||
State and political subdivision securities | 8 | 4 | ||||||
CMBS | 4 | 10 | ||||||
Other | 3 | 4 | ||||||
Total | 100 | % | 100 | % | ||||
Industry: | ||||||||
Mortgage-backed | 24 | % | 34 | % | ||||
Finance | 21 | 22 | ||||||
Asset-backed | 10 | 12 | ||||||
Foreign government securities | 9 | 1 | ||||||
U.S. Treasury, agency and government guaranteed securities | 8 | 9 | ||||||
State and political subdivision securities | 8 | 4 | ||||||
Utility | 5 | 4 | ||||||
Consumer | 4 | 4 | ||||||
Communications | 2 | 2 | ||||||
Industrial | 2 | 1 | ||||||
Other | 7 | 7 | ||||||
Total | 100 | % | 100 | % | ||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Fixed Maturity | Equity | Fixed Maturity | Equity | |||||||||||||
Securities | Securities | Securities | Securities | |||||||||||||
(In millions, except number of securities) | ||||||||||||||||
Number of securities | 107 | 6 | 223 | 9 | ||||||||||||
Total gross unrealized loss | $ | 2,014 | $ | 103 | $ | 4,465 | $ | 132 | ||||||||
Percentage of total gross unrealized loss | 30 | % | 43 | % | 43 | % | 48 | % |
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 | $ | 22 | $ | 18 | 82 | % | $ | 9 | 50 | % | $ | 9 | 100 | % | 100 | % | ||||||||||||||||
Six months or greater but less than twelve months | 32 | 32 | 100 | % | 32 | 100 | % | 32 | 100 | % | 50 | % | ||||||||||||||||||||
Twelve months or greater | 116 | 116 | 100 | % | 115 | 99 | % | 115 | 100 | % | 77 | % | ||||||||||||||||||||
All equity securities with a gross unrealized loss of 20% or more | $ | 170 | $ | 166 | 98 | % | $ | 156 | 94 | % | $ | 156 | 100 | % | 73 | % | ||||||||||||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Total gains (losses) on fixed maturity securities: | ||||||||||||
Total OTTI losses recognized | $ | (682 | ) | $ | (2,439 | ) | $ | (1,296 | ) | |||
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive income (loss) | 212 | 939 | — | |||||||||
Net OTTI losses on fixed maturity securities recognized in earnings | (470 | ) | (1,500 | ) | (1,296 | ) | ||||||
Fixed maturity securities — net gains (losses) on sales and disposals | 215 | (163 | ) | (657 | ) | |||||||
Total gains (losses) on fixed maturity securities | (255 | ) | (1,663 | ) | (1,953 | ) | ||||||
Other net investment gains (losses): | ||||||||||||
Equity securities | 104 | (399 | ) | (253 | ) | |||||||
Mortgage loans | 22 | (442 | ) | (136 | ) | |||||||
Real estate and real estate joint ventures | (54 | ) | (164 | ) | (18 | ) | ||||||
Other limited partnership interests | (18 | ) | (356 | ) | (140 | ) | ||||||
Other investment portfolio gains (losses) | (6 | ) | (26 | ) | 134 | |||||||
Subtotal — investment portfolio gains (losses) | (207 | ) | (3,050 | ) | (2,366 | ) | ||||||
FVO consolidated securitization entities: | ||||||||||||
Commercial mortgage loans | 758 | — | — | |||||||||
Securities | (78 | ) | — | — | ||||||||
Long-term debt — related to commercial mortgage loans | (722 | ) | — | — | ||||||||
Long-term debt — related to securities | 48 | — | — | |||||||||
Other gains (losses) (1) | (191 | ) | 144 | 268 | ||||||||
Subtotal FVO consolidated securitization entities and other gains (losses) | (185 | ) | 144 | 268 | ||||||||
Total net investment gains (losses) | $ | (392 | ) | $ | (2,906 | ) | $ | (2,098 | ) | |||
(1) | Other gains (losses) for the year ended December 31, 2010 includes a loss of $209 million related to recording the Company’s investment in MSI MetLife at its estimated recoverable amount. See Note 2. |
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Years Ended December 31, | Years Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
Fixed Maturity Securities | Equity Securities | Total | ||||||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||
Proceeds | $ | 54,559 | $ | 38,972 | $ | 62,495 | $ | 623 | $ | 950 | $ | 2,107 | $ | 55,182 | $ | 39,922 | $ | 64,602 | ||||||||||||||||||
Gross investment gains | 832 | 947 | 858 | 129 | 134 | 440 | 961 | 1,081 | 1,298 | |||||||||||||||||||||||||||
Gross investment losses | (617 | ) | (1,110 | ) | (1,515 | ) | (11 | ) | (133 | ) | (263 | ) | (628 | ) | (1,243 | ) | (1,778 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings: | ||||||||||||||||||||||||||||||||||||
Credit-related | (423 | ) | (1,137 | ) | (1,138 | ) | — | — | — | (423 | ) | (1,137 | ) | (1,138 | ) | |||||||||||||||||||||
Other (1) | (47 | ) | (363 | ) | (158 | ) | (14 | ) | (400 | ) | (430 | ) | (61 | ) | (763 | ) | (588 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings | (470 | ) | (1,500 | ) | (1,296 | ) | (14 | ) | (400 | ) | (430 | ) | (484 | ) | (1,900 | ) | (1,726 | ) | ||||||||||||||||||
Net investment gains (losses) | $ | (255 | ) | $ | (1,663 | ) | $ | (1,953 | ) | $ | 104 | $ | (399 | ) | $ | (253 | ) | $ | (151 | ) | $ | (2,062 | ) | $ | (2,206 | ) | ||||||||||
(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, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Sector: | ||||||||||||
U.S. and foreign corporate securities — by industry: | ||||||||||||
Finance | $ | 126 | $ | 459 | $ | 673 | ||||||
Consumer | 36 | 211 | 107 | |||||||||
Communications | 16 | 235 | 134 | |||||||||
Utility | 3 | 89 | 5 | |||||||||
Industrial | 2 | 30 | 26 | |||||||||
Other industries | — | 26 | 185 | |||||||||
Total U.S. and foreign corporate securities | 183 | 1,050 | 1,130 | |||||||||
ABS | 103 | 168 | 99 | |||||||||
RMBS | 98 | 193 | — | |||||||||
CMBS | 86 | 88 | 65 | |||||||||
Foreign government securities | — | 1 | 2 | |||||||||
Total | $ | 470 | $ | 1,500 | $ | 1,296 | ||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Sector: | ||||||||||||
Non-redeemable preferred stock | $ | 7 | $ | 333 | $ | 319 | ||||||
Common stock | 7 | 67 | 111 | |||||||||
Total | $ | 14 | $ | 400 | $ | 430 | ||||||
Industry: | ||||||||||||
Financial services industry: | ||||||||||||
Perpetual hybrid securities | $ | 3 | $ | 310 | $ | 90 | ||||||
Common and remaining non-redeemable preferred stock | — | 30 | 251 | |||||||||
Total financial services industry | 3 | 340 | 341 | |||||||||
Other industries | 11 | 60 | 89 | |||||||||
Total | $ | 14 | $ | 400 | $ | 430 | ||||||
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Years Ended December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Balance, at January 1, | $ | 581 | $ | — | ||||
Credit loss component of OTTI loss not reclassified to other comprehensive income (loss) in the cumulative effect transition adjustment | — | 230 | ||||||
Additions: | ||||||||
Initial impairments — credit loss OTTI recognized on securities not previously impaired | 109 | 311 | ||||||
Additional impairments — credit loss OTTI recognized on securities previously impaired | 125 | 91 | ||||||
Reductions: | ||||||||
Due to sales (maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired | (260 | ) | (49 | ) | ||||
Due to securities de-recognized in connection with the adoption of new guidance related to the consolidation of VIEs | (100 | ) | — | |||||
Due to securities impaired to net present value of expected future cash flows | (2 | ) | — | |||||
Due to increases in cash flows — accretion of previous credit loss OTTI | (10 | ) | (2 | ) | ||||
Balance, at December 31, | $ | 443 | $ | 581 | ||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Investment income: | ||||||||||||
Fixed maturity securities | $ | 12,489 | $ | 11,617 | $ | 13,577 | ||||||
Equity securities | 128 | 178 | 258 | |||||||||
Trading and other securities — Actively Traded Securities and FVO general account securities | 73 | 116 | (27 | ) | ||||||||
Mortgage loans | 2,826 | 2,743 | 2,855 | |||||||||
Policy loans | 657 | 648 | 601 | |||||||||
Real estate and real estate joint ventures | 439 | (197 | ) | 572 | ||||||||
Other limited partnership interests | 879 | 174 | (170 | ) | ||||||||
Cash, cash equivalents and short-term investments | 102 | 129 | 353 | |||||||||
International joint ventures (1) | (81 | ) | (115 | ) | 43 | |||||||
Other | 235 | 205 | 350 | |||||||||
Subtotal | 17,747 | 15,498 | 18,412 | |||||||||
Less: Investment expenses | 930 | 945 | 1,957 | |||||||||
Subtotal, net | 16,817 | 14,553 | 16,455 | |||||||||
Trading and other securities — FVO contractholder-directed unit-linked investments | 372 | 284 | (166 | ) | ||||||||
FVO consolidated securitization entities: | ||||||||||||
Commercial mortgage loans | 411 | — | — | |||||||||
Securities | 15 | — | — | |||||||||
Subtotal | 798 | 284 | (166 | ) | ||||||||
Net investment income | $ | 17,615 | $ | 14,837 | $ | 16,289 | ||||||
(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 venture investments that do not qualify for hedge accounting of $36 million, ($143) million and $178 million for the years ended December 31, 2010, 2009 and 2008, respectively. |
F-71
Table of Contents
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Securities on loan: | ||||||||
Amortized cost | $ | 23,715 | $ | 21,012 | ||||
Estimated fair value | $ | 24,230 | $ | 20,949 | ||||
Aging of cash collateral liability: | ||||||||
Open (1) | $ | 2,752 | $ | 3,290 | ||||
Less than thirty days | 12,301 | 13,605 | ||||||
Thirty days or greater but less than sixty days | 4,399 | 3,534 | ||||||
Sixty days or greater but less than ninety days | 2,291 | 92 | ||||||
Ninety days or greater | 2,904 | 995 | ||||||
Total cash collateral liability | $ | 24,647 | $ | 21,516 | ||||
Security collateral on deposit from counterparties | $ | — | $ | 6 | ||||
Reinvestment portfolio — estimated fair value | $ | 24,177 | $ | 20,339 | ||||
(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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Table of Contents
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Invested assets on deposit: | ||||||||
Regulatory agencies (1) | $ | 2,110 | $ | 1,383 | ||||
Invested assets held in trust: | ||||||||
Collateral financing arrangements (2) | 5,340 | 5,653 | ||||||
Reinsurance arrangements (3) | 3,090 | 2,719 | ||||||
Invested assets pledged as collateral: | ||||||||
Funding agreements and advances — FHLB of NY (4) | 21,975 | 20,612 | ||||||
Funding agreements — FHLB of Boston (4) | 211 | 419 | ||||||
Funding agreements — Farmer Mac (5) | 3,159 | 2,871 | ||||||
Federal Reserve Bank of New York (6) | 1,822 | 1,537 | ||||||
Collateral financing arrangements (7) | 112 | 80 | ||||||
Derivative transactions (8) | 1,726 | 1,671 | ||||||
Short sale agreements (9) | 465 | 496 | ||||||
Total invested assets on deposit, held in trust and pledged as collateral | $ | 40,010 | $ | 37,441 | ||||
(1) | The Company has investment assets on deposit with regulatory agencies consisting primarily of cash and cash equivalents, short-term investments, fixed maturity securities 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 held in trust 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 funding agreements with, and advances from, the Federal Home Loan Bank of New York (“FHLB of NY”) and has pledged fixed maturity securities in support of its funding agreements with the Federal Home Loan Bank of Boston (“FHLB of Boston”). The nature of these Federal Home Loan Bank arrangements is described in Notes 8 and 11. | |
(5) | The Company has pledged certain agricultural mortgage loans in connection with funding agreements issued to certain SPEs that have issued securities guaranteed by the Federal Agricultural Mortgage Corporation (“Farmer Mac”). The nature of these 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. | |
(8) | Certain of the Company’s invested assets are pledged as collateral for various derivative transactions as described in Note 4. |
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(9) | Certain of the Company’s Actively Traded Securities and cash and cash equivalents are pledged to secure liabilities associated with short sale agreements in the Actively Traded Securities portfolio. |
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Actively Traded Securities | $ | 463 | $ | 420 | ||||
FVO general account securities | 131 | 78 | ||||||
FVO contractholder-directed unit-linked investments | 17,794 | 1,886 | ||||||
FVO securities held by consolidated securitization entities | 201 | — | ||||||
Total trading and other securities — at estimated fair value | $ | 18,589 | $ | 2,384 | ||||
Actively Traded Securities — at estimated fair value | $ | 463 | $ | 420 | ||||
Short sale agreement liabilities — at estimated fair value | (46 | ) | (106 | ) | ||||
Net long/short position — at estimated fair value | $ | 417 | $ | 314 | ||||
Investments pledged to secure short sale agreement liabilities | $ | 465 | $ | 496 | ||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Actively Traded Securities: | ||||||||||||
Net investment income | $ | 54 | $ | 98 | $ | (13 | ) | |||||
Changes in estimated fair value included in net investment income | $ | 12 | $ | 18 | $ | (2 | ) | |||||
FVO general account securities: | ||||||||||||
Net investment income | $ | 19 | $ | 18 | $ | (14 | ) | |||||
Changes in estimated fair value included in net investment income | $ | 18 | $ | 16 | $ | (17 | ) | |||||
FVO contractholder-directed unit-linked investments: | ||||||||||||
Net investment income | $ | 372 | $ | 284 | $ | (166 | ) | |||||
Changes in estimated fair value included in net investment income | $ | 322 | $ | 275 | $ | (155 | ) | |||||
FVO securities held by consolidated securitization entities: | ||||||||||||
Net investment income | $ | 15 | $ | — | $ | — | ||||||
Changes in estimated fair value included in net investment gains (losses) | $ | (78 | ) | $ | — | $ | — |
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Mortgage loansheld-for-investment: | ||||||||||||||||
Commercial mortgage loans | $ | 37,820 | 60.7 | % | $ | 35,176 | 69.0 | % | ||||||||
Agricultural mortgage loans | 12,751 | 20.4 | 12,255 | 24.1 | ||||||||||||
Residential mortgage loans | 2,308 | 3.7 | 1,471 | 2.9 | ||||||||||||
Subtotal | 52,879 | 84.8 | 48,902 | 96.0 | ||||||||||||
Valuation allowances | (664 | ) | (1.1 | ) | (721 | ) | (1.4 | ) | ||||||||
Subtotal mortgage loansheld-for-investment, net | 52,215 | 83.7 | 48,181 | 94.6 | ||||||||||||
Commercial mortgage loans held by consolidated securitization entities — FVO | 6,840 | 11.0 | — | — | ||||||||||||
Total mortgage loansheld-for-investment, net | 59,055 | 94.7 | 48,181 | 94.6 | ||||||||||||
Mortgage loansheld-for-sale: | ||||||||||||||||
Residential mortgage loans — FVO | 2,510 | 4.0 | 2,470 | 4.9 | ||||||||||||
Mortgage loans — lower of amortized cost or estimated fair value (1) | 811 | 1.3 | 258 | 0.5 | ||||||||||||
Total mortgage loansheld-for-sale | 3,321 | 5.3 | 2,728 | 5.4 | ||||||||||||
Total mortgage loans, net | $ | 62,376 | 100.0 | % | $ | 50,909 | 100.0 | % | ||||||||
(1) | Includes agricultural and residential mortgage loans. |
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December 31, | ||||||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||
Commercial | Agricultural | Residential | Total | |||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Mortgage loans: | ||||||||||||||||||||||||||||||||
Evaluated individually for credit losses | $ | 120 | $ | 102 | $ | 146 | $ | 211 | $ | 15 | $ | 3 | $ | 281 | $ | 316 | ||||||||||||||||
Evaluated collectively for credit losses | 37,700 | 35,074 | 12,605 | 12,044 | 2,293 | 1,468 | 52,598 | 48,586 | ||||||||||||||||||||||||
Total mortgage loans | 37,820 | 35,176 | 12,751 | 12,255 | 2,308 | 1,471 | 52,879 | 48,902 | ||||||||||||||||||||||||
Valuation allowances: | ||||||||||||||||||||||||||||||||
Specific credit losses | 36 | 41 | 52 | 82 | — | — | 88 | 123 | ||||||||||||||||||||||||
Non-specifically identified credit losses | 526 | 548 | 36 | 33 | 14 | 17 | 576 | 598 | ||||||||||||||||||||||||
Total valuation allowances | 562 | 589 | 88 | 115 | 14 | 17 | 664 | 721 | ||||||||||||||||||||||||
Mortgage loans, net of valuation allowance | $ | 37,258 | $ | 34,587 | $ | 12,663 | $ | 12,140 | $ | 2,294 | $ | 1,454 | $ | 52,215 | $ | 48,181 | ||||||||||||||||
Mortgage Loan Valuation Allowances | ||||||||||||||||
Commercial | Agricultural | Residential | Total | |||||||||||||
(In millions) | ||||||||||||||||
Balance at January 1, 2008 | $ | 167 | $ | 24 | $ | 6 | $ | 197 | ||||||||
Provision (release) | 145 | 49 | 6 | 200 | ||||||||||||
Charge-offs, net of recoveries | (80 | ) | (12 | ) | (1 | ) | (93 | ) | ||||||||
Balance at December 31, 2008 | 232 | 61 | 11 | 304 | ||||||||||||
Provision (release) | 384 | 79 | 12 | 475 | ||||||||||||
Charge-offs, net of recoveries | (27 | ) | (25 | ) | (6 | ) | (58 | ) | ||||||||
Balance at December 31, 2009 | 589 | 115 | 17 | 721 | ||||||||||||
Provision (release) | (5 | ) | 12 | 2 | 9 | |||||||||||
Charge-offs, net of recoveries | (22 | ) | (39 | ) | (5 | ) | (66 | ) | ||||||||
Balance at December 31, 2010 | $ | 562 | $ | 88 | $ | 14 | $ | 664 | ||||||||
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December 31, 2010 | ||||||||||||||||||||||||||||
Recorded Investment | ||||||||||||||||||||||||||||
Debt Service Coverage Ratios | Estimated | |||||||||||||||||||||||||||
> 1.20x | 1.00x - 1.20x | < 1.00x | Total | % of Total | Fair Value | % of Total | ||||||||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||||||
Loan-to-value ratios: | ||||||||||||||||||||||||||||
Less than 65% | $ | 16,664 | $ | 125 | $ | 483 | $ | 17,272 | 45.7 | % | $ | 18,183 | 46.9 | % | ||||||||||||||
65% to 75% | 9,023 | 765 | 513 | 10,301 | 27.2 | 10,686 | 27.6 | |||||||||||||||||||||
76% to 80% | 3,033 | 304 | 135 | 3,472 | 9.2 | 3,536 | 9.1 | |||||||||||||||||||||
Greater than 80% | 4,155 | 1,813 | 807 | 6,775 | 17.9 | 6,374 | 16.4 | |||||||||||||||||||||
Total | $ | 32,875 | $ | 3,007 | $ | 1,938 | $ | 37,820 | 100.0 | % | $ | 38,779 | 100.0 | % | ||||||||||||||
December 31, 2010 | ||||||||||||||||||
Agricultural Mortgage Loans | Residential Mortgage Loans | |||||||||||||||||
Recorded Investment | % of Total | Recorded Investment | % of Total | |||||||||||||||
(In millions) | (In millions) | |||||||||||||||||
Loan-to-value ratios: | Performance indicators: | |||||||||||||||||
Less than 65% | $ | 11,483 | 90.1 | % | Performing | $ | 2,225 | 96.4 | % | |||||||||
65% to 75% | 885 | 6.9 | Nonperforming | 83 | 3.6 | |||||||||||||
76% to 80% | 48 | 0.4 | Total | $ | 2,308 | 100.0 | % | |||||||||||
Greater than 80% | 335 | 2.6 | ||||||||||||||||
Total | $ | 12,751 | 100.0 | % | ||||||||||||||
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Impaired Mortgage Loans | ||||||||||||||||||||||||||||||||
Loans without | ||||||||||||||||||||||||||||||||
Loans with a Valuation Allowance | a Valuation Allowance | All Impaired Loans | ||||||||||||||||||||||||||||||
Unpaid | Unpaid | Unpaid | ||||||||||||||||||||||||||||||
Principal | Recorded | Valuation | Carrying | Principal | Recorded | Principal | Carrying | |||||||||||||||||||||||||
Balance | Investment | Allowances | Value | Balance | Investment | Balance | Value | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
At December 31, 2010: | ||||||||||||||||||||||||||||||||
Commercial mortgage loans | $ | 120 | $ | 120 | $ | 36 | $ | 84 | $ | 99 | $ | 87 | $ | 219 | $ | 171 | ||||||||||||||||
Agricultural mortgage loans | 146 | 146 | 52 | 94 | 123 | 119 | 269 | 213 | ||||||||||||||||||||||||
Residential mortgage loans | 3 | 3 | — | 3 | 16 | 16 | 19 | 19 | ||||||||||||||||||||||||
Total | $ | 269 | $ | 269 | $ | 88 | $ | 181 | $ | 238 | $ | 222 | $ | 507 | $ | 403 | ||||||||||||||||
Total mortgage loans at December 31, 2009 | $ | 316 | $ | 316 | $ | 123 | $ | 193 | $ | 106 | $ | 106 | $ | 422 | $ | 299 | ||||||||||||||||
Average Investment | ||||||||||||
Impaired Mortgage Loans | ||||||||||||
Interest Income Recognized | ||||||||||||
Cash Basis | Accrual Basis | |||||||||||
(In millions) | ||||||||||||
For the Year Ended December 31, 2010: | ||||||||||||
Commercial mortgage loans | $ | 192 | $ | 5 | $ | 1 | ||||||
Agricultural mortgage loans | 284 | 6 | 2 | |||||||||
Residential mortgage loans | 16 | — | — | |||||||||
Total | $ | 492 | $ | 11 | $ | 3 | ||||||
For the Year Ended December 31, 2009 | $ | 338 | $ | 8 | $ | 1 | ||||||
For the Year Ended December 31, 2008 | $ | 389 | $ | 12 | $ | 10 | ||||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Traditional | $ | 5,163 | 64.3 | % | $ | 4,135 | 60.0 | % | ||||||||
Real estate joint ventures and funds | 2,707 | 33.7 | 2,579 | 37.4 | ||||||||||||
Real estate and real estate joint ventures | 7,870 | 98.0 | 6,714 | 97.4 | ||||||||||||
Foreclosed | 152 | 1.9 | 127 | 1.8 | ||||||||||||
Real estateheld-for-investment | 8,022 | 99.9 | 6,841 | 99.2 | ||||||||||||
Real estateheld-for-sale | 8 | 0.1 | 55 | 0.8 | ||||||||||||
Total real estate and real estate joint ventures | $ | 8,030 | 100.0 | % | $ | 6,896 | 100.0 | % | ||||||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Office | $ | 4,369 | 54.4 | % | $ | 3,557 | 51.6 | % | ||||||||
Apartments | 1,774 | 22.1 | 1,438 | 20.9 | ||||||||||||
Real estate private equity funds | 552 | 6.9 | 504 | 7.3 | ||||||||||||
Industrial | 433 | 5.4 | 436 | 6.3 | ||||||||||||
Retail | 389 | 4.8 | 467 | 6.8 | ||||||||||||
Hotel | 233 | 2.9 | 203 | 2.9 | ||||||||||||
Land | 133 | 1.7 | 110 | 1.6 | ||||||||||||
Agriculture | 17 | 0.2 | 57 | 0.8 | ||||||||||||
Other | 130 | 1.6 | 124 | 1.8 | ||||||||||||
Total real estate and real estate joint ventures | $ | 8,030 | 100.0 | % | $ | 6,896 | 100.0 | % | ||||||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Freestanding derivatives with positive fair values | $ | 7,777 | 50.4 | % | $ | 6,133 | 48.2 | % | ||||||||
Leveraged leases, net of non-recourse debt | 2,191 | 14.2 | 2,227 | 17.5 | ||||||||||||
Tax credit partnerships | 976 | 6.3 | 719 | 5.7 | ||||||||||||
MSRs | 950 | 6.2 | 878 | 6.9 | ||||||||||||
Joint venture investments | 694 | 4.5 | 977 | 7.7 | ||||||||||||
Funds withheld | 551 | 3.6 | 505 | 4.0 | ||||||||||||
Funding agreements | — | — | 409 | 3.2 | ||||||||||||
Other | 2,291 | 14.8 | 861 | 6.8 | ||||||||||||
Total | $ | 15,430 | 100.0 | % | $ | 12,709 | 100.0 | % | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Rental receivables, net | $ | 1,882 | $ | 1,698 | ||||
Estimated residual values | 1,682 | 1,921 | ||||||
Subtotal | 3,564 | 3,619 | ||||||
Unearned income | (1,373 | ) | (1,392 | ) | ||||
Investment in leveraged leases | $ | 2,191 | $ | 2,227 | ||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Net income from investment in leveraged leases | $ | 123 | $ | 114 | $ | 116 | ||||||
Less: Income tax expense on leveraged leases net investment income | (43 | ) | (40 | ) | (40 | ) | ||||||
Net investment income after income tax from investment in leveraged leases | $ | 80 | $ | 74 | $ | 76 | ||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Estimated fair value at January 1, | $ | 878 | $ | 191 | $ | — | ||||||
Acquisition of MSRs | 110 | 117 | 350 | |||||||||
Origination of MSRs | 220 | 511 | — | |||||||||
Reductions due to loan payments | (136 | ) | (113 | ) | (10 | ) | ||||||
Reductions due to loan sales | (43 | ) | — | — | ||||||||
Changes in estimated fair value due to: | ||||||||||||
Changes in valuation model inputs or assumptions | (79 | ) | 172 | (149 | ) | |||||||
Estimated fair value at December 31, | $ | 950 | $ | 878 | $ | 191 | ||||||
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December 31, 2010 | ||||||||
Fixed Maturity Securities | Mortgage Loans | |||||||
(In millions) | ||||||||
Outstanding principal and interest balance (1) | $ | 1,548 | $ | 504 | ||||
Carrying value (2) | $ | 1,050 | $ | 195 |
(1) | Represents the contractually required payments which is the sum of contractual principal, whether or not currently due, and accrued interest. | |
(2) | Estimated fair value plus accrued interest for fixed maturity securities and amortized cost, plus accrued interest, less any valuation allowances for mortgage loans. |
Year Ended December 31, 2010 | ||||||||
Fixed Maturity Securities | Mortgage Loans | |||||||
(In millions) | ||||||||
Contractually required payments (including interest) | $ | 2,126 | $ | 553 | ||||
Cash flows expected to be collected (1) (2) | $ | 1,782 | $ | 374 | ||||
Fair value of investments acquired | $ | 1,076 | $ | 201 |
(1) | Represents undiscounted principal and interest cash flow expectations, at the date of acquisition. | |
(2) | A portion of the difference between the contractually required payments (including interest) and the cash flows expected to be collected on certain of the investments acquired from American Life has been established as an indemnification asset as discussed further in Note 2. |
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December 31, 2010 | ||||||||
Fixed Maturity Securities | Mortgage Loans | |||||||
(In millions) | ||||||||
Accretable yield, January 1, | $ | — | $ | — | ||||
Investments purchased | 606 | — | ||||||
Acquisition (1) | 100 | 173 | ||||||
Accretion recognized in net investment income | (62 | ) | (3 | ) | ||||
Reclassification (to) from nonaccretable difference | (103 | ) | — | |||||
Accretable yield, December 31, | $ | 541 | $ | 170 | ||||
(1) | As described further in Note 2, all investments acquired with American Life were recorded at estimated fair value as of the Acquisition Date. This activity relates to acquired fixed maturity securities and mortgage loans with a credit impairment inherent in the estimated fair value. |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Total | Total | Total | Total | |||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
(In millions) | ||||||||||||||||
Consolidated securitization entities (1) | $ | 7,114 | $ | 6,892 | $ | — | $ | — | ||||||||
MRSC collateral financing arrangement (2) | 3,333 | — | 3,230 | — | ||||||||||||
Other limited partnership interests | 319 | 85 | 367 | 72 | ||||||||||||
Trading securities | 186 | — | — | — | ||||||||||||
Other invested assets | 108 | 1 | 27 | 1 | ||||||||||||
Real estate joint ventures | 20 | 17 | 22 | 17 | ||||||||||||
Total | $ | 11,080 | $ | 6,995 | $ | 3,646 | $ | 90 | ||||||||
(1) | As discussed in Note 1, upon the adoption of new guidance effective January 1, 2010, the Company consolidated former QSPEs that are structured as CMBS and former QSPEs that are structured as collateralized debt obligations. At December 31, 2010, these entities held total assets of $7,114 million, consisting of $201 million of FVO securities held by CSEs classified within trading and other securities, $6,840 million of commercial mortgage loans, $34 million of accrued investment income and $39 million of cash. These entities had total liabilities of $6,892 million, consisting of $6,820 million of long-term debt and $72 million of other liabilities. The assets of these entities can only be used to settle their respective liabilities, and under no circumstances is the Company or any of its subsidiaries or affiliates liable for any principal or interest shortfalls should any arise. The Company’s exposure is limited to that of its remaining investment in the |
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former QSPEs of $201 million at estimated fair value at December 31, 2010. The long-term debt referred to above bears interest at primarily fixed rates ranging from 2.25% to 5.57%, payable primarily on a monthly basis and is expected to be repaid over the next 7 years. Interest expense related to these obligations, included in other expenses, was $411 million for the year ended December 31, 2010. | ||
(2) | See Note 12 for a description of the MetLife Reinsurance Company of South Carolina (“MRSC”) collateral financing arrangement. These assets consist of the following, at estimated fair value at: |
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Fixed maturity securitiesavailable-for-sale: | ||||||||
ABS | $ | 1,333 | $ | 963 | ||||
U.S. corporate securities | 893 | 1,049 | ||||||
RMBS | 547 | 672 | ||||||
CMBS | 383 | 348 | ||||||
Foreign corporate securities | 139 | 80 | ||||||
U.S. Treasury, agency and government guaranteed securities | — | 33 | ||||||
State and political subdivision securities | 30 | 21 | ||||||
Foreign government securities | 5 | 5 | ||||||
Cash and cash equivalents (including cash held in trust of less than $1 million for both years) | 3 | 59 | ||||||
Total | $ | 3,333 | $ | 3,230 | ||||
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Maximum | Maximum | |||||||||||||||
Carrying | Exposure | Carrying | Exposure | |||||||||||||
Amount | to Loss (1) | Amount | to Loss (1) | |||||||||||||
(In millions) | ||||||||||||||||
Fixed maturity securitiesavailable-for-sale: | ||||||||||||||||
RMBS (2) | $ | 44,733 | $ | 44,733 | $ | — | $ | — | ||||||||
CMBS (2) | 20,675 | 20,675 | — | — | ||||||||||||
ABS (2) | 14,290 | 14,290 | — | — | ||||||||||||
Foreign corporate securities | 2,968 | 2,968 | 1,254 | 1,254 | ||||||||||||
U.S. corporate securities | 2,447 | 2,447 | 1,216 | 1,216 | ||||||||||||
Other limited partnership interests | 4,383 | 6,479 | 2,543 | 2,887 | ||||||||||||
Trading securities | 789 | 789 | — | — | ||||||||||||
Other invested assets | 576 | 773 | 416 | 409 | ||||||||||||
Mortgage loans | 350 | 350 | — | — | ||||||||||||
Real estate joint ventures | 40 | 108 | 30 | 30 | ||||||||||||
Equity securitiesavailable-for-sale: | ||||||||||||||||
Non-redeemable preferred stock | — | — | 31 | 31 | ||||||||||||
Total | $ | 91,251 | $ | 93,612 | $ | 5,490 | $ | 5,827 | ||||||||
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(1) | The maximum exposure to loss relating to the fixed maturity, equity and trading securities is equal to the carrying amounts or carrying amounts of retained interests. The maximum exposure to loss relating to the other limited partnership interests and real estate joint ventures is equal to the carrying amounts plus any unfunded commitments of the Company. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. The maximum exposure to loss relating to the mortgage loans is equal to the carrying amounts plus any unfunded commitments of the Company. For certain of its investments in other invested assets, the Company’s return is in the form of income 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 $231 million and $232 million at December 31, 2010 and 2009, respectively. | |
(2) | As discussed in Note 1, the Company adopted new guidance effective January 1, 2010 which eliminated the concept of a QSPE. As a result, the Company concluded it held variable interests in RMBS, CMBS and ABS. For these interests, the Company’s involvement is limited to that of a passive investor. |
4. | Derivative Financial Instruments |
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December 31, | ||||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||||
Estimated Fair | Estimated Fair | |||||||||||||||||||||||||
Primary Underlying | Notional | Value (1) | Notional | Value (1) | ||||||||||||||||||||||
Risk Exposure | Instrument Type | Amount | Assets | Liabilities | Amount | Assets | Liabilities | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Interest rate | Interest rate swaps | $ | 54,803 | $ | 2,654 | $ | 1,516 | $ | 38,152 | $ | 1,570 | $ | 1,255 | |||||||||||||
Interest rate floors | 23,866 | 630 | 66 | 23,691 | 461 | 37 | ||||||||||||||||||||
Interest rate caps | 35,412 | 176 | 1 | 28,409 | 283 | — | ||||||||||||||||||||
Interest rate futures | 9,385 | 43 | 17 | 7,563 | 8 | 10 | ||||||||||||||||||||
Interest rate options | 8,761 | 144 | 23 | 4,050 | 117 | 57 | ||||||||||||||||||||
Interest rate forwards | 10,374 | 106 | 135 | 9,921 | 66 | 27 | ||||||||||||||||||||
Synthetic GICs | 4,397 | — | — | 4,352 | — | — | ||||||||||||||||||||
Foreign currency | Foreign currency swaps | 17,626 | 1,616 | 1,282 | 16,879 | 1,514 | 1,392 | |||||||||||||||||||
Foreign currency forwards | 10,443 | 119 | 91 | 6,485 | 83 | 57 | ||||||||||||||||||||
Currency futures | 493 | 2 | — | — | — | — | ||||||||||||||||||||
Currency options | 5,426 | 50 | — | 822 | 18 | — | ||||||||||||||||||||
Non-derivative hedging instruments (2) | 169 | — | 185 | — | — | — | ||||||||||||||||||||
Credit | Credit default swaps | 10,957 | 173 | 104 | 6,723 | 74 | 130 | |||||||||||||||||||
Credit forwards | 90 | 2 | 3 | 220 | 2 | 6 | ||||||||||||||||||||
Equity market | Equity futures | 8,794 | 21 | 9 | 7,405 | 44 | 21 | |||||||||||||||||||
Equity options | 33,688 | 1,843 | 1,197 | 27,175 | 1,712 | 1,018 | ||||||||||||||||||||
Variance swaps | 18,022 | 198 | 118 | 13,654 | 181 | 58 | ||||||||||||||||||||
Total rate of return swaps | 1,547 | — | — | 376 | — | 47 | ||||||||||||||||||||
Total | $ | 254,253 | $ | 7,777 | $ | 4,747 | $ | 195,877 | $ | 6,133 | $ | 4,115 | ||||||||||||||
(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. |
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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 | $ | 4,970 | $ | 14,491 | $ | 16,403 | $ | 18,939 | $ | 54,803 | ||||||||||
Interest rate floors | — | 13,048 | 7,318 | 3,500 | 23,866 | |||||||||||||||
Interest rate caps | 5,000 | 28,436 | 1,976 | — | 35,412 | |||||||||||||||
Interest rate futures | 9,385 | — | — | — | 9,385 | |||||||||||||||
Interest rate options | 1,853 | 5,206 | 1,702 | — | 8,761 | |||||||||||||||
Interest rate forwards | 9,409 | 860 | 105 | — | 10,374 | |||||||||||||||
Synthetic GICs | 4,397 | — | — | — | 4,397 | |||||||||||||||
Foreign currency swaps | 3,262 | 5,857 | 5,999 | 2,508 | 17,626 | |||||||||||||||
Foreign currency forwards | 10,337 | 24 | 20 | 62 | 10,443 | |||||||||||||||
Currency futures | 493 | — | — | — | 493 | |||||||||||||||
Currency options | 5,426 | — | — | — | 5,426 | |||||||||||||||
Non-derivative hedging instruments | 169 | — | — | — | 169 | |||||||||||||||
Credit default swaps | 111 | 10,197 | 649 | — | 10,957 | |||||||||||||||
Credit forwards | 90 | — | — | — | 90 | |||||||||||||||
Equity futures | 8,794 | — | — | — | 8,794 | |||||||||||||||
Equity options | 20,856 | 3,346 | 9,486 | — | 33,688 | |||||||||||||||
Variance swaps | 1,411 | 1,795 | 14,493 | 323 | 18,022 | |||||||||||||||
Total rate of return swaps | 1,492 | 55 | — | — | 1,547 | |||||||||||||||
Total | $ | 87,455 | $ | 83,315 | $ | 58,151 | $ | 25,332 | $ | 254,253 | ||||||||||
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December 31, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Notional | Fair Value | Notional | Fair Value | |||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Amount | Assets | Liabilities | Amount | Assets | Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Fair Value Hedges: | ||||||||||||||||||||||||
Foreign currency swaps | $ | 4,524 | $ | 907 | $ | 145 | $ | 4,807 | $ | 854 | $ | 132 | ||||||||||||
Interest rate swaps | 5,108 | 823 | 169 | 4,824 | 500 | 75 | ||||||||||||||||||
Subtotal | 9,632 | 1,730 | 314 | 9,631 | 1,354 | 207 | ||||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||||||
Foreign currency swaps | 5,556 | 213 | 347 | 4,108 | 127 | 347 | ||||||||||||||||||
Interest rate swaps | 3,562 | 102 | 116 | 1,740 | — | 48 | ||||||||||||||||||
Interest rate forwards | 1,140 | — | 107 | — | — | — | ||||||||||||||||||
Credit forwards | 90 | 2 | 3 | 220 | 2 | 6 | ||||||||||||||||||
Subtotal | 10,348 | 317 | 573 | 6,068 | 129 | 401 | ||||||||||||||||||
Foreign Operations Hedges: | ||||||||||||||||||||||||
Foreign currency forwards | 1,935 | 9 | 26 | 1,880 | 27 | 13 | ||||||||||||||||||
Non-derivative hedging instruments | 169 | — | 185 | — | — | — | ||||||||||||||||||
Subtotal | 2,104 | 9 | 211 | 1,880 | 27 | 13 | ||||||||||||||||||
Total Qualifying Hedges | $ | 22,084 | $ | 2,056 | $ | 1,098 | $ | 17,579 | $ | 1,510 | $ | 621 | ||||||||||||
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December 31, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Derivatives Not Designated or Not | Notional | Fair Value | Notional | Fair Value | ||||||||||||||||||||
Qualifying as Hedging Instruments | Amount | Assets | Liabilities | Amount | Assets | Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Interest rate swaps | $ | 46,133 | $ | 1,729 | $ | 1,231 | $ | 31,588 | $ | 1,070 | $ | 1,132 | ||||||||||||
Interest rate floors | 23,866 | 630 | 66 | 23,691 | 461 | 37 | ||||||||||||||||||
Interest rate caps | 35,412 | 176 | 1 | 28,409 | 283 | — | ||||||||||||||||||
Interest rate futures | 9,385 | 43 | 17 | 7,563 | 8 | 10 | ||||||||||||||||||
Interest rate options | 8,761 | 144 | 23 | 4,050 | 117 | 57 | ||||||||||||||||||
Interest rate forwards | 9,234 | 106 | 28 | 9,921 | 66 | 27 | ||||||||||||||||||
Synthetic GICs | 4,397 | — | — | 4,352 | — | — | ||||||||||||||||||
Foreign currency swaps | 7,546 | 496 | 790 | 7,964 | 533 | 913 | ||||||||||||||||||
Foreign currency forwards | 8,508 | 110 | 65 | 4,605 | 56 | 44 | ||||||||||||||||||
Currency futures | 493 | 2 | — | — | — | — | ||||||||||||||||||
Currency options | 5,426 | 50 | — | 822 | 18 | — | ||||||||||||||||||
Credit default swaps | 10,957 | 173 | 104 | 6,723 | 74 | 130 | ||||||||||||||||||
Equity futures | 8,794 | 21 | 9 | 7,405 | 44 | 21 | ||||||||||||||||||
Equity options | 33,688 | 1,843 | 1,197 | 27,175 | 1,712 | 1,018 | ||||||||||||||||||
Variance swaps | 18,022 | 198 | 118 | 13,654 | 181 | 58 | ||||||||||||||||||
Total rate of return swaps | 1,547 | — | — | 376 | — | 47 | ||||||||||||||||||
Total non-designated or non-qualifying derivatives | $ | 232,169 | $ | 5,721 | $ | 3,649 | $ | 178,298 | $ | 4,623 | $ | 3,494 | ||||||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Derivatives and hedging gains (losses) (1) | $ | 122 | $ | (6,624 | ) | $ | 6,560 | |||||
Embedded derivatives | (387 | ) | 1,758 | (2,650 | ) | |||||||
Total net derivative gains (losses) | $ | (265 | ) | $ | (4,866 | ) | $ | 3,910 | ||||
(1) | Includes foreign currency transaction gains (losses) on hedged items in cash flow and non-qualifying hedge relationships, which are not presented elsewhere in this note. |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Qualifying hedges: | ||||||||||||
Net investment income | $ | 83 | $ | 49 | $ | 19 | ||||||
Interest credited to policyholder account balances | 233 | 220 | 105 | |||||||||
Other expenses | (6 | ) | (3 | ) | (9 | ) | ||||||
Non-qualifying hedges: | ||||||||||||
Net investment income | (3 | ) | (2 | ) | 1 | |||||||
Net derivative gains (losses) | 65 | 91 | 49 | |||||||||
Other revenues | 108 | 77 | 3 | |||||||||
Total | $ | 480 | $ | 432 | $ | 168 | ||||||
Net Derivative | Ineffectiveness | |||||||||||||
Gains (Losses) | Net Derivative Gains | Recognized in | ||||||||||||
Derivatives in Fair Value | Hedged Items in Fair Value | Recognized | (Losses) Recognized | Net Derivative | ||||||||||
Hedging Relationships | Hedging Relationships | for Derivatives | for Hedged Items | Gains (Losses) | ||||||||||
(In millions) | ||||||||||||||
For the Year Ended December 31, 2010: | ||||||||||||||
Interest rate swaps: | Fixed maturity securities | $ | (14 | ) | $ | 16 | $ | 2 | ||||||
Policyholder account balances (1) | 140 | (142 | ) | (2 | ) | |||||||||
Foreign currency swaps: | Foreign-denominated fixed maturity securities | 14 | (14 | ) | — | |||||||||
Foreign-denominated policyholder account balances (2) | 9 | (20 | ) | (11 | ) | |||||||||
Total | $ | 149 | $ | (160 | ) | $ | (11 | ) | ||||||
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 | ) | ||||||
(1) | Fixed rate liabilities | |
(2) | Fixed rate or floating rate liabilities |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Accumulated other comprehensive income (loss), balance at January 1, | $ | (76 | ) | $ | 82 | $ | (270 | ) | ||||
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges | (51 | ) | (221 | ) | 203 | |||||||
Amounts reclassified to net derivative gains (losses) | 65 | 54 | 140 | |||||||||
Amounts reclassified to net investment income | 4 | 8 | 9 | |||||||||
Amounts reclassified to other expenses | (1 | ) | 3 | (1 | ) | |||||||
Amortization of transition adjustment | — | (2 | ) | 1 | ||||||||
Accumulated other comprehensive income (loss), balance at December 31, | $ | (59 | ) | $ | (76 | ) | $ | 82 | ||||
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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 Derivative | Net Investment | Other | Net Derivative | Net Investment | ||||||||||||||||||||
Gains (Losses) | Income | Expenses | Gains (Losses) | Income | ||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
For the Year Ended December 31, 2010: | ||||||||||||||||||||||||
Interest rate swaps | $ | 13 | $ | — | $ | — | $ | (1 | ) | $ | 3 | $ | — | |||||||||||
Foreign currency swaps | 34 | (79 | ) | (6 | ) | 2 | — | — | ||||||||||||||||
Interest rate forwards | (117 | ) | 14 | 2 | — | (2 | ) | — | ||||||||||||||||
Credit forwards | 19 | — | — | — | — | — | ||||||||||||||||||
Total | $ | (51 | ) | $ | (65 | ) | $ | (4 | ) | $ | 1 | $ | 1 | $ | — | |||||||||
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: | ||||||||||||||||||||||||
Foreign currency swaps | $ | 203 | $ | (140 | ) | $ | (10 | ) | $ | 1 | $ | — | $ | — | ||||||||||
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Amount and Location | ||||||||||||||||||||||||
of Gains (Losses) | ||||||||||||||||||||||||
Reclassified From Accumulated Other | ||||||||||||||||||||||||
Amount of Gains (Losses) | Comprehensive Income | |||||||||||||||||||||||
Deferred in Accumulated | (Loss) into Income (Loss) | |||||||||||||||||||||||
Other Comprehensive 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) | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Foreign currency forwards | $ | (167 | ) | $ | (244 | ) | $ | 338 | $ | — | $ | (59 | ) | $ | — | |||||||||
Foreign currency swaps | — | (18 | ) | 76 | — | (63 | ) | — | ||||||||||||||||
Non-derivative hedging instruments | (16 | ) | (37 | ) | 81 | — | (11 | ) | — | |||||||||||||||
Total | $ | (183 | ) | $ | (299 | ) | $ | 495 | $ | — | $ | (133 | ) | $ | — | |||||||||
(1) | During the years ended December 31, 2010 and 2008, 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 income (loss) into earnings. 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 income (loss) into earnings. | |
(2) | There was no ineffectiveness recognized for the Company’s hedges of net investments in foreign operations. |
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Net | Net | Policyholder | ||||||||||||||||||
Derivative | Investment | Benefits | Other | Other | ||||||||||||||||
Gains (Losses) | Income (1) | and Claims (2) | Revenues (3) | Expenses (4) | ||||||||||||||||
(In millions) | ||||||||||||||||||||
For the Year Ended December 31, 2010: | ||||||||||||||||||||
Interest rate swaps | $ | 622 | $ | 4 | $ | 39 | $ | 172 | $ | — | ||||||||||
Interest rate floors | 144 | — | — | — | — | |||||||||||||||
Interest rate caps | (185 | ) | — | — | — | — | ||||||||||||||
Interest rate futures | 77 | (4 | ) | — | (3 | ) | — | |||||||||||||
Equity futures | (58 | ) | (25 | ) | (314 | ) | — | — | ||||||||||||
Foreign currency swaps | 52 | — | — | — | — | |||||||||||||||
Foreign currency forwards | 250 | 55 | — | — | — | |||||||||||||||
Currency futures | (23 | ) | — | — | — | — | ||||||||||||||
Currency options | (83 | ) | (1 | ) | — | — | (4 | ) | ||||||||||||
Equity options | (683 | ) | (16 | ) | — | — | — | |||||||||||||
Interest rate options | 25 | — | — | (6 | ) | — | ||||||||||||||
Interest rate forwards | 8 | — | — | (74 | ) | — | ||||||||||||||
Variance swaps | (55 | ) | — | — | — | — | ||||||||||||||
Credit default swaps | 34 | (2 | ) | — | — | — | ||||||||||||||
Total rate of return swaps | 14 | — | — | — | — | |||||||||||||||
Total | $ | 139 | $ | 11 | $ | (275 | ) | $ | 89 | $ | (4 | ) | ||||||||
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 | $ | — | ||||||||||
(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. |
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(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. |
December 31, | ||||||||||||||||||||||||
2010 | 2009 | |||||||||||||||||||||||
Maximum | Maximum | |||||||||||||||||||||||
Estimated | Amount | Estimated | Amount of | |||||||||||||||||||||
Fair Value | of Future | Weighted | Fair Value | Future | Weighted | |||||||||||||||||||
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 | $ | 470 | 3.8 | $ | 5 | $ | 175 | 4.3 | ||||||||||||||
Credit default swaps referencing indices | 45 | 2,928 | 3.7 | 46 | 2,676 | 3.4 | ||||||||||||||||||
Subtotal | 50 | 3,398 | 3.7 | 51 | 2,851 | 3.5 | ||||||||||||||||||
Baa | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | 5 | 735 | 4.3 | 2 | 195 | 4.8 | ||||||||||||||||||
Credit default swaps referencing indices | 7 | 931 | 5.0 | — | 10 | 5.0 | ||||||||||||||||||
Subtotal | 12 | 1,666 | 4.7 | 2 | 205 | 4.8 | ||||||||||||||||||
Ba | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | 25 | 4.4 | — | 25 | 5.0 | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | 25 | 4.4 | — | 25 | 5.0 | ||||||||||||||||||
B | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | 20 | 5.0 | ||||||||||||||||||
Subtotal | — | — | — | — | 20 | 5.0 | ||||||||||||||||||
Total | $ | 62 | $ | 5,089 | 4.1 | $ | 53 | $ | 3,101 | 3.6 | ||||||||||||||
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(1) | The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s, S&P and Fitch. If no rating is available from a rating agency, then an internally developed rating is used. | |
(2) | Assumes the value of the referenced credit obligations is zero. | |
(3) | The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts. |
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Estimated Fair Value of | Fair Value of Incremental Collateral | |||||||||||||||||||
Collateral Provided: | Provided Upon: | |||||||||||||||||||
Downgrade in the | ||||||||||||||||||||
One Notch | Company’s Credit Rating | |||||||||||||||||||
Downgrade | to a Level that Triggers | |||||||||||||||||||
Estimated | in the | Full Overnight | ||||||||||||||||||
Fair Value (1) of | Company’s | Collateralization or | ||||||||||||||||||
Derivatives in Net | Fixed Maturity | Credit | Termination | |||||||||||||||||
Liability Position | Securities (2) | Cash (3) | Rating | of the Derivative Position | ||||||||||||||||
(In millions) | ||||||||||||||||||||
December 31, 2010: | ||||||||||||||||||||
Derivatives subject to credit-contingent provisions | $ | 1,167 | $ | 1,024 | $ | — | $ | 99 | $ | 231 | ||||||||||
Derivatives not subject to credit-contingent provisions | 22 | — | 43 | — | — | |||||||||||||||
Total | $ | 1,189 | $ | 1,024 | $ | 43 | $ | 99 | $ | 231 | ||||||||||
December 31, 2009: | ||||||||||||||||||||
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. | |
(3) | Included in premiums, reinsurance and other receivables in the consolidated balance sheets. |
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Net embedded derivatives within asset host contracts: | ||||||||
Ceded guaranteed minimum benefits | $ | 185 | $ | 76 | ||||
Options embedded in debt or equity securities | (57 | ) | (37 | ) | ||||
Net embedded derivatives within asset host contracts | $ | 128 | $ | 39 | ||||
Net embedded derivatives within liability host contracts: | ||||||||
Direct guaranteed minimum benefits | $ | 2,556 | $ | 1,500 | ||||
Other | 78 | 5 | ||||||
Net embedded derivatives within liability host contracts | $ | 2,634 | $ | 1,505 | ||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Net derivative gains (losses) (1) | $ | (387 | ) | $ | 1,758 | $ | (2,650 | ) | ||||
Policyholder benefits and claims | $ | 8 | $ | (114 | ) | $ | 182 |
(1) | The valuation of guaranteed minimum benefits includes an adjustment for nonperformance risk. Included in net derivative gains (losses), in connection with this adjustment, were gains (losses) of ($96) million, ($1,932) million and $2,994 million for the years ended December 31, 2010, 2009 and 2008, respectively. Net derivative gains (losses) for the year ended December 31, 2010 included a loss of $955 million relating to a refinement for estimating nonperformance risk in fair value measurements implemented at June 30, 2010. See Note 5. |
5. | Fair Value |
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December 31, 2010 | ||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant | Total | ||||||||||||||
Identical Assets | Significant Other | Unobservable | Estimated | |||||||||||||
and Liabilities | Observable Inputs | Inputs | Fair | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | |||||||||||||
(In millions) | ||||||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
U.S. corporate securities | $ | — | $ | 85,419 | $ | 7,149 | $ | 92,568 | ||||||||
Foreign corporate securities | — | 62,401 | 5,777 | 68,178 | ||||||||||||
RMBS | 274 | 43,037 | 1,422 | 44,733 | ||||||||||||
Foreign government securities | 149 | 40,092 | 3,159 | 43,400 | ||||||||||||
U.S. Treasury, agency and government guaranteed securities | 14,602 | 18,623 | 79 | 33,304 | ||||||||||||
CMBS | — | 19,664 | 1,011 | 20,675 | ||||||||||||
ABS | — | 10,142 | 4,148 | 14,290 | ||||||||||||
State and political subdivision securities | — | 10,083 | 46 | 10,129 | ||||||||||||
Other fixed maturity securities | — | 3 | 4 | 7 | ||||||||||||
Total fixed maturity securities | 15,025 | 289,464 | 22,795 | 327,284 | ||||||||||||
Equity securities: | ||||||||||||||||
Common stock | 832 | 1,094 | 268 | 2,194 | ||||||||||||
Non-redeemable preferred stock | — | 507 | 905 | 1,412 | ||||||||||||
Total equity securities | 832 | 1,601 | 1,173 | 3,606 | ||||||||||||
Trading and other securities: | ||||||||||||||||
Actively Traded Securities | — | 453 | 10 | 463 | ||||||||||||
FVO general account securities | — | 54 | 77 | 131 | ||||||||||||
FVO contractholder-directed unit-linked investments | 6,270 | 10,789 | 735 | 17,794 | ||||||||||||
FVO securities held by consolidated securitization entities | — | 201 | — | 201 | ||||||||||||
Total trading and other securities | 6,270 | 11,497 | 822 | 18,589 | ||||||||||||
Short-term investments (1) | 3,026 | 4,681 | 858 | 8,565 | ||||||||||||
Mortgage loans: | ||||||||||||||||
Mortgage loans held by consolidated securitization entities | — | 6,840 | — | 6,840 | ||||||||||||
Mortgage loansheld-for-sale (2) | — | 2,486 | 24 | 2,510 | ||||||||||||
Total mortgage loans | — | 9,326 | 24 | 9,350 | ||||||||||||
MSRs (3) | — | — | 950 | 950 | ||||||||||||
Other invested assets — investment funds | 373 | 121 | — | 494 | ||||||||||||
Derivative assets: (4) | ||||||||||||||||
Interest rate contracts | 131 | 3,583 | 39 | 3,753 | ||||||||||||
Foreign currency contracts | 2 | 1,711 | 74 | 1,787 | ||||||||||||
Credit contracts | — | 125 | 50 | 175 | ||||||||||||
Equity market contracts | 23 | 1,757 | 282 | 2,062 | ||||||||||||
Total derivative assets | 156 | 7,176 | 445 | 7,777 | ||||||||||||
Net embedded derivatives within asset host contracts (5) | — | — | 185 | 185 | ||||||||||||
Separate account assets (6) | 25,660 | 155,589 | 2,088 | 183,337 | ||||||||||||
Total assets | $ | 51,342 | $ | 479,455 | $ | 29,340 | $ | 560,137 | ||||||||
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December 31, 2010 | ||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant | Total | ||||||||||||||
Identical Assets | Significant Other | Unobservable | Estimated | |||||||||||||
and Liabilities | Observable Inputs | Inputs | Fair | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | |||||||||||||
(In millions) | ||||||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities: (4) | ||||||||||||||||
Interest rate contracts | $ | 35 | $ | 1,598 | $ | 125 | $ | 1,758 | ||||||||
Foreign currency contracts | — | 1,372 | 1 | 1,373 | ||||||||||||
Credit contracts | — | 101 | 6 | 107 | ||||||||||||
Equity market contracts | 10 | 1,174 | 140 | 1,324 | ||||||||||||
Total derivative liabilities | 45 | 4,245 | 272 | 4,562 | ||||||||||||
Net embedded derivatives within liability host contracts (5) | — | 11 | 2,623 | 2,634 | ||||||||||||
Long-term debt of consolidated securitization entities | — | 6,636 | 184 | 6,820 | ||||||||||||
Trading liabilities (7) | 46 | — | — | 46 | ||||||||||||
Total liabilities | $ | 91 | $ | 10,892 | $ | 3,079 | $ | 14,062 | ||||||||
�� |
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 | ||||||||
Foreign corporate securities | — | 32,738 | 5,292 | 38,030 | ||||||||||||
RMBS | — | 42,180 | 1,840 | 44,020 | ||||||||||||
Foreign government securities | 306 | 11,240 | 401 | 11,947 | ||||||||||||
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 | ||||||||||||
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 and other securities | 1,886 | 415 | 83 | 2,384 | ||||||||||||
Short-term investments (1) | 5,650 | 2,500 | 23 | 8,173 | ||||||||||||
Mortgage loansheld-for-sale (2) | — | 2,445 | 25 | 2,470 | ||||||||||||
MSRs (3) | — | — | 878 | 878 | ||||||||||||
Derivative assets (4) | 103 | 5,600 | 430 | 6,133 | ||||||||||||
Net embedded derivatives within asset host contracts (5) | — | — | 76 | 76 | ||||||||||||
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 (4) | $ | 51 | $ | 3,990 | $ | 74 | $ | 4,115 | ||||||||
Net embedded derivatives within liability host contracts (5) | — | (26 | ) | 1,531 | 1,505 | |||||||||||
Trading liabilities (7) | 106 | — | — | 106 | ||||||||||||
Total liabilities | $ | 157 | $ | 3,964 | $ | 1,605 | $ | 5,726 | ||||||||
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(1) | Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value (e.g., time deposits, etc.), and therefore are excluded from the tables presented above. | |
(2) | Mortgage loansheld-for-sale 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) | MSRs are presented within other invested assets in the consolidated balance sheets. | |
(4) | Derivative assets are presented within other invested assets in the consolidated balance sheets and derivative liabilities are presented within other liabilities in the consolidated balance sheets. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the Fair Value Measurements Using Significant Unobservable Inputs (Level 3) tables which follow. At December 31, 2010 and 2009, certain non-derivative hedging instruments of $185 million and $0, respectively, which are carried at amortized cost, are included with the liabilities total in Note 4 but excluded from derivative liabilities in the tables above as they are not derivative instruments. | |
(5) | Net embedded derivatives within asset host contracts are presented within premiums, reinsurance and other receivables in the consolidated balance sheets. Net embedded derivatives within liability host contracts are presented primarily within policyholder account balances in the consolidated balance sheets. At December 31, 2010, fixed maturity securities and equity securities also included embedded derivatives of $5 million and ($62) million, respectively. At December 31, 2009, fixed maturity securities and equity securities included embedded derivatives of $0 and ($37) million, respectively. | |
(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 in the consolidated balance sheets. |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||||||
Other | Sales, | |||||||||||||||||||||||||||
Balance, | Comprehensive | Issuances and | Transfer Into | Transfer Out | Balance, | |||||||||||||||||||||||
January 1, | Earnings (1), (2) | Income (Loss) | Settlements (3) | Level 3 (4) | of Level 3 (4) | December 31, | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2010: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 6,694 | $ | 9 | $ | 277 | $ | (415 | ) | $ | 898 | $ | (314 | ) | $ | 7,149 | ||||||||||||
Foreign corporate securities | 5,292 | (19 | ) | 323 | 304 | 501 | (624 | ) | 5,777 | |||||||||||||||||||
RMBS | 1,840 | 27 | 63 | (303 | ) | 87 | (292 | ) | 1,422 | |||||||||||||||||||
Foreign government securities | 401 | 1 | (93 | ) | 2,965 | 40 | (155 | ) | 3,159 | |||||||||||||||||||
U.S. Treasury, agency and government guaranteed securities | 37 | — | 2 | (6 | ) | 46 | — | 79 | ||||||||||||||||||||
CMBS | 139 | (5 | ) | 89 | 684 | 132 | (28 | ) | 1,011 | |||||||||||||||||||
ABS | 2,712 | (53 | ) | 411 | 1,286 | 32 | (240 | ) | 4,148 | |||||||||||||||||||
State and political subdivision securities | 69 | — | (2 | ) | 9 | — | (30 | ) | 46 | |||||||||||||||||||
Other fixed maturity securities | 6 | 1 | 2 | (5 | ) | — | — | 4 | ||||||||||||||||||||
Total fixed maturity securities | $ | 17,190 | $ | (39 | ) | $ | 1,072 | $ | 4,519 | $ | 1,736 | $ | (1,683 | ) | $ | 22,795 | ||||||||||||
Equity securities: | ||||||||||||||||||||||||||||
Common stock | $ | 136 | $ | 5 | $ | 7 | $ | 128 | $ | 1 | $ | (9 | ) | $ | 268 | |||||||||||||
Non-redeemable preferred stock | 1,104 | 46 | 12 | (250 | ) | — | (7 | ) | 905 | |||||||||||||||||||
Total equity securities | $ | 1,240 | $ | 51 | $ | 19 | $ | (122 | ) | $ | 1 | $ | (16 | ) | $ | 1,173 | ||||||||||||
Trading and other securities: | ||||||||||||||||||||||||||||
Actively Traded Securities | $ | 32 | $ | — | $ | — | $ | (22 | ) | $ | — | $ | — | $ | 10 | |||||||||||||
FVO general account securities | 51 | 8 | — | (1 | ) | 37 | (18 | ) | 77 | |||||||||||||||||||
FVO contractholder-directed unit-linked investments | — | (15 | ) | — | 750 | — | — | 735 | ||||||||||||||||||||
Total trading and other securities | $ | 83 | $ | (7 | ) | $ | — | $ | 727 | $ | 37 | $ | (18 | ) | $ | 822 | ||||||||||||
Short-term investments | $ | 23 | $ | 2 | $ | (9 | ) | $ | 842 | $ | — | $ | — | $ | 858 | |||||||||||||
Mortgage loansheld-for-sale | $ | 25 | $ | (2 | ) | $ | — | $ | — | $ | 10 | $ | (9 | ) | $ | 24 | ||||||||||||
MSRs (5), (6) | $ | 878 | $ | (79 | ) | $ | — | $ | 151 | $ | — | $ | — | $ | 950 | |||||||||||||
Net derivatives: (7) | ||||||||||||||||||||||||||||
Interest rate contracts | $ | 7 | $ | 37 | $ | (107 | ) | $ | (23 | ) | $ | — | $ | — | $ | (86 | ) | |||||||||||
Foreign currency contracts | 108 | 42 | 2 | (57 | ) | — | (22 | ) | 73 | |||||||||||||||||||
Credit contracts | 42 | 4 | 13 | (15 | ) | — | — | 44 | ||||||||||||||||||||
Equity market contracts | 199 | (88 | ) | 11 | 20 | — | — | 142 | ||||||||||||||||||||
Total net derivatives | $ | 356 | $ | (5 | ) | $ | (81 | ) | $ | (75 | ) | $ | — | $ | (22 | ) | $ | 173 | ||||||||||
Separate account assets (8) | $ | 1,895 | $ | 139 | $ | — | $ | 242 | $ | 46 | $ | (234 | ) | $ | 2,088 |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||||||
(Gains) Losses included in: | Purchases, | |||||||||||||||||||||||||||
Other | Sales, | |||||||||||||||||||||||||||
Balance, | Comprehensive | Issuances and | Transfer Into | Transfer Out | Balance, | |||||||||||||||||||||||
January 1, | Earnings (1), (2) | Income (Loss) | Settlements (3) | Level 3 (4) | of Level 3 (4) | December 31, | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2010: | ||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Net embedded derivatives (9) | $ | 1,455 | $ | 335 | $ | 226 | $ | 422 | $ | — | $ | — | $ | 2,438 | ||||||||||||||
Long-term debt of consolidated securitization entities (10) | $ | — | $ | (48 | ) | $ | — | $ | 232 | $ | — | $ | — | $ | 184 | |||||||||||||
Trading liabilities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||
Other | Sales, | Transfer Into | ||||||||||||||||||||||
Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||
January 1, | Earnings (1), (2) | Income (Loss) | Settlements (3) | of Level 3 (4) | December 31, | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 7,498 | $ | (429 | ) | $ | 939 | $ | (1,358 | ) | $ | 44 | $ | 6,694 | ||||||||||
Foreign corporate securities | 5,944 | (330 | ) | 1,517 | (511 | ) | (1,328 | ) | 5,292 | |||||||||||||||
RMBS | 595 | 31 | 105 | 1,199 | (90 | ) | 1,840 | |||||||||||||||||
Foreign government securities | 408 | (40 | ) | 54 | 6 | (27 | ) | 401 | ||||||||||||||||
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 | ||||||||||||||||
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 and other securities | $ | 175 | $ | 16 | $ | — | $ | (108 | ) | $ | — | $ | 83 | |||||||||||
Short-term investments | $ | 100 | $ | (21 | ) | $ | — | $ | (51 | ) | $ | (5 | ) | $ | 23 | |||||||||
Mortgage loansheld-for-sale | $ | 177 | $ | (3 | ) | $ | — | $ | 2 | $ | (151 | ) | $ | 25 | ||||||||||
MSRs (5), (6) | $ | 191 | $ | 172 | $ | — | $ | 515 | $ | — | $ | 878 | ||||||||||||
Net derivatives (7) | $ | 2,547 | $ | (273 | ) | $ | (11 | ) | $ | 97 | $ | (2,004 | ) | $ | 356 | |||||||||
Separate account assets (8) | $ | 1,758 | $ | (213 | ) | $ | — | $ | 485 | $ | (135 | ) | $ | 1,895 |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||
(Gains) Losses included in: | Purchases, | |||||||||||||||||||||||
Other | Sales, | Transfer Into | ||||||||||||||||||||||
Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||
January 1, | Earnings (1), (2) | Income (Loss) | Settlements (3) | of Level 3 (4) | December 31, | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Net embedded derivatives (9) | $ | 2,929 | $ | (1,602 | ) | $ | (15 | ) | $ | 143 | $ | — | $ | 1,455 |
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Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||||||||||
Other | Sales, | Transfer Into | ||||||||||||||||||||||||||||||
Balance, | Impact of | Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||||||||
December 31, 2007 | Adoption (11) | January 1, | Earnings (1), (2) | Income (Loss) | Settlements (3) | of Level 3 (4) | December 31, | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Year Ended December 31, 2008: | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
U.S. corporate securities | $ | 8,368 | $ | — | $ | 8,368 | $ | (696 | ) | $ | (1,758 | ) | $ | 859 | $ | 725 | $ | 7,498 | ||||||||||||||
Foreign corporate securities | 7,228 | (8 | ) | 7,220 | (12 | ) | (2,873 | ) | (57 | ) | 1,666 | 5,944 | ||||||||||||||||||||
RMBS | 1,423 | — | 1,423 | 4 | (218 | ) | (204 | ) | (410 | ) | 595 | |||||||||||||||||||||
Foreign government securities | 785 | — | 785 | 19 | (101 | ) | (295 | ) | — | 408 | ||||||||||||||||||||||
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 | ||||||||||||||||||||
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 and other securities | $ | 183 | $ | 8 | $ | 191 | $ | (26 | ) | $ | — | $ | 18 | $ | (8 | ) | $ | 175 | ||||||||||||||
Short-term investments | $ | 179 | $ | — | $ | 179 | $ | — | $ | — | $ | (79 | ) | $ | — | $ | 100 | |||||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | 4 | $ | — | $ | 171 | $ | 2 | $ | 177 | ||||||||||||||||
MSRs (5), (6) | $ | — | $ | — | $ | — | $ | (149 | ) | $ | — | $ | 340 | $ | — | $ | 191 | |||||||||||||||
Net derivatives (7) | $ | 789 | $ | (1 | ) | $ | 788 | $ | 1,729 | $ | — | $ | 29 | $ | 1 | $ | 2,547 | |||||||||||||||
Separate account assets (8) | $ | 1,464 | $ | — | $ | 1,464 | $ | (129 | ) | $ | — | $ | 90 | $ | 333 | $ | 1,758 |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||||||||||
(Gains) Losses included in: | Purchases, | |||||||||||||||||||||||||||||||
Other | Sales, | Transfer Into | ||||||||||||||||||||||||||||||
Balance, | Impact of | Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||||||||
December 31, 2007 | Adoption (11) | January 1, | Earnings (1), (2) | Income (Loss) | Settlements (3) | of Level 3 (4) | December 31, | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Year Ended December 31, 2008: | ||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Net embedded derivatives (9) | $ | 278 | $ | (24 | ) | $ | 254 | $ | 2,500 | $ | 81 | $ | 94 | $ | — | $ | 2,929 |
(1) | Amortization of premium/discount is included within net investment income which is reported within the earnings caption of total gains (losses). Impairments charged to earnings on securities and certain mortgage loans are included within net investment gains (losses) which are reported within the earnings caption of total gains (losses); while changes in estimated fair value of certain mortgage loans and MSRs are recorded in other revenues. Lapses associated with embedded derivatives are included with the earnings caption of total gains (losses). |
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(2) | Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. | |
(3) | The amount reported within purchases, sales, issuances and settlements is the purchase/issuance price (for purchases and issuances) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased/issued or sold/settled. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. For embedded derivatives, attributed fees are included within this caption along with settlements, if any. Purchases, sales, issuances and settlements for the year ended December 31, 2010 include financial instruments acquired from ALICO as follows: fixed maturity securities $5,435 million, equity securities $68 million, trading and other securities $582 million, short-term investments $216 million, net derivatives ($10) million, separate account assets $244 million and net embedded derivatives ($116) million. | |
(4) | Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers into and/or out of Level 3 occurred at the beginning of the period. Items transferred into and out in the same period are excluded from the rollforward. | |
(5) | The additions and reductions (due to loan payments and sales) affecting MSRs were $330 million and ($179) million, respectively, for the year ended December 31, 2010. The additions and reductions (due to loan payments) affecting MSRs were $628 million and ($113) million, respectively, for the year ended December 31, 2009. The additions and reductions (due to loan payments) affecting MSRs were $350 million and ($10) million, respectively, for the year ended December 31, 2008. | |
(6) | 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 ($79) million, $172 million and ($149) million for the years ended December 31, 2010, 2009 and 2008, respectively. | |
(7) | Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. | |
(8) | Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. | |
(9) | Embedded derivative assets and liabilities are presented net for purposes of the rollforward. | |
(10) | The long-term debt at January 1, 2010 of the CSEs is reported within the purchases, sales, issuances and settlements activity column of the rollforward. | |
(11) | The impact of adoption of fair value measurement guidance represents the amount recognized in earnings resulting from a change in estimate for certain 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 inclusion 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 increase of $42 million in Level 3 net assets. This increase of $42 million, offset by 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. |
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Total Gains and Losses | ||||||||||||||||||||||||||||
Classification of Realized/Unrealized Gains | ||||||||||||||||||||||||||||
(Losses) included in Earnings | ||||||||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||||||
Net | Investment | Derivative | Policyholder | |||||||||||||||||||||||||
Investment | Gains | Gains | Other | Benefits and | Other | |||||||||||||||||||||||
Income | (Losses) | (Losses) | Revenues | Claims | Expenses | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2010: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 22 | $ | (13 | ) | $ | — | $ | — | $ | — | $ | — | $ | 9 | |||||||||||||
Foreign corporate securities | 15 | (34 | ) | — | — | — | — | (19 | ) | |||||||||||||||||||
RMBS | 36 | (9 | ) | — | — | — | — | 27 | ||||||||||||||||||||
Foreign government securities | 6 | (5 | ) | — | — | — | — | 1 | ||||||||||||||||||||
CMBS | 1 | (6 | ) | — | — | — | — | (5 | ) | |||||||||||||||||||
ABS | 37 | (90 | ) | — | — | — | — | (53 | ) | |||||||||||||||||||
State and political subdivision securities | — | — | — | — | — | — | — | |||||||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
Total fixed maturity securities | $ | 118 | $ | (157 | ) | $ | — | $ | — | $ | — | $ | — | $ | (39 | ) | ||||||||||||
Equity securities: | ||||||||||||||||||||||||||||
Common stock | $ | — | $ | 5 | $ | — | $ | — | $ | — | $ | — | $ | 5 | ||||||||||||||
Non-redeemable preferred stock | — | 46 | — | — | — | — | 46 | |||||||||||||||||||||
Total equity securities | $ | — | $ | 51 | $ | — | $ | — | $ | — | $ | — | $ | 51 | ||||||||||||||
Trading and other securities: | ||||||||||||||||||||||||||||
Actively Traded Securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
FVO general account securities | 8 | — | — | — | — | — | 8 | |||||||||||||||||||||
FVO contractholder-directed unit-linked investments | (15 | ) | — | — | — | — | — | (15 | ) | |||||||||||||||||||
Total trading and other securities | $ | (7 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (7 | ) | ||||||||||||
Short-term investments | $ | 2 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2 | ||||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | (2 | ) | $ | — | $ | — | $ | (2 | ) | ||||||||||||
MSRs | $ | — | $ | — | $ | — | $ | (79 | ) | $ | — | $ | — | $ | (79 | ) | ||||||||||||
Net derivatives: | ||||||||||||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | 36 | $ | 1 | $ | — | $ | — | $ | 37 | ||||||||||||||
Foreign currency contracts | — | — | 46 | — | — | (4 | ) | 42 | ||||||||||||||||||||
Credit contracts | — | — | 4 | — | — | — | 4 | |||||||||||||||||||||
Equity market contracts | — | — | (88 | ) | — | — | — | (88 | ) | |||||||||||||||||||
Total net derivatives | $ | — | $ | — | $ | (2 | ) | $ | 1 | $ | — | $ | (4 | ) | $ | (5 | ) | |||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Net embedded derivatives | $ | — | $ | — | $ | (343 | ) | $ | — | $ | 8 | $ | — | $ | (335 | ) | ||||||||||||
Long-term debt of consolidated securitization entities | $ | — | $ | 48 | $ | — | $ | — | $ | — | $ | — | $ | 48 |
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Total Gains and Losses | ||||||||||||||||||||||||||||
Classification of Realized/Unrealized Gains | ||||||||||||||||||||||||||||
(Losses) included in Earnings | ||||||||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||||||
Net | Investment | Derivative | Policyholder | |||||||||||||||||||||||||
Investment | Gains | Gains | Other | Benefits and | Other | |||||||||||||||||||||||
Income | (Losses) | (Losses) | Revenues | Claims | Expenses | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 15 | $ | (444 | ) | $ | — | $ | — | $ | — | $ | — | $ | (429 | ) | ||||||||||||
Foreign corporate securities | (4 | ) | (326 | ) | — | — | — | — | (330 | ) | ||||||||||||||||||
RMBS | 30 | 1 | — | — | — | — | 31 | |||||||||||||||||||||
Foreign government securities | 12 | (52 | ) | — | — | — | — | (40 | ) | |||||||||||||||||||
CMBS | 1 | (37 | ) | — | — | — | — | (36 | ) | |||||||||||||||||||
ABS | 8 | (129 | ) | — | — | — | — | (121 | ) | |||||||||||||||||||
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 and other securities | $ | 16 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16 | ||||||||||||||
Short-term investments | $ | — | $ | (21 | ) | $ | — | $ | — | $ | — | $ | — | $ | (21 | ) | ||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | (3 | ) | ||||||||||||
MSRs | $ | — | $ | — | $ | — | $ | 172 | $ | — | $ | — | $ | 172 | ||||||||||||||
Net derivatives | $ | (13 | ) | $ | — | $ | (225 | ) | $ | (33 | ) | $ | — | $ | (2 | ) | $ | (273 | ) | |||||||||
Liabilities: | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
Net | Investment | Derivative | Policyholder | |||||||||||||||||||||||||
Investment | Gains | Gains | Other | Benefits and | Other | |||||||||||||||||||||||
Income | (Losses) | (Losses) | Revenues | Claims | Expenses | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2008: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 15 | $ | (711 | ) | $ | — | $ | — | $ | — | $ | — | $ | (696 | ) | ||||||||||||
Foreign corporate securities | 123 | (135 | ) | — | — | — | — | (12 | ) | |||||||||||||||||||
RMBS | 3 | 1 | — | — | — | — | 4 | |||||||||||||||||||||
Foreign government securities | 27 | (8 | ) | — | — | — | — | 19 | ||||||||||||||||||||
CMBS | 4 | (76 | ) | — | — | — | — | (72 | ) | |||||||||||||||||||
ABS | 4 | (129 | ) | — | — | — | — | (125 | ) | |||||||||||||||||||
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 and other securities | $ | (26 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (26 | ) | ||||||||||||
Short-term investments | $ | 1 | $ | (1 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | 4 | $ | — | $ | — | $ | 4 | ||||||||||||||
MSRs | $ | — | $ | — | $ | — | $ | (149 | ) | $ | — | $ | — | $ | (149 | ) | ||||||||||||
Net derivatives | $ | 103 | $ | — | $ | 1,587 | $ | 39 | $ | — | $ | — | $ | 1,729 | ||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
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, 2010 | ||||||||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||||||
Net | Investment | Derivative | Policyholder | |||||||||||||||||||||||||
Investment | Gains | Gains | Other | Benefits and | Other | |||||||||||||||||||||||
Income | (Losses) | (Losses) | Revenues | Claims | Expenses | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2010: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 13 | $ | (44 | ) | $ | — | $ | — | $ | — | $ | — | $ | (31 | ) | ||||||||||||
Foreign corporate securities | 15 | (43 | ) | — | — | — | — | (28 | ) | |||||||||||||||||||
RMBS | 36 | — | — | — | — | — | 36 | |||||||||||||||||||||
Foreign government securities | 10 | — | — | — | — | — | 10 | |||||||||||||||||||||
CMBS | 1 | (6 | ) | — | — | — | — | (5 | ) | |||||||||||||||||||
ABS | 36 | (52 | ) | — | — | — | — | (16 | ) | |||||||||||||||||||
State and political subdivision securities | — | — | — | — | — | — | — | |||||||||||||||||||||
Other fixed maturity securities | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
Total fixed maturity securities | $ | 112 | $ | (145 | ) | $ | — | $ | — | $ | — | $ | — | $ | (33 | ) | ||||||||||||
Equity securities: | ||||||||||||||||||||||||||||
Common stock | $ | — | $ | (2 | ) | $ | — | $ | — | $ | — | $ | — | $ | (2 | ) | ||||||||||||
Non-redeemable preferred stock | — | (3 | ) | — | — | — | — | (3 | ) | |||||||||||||||||||
Total equity securities | $ | — | $ | (5 | ) | $ | — | $ | — | $ | — | $ | — | $ | (5 | ) | ||||||||||||
Trading and other securities: | ||||||||||||||||||||||||||||
Actively Traded Securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
FVO general account securities | 12 | — | — | — | — | — | 12 | |||||||||||||||||||||
FVO contractholder-directed unit-linked investments | (15 | ) | — | — | — | — | — | (15 | ) | |||||||||||||||||||
Total trading and other securities | $ | (3 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (3 | ) | ||||||||||||
Short-term investments | $ | 2 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 2 | ||||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | (2 | ) | $ | — | $ | — | $ | (2 | ) | ||||||||||||
MSRs | $ | — | $ | — | $ | — | $ | (28 | ) | $ | — | $ | — | $ | (28 | ) | ||||||||||||
Net derivatives: | ||||||||||||||||||||||||||||
Interest rate contracts | $ | — | $ | — | $ | 36 | $ | 5 | $ | — | $ | — | $ | 41 | ||||||||||||||
Foreign currency contracts | — | — | 45 | — | — | — | 45 | |||||||||||||||||||||
Credit contracts | — | — | 6 | — | — | — | 6 | |||||||||||||||||||||
Equity market contracts | — | — | (82 | ) | — | — | — | (82 | ) | |||||||||||||||||||
Total net derivatives | $ | — | $ | — | $ | 5 | $ | 5 | $ | — | $ | — | $ | 10 | ||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Net embedded derivatives | $ | — | $ | — | $ | (363 | ) | $ | — | $ | 8 | $ | — | $ | (355 | ) | ||||||||||||
Long-term debt of consolidated securitization entities | $ | — | $ | 48 | $ | — | $ | — | $ | — | $ | — | $ | 48 |
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Changes in Unrealized Gains (Losses) | ||||||||||||||||||||||||||||
Relating to Assets and Liabilities Held at December 31, 2009 | ||||||||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||||||
Net | Investment | Derivative | Policyholder | |||||||||||||||||||||||||
Investment | Gains | Gains | Other | Benefits and | Other | |||||||||||||||||||||||
Income | (Losses) | (Losses) | Revenues | Claims | Expenses | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 18 | $ | (412 | ) | $ | — | $ | — | $ | — | $ | — | $ | (394 | ) | ||||||||||||
Foreign corporate securities | (3 | ) | (176 | ) | — | — | — | — | (179 | ) | ||||||||||||||||||
RMBS | 30 | 6 | — | — | — | — | 36 | |||||||||||||||||||||
Foreign government securities | 11 | — | — | — | — | — | 11 | |||||||||||||||||||||
CMBS | 1 | (61 | ) | — | — | — | — | (60 | ) | |||||||||||||||||||
ABS | 8 | (136 | ) | — | — | — | — | (128 | ) | |||||||||||||||||||
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 and other securities | $ | 15 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 15 | ||||||||||||||
Short-term investments | $ | — | $ | 1 | $ | — | $ | — | $ | — | $ | — | $ | 1 | ||||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | (3 | ) | $ | — | $ | — | $ | (3 | ) | ||||||||||||
MSRs | $ | — | $ | — | $ | — | $ | 147 | $ | — | $ | — | $ | 147 | ||||||||||||||
Net derivatives | $ | (13 | ) | $ | — | $ | (194 | ) | $ | 5 | $ | — | $ | (2 | ) | $ | (204 | ) | ||||||||||
Liabilities: | ||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||
Net | Investment | Derivative | Policyholder | |||||||||||||||||||||||||
Investment | Gains | Gains | Other | Benefits and | Other | |||||||||||||||||||||||
Income | (Losses) | (Losses) | Revenues | Claims | Expenses | Total | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2008: | ||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
U.S. corporate securities | $ | 12 | $ | (497 | ) | $ | — | $ | — | $ | — | $ | — | $ | (485 | ) | ||||||||||||
Foreign corporate securities | 117 | (125 | ) | — | — | — | — | (8 | ) | |||||||||||||||||||
RMBS | 4 | — | — | — | — | — | 4 | |||||||||||||||||||||
Foreign government securities | 23 | — | — | — | — | — | 23 | |||||||||||||||||||||
CMBS | 4 | (69 | ) | — | — | — | — | (65 | ) | |||||||||||||||||||
ABS | 3 | (102 | ) | — | — | — | — | (99 | ) | |||||||||||||||||||
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 and other securities | $ | (17 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (17 | ) | ||||||||||||
Short-term investments | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Mortgage loansheld-for-sale | $ | — | $ | — | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | ||||||||||||||
MSRs | $ | — | $ | — | $ | — | $ | (150 | ) | $ | — | $ | — | $ | (150 | ) | ||||||||||||
Net derivatives | $ | 114 | $ | — | $ | 1,504 | $ | 38 | $ | — | $ | — | $ | 1,656 | ||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||
Net embedded derivatives | $ | — | $ | — | $ | (2,779 | ) | $ | — | $ | 182 | $ | — | $ | (2,597 | ) |
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Unpaid principal balance | $ | 2,473 | $ | 2,418 | ||||
Excess of estimated fair value over unpaid principal balance | 37 | 52 | ||||||
Carrying value at estimated fair value | $ | 2,510 | $ | 2,470 | ||||
Loans in non-accrual status | $ | 2 | $ | 4 | ||||
Loans more than 90 days past due | $ | 3 | $ | 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 | $ | (1 | ) | $ | (2 | ) |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Instrument-specific credit risk based on changes in credit spreads for non-agency loans and adjustments in individual loan quality | $ | (1 | ) | $ | (2 | ) | $ | — | ||||
Other changes in estimated fair value | 487 | 600 | 55 | |||||||||
Total gains (losses) recognized in other revenues | $ | 486 | $ | 598 | $ | 55 | ||||||
December 31, 2010 | ||||
(In millions) | ||||
Unpaid principal balance | $ | 6,636 | ||
Excess of estimated fair value over unpaid principal balance | 204 | |||
Carrying value at estimated fair value | $ | 6,840 | ||
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December 31, 2010 | ||||
(In millions) | ||||
Contractual principal balance | $ | 6,619 | ||
Excess of estimated fair value over contractual principal balance | 201 | |||
Carrying value at estimated fair value | $ | 6,820 | ||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||||||||||||||
Estimated | Net | Estimated | Net | Estimated | Net | |||||||||||||||||||||||||||||||
Carrying | Fair | Investment | Carrying | Fair | Investment | Carrying | Fair | Investment | ||||||||||||||||||||||||||||
Value Prior to | Value After | Gains | Value Prior to | Value After | Gains | Value Prior to | Value After | Gains | ||||||||||||||||||||||||||||
Measurement | Measurement | (Losses) | Measurement | Measurement | (Losses) | Measurement | Measurement | (Losses) | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||
Mortgage loans: (1) | ||||||||||||||||||||||||||||||||||||
Held-for-investment | $ | 179 | $ | 164 | $ | (15 | ) | $ | 294 | $ | 202 | $ | (92 | ) | $ | 257 | $ | 188 | $ | (69 | ) | |||||||||||||||
Held-for-sale | 35 | 33 | (2 | ) | 9 | 8 | (1 | ) | 42 | 32 | (10 | ) | ||||||||||||||||||||||||
Mortgage loans, net | $ | 214 | $ | 197 | $ | (17 | ) | $ | 303 | $ | 210 | $ | (93 | ) | $ | 299 | $ | 220 | $ | (79 | ) | |||||||||||||||
Other limited partnership interests (2) | $ | 35 | $ | 23 | $ | (12 | ) | $ | 915 | $ | 561 | $ | (354 | ) | $ | 242 | $ | 137 | $ | (105 | ) | |||||||||||||||
Real estate joint ventures (3) | $ | 33 | $ | 8 | $ | (25 | ) | $ | 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 and are reported as losses above. Subsequent improvements in estimated fair value on previously impaired loans recorded through a reduction in the previously established valuation allowance are reported as gains above. 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 and decreases in previous impairments from subsequent improvements in 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 method. Impairments on these cost method 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 |
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inherent in the market for such investments. This category includes several private equity and debt funds that typically invest primarily in a diversified pool of investments across certain investment strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development funds; venture capital funds; below investment grade debt and mezzanine debt funds. The estimated fair values of these investments have been determined using the NAV of the Company’s ownership interest in the partners’ capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $34 million at December 31, 2010. | ||
(3) | Real estate joint ventures —The impaired investments presented above were accounted for using the cost method. Impairments on these cost method 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 $6 million at December 31, 2010. |
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Estimated | ||||||||||||
Notional | Carrying | Fair | ||||||||||
December 31, 2010 | Amount | Value | Value | |||||||||
(In millions) | ||||||||||||
Assets | ||||||||||||
Mortgage loans: (1) | ||||||||||||
Held-for-investment | $ | 52,215 | $ | 54,006 | ||||||||
Held-for-sale | $ | 811 | $ | 811 | ||||||||
Mortgage loans, net | $ | 53,026 | $ | 54,817 | ||||||||
Policy loans | $ | 11,914 | $ | 13,406 | ||||||||
Real estate joint ventures (2) | $ | 451 | $ | 482 | ||||||||
Other limited partnership interests (2) | $ | 1,539 | $ | 1,619 | ||||||||
Short-term investments (3) | $ | 822 | $ | 822 | ||||||||
Other invested assets (2) | $ | 1,490 | $ | 1,490 | ||||||||
Cash and cash equivalents | $ | 13,046 | $ | 13,046 | ||||||||
Accrued investment income | $ | 4,381 | $ | 4,381 | ||||||||
Premiums, reinsurance and other receivables (2) | $ | 3,752 | $ | 4,048 | ||||||||
Other assets (2) | $ | 466 | $ | 453 | ||||||||
Liabilities | ||||||||||||
Policyholder account balances (2) | $ | 146,927 | $ | 152,850 | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 27,272 | $ | 27,272 | ||||||||
Bank deposits | $ | 10,316 | $ | 10,371 | ||||||||
Short-term debt | $ | 306 | $ | 306 | ||||||||
Long-term debt (2) | $ | 20,734 | $ | 21,892 | ||||||||
Collateral financing arrangements | $ | 5,297 | $ | 4,757 | ||||||||
Junior subordinated debt securities | $ | 3,191 | $ | 3,461 | ||||||||
Other liabilities (2) | $ | 2,777 | $ | 2,777 | ||||||||
Separate account liabilities (2) | $ | 42,160 | $ | 42,160 | ||||||||
Commitments(4) | ||||||||||||
Mortgage loan commitments | $ | 3,754 | $ | — | $ | (17 | ) | |||||
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments | $ | 2,437 | $ | — | $ | — |
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Estimated | ||||||||||||
Notional | Carrying | Fair | ||||||||||
December 31, 2009 | Amount | Value | Value | |||||||||
(In millions) | ||||||||||||
Assets | ||||||||||||
Mortgage loans: (1) | ||||||||||||
Held-for-investment | $ | 48,181 | $ | 46,315 | ||||||||
Held-for-sale | 258 | 258 | ||||||||||
Mortgage loans, net | $ | 48,439 | $ | 46,573 | ||||||||
Policy loans | $ | 10,061 | $ | 11,294 | ||||||||
Real estate joint ventures (2) | $ | 115 | $ | 127 | ||||||||
Other limited partnership interests (2) | $ | 1,571 | $ | 1,581 | ||||||||
Short-term investments (3) | $ | 201 | $ | 201 | ||||||||
Other invested assets (2) | $ | 1,241 | $ | 1,284 | ||||||||
Cash and cash equivalents | $ | 10,112 | $ | 10,112 | ||||||||
Accrued investment income | $ | 3,173 | $ | 3,173 | ||||||||
Premiums, reinsurance and other receivables (2) | $ | 3,375 | $ | 3,532 | ||||||||
Other assets (2) | $ | 425 | $ | 440 | ||||||||
Liabilities | ||||||||||||
Policyholder account balances (2) | $ | 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 (2) | $ | 13,185 | $ | 13,831 | ||||||||
Collateral financing arrangements | $ | 5,297 | $ | 2,877 | ||||||||
Junior subordinated debt securities | $ | 3,191 | $ | 3,167 | ||||||||
Other liabilities (2) | $ | 1,788 | $ | 1,788 | ||||||||
Separate account liabilities (2) | $ | 32,171 | $ | 32,171 | ||||||||
Commitments(4) | ||||||||||||
Mortgage loan commitments | $ | 2,220 | $ | — | $ | (48 | ) | |||||
Commitments to fund bank credit facilities, bridge loans and private corporate bond investments | $ | 1,261 | $ | — | $ | (52 | ) |
(1) | Mortgage loansheld-for-investment as presented in the tables above differ from the amount presented in the consolidated balance sheets because these tables do not include commercial mortgage loans held by CSEs. Mortgage loansheld-for-sale as presented in the tables above differ from the amount presented in the consolidated balance sheets because these tables do not include residential mortgage loansheld-for-sale accounted for under the FVO. | |
(2) | Carrying values presented herein differ from those presented in the consolidated balance sheets because certain items within the respective financial statement caption are not considered financial instruments. Financial statement captions excluded from the table above are not considered financial instruments. | |
(3) | Short-term investments as presented in the tables above differ from the amounts presented in the consolidated balance sheets because these tables do not include short-term investments that meet the definition of a security, which are measured at estimated fair value on a recurring basis. | |
(4) | Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. |
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6. | Deferred Policy Acquisition Costs and Value of Business Acquired |
DAC | VOBA | Total | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, 2008 | $ | 14,260 | $ | 3,550 | $ | 17,810 | ||||||
Capitalizations | 3,092 | — | 3,092 | |||||||||
Acquisitions | — | (5 | ) | (5 | ) | |||||||
Subtotal | 17,352 | 3,545 | 20,897 | |||||||||
Amortization related to: | ||||||||||||
Net investment gains (losses) | (489 | ) | (32 | ) | (521 | ) | ||||||
Other expenses | (2,460 | ) | (508 | ) | (2,968 | ) | ||||||
Total amortization | (2,949 | ) | (540 | ) | (3,489 | ) | ||||||
Unrealized investment gains (losses) | 2,753 | 599 | 3,352 | |||||||||
Effect of foreign currency translation and 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 | |||||||||
Amortization related to: | ||||||||||||
Net investment gains (losses) | 625 | 87 | 712 | |||||||||
Other expenses | (1,754 | ) | (265 | ) | (2,019 | ) | ||||||
Total amortization | (1,129 | ) | (178 | ) | (1,307 | ) | ||||||
Unrealized investment gains (losses) | (2,314 | ) | (505 | ) | (2,819 | ) | ||||||
Effect of foreign currency translation and other | 163 | 56 | 219 | |||||||||
Balance at December 31, 2009 | 16,392 | 2,864 | 19,256 | |||||||||
Capitalizations | 3,343 | — | 3,343 | |||||||||
Acquisitions | — | 9,210 | 9,210 | |||||||||
Subtotal | 19,735 | 12,074 | 31,809 | |||||||||
Amortization related to: | ||||||||||||
Net investment gains (losses) | (108 | ) | (16 | ) | (124 | ) | ||||||
Other expenses | (2,247 | ) | (494 | ) | (2,741 | ) | ||||||
Total amortization | (2,355 | ) | (510 | ) | (2,865 | ) | ||||||
Unrealized investment gains (losses) | (1,258 | ) | (125 | ) | (1,383 | ) | ||||||
Effect of foreign currency translation and other | 97 | (351 | ) | (254 | ) | |||||||
Balance at December 31, 2010 | $ | 16,219 | $ | 11,088 | $ | 27,307 | ||||||
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DAC | VOBA | Total | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products: | ||||||||||||||||||||||||
Group life | $ | 25 | $ | 27 | $ | — | $ | — | $ | 25 | $ | 27 | ||||||||||||
Individual life | 7,257 | 8,129 | 833 | 1,005 | 8,090 | 9,134 | ||||||||||||||||||
Non-medical health | 965 | 942 | — | — | 965 | 942 | ||||||||||||||||||
Total Insurance Products | 8,247 | 9,098 | 833 | 1,005 | 9,080 | 10,103 | ||||||||||||||||||
Retirement Products | 4,706 | 4,612 | 1,094 | 1,412 | 5,800 | 6,024 | ||||||||||||||||||
Corporate Benefit Funding | 74 | 72 | 1 | 2 | 75 | 74 | ||||||||||||||||||
Auto & Home | 190 | 181 | — | — | 190 | 181 | ||||||||||||||||||
Total U.S. Business | 13,217 | 13,963 | 1,928 | 2,419 | 15,145 | 16,382 | ||||||||||||||||||
International | 3,000 | 2,426 | 9,159 | 444 | 12,159 | 2,870 | ||||||||||||||||||
Banking, Corporate & Other | 2 | 3 | 1 | 1 | 3 | 4 | ||||||||||||||||||
Total | $ | 16,219 | $ | 16,392 | $ | 11,088 | $ | 2,864 | $ | 27,307 | $ | 19,256 | ||||||||||||
7. | Goodwill |
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 5,047 | $ | 5,008 | $ | 4,814 | ||||||
Acquisitions | 6,959 | — | 256 | |||||||||
Effect of foreign currency translation and other | (225 | ) | 39 | (62 | ) | |||||||
Balance at December 31, | $ | 11,781 | $ | 5,047 | $ | 5,008 | ||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
U.S. Business: | ||||||||
Insurance Products: | ||||||||
Group life | $ | 2 | $ | 2 | ||||
Individual life | 1,263 | 1,263 | ||||||
Non-medical health | 149 | 149 | ||||||
Total Insurance Products | 1,414 | 1,414 | ||||||
Retirement Products | 1,692 | 1,692 | ||||||
Corporate Benefit Funding | 900 | 900 | ||||||
Auto & Home | 157 | 157 | ||||||
Total U.S. Business | 4,163 | 4,163 | ||||||
International: | ||||||||
Latin America | 229 | 214 | ||||||
Asia Pacific | 72 | 160 | ||||||
Europe and the Middle East | 38 | 40 | ||||||
�� | ||||||||
Total International | 339 | 414 | ||||||
Banking, Corporate & Other | 470 | 470 | ||||||
Total | $ | 4,972 | $ | 5,047 | ||||
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8. | Insurance |
Future Policy | Policyholder Account | Other Policy-Related | ||||||||||||||||||||||
Benefits | Balances | Balances | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products: | ||||||||||||||||||||||||
Group life | $ | 2,717 | $ | 2,981 | $ | 9,175 | $ | 8,985 | $ | 2,454 | $ | 2,411 | ||||||||||||
Individual life | 56,533 | 55,291 | 19,731 | 18,632 | 2,752 | 2,911 | ||||||||||||||||||
Non-medical health | 13,686 | 12,738 | 501 | 501 | 625 | 616 | ||||||||||||||||||
Total Insurance Products | 72,936 | 71,010 | 29,407 | 28,118 | 5,831 | 5,938 | ||||||||||||||||||
Retirement Products | 8,829 | 8,226 | 46,517 | 46,855 | 146 | 122 | ||||||||||||||||||
Corporate Benefit Funding | 39,187 | 37,377 | 57,773 | 55,522 | 184 | 197 | ||||||||||||||||||
Auto & Home | 3,036 | 2,972 | — | — | 171 | 184 | ||||||||||||||||||
Total U.S. Business | 123,988 | 119,585 | 133,697 | 130,495 | 6,332 | 6,441 | ||||||||||||||||||
International | 43,587 | 10,830 | 77,281 | 8,128 | 9,051 | 1,637 | ||||||||||||||||||
Banking, Corporate & Other | 5,798 | 5,464 | 42 | 50 | 423 | 368 | ||||||||||||||||||
Total | $ | 173,373 | $ | 135,879 | $ | 211,020 | $ | 138,673 | $ | 15,806 | $ | 8,446 | ||||||||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 792 | $ | 822 | $ | 706 | ||||||
Acquisitions | 356 | — | 144 | |||||||||
Amortization | (42 | ) | (34 | ) | (25 | ) | ||||||
Effect of foreign currency translation and other | (12 | ) | 4 | (3 | ) | |||||||
Balance at December 31, | $ | 1,094 | $ | 792 | $ | 822 | ||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 841 | $ | 711 | $ | 677 | ||||||
Capitalization | 157 | 193 | 176 | |||||||||
Amortization | (80 | ) | (63 | ) | (142 | ) | ||||||
Balance at December 31, | $ | 918 | $ | 841 | $ | 711 | ||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Fixed maturity securities | $ | 257 | $ | 11 | ||||
Equity securities | $ | 33 | $ | 57 | ||||
Cash and cash equivalents | $ | 74 | $ | 2 |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 8,219 | $ | 8,260 | $ | 7,836 | ||||||
Less: Reinsurance recoverables | 547 | 1,042 | 955 | |||||||||
Net balance at January 1, | 7,672 | 7,218 | 6,881 | |||||||||
Acquisitions, net | 583 | — | — | |||||||||
Incurred related to: | ||||||||||||
Current year | 6,482 | 6,569 | 6,263 | |||||||||
Prior years | (75 | ) | (152 | ) | (353 | ) | ||||||
Total incurred | 6,407 | 6,417 | 5,910 | |||||||||
Paid related to: | ||||||||||||
Current year | (4,050 | ) | (3,972 | ) | (3,861 | ) | ||||||
Prior years | (2,102 | ) | (1,991 | ) | (1,712 | ) | ||||||
Total paid | (6,152 | ) | (5,963 | ) | (5,573 | ) | ||||||
Net balance at December 31, | 8,510 | 7,672 | 7,218 | |||||||||
Add: Reinsurance recoverables | 2,198 | 547 | 1,042 | |||||||||
Balance at December 31, | $ | 10,708 | $ | 8,219 | $ | 8,260 | ||||||
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
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 | $ | 55,753 | $ | 390 | $ | 41,125 | N/A | |||||||||
Net amount at risk (2) | $ | 6,194 | (3) | $ | 289 | (4) | $ | 4,585 | (3) | N/A | ||||||
Average attained age of contractholders | 62 years | 67 years | 62 years | N/A | ||||||||||||
Anniversary Contract Value or Minimum Return | ||||||||||||||||
Separate account value | $ | 92,041 | $ | 55,668 | $ | 78,808 | $ | 40,234 | ||||||||
Net amount at risk (2) | $ | 5,297 | (3) | $ | 6,373 | (4) | $ | 9,039 | (3) | $ | 7,361 | (4) | ||||
Average attained age of contractholders | 62 years | 61 years | 61 years | 61 years | ||||||||||||
Two Tier Annuities | ||||||||||||||||
General account value | N/A | $ | 280 | N/A | $ | 282 | ||||||||||
Net amount at risk (2) | N/A | $ | 49 | (5) | N/A | $ | 50 | (5) | ||||||||
Average attained age of contractholders | N/A | 62 years | N/A | 61 years |
December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Secondary | Paid-Up | Secondary | Paid-Up | |||||||||||||
Guarantees | Guarantees | Guarantees | Guarantees | |||||||||||||
(In millions) | ||||||||||||||||
Universal and Variable Life Contracts (1) | ||||||||||||||||
Account value (general and separate account) | $ | 11,015 | $ | 4,102 | $ | 9,483 | $ | 4,104 | ||||||||
Net amount at risk (2) | $ | 156,432 | (3) | $ | 26,851 | (3) | $ | 150,905 | (3) | $ | 28,826 | (3) | ||||
Average attained age of policyholders | 52 years | 58 years | 52 years | 57 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 and assumed amount at risk (excluding ceded 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, 2008 | $ | 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 | |||||||||||||||
Acquisitions | 46 | 110 | 2,952 | — | 3,108 | |||||||||||||||
Incurred guaranteed benefits | 149 | 111 | 536 | 24 | 820 | |||||||||||||||
Paid guaranteed benefits | (91 | ) | — | (1 | ) | — | (92 | ) | ||||||||||||
Balance at December 31, 2010 | $ | 272 | $ | 623 | $ | 3,991 | $ | 198 | $ | 5,084 | ||||||||||
Ceded | ||||||||||||||||||||
Balance at January 1, 2008 | $ | 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 | |||||||||||||||
Acquisitions | 30 | — | — | — | 30 | |||||||||||||||
Incurred guaranteed benefits | 18 | (1 | ) | 412 | 17 | 446 | ||||||||||||||
Paid guaranteed benefits | (15 | ) | — | — | — | (15 | ) | |||||||||||||
Balance at December 31, 2010 | $ | 39 | $ | (1 | ) | $ | 594 | $ | 139 | $ | 771 | |||||||||
Net | ||||||||||||||||||||
Balance at January 1, 2008 | $ | 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 | |||||||||||||||
Acquisitions | 16 | 110 | 2,952 | — | 3,078 | |||||||||||||||
Incurred guaranteed benefits | 131 | 112 | 124 | 7 | 374 | |||||||||||||||
Paid guaranteed benefits | (76 | ) | — | (1 | ) | — | (77 | ) | ||||||||||||
Balance at December 31, 2010 | $ | 233 | $ | 624 | $ | 3,397 | $ | 59 | $ | 4,313 | ||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Fund Groupings: | ||||||||
Equity | $ | 59,546 | $ | 48,852 | ||||
Balanced | 40,199 | 31,011 | ||||||
Bond | 9,539 | 7,166 | ||||||
Money Market | 1,584 | 2,104 | ||||||
Specialty | 2,192 | 1,865 | ||||||
Total | $ | 113,060 | $ | 90,998 | ||||
9. | Reinsurance |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Premiums: | ||||||||||||
Direct premiums | $ | 27,923 | $ | 27,472 | $ | 27,058 | ||||||
Reinsurance assumed | 1,377 | 1,313 | 1,466 | |||||||||
Reinsurance ceded | (1,906 | ) | (2,325 | ) | (2,610 | ) | ||||||
Net premiums | $ | 27,394 | $ | 26,460 | $ | 25,914 | ||||||
Universal life and investment-type product policy fees: | ||||||||||||
Direct universal life and investment-type product policy fees | $ | 6,630 | $ | 5,790 | $ | 5,909 | ||||||
Reinsurance assumed | 138 | 106 | 79 | |||||||||
Reinsurance ceded | (731 | ) | (693 | ) | (607 | ) | ||||||
Net universal life and investment-type product policy fees | $ | 6,037 | $ | 5,203 | $ | 5,381 | ||||||
Other revenues: | ||||||||||||
Direct other revenues | $ | 2,256 | $ | 2,264 | $ | 1,481 | ||||||
Reinsurance assumed | — | 1 | — | |||||||||
Reinsurance ceded | 72 | 64 | 105 | |||||||||
Net other revenues | $ | 2,328 | $ | 2,329 | $ | 1,586 | ||||||
Policyholder benefits and claims: | ||||||||||||
Direct policyholder benefits and claims | $ | 31,762 | $ | 30,363 | $ | 29,772 | ||||||
Reinsurance assumed | 1,275 | 1,024 | 1,235 | |||||||||
Reinsurance ceded | (3,492 | ) | (3,051 | ) | (3,570 | ) | ||||||
Net policyholder benefits and claims | $ | 29,545 | $ | 28,336 | $ | 27,437 | ||||||
Interest credited to policyholder account balances: | ||||||||||||
Direct interest credited to policyholder account balances | $ | 4,923 | $ | 4,846 | $ | 4,787 | ||||||
Reinsurance assumed | 2 | 3 | 1 | |||||||||
Reinsurance ceded | — | — | — | |||||||||
Net interest credited to policyholder account balances | $ | 4,925 | $ | 4,849 | $ | 4,788 | ||||||
Policyholder dividends: | ||||||||||||
Direct policyholder dividends | $ | 1,486 | $ | 1,650 | $ | 1,751 | ||||||
Reinsurance assumed | 17 | 13 | 5 | |||||||||
Reinsurance ceded | (17 | ) | (13 | ) | (5 | ) | ||||||
Net policyholder dividends | $ | 1,486 | $ | 1,650 | $ | 1,751 | ||||||
Other expenses: | ||||||||||||
Direct other expenses | $ | 12,911 | $ | 10,602 | $ | 12,107 | ||||||
Reinsurance assumed | 116 | 100 | 57 | |||||||||
Reinsurance ceded | (224 | ) | (146 | ) | (217 | ) | ||||||
Net other expenses | $ | 12,803 | $ | 10,556 | $ | 11,947 | ||||||
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December 31, 2010 | ||||||||||||||||
Total | ||||||||||||||||
Balance | Total, Net of | |||||||||||||||
Sheet | Assumed | Ceded | Reinsurance | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums, reinsurance and other receivables | $ | 19,830 | $ | 722 | $ | 13,561 | $ | 5,547 | ||||||||
Deferred policy acquisition costs and value of business acquired | 27,307 | 176 | (179 | ) | 27,310 | |||||||||||
Total assets | $ | 47,137 | $ | 898 | $ | 13,382 | $ | 32,857 | ||||||||
Liabilities: | ||||||||||||||||
Future policy benefits | $ | 173,373 | $ | 2,074 | $ | (65 | ) | $ | 171,364 | |||||||
Policyholder account balances | 211,020 | 2,237 | — | 208,783 | ||||||||||||
Other policy-related balances | 15,806 | 265 | 506 | 15,035 | ||||||||||||
Other liabilities | 20,386 | 608 | 2,703 | 17,075 | ||||||||||||
Total liabilities | $ | 420,585 | $ | 5,184 | $ | 3,144 | $ | 412,257 | ||||||||
December 31, 2009 | ||||||||||||||||
Total | ||||||||||||||||
Balance | Total, Net of | |||||||||||||||
Sheet | Assumed | Ceded | Reinsurance | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums, reinsurance 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 policy-related balances | 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 | ||||||||
10. | Closed Block |
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Closed Block Liabilities | ||||||||
Future policy benefits | $ | 43,456 | $ | 43,576 | ||||
Other policy-related balances | 316 | 307 | ||||||
Policyholder dividends payable | 579 | 615 | ||||||
Policyholder dividend obligation | 876 | — | ||||||
Current income tax payable | 178 | — | ||||||
Other liabilities | 627 | 576 | ||||||
Total closed block liabilities | 46,032 | 45,074 | ||||||
Assets Designated to the Closed Block | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $27,067 and $27,129, respectively) | 28,768 | 27,375 | ||||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $110 and $204, respectively) | 102 | 218 | ||||||
Mortgage loans | 6,253 | 6,200 | ||||||
Policy loans | 4,629 | 4,538 | ||||||
Real estate and real estate joint venturesheld-for-investment | 328 | 321 | ||||||
Short-term investments | 1 | 1 | ||||||
Other invested assets | 729 | 463 | ||||||
Total investments | 40,810 | 39,116 | ||||||
Cash and cash equivalents | 236 | 241 | ||||||
Accrued investment income | 518 | 489 | ||||||
Premiums, reinsurance and other receivables | 95 | 78 | ||||||
Current income tax recoverable | — | 112 | ||||||
Deferred income tax assets | 474 | 612 | ||||||
Total assets designated to the closed block | 42,133 | 40,648 | ||||||
Excess of closed block liabilities over assets designated to the closed block | 3,899 | 4,426 | ||||||
Amounts included in accumulated other comprehensive income (loss): | ||||||||
Unrealized investment gains (losses), net of income tax of $594 and $89, respectively | 1,101 | 166 | ||||||
Unrealized gains (losses) on derivative instruments, net of income tax of $5 and ($3), respectively | 10 | (5 | ) | |||||
Allocated to policyholder dividend obligation, net of income tax of ($307) and $0, respectively | (569 | ) | — | |||||
Total amounts included in accumulated other comprehensive income (loss) | 542 | 161 | ||||||
Maximum future earnings to be recognized from closed block assets and liabilities | $ | 4,441 | $ | 4,587 | ||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | — | $ | — | $ | 789 | ||||||
Change in unrealized investment and derivative gains (losses) | 876 | — | (789 | ) | ||||||||
Balance at December 31, | $ | 876 | $ | — | $ | — | ||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Revenues | ||||||||||||
Premiums | $ | 2,461 | $ | 2,708 | $ | 2,787 | ||||||
Net investment income | 2,294 | 2,197 | 2,248 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (32 | ) | (107 | ) | (94 | ) | ||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive income (loss) | — | 40 | — | |||||||||
Other net investment gains (losses) | 71 | 327 | (19 | ) | ||||||||
Total net investment gains (losses) | 39 | 260 | (113 | ) | ||||||||
Net derivative gains (losses) | (27 | ) | (128 | ) | 29 | |||||||
Total revenues | 4,767 | 5,037 | 4,951 | |||||||||
Expenses | ||||||||||||
Policyholder benefits and claims | 3,115 | 3,329 | 3,393 | |||||||||
Policyholder dividends | 1,235 | 1,394 | 1,498 | |||||||||
Other expenses | 199 | 203 | 217 | |||||||||
Total expenses | 4,549 | 4,926 | 5,108 | |||||||||
Revenues, net of expenses before provision for income tax expense (benefit) | 218 | 111 | (157 | ) | ||||||||
Provision for income tax expense (benefit) | 72 | 36 | (68 | ) | ||||||||
Revenues, net of expenses and provision for income tax expense (benefit) | $ | 146 | $ | 75 | $ | (89 | ) | |||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at December 31, | $ | 4,441 | $ | 4,587 | $ | 4,518 | ||||||
Less: | ||||||||||||
Closed block adjustment (1) | — | 144 | — | |||||||||
Balance at January 1, | 4,587 | 4,518 | 4,429 | |||||||||
Change during year | $ | (146 | ) | $ | (75 | ) | $ | 89 | ||||
(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 | 2010 | 2009 | ||||||||||||
(In millions) | ||||||||||||||||
Senior notes | 0.61%-7.72% | 5.58 | % | 2011-2045 | $ | 16,258 | $ | 10,458 | ||||||||
Advances agreements | 0.23%-4.86% | 2.41 | % | 2011-2015 | 3,600 | 1,846 | ||||||||||
Surplus notes | 7.63%-7.88% | 7.85 | % | 2015-2025 | 699 | 698 | ||||||||||
Fixed rate notes | 3.76%-15.00% | 8.67 | % | 2011-2012 | 82 | 63 | ||||||||||
Other notes with varying interest rates | 1.98%-8.00% | 7.20 | % | 2013-2030 | 95 | 120 | ||||||||||
Capital lease obligations | 32 | 35 | ||||||||||||||
Total long-term debt (1) | 20,766 | 13,220 | ||||||||||||||
Total short-term debt | 306 | 912 | ||||||||||||||
Total | $ | 21,072 | $ | 14,132 | ||||||||||||
(1) | Excludes $6,820 million at December 31, 2010 of long-term debt relating to CSEs. See Note 3. |
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• | $1,000 million senior notes due February 6, 2014, which bear interest at a fixed rate of 2.375%, payable semiannually; | |
• | $1,000 million senior notes due February 8, 2021, which bear interest at a fixed rate of 4.75%, payable semiannually; | |
• | $750 million senior notes due February 6, 2041, which bear interest at a fixed rate of 5.875%, payable semiannually; and | |
• | $250 million floating rate senior notes due August 6, 2013, which bear interest at a rate equal to three-month LIBOR, reset quarterly, plus 1.25%, payable quarterly. |
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Commercial paper | $ | 102 | $ | 319 | ||||
MetLife Bank, N.A. — Advances agreements with the FHLB of NY | 190 | 585 | ||||||
Other | 14 | 8 | ||||||
Total short-term debt | $ | 306 | $ | 912 | ||||
Average daily balance | $ | 687 | $ | 2,845 | ||||
Average days outstanding | 21 days | 16 days |
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Letter of | ||||||||||||||||||
Credit | Unused | |||||||||||||||||
Borrower(s) | Expiration | Capacity | Issuances | Drawdowns | Commitments | |||||||||||||
(In millions) | ||||||||||||||||||
MetLife, Inc. and MetLife Funding, Inc. | October 2011 | $ | 1,000 | $ | — | $ | — | $ | 1,000 | |||||||||
MetLife, Inc. and MetLife Funding, Inc. | October 2013 (1) | 3,000 | 1,507 | — | 1,493 | |||||||||||||
Total | $ | 4,000 | $ | 1,507 | $ | — | $ | 2,493 | ||||||||||
(1) | All borrowings under the credit agreement must be repaid by October 2013, except that letters of credit outstanding upon termination may remain outstanding until October 2014. |
Letter of | ||||||||||||||||||||||
Credit | Unused | Maturity | ||||||||||||||||||||
Account Party/Borrower(s) | Expiration | Capacity | Issuances | Drawdowns | Commitments | (Years) | ||||||||||||||||
(In millions) | ||||||||||||||||||||||
MetLife, Inc. | August 2011 | $ | 300 | $ | 300 | $ | — | $ | — | — | ||||||||||||
Exeter Reassurance Company Ltd., MetLife, Inc., & Missouri Reinsurance (Barbados), Inc. | June 2016 | 500 | 490 | — | 10 | 5 | ||||||||||||||||
MetLife Reinsurance Company of Vermont & MetLife, Inc. | December 2020 (1) | 350 | 350 | — | — | 10 | ||||||||||||||||
Exeter Reassurance Company Ltd. | December 2027 (1) | 650 | 535 | — | 115 | 17 | ||||||||||||||||
MetLife Reinsurance Company of South Carolina & MetLife, Inc. | June 2037 | 3,500 | — | 2,797 | 703 | 26 | ||||||||||||||||
MetLife Reinsurance Company of Vermont & MetLife, Inc. | December 2037 (1) | 2,896 | 1,603 | — | 1,293 | 27 | ||||||||||||||||
MetLife Reinsurance Company of Vermont & MetLife, Inc. | September 2038 (1) | 4,250 | 2,160 | — | 2,090 | 27 | ||||||||||||||||
Total (2) | $ | 12,446 | $ | 5,438 | $ | 2,797 | $ | 4,211 | ||||||||||||||
(1) | The Holding Company is a guarantor under this agreement. | |
(2) | See also Note 24. |
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12. | Collateral Financing Arrangements |
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13. | Junior Subordinated Debt Securities |
Interest Rate | ||||||||||||||||||||||||
Subsequent to | ||||||||||||||||||||||||
Scheduled | Scheduled | Carrying Value | ||||||||||||||||||||||
Face | Interest | Redemption | Redemption | Final | at December 31, | |||||||||||||||||||
Issuer | Issue Date | Value | Rate (2) | Date | Date (3) | Maturity | 2010 | 2009 | ||||||||||||||||
(In millions) | (In millions) | |||||||||||||||||||||||
MetLife, Inc. | July 2009 | $ | 500 | 10.750 | % | August 2039 | LIBOR + 7.548% | August 2069 | $ | 500 | $ | 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 | $ | 3,191 | |||||||||||||||||||||
(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 |
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15. | Income Tax |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Current: | ||||||||||||
Federal | $ | 141 | $ | (231 | ) | $ | (35 | ) | ||||
State and local | 21 | 12 | 10 | |||||||||
Foreign | 203 | 236 | 623 | |||||||||
Subtotal | 365 | 17 | 598 | |||||||||
Deferred: | ||||||||||||
Federal | 670 | (2,135 | ) | 1,056 | ||||||||
State and local | (7 | ) | 26 | (6 | ) | |||||||
Foreign | 153 | 77 | (68 | ) | ||||||||
Subtotal | 816 | (2,032 | ) | 982 | ||||||||
Provision for income tax expense (benefit) | $ | 1,181 | $ | (2,015 | ) | $ | 1,580 | |||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Tax provision at U.S. statutory rate | $ | 1,385 | $ | (1,517 | ) | $ | 1,771 | |||||
Tax effect of: | ||||||||||||
Tax-exempt investment income | (242 | ) | (288 | ) | (254 | ) | ||||||
State and local income tax | 9 | 17 | 2 | |||||||||
Prior year tax | 59 | (26 | ) | 53 | ||||||||
Tax credits | (82 | ) | (87 | ) | (58 | ) | ||||||
Foreign tax rate differential and change in valuation allowance | 26 | (118 | ) | 65 | ||||||||
Other, net | 26 | 4 | 1 | |||||||||
Provision for income tax expense (benefit) | $ | 1,181 | $ | (2,015 | ) | $ | 1,580 | |||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Deferred income tax assets: | ||||||||
Policyholder liabilities and receivables | $ | 5,169 | $ | 3,929 | ||||
Net operating loss carryforwards | 1,400 | 871 | ||||||
Employee benefits | 664 | 661 | ||||||
Capital loss carryforwards | 408 | 551 | ||||||
Tax credit carryforwards | 459 | 401 | ||||||
Net unrealized investment losses | — | 816 | ||||||
Litigation-related and government mandated | 227 | 240 | ||||||
Other | 331 | 276 | ||||||
8,658 | 7,745 | |||||||
Less: Valuation allowance | 261 | 217 | ||||||
8,397 | 7,528 | |||||||
Deferred income tax liabilities: | ||||||||
Investments, including derivatives | 1,253 | 1,434 | ||||||
Intangibles | 3,068 | 334 | ||||||
Net unrealized investment gains | 1,490 | — | ||||||
DAC | 4,342 | 4,439 | ||||||
Other | 125 | 93 | ||||||
10,278 | 6,300 | |||||||
Net deferred income tax asset (liability) | $ | (1,881 | ) | $ | 1,228 | |||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 773 | $ | 766 | $ | 840 | ||||||
Additions for tax positions of prior years | 186 | 43 | 11 | |||||||||
Reductions for tax positions of prior years | (84 | ) | (33 | ) | (51 | ) | ||||||
Additions for tax positions of current year | 13 | 52 | 147 | |||||||||
Reductions for tax positions of current year | (8 | ) | (9 | ) | (22 | ) | ||||||
Settlements with tax authorities | (59 | ) | (46 | ) | (153 | ) | ||||||
Lapses of statutes of limitations | (11 | ) | — | (6 | ) | |||||||
Balance at December 31, | $ | 810 | $ | 773 | $ | 766 | ||||||
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16. | Contingencies, Commitments and Guarantees |
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December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions, except number of claims) | ||||||||||||
Asbestos personal injury claims at year end | 68,513 | 68,804 | 74,027 | |||||||||
Number of new claims during the year | 5,670 | 3,910 | 5,063 | |||||||||
Settlement payments during the year (1) | $ | 34.9 | $ | 37.6 | $ | 99.0 |
(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, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Other Assets: | ||||||||
Premium tax offset for future undiscounted assessments | $ | 55 | $ | 54 | ||||
Premium tax offsets currently available for paid assessments | 8 | 9 | ||||||
Receivable for reimbursement of paid assessments (1) | 6 | 4 | ||||||
$ | 69 | $ | 67 | |||||
Other Liabilities: | ||||||||
Insolvency assessments | $ | 94 | $ | 86 | ||||
(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) | ||||||||||||
2011 | $ | 444 | $ | 18 | $ | 366 | ||||||
2012 | $ | 375 | $ | 17 | $ | 280 | ||||||
2013 | $ | 331 | $ | 16 | $ | 237 | ||||||
2014 | $ | 286 | $ | 10 | $ | 167 | ||||||
2015 | $ | 236 | $ | 6 | $ | 136 | ||||||
Thereafter | $ | 724 | $ | 44 | $ | 965 |
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17. | Employee Benefit Plans |
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Other | ||||||||||||||||
Pension | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
December 31, | ||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Change in benefit obligations: | ||||||||||||||||
Benefit obligations at beginning of year | $ | 6,649 | $ | 6,041 | $ | 1,847 | $ | 1,632 | ||||||||
Service costs | 180 | 170 | 17 | 22 | ||||||||||||
Interest costs | 399 | 395 | 113 | 125 | ||||||||||||
Plan participants’ contributions | — | — | 34 | 30 | ||||||||||||
Net actuarial (gains) losses | 271 | 421 | 73 | 351 | ||||||||||||
Acquisition, settlements and curtailments | 639 | 12 | — | — | ||||||||||||
Change in benefits | 1 | (6 | ) | (80 | ) | (167 | ) | |||||||||
Prescription drug subsidy | — | — | 12 | 12 | ||||||||||||
Benefits paid | (420 | ) | (384 | ) | (154 | ) | (158 | ) | ||||||||
Transfers | — | — | (17 | ) | — | |||||||||||
Benefit obligations at end of year | 7,719 | 6,649 | 1,845 | 1,847 | ||||||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | 5,770 | 5,559 | 1,121 | 1,011 | ||||||||||||
Actual return on plan assets | 716 | 525 | 102 | 137 | ||||||||||||
Acquisition and settlements | 97 | — | — | — | ||||||||||||
Plan participants’ contributions | — | — | 34 | 2 | ||||||||||||
Employer contributions | 325 | 70 | 95 | 4 | ||||||||||||
Benefits paid | (420 | ) | (384 | ) | (140 | ) | (33 | ) | ||||||||
Transfers | — | — | (12 | ) | — | |||||||||||
Fair value of plan assets at end of year | 6,488 | 5,770 | 1,200 | 1,121 | ||||||||||||
Funded status at end of year | $ | (1,231 | ) | $ | (879 | ) | $ | (645 | ) | $ | (726 | ) | ||||
Amounts recognized in the consolidated balance sheets consist of: | ||||||||||||||||
Other assets | $ | 112 | $ | — | $ | — | $ | — | ||||||||
Other liabilities | (1,343 | ) | (879 | ) | (645 | ) | (726 | ) | ||||||||
Net amount recognized | $ | (1,231 | ) | $ | (879 | ) | $ | (645 | ) | $ | (726 | ) | ||||
Accumulated other comprehensive (income) loss: | ||||||||||||||||
Net actuarial losses | $ | 2,092 | $ | 2,267 | $ | 400 | $ | 388 | ||||||||
Prior service costs (credit) | 20 | 25 | (285 | ) | (288 | ) | ||||||||||
Accumulated other comprehensive (income) loss | 2,112 | 2,292 | 115 | 100 | ||||||||||||
Deferred income tax (benefit) | (738 | ) | (811 | ) | (40 | ) | (36 | ) | ||||||||
Accumulated other comprehensive (income) loss, net of income tax | $ | 1,374 | $ | 1,481 | $ | 75 | $ | 64 | ||||||||
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Qualified Plans | Non-Qualified Plans | Total | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Aggregate fair value of plan assets | $ | 6,484 | $ | 5,770 | $ | 4 | $ | — | $ | 6,488 | $ | 5,770 | ||||||||||||
Aggregate projected benefit obligations | 6,835 | 5,862 | 884 | 787 | 7,719 | 6,649 | ||||||||||||||||||
Over (under) funded | $ | (351 | ) | $ | (92 | ) | $ | (880 | ) | $ | (787 | ) | $ | (1,231 | ) | $ | (879 | ) | ||||||
December 31, | ||||||||
2010 | 2009 | |||||||
(In millions) | ||||||||
Projected benefit obligations | $ | 1,436 | $ | 798 | ||||
Accumulated benefit obligations | $ | 1,307 | $ | 714 | ||||
Fair value of plan assets | $ | 106 | $ | 1 |
Other | ||||||||||||||||
Pension | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
December 31, | ||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(In millions) | ||||||||||||||||
Projected benefit obligations | $ | 1,803 | $ | 6,580 | $ | 1,845 | $ | 1,847 | ||||||||
Fair value of plan assets | $ | 461 | $ | 5,700 | $ | 1,200 | $ | 1,121 |
i) | Service Costs — Service costs are 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 Costs on the Liability — Interest costs are the time value adjustment on the projected (expected) pension benefit obligation at the end of each year. | |
iii) | Settlement and Curtailment Costs — The aggregate amount of net gains (losses) recognized in net periodic benefit costs due to settlements and curtailments. Settlements result from actions that relieve/eliminate the plan’s responsibility for benefit obligations or risks associated with the obligations or assets used for the settlement. Curtailments result from an event that significantly reduces/eliminates plan participants’ expected years of future services or benefit accruals. | |
iv) | Expected Return on Plan Assets — Expected return on plan assets is the assumed return earned by the accumulated pension and other postretirement fund assets in a particular year. |
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v) | Amortization of Net Actuarial Gains (Losses) — Actuarial gains and losses result from differences between the actual experience and the expected experience on pension and 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 and other postretirement benefit costs over the expected service years of the employees. | |
vi) | Amortization of Prior Service Costs — These costs relate to the recognition of increases or decreases in pension and 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 (loss) at the time of the amendment. These costs are then amortized to pension and other postretirement benefit costs over the expected service years of the employees affected by the change. |
Other | ||||||||||||||||||||||||
Pension | Postretirement | |||||||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Net Periodic Benefit Costs: | ||||||||||||||||||||||||
Service costs | $ | 180 | $ | 170 | $ | 164 | $ | 17 | $ | 22 | $ | 21 | ||||||||||||
Interest costs | 399 | 395 | 379 | 113 | 125 | 103 | ||||||||||||||||||
Settlement and curtailment costs | 8 | 17 | — | 1 | — | — | ||||||||||||||||||
Expected return on plan assets | (450 | ) | (439 | ) | (517 | ) | (79 | ) | (72 | ) | (86 | ) | ||||||||||||
Amortization of net actuarial (gains) losses | 196 | 227 | 24 | 38 | 42 | (1 | ) | |||||||||||||||||
Amortization of prior service costs (credit) | 7 | 10 | 15 | (83 | ) | (36 | ) | (37 | ) | |||||||||||||||
Net periodic benefit costs | 340 | 380 | 65 | 7 | 81 | — | ||||||||||||||||||
Net periodic benefit costs of subsidiary at date of disposal | — | — | 1 | — | — | — | ||||||||||||||||||
Total net periodic benefit costs | 340 | 380 | 66 | 7 | 81 | — | ||||||||||||||||||
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): | ||||||||||||||||||||||||
Net actuarial (gains) losses | 22 | 310 | 1,561 | 50 | 283 | 259 | ||||||||||||||||||
Prior service costs (credit) | 1 | (10 | ) | (19 | ) | (80 | ) | (167 | ) | 36 | ||||||||||||||
Amortization of net actuarial gains (losses) | (196 | ) | (227 | ) | (24 | ) | (38 | ) | (42 | ) | 1 | |||||||||||||
Amortization of prior service (costs) credit | (7 | ) | (10 | ) | (15 | ) | 83 | 36 | 37 | |||||||||||||||
Total recognized in other comprehensive income (loss) | (180 | ) | 63 | 1,503 | 15 | 110 | 333 | |||||||||||||||||
Total recognized in net periodic benefit costs and other comprehensive income (loss) | $ | 160 | $ | 443 | $ | 1,569 | $ | 22 | $ | 191 | $ | 333 | ||||||||||||
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December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Cumulative reduction in other postretirement benefits obligations: | ||||||||||||
Balance at January 1, | $ | 247 | $ | 317 | $ | 299 | ||||||
Service costs | 3 | 2 | 5 | |||||||||
Interest costs | 16 | 16 | 20 | |||||||||
Net actuarial gains (losses) | (255 | ) | (76 | ) | 3 | |||||||
Prescription drug subsidy | (11 | ) | (12 | ) | (10 | ) | ||||||
Balance at December 31, | $ | — | $ | 247 | $ | 317 | ||||||
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Reduction in net periodic other postretirement benefit costs: | ||||||||||||
Service costs | $ | 3 | $ | 2 | $ | 5 | ||||||
Interest costs | 16 | 16 | 20 | |||||||||
Amortization of net actuarial gains (losses) | 10 | 11 | — | |||||||||
Total reduction in net periodic benefit costs | $ | 29 | $ | 29 | $ | 25 | ||||||
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Other | ||||||||
Pension | Postretirement | |||||||
Benefits | Benefits | |||||||
December 31, | ||||||||
2010 | 2009 | 2010 | 2009 | |||||
Weighted average discount rate | 5.80% | 6.25% | 5.80% | 6.25% | ||||
Rate of compensation increase | 3.5%-7.5% | 2.0%-7.5% | N/A | N/A |
Other | ||||||||||||
Pension | Postretirement | |||||||||||
Benefits | Benefits | |||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||
Weighted average discount rate | 6.25% | 6.60% | 6.65% | 6.25% | 6.60% | 6.65% | ||||||
Weighted average expected rate of return on plan assets | 8.00% | 8.25% | 8.25% | 7.20% | 7.36% | 7.33% | ||||||
Rate of compensation increase | 3.5%-7.5% | 3.5%-7.5% | 3.5%-8% | N/A | N/A | N/A |
December 31, | ||||
2010 | 2009 | |||
Pre-and Post-Medicare eligible claims | 7.8% in 2011, gradually decreasing each year until 2083 reaching the ultimate rate of 4.4%. | 8.2% in 2010, gradually decreasing each year until 2079 reaching the ultimate rate of 4.1%. |
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One Percent | One Percent | |||||||
Increase | Decrease | |||||||
(In millions) | ||||||||
Effect on total of service and interest costs components | $ | 8 | $ | (8 | ) | |||
Effect of accumulated postretirement benefit obligations | $ | 86 | $ | (104 | ) |
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December 31, 2010 | ||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Pension | Postretirement | |||||||||||||||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||||||||||
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) | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
Corporate | $ | — | $ | 1,528 | $ | 49 | $ | 1,577 | $ | — | $ | 67 | $ | 4 | $ | 71 | ||||||||||||||||
Federal agencies | — | 175 | — | 175 | — | 15 | — | 15 | ||||||||||||||||||||||||
Foreign bonds | 1 | 222 | 4 | 227 | — | 19 | — | 19 | ||||||||||||||||||||||||
Municipals | — | 137 | — | 137 | — | 37 | 1 | 38 | ||||||||||||||||||||||||
Preferred stocks | — | 4 | — | 4 | — | — | — | — | ||||||||||||||||||||||||
U.S. government bonds | 650 | 136 | — | 786 | 82 | — | — | 82 | ||||||||||||||||||||||||
Total fixed maturity securities | 651 | 2,202 | 53 | 2,906 | 82 | 138 | 5 | 225 | ||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Common stock — domestic | 1,410 | 93 | 240 | 1,743 | 359 | 3 | — | 362 | ||||||||||||||||||||||||
Common stock — foreign | 469 | 35 | — | 504 | 77 | — | — | 77 | ||||||||||||||||||||||||
Total equity securities | 1,879 | 128 | 240 | 2,247 | 436 | 3 | — | 439 | ||||||||||||||||||||||||
Money market securities | 200 | 100 | — | 300 | 1 | 1 | — | 2 | ||||||||||||||||||||||||
Pass-through securities | — | 321 | 2 | 323 | — | 73 | 6 | 79 | ||||||||||||||||||||||||
Derivative securities | 3 | (5 | ) | 11 | 9 | — | — | — | — | |||||||||||||||||||||||
Short-term investments | (9 | ) | 105 | — | 96 | 8 | 443 | — | 451 | |||||||||||||||||||||||
Other invested assets | 16 | 63 | 471 | 550 | — | — | — | �� | — | |||||||||||||||||||||||
Other receivables | — | 39 | — | 39 | — | 3 | — | 3 | ||||||||||||||||||||||||
Securities receivable | — | 70 | — | 70 | — | 2 | — | 2 | ||||||||||||||||||||||||
Real estate | — | — | 8 | 8 | — | — | — | — | ||||||||||||||||||||||||
Total assets | $ | 2,740 | $ | 3,023 | $ | 785 | $ | 6,548 | $ | 527 | $ | 663 | $ | 11 | $ | 1,201 | ||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Securities payable | $ | — | $ | 60 | $ | — | $ | 60 | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||
Total liabilities | $ | — | $ | 60 | $ | — | $ | 60 | $ | — | $ | 1 | $ | — | $ | 1 | ||||||||||||||||
Total assets and liabilities | $ | 2,740 | $ | 2,963 | $ | 785 | $ | 6,488 | $ | 527 | $ | 662 | $ | 11 | $ | 1,200 | ||||||||||||||||
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December 31, 2009 | ||||||||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||||||||
Pension | Postretirement | |||||||||||||||||||||||||||||||
Benefits | Benefits | |||||||||||||||||||||||||||||||
Fair Value Measurements at | Fair Value Measurements at | |||||||||||||||||||||||||||||||
Reporting Date Using | Reporting Date Using | |||||||||||||||||||||||||||||||
Quoted | Quoted | |||||||||||||||||||||||||||||||
Prices | Prices | |||||||||||||||||||||||||||||||
In Active | In Active | |||||||||||||||||||||||||||||||
Markets | Significant | Markets | Significant | |||||||||||||||||||||||||||||
for | Other | Significant | Total | for | Other | Significant | Total | |||||||||||||||||||||||||
Identical | Observable | Unobservable | Estimated | Identical | Observable | Unobservable | Estimated | |||||||||||||||||||||||||
Assets | Inputs | Inputs | Fair | Assets | Inputs | Inputs | Fair | |||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | (Level 1) | (Level 2) | (Level 3) | Value | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
Corporate | $ | — | $ | 1,458 | $ | 68 | $ | 1,526 | $ | — | $ | 48 | $ | — | $ | 48 | ||||||||||||||||
Federal agencies | (41 | ) | 140 | — | 99 | — | 30 | — | 30 | |||||||||||||||||||||||
Foreign bonds | 1 | 195 | 5 | 201 | — | 6 | — | 6 | ||||||||||||||||||||||||
Municipals | — | 56 | — | 56 | — | 21 | — | 21 | ||||||||||||||||||||||||
Preferred stocks | — | 2 | — | 2 | — | — | — | — | ||||||||||||||||||||||||
U.S. government bonds | 319 | 50 | — | 369 | 45 | — | — | 45 | ||||||||||||||||||||||||
U.S. treasury notes | — | — | — | — | 12 | — | — | 12 | ||||||||||||||||||||||||
Total fixed maturity securities | 279 | 1,901 | 73 | 2,253 | 57 | 105 | — | 162 | ||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Common stock — domestic | 1,565 | 238 | 241 | 2,044 | 342 | 6 | — | 348 | ||||||||||||||||||||||||
Common stock — foreign | 393 | — | — | 393 | 72 | — | — | 72 | ||||||||||||||||||||||||
Total equity securities | 1,958 | 238 | 241 | 2,437 | 414 | 6 | — | 420 | ||||||||||||||||||||||||
Money market securities | 72 | 56 | — | 128 | 12 | 1 | — | 13 | ||||||||||||||||||||||||
Pass-through securities | 1 | 376 | 69 | 446 | — | 75 | 9 | 84 | ||||||||||||||||||||||||
Derivative securities | 3 | — | — | 3 | — | — | — | — | ||||||||||||||||||||||||
Short-term investments | 2 | 115 | — | 117 | — | 442 | — | 442 | ||||||||||||||||||||||||
Other invested assets | 13 | — | 373 | 386 | — | — | — | — | ||||||||||||||||||||||||
Total assets | $ | 2,328 | $ | 2,686 | $ | 756 | $ | 5,770 | $ | 483 | $ | 629 | $ | 9 | $ | 1,121 | ||||||||||||||||
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 into 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. |
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Level 3 | This category includes separate accounts that are invested in real estate and private equity investments that 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. |
Total Realized/Unrealized | ||||||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||||||
Other | Sales, | |||||||||||||||||||||||||||
Balance, | Comprehensive | Issuances and | Transfer Into | Transfer Out | Balance, | |||||||||||||||||||||||
January 1, | Earnings | Income (Loss) | Settlements | Level 3 | of Level 3 | December 31, | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Year Ended December 31, 2010: | ||||||||||||||||||||||||||||
Pension: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
Corporate | $ | 68 | $ | — | $ | 7 | $ | (17 | ) | $ | 4 | $ | (13 | ) | $ | 49 | ||||||||||||
Foreign bonds | 5 | — | 1 | (2 | ) | — | — | 4 | ||||||||||||||||||||
Total fixed maturity securities | 73 | — | 8 | (19 | ) | 4 | (13 | ) | 53 | |||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||
Common stock — domestic | 241 | — | (2 | ) | 1 | — | — | 240 | ||||||||||||||||||||
Total equity securities | 241 | — | (2 | ) | 1 | — | — | 240 | ||||||||||||||||||||
Pass-through securities | 69 | (11 | ) | 14 | (71 | ) | 2 | (1 | ) | 2 | ||||||||||||||||||
Derivative securities (1) | — | 3 | (3 | ) | (1 | ) | 12 | — | 11 | |||||||||||||||||||
Other invested assets | 373 | 78 | (4 | ) | 24 | — | — | 471 | ||||||||||||||||||||
Real estate (1) | — | — | — | — | 8 | — | 8 | |||||||||||||||||||||
Total pension assets | $ | 756 | $ | 70 | $ | 13 | $ | (66 | ) | $ | 26 | $ | (14 | ) | $ | 785 | ||||||||||||
Other postretirement: | ||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||
Corporate | $ | — | $ | — | $ | 1 | $ | — | $ | 3 | $ | — | $ | 4 | ||||||||||||||
Municipals | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||
Total fixed maturity securities | — | — | 1 | — | 4 | — | 5 | |||||||||||||||||||||
Pass-through securities | 9 | (4 | ) | 1 | (1 | ) | 1 | — | 6 | |||||||||||||||||||
Total other postretirement assets | $ | 9 | $ | (4 | ) | $ | 2 | $ | (1 | ) | $ | 5 | $ | — | $ | 11 | ||||||||||||
Total assets | $ | 765 | $ | 66 | $ | 15 | $ | (67 | ) | $ | 31 | $ | (14 | ) | $ | 796 | ||||||||||||
(1) | Derivative securities and real estate transfers into Level 3 are due to the Acquisition and are not related to the changes in Level 3 classification at the security level. |
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Total Realized/Unrealized | ||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||
Other | Sales, | Transfer Into | ||||||||||||||||||||||
Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||
January 1, | Earnings | Income (Loss) | Settlements | of Level 3 | December 31, | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Year Ended December 31, 2009: | ||||||||||||||||||||||||
Pension: | ||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||
Corporate | $ | 57 | $ | (5 | ) | $ | 21 | $ | (3 | ) | $ | (2 | ) | $ | 68 | |||||||||
Foreign bonds | 4 | (1 | ) | 5 | (3 | ) | — | 5 | ||||||||||||||||
Total fixed maturity securities | 61 | (6 | ) | 26 | (6 | ) | (2 | ) | 73 | |||||||||||||||
Equity securities: | ||||||||||||||||||||||||
Common stock — domestic | 460 | — | (232 | ) | 13 | — | 241 | |||||||||||||||||
Total equity securities | 460 | — | (232 | ) | 13 | — | 241 | |||||||||||||||||
Pass-through securities | 80 | (2 | ) | 8 | (24 | ) | 7 | 69 | ||||||||||||||||
Derivative securities | 40 | 36 | (39 | ) | (37 | ) | — | — | ||||||||||||||||
Other invested assets | 392 | 4 | (59 | ) | 36 | — | 373 | |||||||||||||||||
Total pension assets | $ | 1,033 | $ | 32 | $ | (296 | ) | $ | (18 | ) | $ | 5 | $ | 756 | ||||||||||
Other postretirement: | ||||||||||||||||||||||||
Pass-through securities | $ | 13 | $ | (17 | ) | $ | 17 | $ | (4 | ) | $ | — | $ | 9 | ||||||||||
Total other postretirement assets | $ | 13 | $ | (17 | ) | $ | 17 | $ | (4 | ) | $ | — | $ | 9 | ||||||||||
Total assets | $ | 1,046 | $ | 15 | $ | (279 | ) | $ | (22 | ) | $ | 5 | $ | 765 | ||||||||||
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Actual Allocation | ||||||||||||
Defined Benefit Plan | Postretirement Medical | Postretirement Life | ||||||||||
Year Ended December 31, 2010: | ||||||||||||
Asset Class: | ||||||||||||
Fixed maturity securities (target range) | 50% to 80 | % | 20% to 50 | % | — | |||||||
Corporate | 24 | % | 9 | % | — | |||||||
Federal agency | 3 | 2 | — | |||||||||
Foreign bonds | 3 | 3 | — | |||||||||
Municipals | 2 | 5 | — | |||||||||
U.S. government bonds | 12 | 11 | — | |||||||||
Total fixed maturity securities | 44 | % | 30 | % | — | |||||||
Equity securities (target range) | 0% to 40 | % | 50% to 80 | % | — | |||||||
Common stock — domestic | 27 | % | 48 | % | — | |||||||
Common stock — foreign | 8 | 10 | — | |||||||||
Total equity securities | 35 | % | 58 | % | — | |||||||
Money market securities | 5 | % | — | — | ||||||||
Pass-through securities | 5 | 10 | — | |||||||||
Short-term investments | 1 | 1 | 100 | % | ||||||||
Other invested assets | 8 | — | — | |||||||||
Other receivables | 1 | 1 | — | |||||||||
Securities receivable | 1 | — | — | |||||||||
Total assets | 100 | % | 100 | % | 100 | % | ||||||
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Actual Allocation | ||||||||||||
Defined Benefit Plan | Postretirement Medical | Postretirement Life | ||||||||||
Year Ended December 31, 2009: | ||||||||||||
Asset Class: | ||||||||||||
Fixed maturity securities (target range) | 35% to 55% | 10% to 40% | — | |||||||||
Corporate | 26% | 7% | — | |||||||||
Federal agency | 2 | 4 | — | |||||||||
Foreign bonds | 4 | 1 | — | |||||||||
Municipals | 1 | 3 | — | |||||||||
U.S. government bonds | 6 | 7 | — | |||||||||
U.S. treasury notes | — | 2 | — | |||||||||
Total fixed maturity securities | 39% | 24% | — | |||||||||
Equity securities (target range) | 25% to 45% | 50% to 80% | — | |||||||||
Common stock — domestic | 35% | 51% | — | |||||||||
Common stock — foreign | 7 | 11 | — | |||||||||
Total equity securities | 42% | 62% | — | |||||||||
Money market securities | 2% | 2% | — | |||||||||
Pass-through securities | 8 | 12 | — | |||||||||
Short-term investments | 2 | — | 100 | % | ||||||||
Other invested assets | 7 | — | — | |||||||||
Total assets | 100% | 100% | 100 | % | ||||||||
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Other | ||||||||
Pension | Postretirement | |||||||
Benefits | Benefits | |||||||
(In millions) | ||||||||
2011 | $ | 446 | $ | 120 | ||||
2012 | $ | 454 | $ | 121 | ||||
2013 | $ | 463 | $ | 122 | ||||
2014 | $ | 486 | $ | 123 | ||||
2015 | $ | 500 | $ | 124 | ||||
2016-2020 | $ | 2,789 | $ | 631 |
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 15, 2010 | November 30, 2010 | December 15, 2010 | $ | 0.2527777 | $ | 7 | $ | 0.4062500 | $ | 24 | ||||||||||
August 16, 2010 | August 31, 2010 | September 15, 2010 | $ | 0.2555555 | 6 | $ | 0.4062500 | 24 | ||||||||||||
May 17, 2010 | May 31, 2010 | June 15, 2010 | $ | 0.2555555 | 7 | $ | 0.4062500 | 24 | ||||||||||||
March 5, 2010 | February 28, 2010 | March 15, 2010 | $ | 0.2500000 | 6 | $ | 0.4062500 | 24 | ||||||||||||
$ | 26 | $ | 96 | |||||||||||||||||
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 | |||||||||||||||||
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Dividend | ||||||||||||
Per Share | Aggregate | |||||||||||
(In millions, except | ||||||||||||
Declaration Date | Record Date | Payment Date | per share data) | |||||||||
October 26, 2010 | November 9, 2010 | December 14, 2010 | $ | 0.74 | $ | 784 | (1) | |||||
October 29, 2009 | November 9, 2009 | December 14, 2009 | $ | 0.74 | $ | 610 | ||||||
October 28, 2008 | November 10, 2008 | December 15, 2008 | $ | 0.74 | $ | 592 |
(1) | Includes dividends on Convertible Preferred Stock (see above). |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Stock Options | $ | 45 | $ | 55 | $ | 51 | ||||||
Performance Shares (1) | 29 | 11 | 70 | |||||||||
Restricted Stock Units | 10 | 3 | 2 | |||||||||
Total compensation expenses related to the Incentive Plans | $ | 84 | $ | 69 | $ | 123 | ||||||
Income tax benefits | $ | 29 | $ | 24 | $ | 43 | ||||||
(1) | Performance Shares expected to vest and the related compensation expenses may be further adjusted by the performance factor most likely to be achieved, as estimated by management, at the end of the performance period. |
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December 31, 2010 | ||||||||
Weighted Average | ||||||||
Expense | Period | |||||||
(In millions) | (Years) | |||||||
Stock Options | $ | 39 | 1.73 | |||||
Performance Shares | $ | 30 | 1.74 | |||||
Restricted Stock Units | $ | 14 | 1.87 |
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Remaining | Aggregate | |||||||||||||||
Shares Under | Weighted Average | Contractual | Intrinsic | |||||||||||||
Option | Exercise Price | Term | Value (1) | |||||||||||||
(Years) | (In millions) | |||||||||||||||
Outstanding at January 1, 2010 | 30,152,405 | $ | 38.51 | 5.50 | $ | — | ||||||||||
Granted (2) | 4,683,144 | $ | 35.06 | |||||||||||||
Exercised | (1,742,003 | ) | $ | 29.74 | ||||||||||||
Expired | (154,947 | ) | $ | 47.78 | ||||||||||||
Forfeited | (236,268 | ) | $ | 34.64 | ||||||||||||
Outstanding at December 31, 2010 | 32,702,331 | $ | 38.47 | 5.30 | $ | 195 | ||||||||||
Aggregate number of stock options expected to vest at December 31, 2010 | 31,930,964 | $ | 38.62 | 5.21 | $ | 186 | ||||||||||
Exercisable at December 31, 2010 | 23,405,998 | $ | 40.43 | 4.00 | $ | 94 | ||||||||||
(1) | The aggregate intrinsic value was computed using the closing share price on December 31, 2010 of $44.44 and December 31, 2009 of $35.35, as applicable. | |
(2) | The total fair value on the date of the grant was $53 million. |
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Years Ended December 31, | ||||||
2010 | 2009 | 2008 | ||||
Dividend yield | 2.11% | 3.15% | 1.21% | |||
Risk-free rate of return | 0.35%-5.88% | 0.73%-6.67% | 1.91%-7.21% | |||
Expected volatility | 34.41% | 44.39% | 24.85% | |||
Exercise multiple | 1.75 | 1.76 | 1.73 | |||
Post-vesting termination rate | 3.64% | 3.70% | 3.05% | |||
Contractual term (years) | 10 | 10 | 10 | |||
Expected life (years) | 7 | 6 | 6 | |||
Weighted average exercise price of stock options granted | $35.06 | $23.61 | $59.48 | |||
Weighted average fair value of stock options granted | $11.29 | $8.37 | $17.51 |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Total intrinsic value of stock options exercised | $ | 22 | $ | 1 | $ | 36 | ||||||
Cash received from exercise of stock options | $ | 52 | $ | 8 | $ | 45 | ||||||
Tax benefit realized from stock options exercised | $ | 8 | $ | — | $ | 13 |
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Weighted Average | ||||||||
Performance | Grant Date | |||||||
Shares | Fair Value | |||||||
Outstanding at January 1, 2010 | 3,493,435 | $ | 38.43 | |||||
Granted (1) | 1,528,065 | $ | 32.24 | |||||
Forfeited | (58,176 | ) | $ | 30.06 | ||||
Payable (2) | (807,750 | ) | $ | 60.83 | ||||
Outstanding at December 31, 2010 | 4,155,574 | $ | 31.91 | |||||
Performance Shares expected to vest at December 31, 2010 | 3,972,769 | $ | 33.40 | |||||
(1) | The total fair value on the date of the grant was $49 million. | |
(2) | Includes both shares paid and shares deferred for later payment. |
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Weighted Average | ||||||||
Restricted Stock | Grant Date | |||||||
Units | Fair Value | |||||||
Outstanding at January 1, 2010 | 393,362 | $ | 28.05 | |||||
Granted (1) | 607,200 | $ | 32.32 | |||||
Forfeited | (31,275 | ) | $ | 27.31 | ||||
Payable (2) | (32,115 | ) | $ | 63.32 | ||||
Outstanding at December 31, 2010 | 937,172 | $ | 29.63 | |||||
Restricted Stock Units expected to vest at December 31, 2010 | 937,172 | $ | 29.63 | |||||
(1) | The total fair value on the date of the grant was $20 million. | |
(2) | Includes both shares paid and shares deferred for later payment. |
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2011 | 2010 | 2009 | ||||||||||||||||||
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 | $ | 1,321 | $ | 631 | (4) | $ | 1,262 | $ | — | $ | 552 | |||||||||
American Life Insurance Company (5) | $ | 661 | $ | — | $ | 511 | N/A | N/A | ||||||||||||
MetLife Insurance Company of Connecticut | $ | 517 | $ | 330 | $ | 659 | $ | — | $ | 714 | ||||||||||
Metropolitan Property and Casualty Insurance Company | $ | — | $ | 260 | $ | — | $ | 300 | $ | 9 | ||||||||||
Metropolitan Tower Life Insurance Company | $ | 80 | $ | 569 | (6) | $ | 93 | $ | — | $ | 88 |
(1) | Reflects dividend amounts that may be paid during 2011 without prior regulatory approval. However, because dividend tests may be based on dividends previously paid over rolling12-month periods, if paid before a specified date during 2011, 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) | Includes securities transferred to the Holding Company of $399 million. | |
(5) | Reflects approximate dividends permitted to be paid and the respective dividends paid since the Acquisition Date. See Note 2. | |
(6) | Includes shares of an affiliate distributed to the Holding Company as an in-kind dividend of $475 million. |
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Holding gains (losses) on investments arising during the year | $ | 10,092 | $ | 18,548 | $ | (26,650 | ) | |||||
Income tax effect of holding gains (losses) | (3,516 | ) | (6,243 | ) | 8,989 | |||||||
Reclassification adjustments: | ||||||||||||
Recognized holding (gains) losses included in current year income | (143 | ) | 1,954 | 2,040 | ||||||||
Amortization of premiums and accretion of discounts associated with investments | (590 | ) | (490 | ) | (926 | ) | ||||||
Income tax effect | 255 | (493 | ) | (377 | ) | |||||||
Allocation of holding (gains) losses on investments relating to other policyholder amounts | (2,813 | ) | (2,979 | ) | 4,809 | |||||||
Income tax effect of allocation of holding (gains) losses to other policyholder amounts | 980 | 1,002 | (1,621 | ) | ||||||||
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 | 4,265 | 11,299 | (13,665 | ) | ||||||||
Foreign currency translation adjustments, net of income tax | (350 | ) | 63 | (700 | ) | |||||||
Defined benefit plans adjustment, net of income tax | 96 | (102 | ) | (1,199 | ) | |||||||
Other comprehensive income (loss) | 4,011 | 11,260 | (15,564 | ) | ||||||||
Other comprehensive income (loss) attributable to noncontrolling interests | (5 | ) | 11 | (10 | ) | |||||||
Other comprehensive income (loss) attributable to noncontrolling interests of subsidiary at date of disposal | — | — | 150 | |||||||||
Foreign currency translation adjustments attributable to noncontrolling interests of subsidiary at date of disposal | — | — | 107 | |||||||||
Defined benefit plans adjustment attributable to noncontrolling interests of subsidiary at date of disposal | — | — | (4 | ) | ||||||||
Other comprehensive income (loss) attributable to MetLife, Inc., excluding cumulative effect of change in accounting principle | 4,006 | 11,271 | (15,321 | ) | ||||||||
Cumulative effect of change in accounting principle, net of income tax of $27 million, $40 million and $0 (see Note 1) | 52 | (76 | ) | — | ||||||||
Other comprehensive income (loss) attributable to MetLife, Inc. | $ | 4,058 | $ | 11,195 | $ | (15,321 | ) | |||||
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19. | Other Expenses |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Compensation | $ | 3,584 | $ | 3,402 | $ | 3,299 | ||||||
Pension, postretirement & postemployment benefit costs | 380 | 452 | 120 | |||||||||
Commissions | 3,646 | 3,433 | 3,384 | |||||||||
Volume-related costs | 379 | 407 | 354 | |||||||||
Interest credited to bank deposits | 137 | 163 | 166 | |||||||||
Capitalization of DAC | (3,343 | ) | (3,019 | ) | (3,092 | ) | ||||||
Amortization of DAC and VOBA | 2,801 | 1,307 | 3,489 | |||||||||
Interest expense on debt and debt issue costs | 1,550 | 1,044 | 1,051 | |||||||||
Premium taxes, licenses & fees | 514 | 527 | 471 | |||||||||
Professional services | 1,104 | 902 | 949 | |||||||||
Rent, net of sublease income | 307 | 385 | 373 | |||||||||
Other | 1,744 | 1,553 | 1,383 | |||||||||
Total other expenses | $ | 12,803 | $ | 10,556 | $ | 11,947 | ||||||
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Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 36 | $ | 86 | $ | — | ||||||
Severance charges | 17 | 84 | 109 | |||||||||
Change in severance charge estimates | (1 | ) | (8 | ) | (8 | ) | ||||||
Cash payments | (45 | ) | (126 | ) | (15 | ) | ||||||
Balance at December 31, | $ | 7 | $ | 36 | $ | 86 | ||||||
Restructuring charges incurred in current period | $ | 16 | $ | 76 | $ | 101 | ||||||
Total restructuring charges incurred since inception of program | $ | 193 | $ | 177 | $ | 101 | ||||||
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20. | Earnings Per Common Share |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions, except share and per share data) | ||||||||||||
Weighted Average Shares: | ||||||||||||
Weighted average common stock outstanding for basic earnings per common share (1) | 882,436,532 | 818,462,150 | 735,184,337 | |||||||||
Incremental common shares from assumed: | ||||||||||||
Stock purchase contracts underlying common equity units (2) | — | — | 2,043,553 | |||||||||
Exercise or issuance of stock-based awards (3) | 7,131,346 | — | 7,557,540 | |||||||||
Weighted average common stock outstanding for diluted earnings per common share(1) | 889,567,878 | 818,462,150 | 744,785,430 | |||||||||
Income (Loss) from Continuing Operations: | ||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 2,777 | $ | (2,319 | ) | $ | 3,479 | |||||
Less: Income (loss) from continuing operations, net of income tax, attributable to noncontrolling interests | (4 | ) | (32 | ) | (25 | ) | ||||||
Less: Preferred stock dividends | 122 | 122 | 125 | |||||||||
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders | $ | 2,659 | $ | (2,409 | ) | $ | 3,379 | |||||
Basic | $ | 3.01 | $ | (2.94 | ) | $ | 4.60 | |||||
Diluted | $ | 2.99 | $ | (2.94 | ) | $ | 4.54 | |||||
Income (Loss) from Discontinued Operations: | ||||||||||||
Income (loss) from discontinued operations, net of income tax | $ | 9 | $ | 41 | $ | (201 | ) | |||||
Less: Income (loss) from discontinued operations, net of income tax, attributable to noncontrolling interests | — | — | 94 | |||||||||
Income (loss) from discontinued operations, net of income tax, available to MetLife, Inc.’s common shareholders | $ | 9 | $ | 41 | $ | (295 | ) | |||||
Basic | $ | 0.01 | $ | 0.05 | $ | (0.41 | ) | |||||
Diluted | $ | 0.01 | $ | 0.05 | $ | (0.40 | ) | |||||
Net Income (Loss): | ||||||||||||
Net income (loss) | $ | 2,786 | $ | (2,278 | ) | $ | 3,278 | |||||
Less: Net income (loss) attributable to noncontrolling interests | (4 | ) | (32 | ) | 69 | |||||||
Less: Preferred stock dividends | 122 | 122 | 125 | |||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 2,668 | $ | (2,368 | ) | $ | 3,084 | |||||
Basic | $ | 3.02 | $ | (2.89 | ) | $ | 4.19 | |||||
Diluted | $ | 3.00 | $ | (2.89 | ) | $ | 4.14 | |||||
(1) | For purposes of the earnings per common share calculation, the Convertible Preferred Stock is assumed converted into shares of common stock for both basic and diluted weighted average shares. See Note 18 for a description of the Convertible Preferred Stock. | |
(2) | See Note 14 for a description of the Company’s common equity units. |
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(3) | For the year ended December 31, 2009, 4,213,700 shares related to the assumed exercise or issuance of stock-based awards have been excluded from the calculation of diluted earnings per common share as these assumed shares are anti-dilutive. |
21. | Quarterly Results of Operations (Unaudited) |
Three Months Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
(In millions, except per share data) | ||||||||||||||||
2010 | ||||||||||||||||
Total revenues | $ | 13,190 | $ | 14,245 | $ | 12,444 | $ | 12,838 | ||||||||
Total expenses | $ | 11,999 | $ | 11,875 | $ | 12,051 | $ | 12,834 | ||||||||
Income (loss) from continuing operations, net of income tax | $ | 833 | $ | 1,540 | $ | 322 | $ | 82 | ||||||||
Income (loss) from discontinued operations, net of income tax | $ | 1 | $ | 7 | $ | (2 | ) | $ | 3 | |||||||
Net income (loss) | $ | 834 | $ | 1,547 | $ | 320 | $ | 85 | ||||||||
Less: Net income (loss) attributable to noncontrolling interests | $ | (1 | ) | $ | (10 | ) | $ | 4 | $ | 3 | ||||||
Net income (loss) attributable to MetLife, Inc. | $ | 835 | $ | 1,557 | $ | 316 | $ | 82 | ||||||||
Less: Preferred stock dividends | $ | 30 | $ | 31 | $ | 30 | $ | 31 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 805 | $ | 1,526 | $ | 286 | $ | 51 | ||||||||
Basic earnings per common share: | ||||||||||||||||
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders | $ | 0.98 | $ | 1.84 | $ | 0.33 | $ | 0.05 | ||||||||
Income (loss) from discontinued operations, net of income tax, attributable to MetLife, Inc. | $ | — | $ | 0.01 | $ | — | $ | — | ||||||||
Net income (loss) attributable to MetLife, Inc. | $ | 1.02 | $ | 1.90 | $ | 0.36 | $ | 0.08 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 0.98 | $ | 1.85 | $ | 0.33 | $ | 0.05 | ||||||||
Diluted earnings per common share: | ||||||||||||||||
Income (loss) from continuing operations, net of income tax, available to MetLife, Inc.’s common shareholders | $ | 0.97 | $ | 1.83 | $ | 0.32 | $ | 0.05 | ||||||||
Income (loss) from discontinued operations, net of income tax, attributable to MetLife, Inc. | $ | — | $ | 0.01 | $ | — | $ | — | ||||||||
Net income (loss) attributable to MetLife, Inc. | $ | 1.01 | $ | 1.87 | $ | 0.36 | $ | 0.08 | ||||||||
Net income (loss) available to MetLife, Inc.’s common shareholders | $ | 0.97 | $ | 1.84 | $ | 0.32 | $ | 0.05 | ||||||||
2009 | ||||||||||||||||
Total revenues | $ | 10,214 | $ | 8,264 | $ | 10,238 | $ | 12,341 | ||||||||
Total expenses | $ | 11,176 | $ | 10,640 | $ | 11,413 | $ | 12,162 | ||||||||
Income (loss) from continuing operations, net of income tax | $ | (585 | ) | $ | (1,420 | ) | $ | (624 | ) | $ | 310 | |||||
Income (loss) from discontinued operations, net of income tax | $ | 37 | $ | 2 | $ | (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 common share: | ||||||||||||||||
Income (loss) from continuing operations, net of income tax, 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 common share: | ||||||||||||||||
Income (loss) from continuing operations, net of income tax, 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 |
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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, 2010 | Products | Products | Funding | & Home | Total | International | & Other | Total | Adjustments | Consolidated | ||||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||||||
Premiums | $ | 17,200 | $ | 875 | $ | 1,938 | $ | 2,923 | $ | 22,936 | $ | 4,447 | $ | 11 | $ | 27,394 | $ | — | $ | 27,394 | ||||||||||||||||||||
Universal life and investment-type product policy fees | 2,247 | 2,234 | 226 | — | 4,707 | 1,329 | — | 6,036 | 1 | 6,037 | ||||||||||||||||||||||||||||||
Net investment income | 6,068 | 3,395 | 4,954 | 209 | 14,626 | 1,703 | 992 | 17,321 | 294 | 17,615 | ||||||||||||||||||||||||||||||
Other revenues | 761 | 220 | 246 | 22 | 1,249 | 35 | 1,044 | 2,328 | — | 2,328 | ||||||||||||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | — | — | — | (392 | ) | (392 | ) | ||||||||||||||||||||||||||||
Net derivative gains (losses) | — | — | — | — | — | — | — | — | (265 | ) | (265 | ) | ||||||||||||||||||||||||||||
Total revenues | 26,276 | 6,724 | 7,364 | 3,154 | 43,518 | 7,514 | 2,047 | 53,079 | (362 | ) | 52,717 | |||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 19,075 | 1,879 | 4,041 | 2,021 | 27,016 | 3,723 | (14 | ) | 30,725 | 306 | 31,031 | |||||||||||||||||||||||||||||
Interest credited to policyholder account balances | 963 | 1,612 | 1,445 | — | 4,020 | 683 | — | 4,703 | 222 | 4,925 | ||||||||||||||||||||||||||||||
Interest credited to bank deposits | — | — | — | — | — | — | 137 | 137 | — | 137 | ||||||||||||||||||||||||||||||
Capitalization of DAC | (841 | ) | (1,067 | ) | (19 | ) | (448 | ) | (2,375 | ) | (968 | ) | — | (3,343 | ) | — | (3,343 | ) | ||||||||||||||||||||||
Amortization of DAC and VOBA | 966 | 724 | 16 | 439 | 2,145 | 537 | 1 | 2,683 | 118 | 2,801 | ||||||||||||||||||||||||||||||
Interest expense on debt | 1 | 3 | 6 | — | 10 | 3 | 1,126 | 1,139 | 411 | 1,550 | ||||||||||||||||||||||||||||||
Other expenses | 4,080 | 2,437 | 460 | 769 | 7,746 | 2,538 | 1,155 | 11,439 | 219 | 11,658 | ||||||||||||||||||||||||||||||
Total expenses | 24,244 | 5,588 | 5,949 | 2,781 | 38,562 | 6,516 | 2,405 | 47,483 | 1,276 | 48,759 | ||||||||||||||||||||||||||||||
Provision for income tax expense (benefit) | 711 | 397 | 495 | 73 | 1,676 | 206 | (300 | ) | 1,582 | (401 | ) | 1,181 | ||||||||||||||||||||||||||||
Operating earnings | $ | 1,321 | $ | 739 | $ | 920 | $ | 300 | $ | 3,280 | $ | 792 | $ | (58 | ) | 4,014 | ||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||||||||||||||
Total revenues | (362 | ) | ||||||||||||||||||||||||||||||||||||||
Total expenses | (1,276 | ) | ||||||||||||||||||||||||||||||||||||||
Provision for income tax (expense) benefit | 401 | |||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 2,777 | $ | 2,777 | ||||||||||||||||||||||||||||||||||||
U.S. Business | ||||||||||||||||||||||||||||||||
Corporate | Banking, | |||||||||||||||||||||||||||||||
Insurance | Retirement | Benefit | Auto | Corporate | ||||||||||||||||||||||||||||
At December 31, 2010: | Products | Products | Funding | & Home | Total | International | & Other | Total | ||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Total assets | $ | 141,366 | $ | 177,056 | $ | 172,918 | $ | 5,541 | $ | 496,881 | $ | 164,995 | $ | 69,030 | $ | 730,906 | ||||||||||||||||
Separate account assets | $ | 9,567 | $ | 107,335 | $ | 56,571 | $ | — | $ | 173,473 | $ | 9,864 | $ | — | $ | 183,337 | ||||||||||||||||
Separate account liabilities | $ | 9,567 | $ | 107,335 | $ | 56,571 | $ | — | $ | 173,473 | $ | 9,864 | $ | — | $ | 183,337 |
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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 | $ | 920 | $ | 2,264 | $ | 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 | 3,098 | 4,527 | 180 | 13,419 | 1,193 | 477 | 15,089 | (252 | ) | 14,837 | |||||||||||||||||||||||||||||
Other revenues | 779 | 173 | 238 | 33 | 1,223 | 14 | 1,092 | 2,329 | — | 2,329 | ||||||||||||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | — | — | — | (2,906 | ) | (2,906 | ) | ||||||||||||||||||||||||||||
Net derivative gains (losses) | — | — | — | — | — | — | — | — | (4,866 | ) | (4,866 | ) | ||||||||||||||||||||||||||||
Total revenues | 25,842 | 5,903 | 7,205 | 3,115 | 42,065 | 5,455 | 1,588 | 49,108 | (8,051 | ) | 41,057 | |||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 19,111 | 1,950 | 4,245 | 1,932 | 27,238 | 2,660 | 4 | 29,902 | 84 | 29,986 | ||||||||||||||||||||||||||||||
Interest credited to policyholder account balances | 952 | 1,688 | 1,632 | — | 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 on debt | 6 | — | 3 | — | 9 | 8 | 1,027 | 1,044 | — | 1,044 | ||||||||||||||||||||||||||||||
Other expenses | 4,206 | 2,433 | 456 | 764 | 7,859 | 1,797 | 1,336 | 10,992 | 69 | 11,061 | ||||||||||||||||||||||||||||||
Total expenses | 24,127 | 5,428 | 6,337 | 2,697 | 38,589 | 4,831 | 2,533 | 45,953 | (562 | ) | 45,391 | |||||||||||||||||||||||||||||
Provision for income tax expense (benefit) | 573 | 167 | 288 | 96 | 1,124 | 161 | (617 | ) | 668 | (2,683 | ) | (2,015 | ) | |||||||||||||||||||||||||||
Operating earnings | $ | 1,142 | $ | 308 | $ | 580 | $ | 322 | $ | 2,352 | $ | 463 | $ | (328 | ) | 2,487 | ||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||||||||||||||
Total revenues | (8,051 | ) | ||||||||||||||||||||||||||||||||||||||
Total expenses | 562 | |||||||||||||||||||||||||||||||||||||||
Provision for income tax (expense) benefit | 2,683 | |||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | (2,319 | ) | $ | (2,319 | ) | ||||||||||||||||||||||||||||||||||
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 | $ | 132,720 | $ | 154,228 | $ | 153,795 | $ | 5,517 | $ | 446,260 | $ | 33,923 | $ | 59,131 | $ | 539,314 | ||||||||||||||||
Separate account assets | $ | 8,838 | $ | 87,157 | $ | 45,688 | $ | — | $ | 141,683 | $ | 7,358 | $ | — | $ | 149,041 | ||||||||||||||||
Separate account liabilities | $ | 8,838 | $ | 87,157 | $ | 45,688 | $ | — | $ | 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 | $ | 696 | $ | 2,348 | $ | 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 | 2,624 | 5,615 | 186 | 14,212 | 1,180 | 808 | 16,200 | 89 | 16,289 | ||||||||||||||||||||||||||||||
Other revenues | 819 | 169 | 358 | 38 | 1,384 | 18 | 184 | 1,586 | — | 1,586 | ||||||||||||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | — | — | — | (2,098 | ) | (2,098 | ) | ||||||||||||||||||||||||||||
Net derivative gains (losses) | — | — | — | — | — | — | — | — | 3,910 | 3,910 | ||||||||||||||||||||||||||||||
Total revenues | 25,179 | 5,359 | 8,548 | 3,195 | 42,281 | 5,763 | 1,019 | 49,063 | 1,919 | 50,982 | ||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||||||
Policyholder benefits and claims and policyholder dividends | 18,183 | 1,271 | 4,398 | 1,924 | 25,776 | 3,185 | 46 | 29,007 | 181 | 29,188 | ||||||||||||||||||||||||||||||
Interest credited to policyholder account balances | 930 | 1,338 | 2,297 | — | 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 on debt | 5 | 2 | 2 | — | 9 | 9 | 1,033 | 1,051 | — | 1,051 | ||||||||||||||||||||||||||||||
Other expenses | 4,196 | 2,101 | 440 | 794 | 7,531 | 2,079 | 699 | 10,309 | 24 | 10,333 | ||||||||||||||||||||||||||||||
Total expenses | 23,208 | 5,088 | 7,148 | 2,728 | 38,172 | 5,027 | 1,953 | 45,152 | 771 | 45,923 | ||||||||||||||||||||||||||||||
Provision for income tax expense (benefit) | 661 | 91 | 474 | 104 | 1,330 | 257 | (495 | ) | 1,092 | 488 | 1,580 | |||||||||||||||||||||||||||||
Operating earnings | $ | 1,310 | $ | 180 | $ | 926 | $ | 363 | $ | 2,779 | $ | 479 | $ | (439 | ) | 2,819 | ||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||||||||||||||
Total revenues | 1,919 | |||||||||||||||||||||||||||||||||||||||
Total expenses | (771 | ) | ||||||||||||||||||||||||||||||||||||||
Provision for income tax (expense) benefit | (488 | ) | ||||||||||||||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 3,479 | $ | 3,479 | ||||||||||||||||||||||||||||||||||||
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23. | Discontinued Operations |
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Total revenues | $ | 25 | $ | 134 | ||||
Total expenses | 19 | 119 | ||||||
Income before provision for income tax | 6 | 15 | ||||||
Provision for income tax | 2 | 4 | ||||||
Income from operations of discontinued operations, net of income tax | 4 | 11 | ||||||
Gain on disposal, net of income tax | 28 | 37 | ||||||
Income from discontinued operations, net of income tax | $ | 32 | $ | 48 | ||||
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Year Ended | ||||
December 31, 2008 | ||||
(In millions) | ||||
Total revenues | $ | 3,952 | ||
Total expenses | 3,796 | |||
Income before provision for income tax | 156 | |||
Provision for income tax | 53 | |||
Income from discontinued operations, net of income tax, available to MetLife, Inc.’s common shareholders | 103 | |||
Income from discontinued operations, net of income tax, attributable to noncontrolling interests | 94 | |||
Loss on disposal, net of income tax | (458 | ) | ||
Income (loss) from discontinued operations, net of income tax | $ | (261 | ) | |
24. | Subsequent Events |
F-211
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Other Than Investments in Related Parties
December 31, 2010
(In millions)
Amount at | ||||||||||||
Cost or | Estimated | Which Shown on | ||||||||||
Type of Investments | Amortized Cost (1) | Fair Value | Balance Sheet | |||||||||
Fixed maturity securities: | ||||||||||||
Bonds: | ||||||||||||
Foreign government securities | $ | 42,154 | $ | 43,400 | $ | 43,400 | ||||||
U.S. Treasury, agency and government guaranteed securities | 32,469 | 33,304 | 33,304 | |||||||||
Public utilities | 11,416 | 12,040 | 12,040 | |||||||||
State and political subdivision securities | 10,476 | 10,129 | 10,129 | |||||||||
All other corporate bonds | 138,873 | 143,851 | 143,851 | |||||||||
Total bonds | 235,388 | 242,724 | 242,724 | |||||||||
Mortgage-backed and asset-backed securities | 79,406 | 79,698 | 79,698 | |||||||||
Redeemable preferred stock | 5,208 | 4,855 | 4,855 | |||||||||
Other fixed maturity securities | 6 | 7 | 7 | |||||||||
Total fixed maturity securities | 320,008 | 327,284 | 327,284 | |||||||||
Trading and other securities | 18,263 | 18,589 | 18,589 | |||||||||
Equity securities: | ||||||||||||
Common stock: | ||||||||||||
Industrial, miscellaneous and all other | 2,036 | 2,167 | 2,167 | |||||||||
Banks, trust and insurance companies | 18 | 19 | 19 | |||||||||
Public utilities | 6 | 8 | 8 | |||||||||
Non-redeemable preferred stock | 1,565 | 1,412 | 1,412 | |||||||||
Total equity securities | 3,625 | 3,606 | 3,606 | |||||||||
Mortgage loans: | ||||||||||||
Held-for-investment | 59,055 | 59,055 | ||||||||||
Held-for-sale | 3,321 | 3,321 | ||||||||||
Mortgage loans, net | 62,376 | 62,376 | ||||||||||
Policy loans | 11,914 | 11,914 | ||||||||||
Real estate and real estate joint ventures | 7,878 | 7,878 | ||||||||||
Real estate acquired in satisfaction of debt | 152 | 152 | ||||||||||
Other limited partnership interests | 6,416 | 6,416 | ||||||||||
Short-term investments | 9,387 | 9,387 | ||||||||||
Other invested assets | 15,430 | 15,430 | ||||||||||
Total investments | $ | 455,449 | $ | 463,032 | ||||||||
(1) | The Company’s trading and other securities portfolio is mainly comprised of fixed maturity and equity securities, including mutual funds, and to a lesser extent, short-term investments and cash and cash equivalents. 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. |
F-212
Table of Contents
December 31, 2010 and 2009
(In millions, except share and per share data)
2010 | 2009 | |||||||
Condensed Balance Sheets | ||||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $2,691 and $3,173, respectively) | $ | 2,740 | $ | 3,187 | ||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $18 and $20, respectively) | 15 | 17 | ||||||
Short-term investments, principally at estimated fair value | 33 | 303 | ||||||
Other invested assets, at estimated fair value | 114 | 37 | ||||||
Total investments | 2,902 | 3,544 | ||||||
Cash and cash equivalents | 624 | 679 | ||||||
Accrued investment income | 42 | 36 | ||||||
Investment in subsidiaries | 65,832 | 42,997 | ||||||
Loans to subsidiaries | 1,275 | 1,575 | ||||||
Receivables from subsidiaries | 73 | 11 | ||||||
Other assets | 1,320 | 991 | ||||||
Total assets | $ | 72,068 | $ | 49,833 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 660 | $ | 427 | ||||
Long-term debt — unaffiliated | 16,258 | 10,458 | ||||||
Long-term debt — affiliated | 665 | 500 | ||||||
Collateral financing arrangements | 2,797 | 2,797 | ||||||
Junior subordinated debt securities | 1,748 | 1,748 | ||||||
Other liabilities | 1,315 | 782 | ||||||
Total liabilities | $ | 23,443 | $ | 16,712 | ||||
Stockholders’ Equity | ||||||||
Preferred stock, par value $0.01 per share; 200,000,000 shares authorized: | ||||||||
Preferred stock, 84,000,000 shares issued and outstanding; $2,100 aggregate liquidation preference | 1 | 1 | ||||||
Convertible preferred stock, 6,857,000 shares issued and outstanding at December 31, 2010 | — | — | ||||||
Common stock, par value $0.01 per share; 3,000,000,000 shares authorized; 989,031,704 and 822,359,818 shares issued at December 31, 2010 and 2009, respectively; 985,837,817 and 818,833,810 shares outstanding at December 31, 2010 and 2009, respectively | 10 | 8 | ||||||
Additional paid-in capital | 26,423 | 16,859 | ||||||
Retained earnings | 21,363 | 19,501 | ||||||
Treasury stock, at cost; 3,193,887 and 3,526,008 shares at December 31, 2010 and 2009, respectively | (172 | ) | (190 | ) | ||||
Accumulated other comprehensive income (loss) | 1,000 | (3,058 | ) | |||||
Total stockholders’ equity | 48,625 | 33,121 | ||||||
Total liabilities and stockholders’ equity | $ | 72,068 | $ | 49,833 | ||||
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Table of Contents
For the Years Ended December 31, 2010, 2009 and 2008
(In millions)
2010 | 2009 | 2008 | ||||||||||
Condensed Statements of Operations | ||||||||||||
Equity in earnings of subsidiaries | $ | 3,441 | $ | (1,811 | ) | $ | 3,666 | |||||
Net investment income | 144 | 153 | 167 | |||||||||
Other income | 144 | 155 | 149 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | — | (23 | ) | (12 | ) | |||||||
Other net investment gains (losses) | 31 | (85 | ) | 139 | ||||||||
Total net investment gains (losses) | 31 | (108 | ) | 127 | ||||||||
Net derivative gains (losses) | (81 | ) | 199 | (399 | ) | |||||||
Interest expense | (882 | ) | (776 | ) | (736 | ) | ||||||
Other expenses | (319 | ) | (202 | ) | (89 | ) | ||||||
Income (loss) before provision for income tax | 2,478 | (2,390 | ) | 2,885 | ||||||||
Provision for income tax benefit | (312 | ) | (144 | ) | (324 | ) | ||||||
Net income (loss) | 2,790 | (2,246 | ) | 3,209 | ||||||||
Less: Preferred stock dividends | 122 | 122 | 125 | |||||||||
Net income (loss) available to common shareholders | $ | 2,668 | $ | (2,368 | ) | $ | 3,084 | |||||
F-214
Table of Contents
For the Years Ended December 31, 2010, 2009 and 2008
(In millions)
2010 | 2009 | 2008 | ||||||||||
Condensed Statements of Cash Flows | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | 2,790 | $ | (2,246 | ) | $ | 3,209 | |||||
Earnings of subsidiaries | (3,441 | ) | 1,811 | (3,666 | ) | |||||||
Dividends from subsidiaries | 916 | 515 | 1,148 | |||||||||
Other, net | 376 | (458 | ) | 509 | ||||||||
Net cash provided by (used in) operating activities | 641 | (378 | ) | 1,200 | ||||||||
Cash flows from investing activities | ||||||||||||
Sales of fixed maturity securities | 7,422 | 1,005 | 3,970 | |||||||||
Purchases of fixed maturity securities | (6,542 | ) | (3,002 | ) | (2,983 | ) | ||||||
Sales of equity securities | 5 | — | — | |||||||||
Purchases of equity securities | — | (3 | ) | (1 | ) | |||||||
Cash received in connection with freestanding derivatives | 200 | 239 | 613 | |||||||||
Cash paid in connection with freestanding derivatives | (450 | ) | (496 | ) | (315 | ) | ||||||
Sales of businesses | — | 130 | — | |||||||||
Disposal of subsidiary | — | (19 | ) | (43 | ) | |||||||
Purchases of businesses | (7,196 | ) | — | (202 | ) | |||||||
Expense paid on behalf of subsidiaries | (72 | ) | (69 | ) | — | |||||||
Repayments of loans to subsidiaries | 300 | — | 400 | |||||||||
Investment in preferred stock of subsidiary | (50 | ) | (75 | ) | — | |||||||
Returns of capital from subsidiaries | 54 | — | — | |||||||||
Capital contributions to subsidiaries | (374 | ) | (876 | ) | (1,284 | ) | ||||||
Net change in short-term investments | 271 | 772 | (1,073 | ) | ||||||||
Other, net | (35 | ) | 186 | (241 | ) | |||||||
Net cash used in investing activities | (6,467 | ) | (2,208 | ) | (1,159 | ) | ||||||
Cash flows from financing activities | ||||||||||||
Net change in payables for collateral under securities loaned and other transactions | 233 | 84 | (471 | ) | ||||||||
Net change in short-term debt | — | (300 | ) | (10 | ) | |||||||
Long-term debt issued | 2,987 | 1,647 | — | |||||||||
Long-term debt paid | — | — | — | |||||||||
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 | (14 | ) | (30 | ) | (8 | ) | ||||||
Stock options exercised | 5 | 8 | 45 | |||||||||
Common stock issued, net of issuance costs | 3,576 | — | 290 | |||||||||
Common stock issued to settle stock forward contracts | — | 1,035 | — | |||||||||
Treasury stock acquired in connection with share repurchase agreements | — | — | (1,250 | ) | ||||||||
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 | ) | (122 | ) | (125 | ) | ||||||
Dividends on common stock | (784 | ) | (610 | ) | (592 | ) | ||||||
Other, net | (110 | ) | — | — | ||||||||
Net cash provided by financing activities | 5,771 | 2,587 | 50 | |||||||||
Change in cash and cash equivalents | (55 | ) | 1 | 91 | ||||||||
Cash and cash equivalents, beginning of year | 679 | 678 | 587 | |||||||||
Cash and cash equivalents, end of year | $ | 624 | $ | 679 | $ | 678 | ||||||
F-215
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Net cash paid (received) during the year for: | ||||||||||||
Interest | $ | 808 | $ | 704 | $ | 696 | ||||||
Income tax | $ | (474 | ) | $ | 104 | $ | (249 | ) | ||||
Non-cash transactions during the year: | ||||||||||||
Business acquisition: | ||||||||||||
Assets acquired | $ | 125,689 | $ | — | $ | — | ||||||
Liabilities assumed | (109,267 | ) | — | — | ||||||||
Redeemable and non-redeemable noncontrolling interests assumed | (130 | ) | — | — | ||||||||
Net assets acquired | 16,292 | — | — | |||||||||
Cash paid, excluding transaction costs of $88, $0 and $0, respectively | (7,196 | ) | — | — | ||||||||
Other purchase price adjustments | 98 | — | — | |||||||||
Securities issued | $ | 9,194 | $ | — | $ | — | ||||||
Disposal of subsidiary: | ||||||||||||
Investment in subsidiary disposed | $ | — | $ | — | $ | 1,716 | ||||||
Transaction costs, including cash paid of $0, $19 and $43, 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 | ||||||
Dividends from subsidiaries | $ | 874 | $ | — | $ | — | ||||||
Capital contribution to subsidiary | $ | — | $ | 105 | $ | 310 | ||||||
Allocation of interest expense to subsidiary | $ | 30 | $ | 44 | $ | 107 | ||||||
Allocation of interest income to subsidiary | $ | 46 | $ | 56 | $ | 110 | ||||||
Issuance of loan to subsidiary via transfer of fixed maturity securities | $ | — | $ | 300 | $ | — | ||||||
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1. | Basis of Presentation |
2. | Acquisition |
3. | Loans to Subsidiaries |
Interest | Maturity | December 31, | ||||||||||
Subsidiaries | Rate | Date | 2010 | 2009 | ||||||||
(In millions) | ||||||||||||
Metropolitan Life Insurance Company | 6-month LIBOR + 1.80% | December 31, 2011 | $ | 775 | $ | 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 | $ | 1,275 | $ | 1,575 | ||||||||
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4. | Long-term and Short-term Debt |
Interest Rates | December 31, | |||||||||||||||
Range | Weighted Average | Maturity | 2010 | 2009 | ||||||||||||
(In millions) | ||||||||||||||||
Senior notes — unaffiliated | 0.61%-7.72% | 5.58% | 2011-2045 | $ | 16,258 | $ | 10,458 | |||||||||
Senior notes — affiliated (1) | 5.00%-6.82% | 5.62% | 2011-2020 | 165 | — | |||||||||||
Other affiliated debt | 0.95%-1.23% | 1.04% | 2015-2016 | 500 | 500 | |||||||||||
Total | $ | 16,923 | $ | 10,958 | ||||||||||||
(1) | Consists of affiliated senior notes associated with bonds held by ALICO. |
Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(In millions) | ||||||||||||
Short-term debt | $ | — | $ | — | $ | 10 | ||||||
Long-term debt — unaffiliated | 689 | 589 | 412 | |||||||||
Long-term debt — affiliated | 15 | 16 | 28 | |||||||||
Collateral financing arrangements | 44 | 59 | 121 | |||||||||
Junior subordinated debt securities | 134 | 112 | 164 | |||||||||
Stock purchase contracts | — | — | 1 | |||||||||
Total interest expense | $ | 882 | $ | 776 | $ | 736 | ||||||
5. | Support Agreements |
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F-219
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F-220
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December 31, 2010, 2009 and 2008
(In millions)
Future Policy Benefits, | ||||||||||||||||||||
Other Policy-Related | ||||||||||||||||||||
DAC | Balances and | Policyholder | Policyholder | |||||||||||||||||
and | Policyholder Dividend | Account | Dividends | Unearned | ||||||||||||||||
Segment | VOBA | Obligation | Balances | Payable | Revenue (1) | |||||||||||||||
2010 | ||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||
Insurance Products | $ | 9,080 | $ | 79,643 | $ | 29,407 | $ | 722 | $ | 988 | ||||||||||
Retirement Products | 5,800 | 8,975 | 46,517 | — | 103 | |||||||||||||||
Corporate Benefit Funding | 75 | 39,371 | 57,773 | — | 53 | |||||||||||||||
Auto & Home | 190 | 3,207 | — | — | — | |||||||||||||||
Total U.S. Business | 15,145 | 131,196 | 133,697 | 722 | 1,144 | |||||||||||||||
International | 12,159 | 52,638 | 77,281 | 108 | 975 | |||||||||||||||
Banking, Corporate & Other | 3 | 6,221 | 42 | — | — | |||||||||||||||
Total | $ | 27,307 | $ | 190,055 | $ | 211,020 | $ | 830 | $ | 2,119 | ||||||||||
2009 | ||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||
Insurance Products | $ | 10,103 | $ | 76,948 | $ | 28,118 | $ | 761 | $ | 1,123 | ||||||||||
Retirement Products | 6,024 | 8,348 | 46,855 | — | 79 | |||||||||||||||
Corporate Benefit Funding | 74 | 37,574 | 55,522 | — | 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 | $ | 74,515 | $ | 26,510 | $ | 1,023 | $ | 1,213 | ||||||||||
Retirement Products | 5,889 | 7,924 | 44,316 | — | 54 | |||||||||||||||
Corporate Benefit Funding | 74 | 36,763 | 66,375 | — | 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 | ||||||||||
(1) | Amounts are included within the future policy benefits, other policy-related balances and policyholder dividend obligation column. |
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December 31, 2010, 2009 and 2008
(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) | ||||||||||||||||||
2010 | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products | $ | 19,448 | $ | 5,924 | $ | 18,568 | $ | 1,056 | $ | 4,714 | $ | 5,899 | ||||||||||||
Retirement Products | 3,109 | 3,147 | 3,491 | 759 | 1,372 | — | ||||||||||||||||||
Corporate Benefit Funding | 2,164 | 5,147 | 5,539 | 16 | 444 | — | ||||||||||||||||||
Auto & Home | 2,923 | 209 | 2,021 | 439 | 321 | 2,970 | ||||||||||||||||||
Total U.S. Business | 27,644 | 14,427 | 29,619 | 2,270 | 6,851 | 8,869 | ||||||||||||||||||
International | 5,776 | 1,747 | 4,865 | 530 | 1,592 | 1,183 | ||||||||||||||||||
Banking, Corporate & Other | 11 | 1,441 | (14 | ) | 1 | 3,045 | — | |||||||||||||||||
Total | $ | 33,431 | $ | 17,615 | $ | 34,470 | $ | 2,801 | $ | 11,488 | $ | 10,052 | ||||||||||||
2009 | ||||||||||||||||||||||||
U.S. Business: | ||||||||||||||||||||||||
Insurance Products | $ | 19,422 | $ | 5,540 | $ | 18,431 | $ | 753 | $ | 4,981 | $ | 5,936 | ||||||||||||
Retirement Products | 2,632 | 2,879 | 3,638 | (315 | ) | 1,367 | — | |||||||||||||||||
Corporate Benefit Funding | 2,440 | 4,715 | 5,942 | 15 | 443 | — | ||||||||||||||||||
Auto & Home | 2,902 | 180 | 1,930 | 436 | 331 | 2,898 | ||||||||||||||||||
Total U.S. Business | 27,396 | 13,314 | 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 | $ | 14,837 | $ | 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 | 2,566 | 2,579 | 2,609 | 1,933 | 1,123 | — | ||||||||||||||||||
Corporate Benefit Funding | 2,575 | 5,668 | 6,666 | 29 | 424 | — | ||||||||||||||||||
Auto & Home | 2,971 | 186 | 1,919 | 454 | 355 | 2,949 | ||||||||||||||||||
Total U.S. Business | 26,703 | 14,219 | 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 | $ | 16,289 | $ | 32,225 | $ | 3,489 | $ | 10,209 | $ | 9,389 | ||||||||||||
(1) | Includes other expenses and policyholder dividends, excluding amortization of deferred policy acquisition costs (“DAC”) and value of business acquired (“VOBA”), charged to other expenses. |
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December 31, 2010, 2009 and 2008
(In millions)
% Amount | ||||||||||||||||||||
Assumed | ||||||||||||||||||||
Gross Amount | Ceded | Assumed | Net Amount | to Net | ||||||||||||||||
2010 | ||||||||||||||||||||
Life insurance in-force | $ | 4,208,692 | $ | 743,438 | $ | 628,879 | $ | 4,094,133 | 15.4 | % | ||||||||||
Insurance premium | ||||||||||||||||||||
Life insurance | $ | 17,576 | $ | 1,472 | $ | 1,183 | $ | 17,287 | 6.8 | % | ||||||||||
Accident and health | 7,349 | 365 | 189 | 7,173 | 2.6 | % | ||||||||||||||
Property and casualty insurance | 2,998 | 69 | 5 | 2,934 | 0.2 | % | ||||||||||||||
Total insurance premium | $ | 27,923 | $ | 1,906 | $ | 1,377 | $ | 27,394 | 5.0 | % | ||||||||||
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 | % | ||||||||||
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Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
192
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193
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Table of Contents
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 (3) | in Column (a)) (4) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders (1) | 44,703,216 | $ | 38.47 | 42,285,559 | ||||||||
Equity compensation plans not approved by security holders | None | — | None | |||||||||
Total | 44,703,216 | $ | 38.47 | 42,285,559 |
(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 Metropolitan Life Insurance Company (“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 of Reorganization”) approved the Plan of Reorganization, 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 of common stock of the Holding Company (“Shares”) available for issuance under each plan. Also includes the MetLife, Inc. 2005 Stock and Incentive Compensation Plan (the “2005 Stock Plan”) and the MetLife, Inc. 2005 Non-Management Director Stock Compensation Plan (the “2005 Directors Stock Plan”), which were approved by Holding Company security holders. | |
(2) | As of December 31, 2010, awards of Stock Options remained outstanding under the 2000 Stock Plan and 2000 Directors Stock Plan, and awards of Stock Options, Performance Shares, and Restricted Stock Units (each as defined in the 2005 Stock Plan) remained outstanding under the 2005 Stock Plan. In addition, as of December 31, 2010, a number of Shares that had vested and become payable from any awards under any plan, but had been deferred, remained deferred and unpaid (“Deferred Shares”). | |
Under the award agreements that apply to the Performance Share awards made under the 2005 Stock Plan as of December 31, 2010, 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 such exceptions as the Holding Company Compensation Committee has determined, with regard to the performance period. With respect to Performance Share awards made in 2010, 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 and 2010, 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. | ||
Under the award agreements that apply to the Restricted Stock Unit awards made under the 2005 Stock Plan as of December 31, 2010, Shares equal to the number of Restricted Stock Units awarded are normally payable to eligible award recipients on the third or later anniversary of the date the Restricted Stock Units were granted. | ||
(3) | Column (b) reflects the weighted average exercise price of all Stock Options under any plan that, as of December 31, 2010, had been granted but not forfeited, expired, or exercised. Performance Shares, Restricted Stock Units, and Deferred Shares are not included in determining the weighted average in column (b) because they have no exercise price. |
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(4) | The aggregate number of Shares available for issuance under 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, 2010, 6,957,603 additional Shares recovered due to forfeiture or expiration of awards under the 2000 Stock Plan, or that, under the Plan of Reorganization, would otherwise have reduced the number of Shares available for issuance under the 2000 Stock Plan, from the time the 2005 Stock Plan became effective to December 31, 2010, were also available for issuance under the 2005 Stock Plan. The aggregate number of Shares available for issuance under the 2005 Directors Stock Plan is 2,000,000. | |
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. 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. | ||
As of December 31, 2010, all Stock-Based awards made under the 2005 Directors Stock Plan have been immediately vested. Share awards to Directors under the 2000 Directors Stock Plan were made under a separate Share award authorization under that plan, and have not reduced the number of Shares remaining available for issuance under any plan as of December 31, 2010. | ||
Under the 2005 Stock Plan, awards 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). 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). 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 |
198
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Item 15. | Exhibits and Financial Statement Schedules |
199
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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 24, 2011 | ||||
Eduardo Castro-Wright | Director | |||||
/s/ Cheryl W. Grisé Cheryl W. Grisé | Director | February 24, 2011 | ||||
/s/ R. Glenn Hubbard R. Glenn Hubbard | Director | February 24, 2011 | ||||
/s/ John M. Keane John M. Keane | Director | February 24, 2011 | ||||
/s/ Alfred F. Kelly, Jr. Alfred F. Kelly, Jr. | Director | February 24, 2011 | ||||
/s/ James M. Kilts James M. Kilts | Director | February 24, 2011 | ||||
/s/ Catherine R. Kinney Catherine R. Kinney | Director | February 24, 2011 | ||||
/s/ Hugh B. Price Hugh B. Price | Director | February 24, 2011 | ||||
/s/ David Satcher, M.D. David Satcher, M.D. | Director | February 24, 2011 |
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Signature | Title | Date | ||||
/s/ Kenton J. Sicchitano Kenton J. Sicchitano | Director | February 24, 2011 | ||||
/s/ Lulu C. Wang Lulu C. Wang | Director | February 24, 2011 | ||||
/s/ C. Robert Henrikson C. Robert Henrikson | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | February 24, 2011 | ||||
/s/ William J. Wheeler William J. Wheeler | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | February 24, 2011 | ||||
/s/ Peter M. Carlson Peter M. Carlson | Executive Vice President, Finance Operations and Chief Accounting Officer (Principal Accounting Officer) | February 24, 2011 |
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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 onForm 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 theS-1 Registration Statement). | |||
2.3 | Acquisition Agreement between MetLife, Inc. and Citigroup Inc., dated as of January 31, 2005 (Incorporated by reference to Exhibit 2.3 to MetLife, Inc.’s Annual Report onForm 10-K for the fiscal year ended December 31, 2009 (the “2009 Annual Report”)). | |||
2.4 | Stock Purchase Agreement, dated as of March 7, 2010, by and among MetLife, Inc., ALICO Holdings LLC (“ALICO Holdings”) and American International Group, Inc. (“AIG”) (Incorporated by reference to Exhibit 2.1 to MetLife, Inc. Current Report onForm 8-K dated May 7, 2010 (the “May 7, 2010Form 8-K”)). | |||
2.5 | Amendment dated October 28, 2010 among MetLife, Inc., ALICO Holdings and AIG amending the Stock Purchase Agreement, dated as of March 7, 2010 by and among MetLife, Inc., ALICO Holdings and AIG (the “Stock Purchase Agreement”) (Incorporated by reference to Exhibit 2.1 to MetLife, Inc.’s Current Report onForm 8-K dated October 27, 2010 (the “October 27, 2010Form 8-K”)). | |||
2.6 | Amendment dated October 29, 2010 among MetLife, Inc., ALICO Holdings and AIG amending the Stock Purchase Agreement (Incorporated by reference to Exhibit 2.2 to the October 27, 2010Form 8-K). | |||
3.1 | Amended and Restated Certificate of Incorporation of MetLife, Inc. (Incorporated by reference to Exhibit 3.1 to MetLife, Inc.’s Annual Report onForm 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 onForm 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 onForm 8-A filed on June 15, 2005). | |||
3.5 | Certificate of Designations of Series B Contingent Convertible Junior Participating Non-Cumulative Perpetual Preferred Stock, filed with the Secretary of State of Delaware on October 27, 2010 (Incorporated by reference to Exhibit 3.1 to MetLife, Inc.’s Current Report onForm 8-K dated October 27, 2010). |
E-1
Table of Contents
Exhibit | ||||
No. | Description | |||
3.6 | MetLife, Inc. Amended and Restated By-Laws effective January 26, 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). | |||
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 onForm 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 onForm 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 (Incorporated by reference to Exhibit 4.7 to the 2009 Annual Report). | |||
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 (Incorporated by reference to Exhibit 4.8 to the 2009 Annual Report). | |||
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 (Incorporated by reference to Exhibit 4.9 to the 2009 Annual Report). | |||
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 (Incorporated by reference to Exhibit 4.10 to the 2009 Annual Report). | |||
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 (Incorporated by reference to Exhibit 4.11 to the 2009 Annual Report). | |||
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. | |||
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. |
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Table of Contents
Exhibit | ||||
No. | Description | |||
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. | |||
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 onForm 8-K dated May 29, 2009 (the “May 2009Form 8-K”)). | |||
4.16 | Sixteenth Supplemental Indenture, dated August 6, 2010 between the 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 2014 Senior Notes (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report onForm 8-K dated August 6, 2010 (the “August 6, 2010Form 8-K”)). | |||
4.17 | Seventeenth Supplemental Indenture, dated August 6, 2010, between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A. (as successor to Bank One Trust Company, N.A.)), as trustee, relating to the 2021 Senior Notes (Incorporated by reference to Exhibit 4.2 to the August 6, 2010Form 8-K). | |||
4.18 | Eighteenth Supplemental Indenture dated August 6, 2010, 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 2041 Senior Notes (Incorporated by reference to Exhibit 4.3 to the August 6, 2010Form 8-K). | |||
4.19 | Nineteenth Supplemental Indenture dated August 6, 2010, 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 Floating Rate Senior Notes (Incorporated by reference to Exhibit 4.4 to the August 6, 2010Form 8-K). | |||
4.20 | Twentieth Supplemental Indenture dated as of November 1, 2010 between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee, supplementing the Indenture dated as of November 9, 2001, 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 (such Indenture dated November 9, 2001, the “Original Indenture”) (Incorporated by reference to Exhibit 4.5 to the October 27, 2010Form 8-K). | |||
4.21 | Twenty-First Supplemental Indenture dated as of November 1, 2010 between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A., supplementing the Original Indenture (Incorporated by reference to Exhibit 4.6 to the October 27, 2010Form 8-K). | |||
4.22 | Twenty-Second Supplemental Indenture dated as of November 1, 2010 between MetLife, Inc. and The Bank of New York Mellon Trust Company, N.A., supplementing the Original Indenture (Incorporated by reference to Exhibit 4.7 to the October 27, 2010Form 8-K). | |||
4.23 | 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). | |||
4.24 | 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). | |||
4.25 | 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). | |||
4.26 | 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). | |||
4.27 | 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). | |||
4.28 | Form of 5.50% Senior Note due June 15, 2014 (Included in Exhibit 4.7 incorporated by reference to Exhibit 4.7 to the 2009 Annual Report). | |||
4.29 | Form of 6.375% Senior Note due June 15, 2034 (Included in Exhibit 4.8 incorporated by reference to Exhibit 4.8 to the 2009 Annual Report). | |||
4.30 | Form of 5.50% Senior Note due June 15, 2014 (Included in Exhibit 4.9 incorporated by reference to Exhibit 4.9 to the 2009 Annual Report). | |||
4.31 | Form of 6.375% Senior Note due June 15, 2034 (Included in Exhibit 4.10 incorporated by reference to Exhibit 4.10 to the 2009 Annual Report). |
E-3
Table of Contents
Exhibit | ||||
No. | Description | |||
4.32 | Form of 5.375% Senior Note due December 9, 2024 (Included in Exhibit 4.11 incorporated by reference to Exhibit 4.11 to the 2009 Annual Report). | |||
4.33 | Form of 5.00% Senior Note due June 15, 2015 (Included in Exhibit 4.12). | |||
4.34 | Form of 5.70% Senior Note due June 15, 2035 (Included in Exhibit 4.13). | |||
4.35 | Form of 5.25% Senior Note due June 29, 2020 (Included in Exhibit 4.14). | |||
4.36 | 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 2009Form 8-K). | |||
4.37 | Form of 2014 Senior Note (Included in Exhibit 4.16 incorporated by reference to Exhibit 4.1 to the August 6, 2010Form 8-K). | |||
4.38 | Form of 2021 Senior Note (Included in Exhibit 4.17 incorporated by reference to Exhibit 4.2 to the August 6, 2010Form 8-K). | |||
4.39 | Form of 2041 Senior Note (Included in Exhibit 4.18 incorporated by reference to Exhibit 4.3 to the August 6, 2010Form 8-K). | |||
4.40 | Floating Rate Senior Note (Included in Exhibit 4.19 incorporated by reference to Exhibit 4.4 to the August 6, 2010Form 8-K). | |||
4.41(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”). | |||
4.41(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 4.41(a), except for the name of the trustee). | |||
4.42 | First Supplemental Indenture dated as of June 21, 2005 to the Subordinated Indenture between MetLife, Inc. and J.P. Morgan Trust Company, National Association. | |||
4.43 | 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.). | |||
4.44 | 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 onForm 8-K dated December 22, 2006 (the “December 2006Form 8-K”)). | |||
4.45 | 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 onForm 8-K dated August 8, 2008). | |||
4.46 | 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 onForm 8-K dated February 9, 2009). | |||
4.47 | 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 onForm 8-K dated July 8, 2009 (the “July 2009Form 8-K”)). | |||
4.48 | Form of Series A Debenture (Included in Exhibit 4.42). | |||
4.49 | Form of Series B Debenture (Included in Exhibit 4.43). | |||
4.50 | Form of junior subordinated debenture (Included in Exhibit 4.44 incorporated by reference to Exhibit 4.1 to the December 2006Form 8-K). | |||
4.51 | 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 onForm 8-K dated August 15, 2008). | |||
4.52 | 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). |
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Table of Contents
Exhibit | ||||
No. | Description | |||
4.53 | Form of security certificate representing MetLife, Inc.’s 10.750%Fixed-to-Floating Rate Junior Subordinated Debentures due 2069 (Included in Exhibit 4.47 incorporated by reference to Exhibit 4.1 to the July 2009Form 8-K). | |||
4.54 | 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 onForm S-3 (Nos.333-61282,333-61282-01 and333-61282-02) (the “2001S-3 Registration Statement”)). | |||
4.55 | 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 onForm S-3 (Nos.333-112073,333-112073-01 and333-112073-02) (the “2004S-3 Registration Statement”)). | |||
4.56 | 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 onForm S-3 (Nos.333-147180,333-147180-01,333-147180-02,333-147180-03,333-147180-04 and333-147180-05) (the “2007S-3 Registration Statement”)). | |||
4.57 | Certificate of Trust of MetLife Capital Trust VI (Incorporated by reference to Exhibit 4.4 to the 2007S-3 Registration Statement). | |||
4.58 | Certificate of Trust of MetLife Capital Trust VII (Incorporated by reference to Exhibit 4.5 to the 2007S-3 Registration Statement). | |||
4.59 | Certificate of Trust of MetLife Capital Trust VIII (Incorporated by reference to Exhibit 4.6 to the 2007S-3 Registration Statement). | |||
4.60 | Certificate of Trust of MetLife Capital Trust IX (Incorporated by reference to Exhibit 4.7 to the 2007S-3 Registration Statement). | |||
4.61 | Amended and Restated Declaration of Trust of MetLife Capital Trust III dated as of June 21, 2005. | |||
4.62 | Declaration of Trust of MetLife Capital Trust V (Incorporated by reference to Exhibit 4.8 to the 2007S-3 Registration Statement). | |||
4.63 | Declaration of Trust of MetLife Capital Trust VI (Incorporated by reference to Exhibit 4.9 to the 2007S-3 Registration Statement). | |||
4.64 | Declaration of Trust of MetLife Capital Trust VII (Incorporated by reference to Exhibit 4.10 to the 2007S-3 Registration Statement). | |||
4.65 | Declaration of Trust of MetLife Capital Trust VIII (Incorporated by reference to Exhibit 4.11 to the 2007S-3 Registration Statement). | |||
4.66 | Declaration of Trust of MetLife Capital Trust IX (Incorporated by reference to Exhibit 4.12 to the 2007S-3 Registration Statement). | |||
4.67 | 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 2007S-3 Registration Statement). | |||
4.68 | 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 4.67 incorporated by reference to Exhibit 4.13 to the 2007S-3 Registration Statement). | |||
4.69 | 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. | |||
4.70 | 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 2007S-3 Registration Statement). | |||
4.71 | 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 2007S-3 Registration Statement). |
E-5
Table of Contents
Exhibit | ||||
No. | Description | |||
4.72 | Removal and Appointment of Trustees of MetLife Capital Trust III (Incorporated by reference to Exhibit 4.10 to the 2004S-3 Registration Statement). | |||
4.73 | Form of Certificate for Common Stock, par value $0.01 per share (Incorporated by reference to Exhibit 4.1 to theS-1 Registration Statement). | |||
4.74 | Rights Agreement dated as of April 4, 2000 (expired on April 4, 2010) 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). | |||
4.75 | 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). | |||
4.76 | Form of Right Certificate (Included as Exhibit B of Exhibit 4.74 incorporated by reference to Exhibit 4.48 to the 2006 Annual Report). | |||
4.77 | Form of Warrant Agreement (Incorporated by reference to Exhibit 4.21 to the 2007S-3 Registration Statement)**. | |||
4.78 | Form of Deposit Agreement (Incorporated by reference to Exhibit 4.22 to the 2007S-3 Registration Statement)**. | |||
4.79 | Form of Depositary Receipt (Included in Exhibit 4.78 incorporated by reference to Exhibit 4.22 to the 2007S-3 Registration Statement)**. | |||
4.80 | Form of Purchase Contract Agreement (Incorporated by reference to Exhibit 4.24 to the 2007S-3 Registration Statement)**. | |||
4.81 | Form of Pledge Agreement (Incorporated by reference to Exhibit 4.25 to the 2007S-3 Registration Statement)**. | |||
4.82 | Form of Unit Agreement (Incorporated by reference to Exhibit 4.26 to the 2007S-3 Registration Statement)**. | |||
4.83 | 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. | |||
4.84 | Form of Normal Common Equity Unit Certificate (Included in Exhibit 4.83). | |||
4.85 | Form of Stripped Common Equity Unit Certificate (Included in Exhibit 4.83). | |||
4.86 | 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. | |||
4.87 | 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). | |||
4.88 | Form of Stock Certificate, Floating Rate Non-Cumulative Preferred Stock, Series A, of MetLife, Inc. (Incorporated by reference to Exhibit 99.6 to MetLife, Inc.’s Registration Statement on Form 8-A filed on June 10, 2005). | |||
4.89 | 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). | |||
4.90 | 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 on Form 8-A filed on June 15, 2005). | |||
4.91 | Replacement Capital Covenant, dated as of December 21, 2006 (Incorporated by reference to Exhibit 4.2 to the December 2006Form 8-K). | |||
4.92 | Replacement Capital Covenant, dated as of December 12, 2007 (Incorporated by reference to Exhibit 4.2 to MetLife, Inc.’s Current Report onForm 8-K dated December 12, 2007). | |||
4.93 | Replacement Capital Covenant, dated as of April 8, 2008 (Incorporated by reference to Exhibit 4.2 to MetLife, Inc.’s Current Report onForm 8-K dated April 8, 2008). | |||
4.94 | Replacement Capital Covenant, dated as of December 30, 2008 (Incorporated by reference to Exhibit 4.1 to MetLife, Inc.’s Current Report onForm 8-K dated December 30, 2008 (the “December 2008Form 8-K”)). |
E-6
Table of Contents
Exhibit | ||||
No. | Description | |||
4.95 | Replacement Capital Covenant, dated as of July 8, 2009 (Incorporated by reference to Exhibit 4.2 to the July 2009Form 8-K). | |||
4.96 | Investor Rights Agreement dated as of November 1, 2010 among MetLife, Inc., ALICO Holdings and AIG (Incorporated by reference to Exhibit 4.1 to theForm 8-K dated October 27, 2010). | |||
4.97 | Stock Purchase Contract Agreement dated as of November 1, 2010 among MetLife, Inc. and Deutsche Bank Trust Company Americas, as Stock Purchase Contract Agent. (Incorporated by reference to Exhibit 4.2 to theForm 8-K dated October 27, 2010). | |||
4.98 | Indemnification Collateral Account Security and Control Agreement dated as of November 1, 2010 among MetLife, Inc., ALICO Holdings, Deutsche Bank Trust Company Americas, as Securities Intermediary, Pledge Collateral Agent and Stock Purchase Contract Agent, and AIG (Incorporated by reference to Exhibit 4.3 to theForm 8-K dated October 27, 2010). | |||
4.99 | Pledge Agreement dated as of November 1, 2010 among MetLife, Inc. and Deutsche Bank Trust Company America as Collateral Agent, Custodial Agent, Securities Intermediary and Stock Purchase Contract Agent (Incorporated by reference to Exhibit 4.4 to theForm 8-K dated October 27, 2010). | |||
4.100 | Form of Transition Services Agreement between MetLife, Inc. and AIG (Included in Exhibit 2.4 incorporated by reference to Exhibit 2.1 to May 7, 2010Form 8-K). | |||
4.101 | Form of Special Asset Protection Agreement by and among MetLife, Inc., AIG and ALICO Holdings (Included in Exhibit 2.4 incorporated by reference to Exhibit 2.1 to May 7, 2010Form 8-K). | |||
4.102 | Form of Hold Harmless Agreement by and among MetLife, Inc., AIG, ALICO Holdings and National Union Fire Insurance Company of Pittsburgh, Pa. (Included in Exhibit 2.4 incorporated by reference to Exhibit 2.1 to May 7, 2010Form 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 onForm 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 onForm 8-K dated December 21, 2009 (the “December 2009Form 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 onForm 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 onForm 8-K dated September 3, 2009).* | |||
10.5 | Employment Agreement, effective as of April 30, 2010, by and between James L. Lipscomb and MetLife, Inc. (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report onForm 10-Q dated June 30, 2010)*. | |||
10.6 | MetLife, Inc. 2000 Stock Incentive Plan, as amended and restated March 28, 2000 (Incorporated by reference to Exhibit 10.7 to theS-1 Registration Statement)*. | |||
10.7 | MetLife, Inc. 2000 Stock Incentive Plan, as amended, effective February 8, 2002 (Incorporated by reference to Exhibit 10.13 to the 2007 Annual Report)*. | |||
10.8 | 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)*. | |||
10.9 | 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)*. | |||
10.10 | MetLife, Inc. 2000 Directors Stock Plan, as amended and restated March 28, 2000 (Incorporated by reference to Exhibit 10.8 to theS-1 Registration Statement)*. | |||
10.11 | MetLife, Inc. 2000 Directors Stock Plan, as amended effective February 8, 2002 (Incorporated by reference to Exhibit 10.17 to the 2007 Annual Report)*. | |||
10.12 | 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)*. | |||
10.13 | MetLife, Inc. 2005 Stock and Incentive Compensation Plan, effective April 15, 2005 (the “2005 SIC Plan”) (Incorporated by reference to Exhibit 10.12 to the 2009 Annual Report)*. | |||
10.14 | MetLife, Inc. 2005 Non-Management Director Stock Compensation Plan, effective April 15, 2005 (Incorporated by reference to Exhibit 10.13 to the 2009 Annual Report)*. |
E-7
Table of Contents
Exhibit | ||||
No. | Description | |||
10.15 | Form of Management Stock Option Agreement under the 2005 SIC Plan (Incorporated by reference to Exhibit 10.14 to the 2009 Annual Report)*. | |||
10.16 | 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 onForm 10-Q for the quarter ended March 31, 2007 (the “First Quarter 200710-Q”))*. | |||
10.17 | 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 200710-Q)*. | |||
10.18 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan*. | |||
10.19 | Amendment to Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective December 31, 2005)*. | |||
10.20 | Form of Management Restricted Stock Unit Agreement under the 2005 SIC Plan (effective December 31, 2005)*. | |||
10.21 | 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 200710-Q)*. | |||
10.22 | 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 200710-Q)*. | |||
10.23 | 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 onForm 8-K dated December 13, 2007 (the “December 13, 2007Form 8-K”))*. | |||
10.24 | 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)*. | |||
10.25 | 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)*. | |||
10.26 | 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 onForm 8-K dated January 30, 2009)*. | |||
10.27 | 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 onForm 8-K dated March 13, 2009)*. | |||
10.28 | 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)*. | |||
10.29 | Clarification of Management Performance Share Agreement under the 2005 SIC Plan*. | |||
10.30 | Amendment to Management Performance Share Agreement under the 2005 SIC Plan (effective December 31, 2005)*. | |||
10.31 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective December 31, 2005)*. | |||
10.32 | 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)*. | |||
10.33 | 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 200710-Q)*. | |||
10.34 | 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)*. | |||
10.35 | 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, 2007Form 8-K)*. | |||
10.36 | 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, 2007Form 8-K)*. | |||
10.37 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective February 21, 2010) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report onForm 8-K dated February 18, 2010)*. | |||
10.38 | Form of Management Performance Share Agreement under the 2005 SIC Plan (effective December 14, 2010) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report onForm 8-K dated December 14, 2010)*. |
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Table of Contents
Exhibit | ||||
No. | Description | |||
10.39 | MetLife Policyholder Trust Agreement (Incorporated by reference to Exhibit 10.12 to theS-1 Registration Statement). | |||
10.40 | Amendment to MetLife Policyholder Trust Agreement (Incorporated by reference to Exhibit 3.2 to the MetLife Policyholder Trust’s Annual Report onForm 10-K for the fiscal year ended December 31, 2007). | |||
10.41 | 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 onForm 8-K dated June 25, 2007). | |||
10.42 | 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 2008Form 8-K). | |||
10.43 | Three-Year Credit Agreement, dated as of October 15, 2010, among MetLife, Inc. and MetLife Funding, Inc., as borrowers, and the other parties signatory thereto (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report onForm 8-K dated October 15, 2010). | |||
10.44 | 364-Day Credit Agreement, dated as of October 15, 2010, among MetLife, Inc. and MetLife Funding, Inc., as borrowers, and the other parties signatory thereto (Incorporated by reference to Exhibit 10.2 to MetLife, Inc.’s Current Report onForm 8-K dated October 15, 2010). | |||
10.45 | 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 2008Form 8-K). | |||
10.46 | Amended and Restated Commitment Letter for $5.0 Billion Senior Credit Facility, dated March 16, 2010 among MetLife, Inc. and the various lenders named therein (Incorporated by reference to Exhibit 10.3 to MetLife, Inc.’s Quarterly Report onForm 10-Q dated March 31, 2010). | |||
10.47 | MetLife Annual Variable Incentive Plan (“AVIP”) (Incorporated by reference to Exhibit 10.41 to the 2009 Annual Report)*. | |||
10.48 | Amendment Number One to the AVIP*. | |||
10.49 | 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)*. | |||
10.50 | 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 onForm 10-Q for the quarter ended March 31, 2009)*. | |||
10.51 | Resolutions of the MetLife, Inc. Board of Directors (adopted February 18, 2010) regarding the selection of performance measures for 2010 awards under the MetLife Annual Variable Incentive Plan (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report onForm 10-Q dated March 31, 2010)*. | |||
10.52 | Resolutions of MetLife, Inc. Board of Directors (adopted December 14, 2010) regarding the selection of performance measures for 2011 under the MetLife Annual Variable Incentive Plan. | |||
10.53 | 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)*. | |||
10.54 | Amendment 1 to the Metropolitan Life Auxiliary Savings and Investment Plan (as amended and restated, effective January 1, 2008) (Incorporated by reference to Exhibit 10.46 to the 2009 Annual Report)*. | |||
10.55 | Amendment Number Two to the Metropolitan Life Auxiliary Savings and Investment Plan (Amended and Restated Effective January 1, 2008)*. | |||
10.56 | 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)*. | |||
10.57 | Amendment Number One to the MetLife Deferred Compensation Plan for Officers, dated May 4, 2005*. | |||
10.58 | Amendment Number Two to The MetLife Deferred Compensation Plan for Officers, effective December 14, 2005*. |
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Table of Contents
Exhibit | ||||
No. | Description | |||
10.59 | 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)*. | |||
10.60 | 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 onForm 10-Q for the quarter ended September 30, 2006 (the “Third Quarter 200610-Q”))*. | |||
10.61 | 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)*. | |||
10.62 | 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)*. | |||
10.63 | Amendment Number Three to The MetLife Leadership Deferred Compensation Plan, dated December 11, 2009 (effective January 1, 2010) (Incorporated by reference to Exhibit 10.54 to the 2009 Annual Report)*. | |||
10.64 | Amendment Number Four to The MetLife Leadership Deferred Compensation Plan, dated December 11, 2009 (effective December 31, 2009) (Incorporated by reference to Exhibit 10.55 to the 2009 Annual Report)*. | |||
10.65 | Amendment Number Five to The MetLife Leadership Deferred Compensation Plan, dated December 11, 2009 (effective January 1, 2011)*. | |||
10.66 | MetLife Deferred Compensation Plan for Outside Directors (effective December 9, 2003) (Incorporated by reference to Exhibit 10.48 to the 2008 Annual Report)*. | |||
10.67 | 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)*. | |||
10.68 | 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 200610-Q)*. | |||
10.69 | 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)*. | |||
10.70 | 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)*. | |||
10.71 | 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)*. | |||
10.72 | MetLife, Inc. Director Indemnity Plan (dated and effective July 22, 2008) (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Current Report onForm 8-K dated July 25, 2008)*. | |||
10.73 | 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 onForm 10-Q for the quarter ended June 30, 2006 (the “Second Quarter 200610-Q”))*. | |||
10.74 | 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)*. | |||
10.75 | 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 onForm 8-K dated December 28, 2007)*. | |||
10.76 | 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)*. | |||
10.77 | 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)*. |
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Table of Contents
Exhibit | ||||
No. | Description | |||
10.78 | 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 onForm 8-K dated March 31, 2009)*. | |||
10.79 | 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 2009Form 8-K)*. | |||
10.80 | Amendment Number Five to the MetLife Auxiliary Pension Plan (as amended and restated effective January 1, 2008) (effective January 1, 2010). | |||
10.81 | MetLife Plan for Transition Assistance for Officers, dated January 7, 2000, as amended (the “MPTA”) (Incorporated by reference to Exhibit 10.70 to the 2009 Annual Report)*. | |||
10.82 | Amendment Number Ten to the MPTA, dated January 26, 2005*. | |||
10.83 | Amendment Number Eleven to the MPTA, dated February 28, 2006*. | |||
10.84 | Amendment Number Twelve to the MPTA, dated August 7, 2006 (Incorporated by reference to Exhibit 10.1 to the Second Quarter 200610-Q)*. | |||
10.85 | Amendment Number Thirteen to the MPTA, dated August 7, 2006 (Incorporated by reference to Exhibit 10.2 to the Second Quarter 200610-Q)*. | |||
10.86 | Amendment Number Fourteen to the MPTA, dated January 26, 2007 (Incorporated by reference to Exhibit 10.63 to the 2006 Annual Report)*. | |||
10.87 | Amendment Number Fifteen to the MPTA, dated June 1, 2007 (Incorporated by reference to Exhibit 10.2 to MetLife, Inc.’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2007)*. | |||
10.88 | Amendment Number Sixteen to the MPTA, dated December 12, 2007 (Incorporated by reference to Exhibit 10.81 to the 2007 Annual Report)*. | |||
10.89 | Amendment Number Seventeen to the MPTA, dated June 3, 2008 (Incorporated by reference to Exhibit 10.1 to MetLife, Inc.’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2008)*. | |||
10.90 | Amendment Number Eighteen to the MPTA, dated August 13, 2008 (Incorporated by reference to Exhibit 10.69 to the 2008 Annual Report)*. | |||
10.91 | Amendment Number Nineteen to the MPTA, dated December 8, 2008 (Incorporated by reference to Exhibit 10.70 to the 2008 Annual Report)*. | |||
10.92 | Amendment Number Twenty to the MPTA, dated December 16, 2008 (Incorporated by reference to Exhibit 10.71 to the 2008 Annual Report)*. | |||
10.93 | Amendment Number Twenty-One to the MPTA, dated December 18, 2008 (Incorporated by reference to Exhibit 10.72 to the 2008 Annual Report)*. | |||
10.94 | Amendment Number Twenty-Two to the MPTA, dated December 21, 2009 (Incorporated by reference to Exhibit 10.41 to the 2009 Annual Report)*. | |||
10.95 | MetLife Plan for Transition Assistance for Officers, dated December 28, 2009 (as amended and restated, effective January 1, 2010) (Incorporated by reference to Exhibit 10.41 to the 2009 Annual Report)*. | |||
10.96 | Amendment Number One to the MetLife Plan for Transition Assistance for Officers (as amended and restated effective January 1, 2010)*. | |||
10.97 | 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. | |||
10.98 | 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. | |||
10.99 | 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 200610-Q). | |||
10.100 | 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 200610-Q). | |||
10.101 | International Distribution Agreement dated as of July 1, 2005 between MetLife, Inc. and Citigroup Inc. | |||
10.102 | Domestic Distribution Agreement dated as of July 1, 2005 between MetLife, Inc. and Citigroup Inc. |
E-11
Table of Contents
Exhibit | ||||
No. | Description | |||
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-12