Table of Contents
Washington, D.C. 20549
(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2009 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Connecticut | 06-0566090 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1300 Hall Boulevard, Bloomfield, Connecticut (Address of principal executive offices) | 06002 (Zip Code) | |
(860) 656-3000 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: None |
Large accelerated filer o | Accelerated filer o | |
Non-accelerated filer þ (Do not check if a smaller reporting company) | Smaller reporting company o |
Table of Contents
2
Table of Contents
• | 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. |
3
Table of Contents
Item 1. | Business |
4
Table of Contents
5
Table of Contents
6
Table of Contents
7
Table of Contents
8
Table of Contents
9
Table of Contents
• | Federal banking regulatory agencies have issued a joint policy statement on funding and liquidity risk management that applies to MetLife as a bank holding company. |
10
Table of Contents
• | The proposals under consideration in Congress include special regulatory and insolvency regimes, including even higher capital and liquidity standards, for financial institutions that are deemed to be systemically significant. These insolvency regimes could vary from the resolution regimes currently applicable to some subsidiaries of such companies and could include assessments on financial companies to provide for a systemic resolution fund. | |
• | The Obama administration, members of Congress and Federal banking regulators have suggested new or increased taxes or assessments on banks and financial firms to mitigate the costs to taxpayers of various government programs established to address the financial crisis and to offset the costs of potential future crisis. | |
• | The proposed legislation also includes new conditions on the writing and trading of certain standardized and non-standardized derivatives. |
• | 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; | |
• | 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. |
11
Table of Contents
12
Table of Contents
13
Table of Contents
14
Table of Contents
A.M. Best (1)* | Fitch (2) | Moody’s (3)** | S&P (4)*** | |||||
MetLife Insurance Company of Connecticut | A+ | AA− | Aa3 | AA− | ||||
MetLife Investors USA Insurance Company | A+ | AA− | Aa3 | AA− |
* | Under Review with negative implications | |
** | Negative outlook | |
*** | CreditWatch negative |
(1) | A.M. Best financial strength ratings range from “A++ (superior)” to “S (Suspended).” A Rating of “A+” is in the “superior” category. | |
(2) | Fitch insurer financial strength ratings range from “AAA (exceptionally strong)” to “C (ceased or interrupted payments imminent).” A “+” or “−” may be appended to ratings from “AA” to “CCC” to indicate relative position within a category. A rating of “AA” is in the “very strong” category. | |
(3) | Moody’s insurance financial strength ratings range from “Aaa (exceptional)” to “C (extremely poor).” A numeric modifier may be appended to ratings from “Aa” to “Caa” to indicate relative position within a category, with 1 being the highest and 3 being the lowest. A rating of “Aa” is in the “excellent” category. | |
(4) | S&P long-term insurer financial strength ratings range from “AAA (extremely strong)” to “R (under regulatory supervision).” A “+” or “−” may be appended to ratings from “AA” to “CCC” to indicate relative position within a category. A rating of “AA” is in the “very strong” category. |
Item 1A. | Risk Factors |
15
Table of Contents
16
Table of Contents
17
Table of Contents
• | licensing companies and agents to transact business; | |
• | calculating the value of assets to determine compliance with statutory requirements; | |
• | mandating certain insurance benefits; | |
• | regulating certain premium rates; | |
• | reviewing and approving policy forms; | |
• | regulating unfair trade and claims practices, including through the imposition of restrictions on marketing and sales practices, distribution arrangements and payment of inducements; | |
• | regulating advertising; | |
• | protecting privacy; | |
• | establishing statutory capital and reserve requirements and solvency standards; | |
• | fixing maximum interest rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; | |
• | approving changes in control of insurance companies; | |
• | restricting the payment of dividends and other transactions between affiliates; and | |
• | regulating the types, amounts and valuation of investments. |
18
Table of Contents
• | The Obama Administration and Congress have made various proposals that would change the capital and liquidity requirements, credit exposure concentrations and similar prudential matters for bank holding companies, banks and other financial firms. | |
• | Federal banking regulatory agencies have issued a joint policy statement on funding and liquidity risk management that applies to MetLife as a bank holding company. | |
• | The proposals under consideration in Congress include special regulatory and insolvency regimes, including even higher capital and liquidity standards, for financial institutions that are deemed to be systemically significant. These insolvency regimes could vary from the resolution regimes currently applicable to some subsidiaries of such companies and could include assessments on financial companies to provide for a systemic resolution fund. | |
• | The Obama Administration, members of Congress and Federal banking regulators have suggested new or increased taxes or assessments on banks and financial firms to mitigate the costs to taxpayers of various government programs established to address the financial crisis and to offset the costs of potential future crises. See “— Actions of the U.S. Government, Federal Reserve Bank of New York and Other Governmental and Regulatory Bodies for the Purpose of Stabilizing and Revitalizing the Financial Markets and Protecting Investors and Consumers May Not Achieve the Intended Effect or Could Adversely Affect the Competitive Position of MetLife, Inc. and its Subsidiaries, Including Us.” | |
• | The proposed legislation also includes new conditions on the writing and trading of certain standardized and non-standardized derivatives. |
19
Table of Contents
20
Table of Contents
21
Table of Contents
22
Table of Contents
23
Table of Contents
24
Table of Contents
25
Table of Contents
26
Table of Contents
• | 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. |
27
Table of Contents
28
Table of Contents
29
Table of Contents
30
Table of Contents
31
Table of Contents
• | Fixed maturity and equity securities are classified asavailable-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses are recorded as a separate component of other comprehensive income (loss), net of policyholder related amounts and deferred income taxes. | |
• | Trading securities are recorded at estimated fair value with subsequent changes in estimated fair value recognized in net investment income. | |
• | Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition. Short-term investments that meet the definition of a security are stated at estimated fair value, and short-term investments that do not meet the definition of a security are stated at amortized cost, which approximates estimated fair value. | |
• | The carrying value of mortgage loans is stated at original cost net of repayments, amortization of premiums, accretion of discounts and valuation allowances. | |
• | Policy loans are stated at unpaid principal balances. | |
• | Real estateheld-for-investment, including related improvements, is stated at cost, less accumulated depreciation. | |
• | Real estate joint ventures and other limited partnership interests in which we have more than a minor equity interest or more than a minor influence over the joint ventures or partnership’s operations, but where we do not have a controlling interest and are not the primary beneficiary, are carried using the equity method of accounting. We use the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which we have a minor equity investment and virtually no influence over the joint ventures or the partnership’s operations. | |
• | Other invested assets consist principally of freestanding derivatives with positive estimated fair values. Freestanding derivatives are carried at estimated fair value with changes in estimated fair value reflected in income for both non-qualifying derivatives and derivatives in fair value hedging relationships. Changes in estimated fair value of derivatives in cash flow hedging relationships are reflected as a separate component of other comprehensive income (loss). |
32
Table of Contents
Level 1 | Unadjusted quoted prices in active markets for identical assets or liabilities. We define active markets based on average trading volume for equity securities. The size of the bid/ask spread is used as an indicator of market activity for fixed maturity securities. | |
Level 2 | Quoted prices in markets that are not active or inputs that are observable either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities other than quoted prices in Level 1; quoted prices in markets that are not active; or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |
Level 3 | Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability. Level 3 assets and liabilities include financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
33
Table of Contents
34
Table of Contents
35
Table of Contents
36
Table of Contents
37
Table of Contents
38
Table of Contents
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | Reserved |
39
Table of Contents
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Item 6. | Selected Financial Data |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
40
Table of Contents
(i) | the estimated fair value of investments in the absence of quoted market values; | |
(ii) | investment impairments; |
(iii) | the recognition of income on certain investment entities and the application of the consolidation rules to certain investments; |
(iv) | the estimated fair value of and accounting for freestanding derivatives and the existence and estimated fair value of embedded derivatives requiring bifurcation; | |
(v) | the capitalization and amortization of DAC and the establishment and amortization of VOBA; | |
(vi) | the measurement of goodwill and related impairment, if any; | |
(vii) | the liability for future policyholder benefits and the accounting for reinsurance contracts; |
41
Table of Contents
(viii) | accounting for income taxes and the valuation of deferred tax assets; | |
(ix) | 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 instruments for which the determination of estimated fair value requires significant management judgment or estimation. |
42
Table of Contents
43
Table of Contents
(i) | the length of time and the extent to which the estimated fair value has been below cost or amortized cost; | |
(ii) | the potential for impairments of securities when the issuer is experiencing significant financial difficulties; | |
(iii) | the potential for impairments in an entire industry sector orsub-sector; | |
(iv) | the potential for impairments in certain economically depressed geographic locations; | |
(v) | the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; | |
(vi) | with respect to fixed maturity securities, whether the Company has the intent to sell or will more likely than not be required to sell a particular security before recovery of the decline in estimated fair value below cost or amortized cost; | |
(vii) | with respect to equity securities, whether the Company’s ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost; | |
(viii) | unfavorable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and | |
(ix) | other subjective factors, including concentrations and information obtained from regulators and rating agencies. |
44
Table of Contents
45
Table of Contents
46
Table of Contents
47
Table of Contents
48
Table of Contents
(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. |
49
Table of Contents
50
Table of Contents
Years Ended December 31, | ||||||||||||||||
2009 | 2008 | Change | % Change | |||||||||||||
(In millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Premiums | $ | 1,312 | $ | 634 | $ | 678 | 106.9 | % | ||||||||
Universal life and investment-type product policy fees | 1,380 | 1,378 | 2 | 0.1 | % | |||||||||||
Net investment income | 2,335 | 2,494 | (159 | ) | (6.4) | % | ||||||||||
Other revenues | 598 | 230 | 368 | 160.0 | % | |||||||||||
Net investment gains (losses) | (1,866 | ) | 549 | (2,415 | ) | (439.9) | % | |||||||||
Total revenues | 3,759 | 5,285 | (1,526 | ) | (28.9) | % | ||||||||||
Expenses | ||||||||||||||||
Policyholder benefits and claims | 2,065 | 1,446 | 619 | 42.8 | % | |||||||||||
Interest credited to policyholder account balances | 1,301 | 1,130 | 171 | 15.1 | % | |||||||||||
Capitalization of DAC | (851 | ) | (835 | ) | (16 | ) | (1.9) | % | ||||||||
Amortization of DAC and VOBA | 294 | 1,163 | (869 | ) | (74.7) | % | ||||||||||
Interest expense | 71 | 72 | (1 | ) | (1.4) | % | ||||||||||
Other expenses | 1,693 | 1,533 | 160 | 10.4 | % | |||||||||||
Total expenses | 4,573 | 4,509 | 64 | 1.4 | % | |||||||||||
Income (loss) before provision for income tax | (814 | ) | 776 | (1,590 | ) | (204.9) | % | |||||||||
Provision for income tax expense (benefit) | (368 | ) | 203 | (571 | ) | (281.3) | % | |||||||||
Net income (loss) | $ | (446 | ) | $ | 573 | $ | (1,019 | ) | (177.8) | % | ||||||
51
Table of Contents
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Net income (loss) | $ | (446 | ) | $ | 573 | |||
Less: Net investment gains (losses) | (1,866 | ) | 549 | |||||
Less: Other adjustments | 239 | (198 | ) | |||||
Less: Provision for income tax (expense) benefit | 571 | (122 | ) | |||||
Operating earnings | $ | 610 | $ | 344 | ||||
52
Table of Contents
Years Ended December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Total revenues | $ | 3,759 | $ | 5,285 | ||||
Less: Net investment gains (losses) | (1,866 | ) | 549 | |||||
Less: Adjustments related to net investment gains (losses) | (20 | ) | 17 | |||||
Less: Other adjustments to revenues | (31 | ) | (24 | ) | ||||
Total operating revenues | $ | 5,676 | $ | 4,743 | ||||
Total expenses | $ | 4,573 | $ | 4,509 | ||||
Less: Adjustments related to net investment gains (losses) | (311 | ) | 225 | |||||
Less: Other adjustments to expenses | 21 | (34 | ) | |||||
Total operating expenses | $ | 4,863 | $ | 4,318 | ||||
53
Table of Contents
54
Table of Contents
55
Table of Contents
56
Table of Contents
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
57
Table of Contents
• | implementing a MetLife, Inc. Board of Directors approved corporate risk framework, which outlines the Company’s approach for managing risk on an enterprise-wide basis; | |
• | developing policies and procedures for managing, measuring, monitoring and controlling those risks identified in the corporate risk framework; | |
• | establishing appropriate corporate risk tolerance levels; | |
• | deploying capital on an economic capital basis; and | |
• | reporting on a periodic basis to MetLife’s Finance and MetLife’s Risk Policy Committee of MetLife’s Board of Directors and various financial and non-financial senior management committees. |
58
Table of Contents
59
Table of Contents
• | MetLife’s Treasury Department is responsible for managing the exposure to investments in foreign subsidiaries. Limits to exposures are established and monitored by MetLife’s Treasury Department and managed by MetLife’s Investment Department. | |
• | MetLife’s 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 MetLife’s Board of Directors and are reported to MetLife’s 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, currency and equity variance swaps, interest rate and currency forwards, and interest rate option contracts. | |
• | 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 long-term care. Hedges include zero coupon interest rate swaps and swaptions. |
60
Table of Contents
• | Foreign Currency Risk — The Company uses currency swaps and forwards to hedge foreign currency risk. These hedges primarily swap foreign currency denominated bonds 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; | |
• | 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, 2009 | ||||
(In millions) | ||||
Non-trading: | ||||
Interest rate risk | $ | 866 | ||
Foreign currency exchange rate risk | $ | 42 | ||
Equity price risk | $ | 123 | ||
Trading: | ||||
Interest rate risk | $ | 1 |
61
Table of Contents
December 31, 2009 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in the Yield | ||||||||||
Amount | Value (3) | Curve | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 41,275 | $ | (773 | ) | |||||||
Equity securities | 459 | — | ||||||||||
Trading securities | 938 | (1 | ) | |||||||||
Mortgage loans, net | 4,345 | (22 | ) | |||||||||
Policy loans | 1,243 | (9 | ) | |||||||||
Real estate joint ventures (1) | 62 | — | ||||||||||
Other limited partnership interests (1) | 151 | — | ||||||||||
Short-term investments | 1,775 | — | ||||||||||
Cash and cash equivalents | 2,574 | — | ||||||||||
Accrued investment income | 516 | — | ||||||||||
Premiums and other receivables | 4,032 | (79 | ) | |||||||||
Net embedded derivatives within asset host contracts (2) | 724 | (245 | ) | |||||||||
Mortgage loan commitments | $ | 131 | (5 | ) | — | |||||||
Commitments to fund bank credit facilities and private corporate bond investments | $ | 445 | (29 | ) | — | |||||||
Total Assets | $ | (1,129 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 24,233 | $ | 209 | ||||||||
Long-term debt — affiliated | 1,003 | 36 | ||||||||||
Payables for collateral under securities loaned and other transactions | 7,169 | — | ||||||||||
Other | 188 | — | ||||||||||
Net embedded derivatives within liability host contracts (2) | 279 | 83 | ||||||||||
Total Liabilities | $ | 328 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 5,261 | $ | 355 | $ | (61 | ) | |||||
Interest rate floors | $ | 7,986 | 44 | (7 | ) | |||||||
Interest rate caps | $ | 4,003 | 15 | 6 | ||||||||
Interest rate futures | $ | 835 | 1 | 6 | ||||||||
Foreign currency swaps | $ | 2,678 | 596 | — | ||||||||
Foreign currency forwards | $ | 79 | 3 | (6 | ) | |||||||
Credit default swaps | $ | 966 | (19 | ) | — | |||||||
Credit forwards | $ | 90 | (3 | ) | — | |||||||
Equity futures | $ | 81 | 1 | — | ||||||||
Equity options | $ | 775 | 112 | (4 | ) | |||||||
Variance swaps | $ | 1,081 | 18 | — | ||||||||
Total Derivative Instruments | $ | (66 | ) | |||||||||
Net Change | $ | (867 | ) | |||||||||
(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. |
62
Table of Contents
December 31, 2009 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Decrease | |||||||||||
Notional | Fair | in the Foreign | ||||||||||
Amount | Value (1) | Exchange Rate | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Fixed maturity securities | $ | 41,275 | $ | (79 | ) | |||||||
Total Assets | $ | (79 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 24,233 | $ | 195 | ||||||||
Total Liabilities | $ | 195 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 5,261 | $ | 355 | $ | 1 | ||||||
Interest rate floors | $ | 7,986 | 44 | — | ||||||||
Interest rate caps | $ | 4,003 | 15 | — | ||||||||
Interest rate futures | $ | 835 | 1 | — | ||||||||
Foreign currency swaps | $ | 2,678 | 596 | (167 | ) | |||||||
Foreign currency forwards | $ | 79 | 3 | 8 | ||||||||
Credit default swaps | $ | 966 | (19 | ) | — | |||||||
Credit forwards | $ | 90 | (3 | ) | — | |||||||
Equity futures | $ | 81 | 1 | — | ||||||||
Equity options | $ | 775 | 112 | — | ||||||||
Variance swaps | $ | 1,081 | 18 | — | ||||||||
Total Derivative Instruments | $ | (158 | ) | |||||||||
Net Change | $ | (42 | ) | |||||||||
(1) | Estimated fair value presented in the table above represents the fair value of all financial instruments within this financial statement caption not necessarily those solely subject to foreign exchange risk. |
63
Table of Contents
December 31, 2009 | ||||||||||||
Assuming a | ||||||||||||
Estimated | 10% Increase | |||||||||||
Notional | Fair | in Equity | ||||||||||
Amount | Value (1) | Prices | ||||||||||
(In millions) | ||||||||||||
Assets: | ||||||||||||
Equity securities | $ | 459 | $ | 20 | ||||||||
Net embedded derivatives within asset host contracts (2) | 724 | (173 | ) | |||||||||
Total Assets | $ | (153 | ) | |||||||||
Liabilities: | ||||||||||||
Policyholder account balances | $ | 24,233 | $ | — | ||||||||
Net embedded derivatives within asset host contracts (2) | 279 | 55 | ||||||||||
Total Liabilities | $ | 55 | ||||||||||
Derivative Instruments: | ||||||||||||
Interest rate swaps | $ | 5,261 | $ | 355 | $ | — | ||||||
Interest rate floors | $ | 7,986 | 44 | — | ||||||||
Interest rate caps | $ | 4,003 | 15 | — | ||||||||
Interest rate futures | $ | 835 | 1 | — | ||||||||
Foreign currency swaps | $ | 2,678 | 596 | — | ||||||||
Foreign currency forwards | $ | 79 | 3 | — | ||||||||
Credit default swaps | $ | 966 | (19 | ) | — | |||||||
Credit forwards | $ | 90 | (3 | ) | — | |||||||
Equity futures | $ | 81 | 1 | (5 | ) | |||||||
Equity options | $ | 775 | 112 | (21 | ) | |||||||
Variance swaps | $ | 1,081 | 18 | 1 | ||||||||
Total Derivative Instruments | $ | (25 | ) | |||||||||
Net Change | $ | (123 | ) | |||||||||
(1) | Estimated fair value presented in the table above represents the 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. |
64
Item 8. | Financial Statements and Supplementary Data |
Page | ||||
F-1 | ||||
Financial Statements at December 31, 2009 and 2008 and for the Years Ended December 31, 2009, 2008 and 2007: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Financial Statement Schedules at December 31, 2009 and 2008 and for the Years Ended December 31, 2009, 2008 and 2007: | ||||
F-115 | ||||
F-116 | ||||
F-120 | ||||
F-122 |
65
Table of Contents
F-1
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated Balance Sheets
December 31, 2009 and 2008
(In millions, except share and per share data)
2009 | 2008 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $42,435 and $39,601, respectively) | $ | 41,275 | $ | 34,846 | ||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $494 and $673, respectively) | 459 | 474 | ||||||
Trading securities, at estimated fair value (cost: $868 and $251, respectively) | 938 | 232 | ||||||
Mortgage loans (net of valuation allowances of $77 and $46, respectively) | 4,748 | 4,447 | ||||||
Policy loans | 1,189 | 1,192 | ||||||
Real estate and real estate joint ventures | 445 | 608 | ||||||
Other limited partnership interests | 1,236 | 1,249 | ||||||
Short-term investments | 1,775 | 3,127 | ||||||
Other invested assets | 1,498 | 2,297 | ||||||
Total investments | 53,563 | 48,472 | ||||||
Cash and cash equivalents | 2,574 | 5,656 | ||||||
Accrued investment income | 516 | 487 | ||||||
Premiums and other receivables | 13,444 | 12,463 | ||||||
Deferred policy acquisition costs and value of business acquired | 5,244 | 5,440 | ||||||
Current income tax recoverable | — | 66 | ||||||
Deferred income tax assets | 1,147 | 1,843 | ||||||
Goodwill | 953 | 953 | ||||||
Other assets | 799 | 752 | ||||||
Separate account assets | 49,449 | 35,892 | ||||||
Total assets | $ | 127,689 | $ | 112,024 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Future policy benefits | $ | 21,621 | $ | 20,213 | ||||
Policyholder account balances | 37,442 | 37,175 | ||||||
Other policyholder funds | 2,297 | 2,085 | ||||||
Payables for collateral under securities loaned and other transactions | 7,169 | 7,871 | ||||||
Short-term debt | — | 300 | ||||||
Long-term debt — affiliated | 950 | 950 | ||||||
Current income tax payable | 23 | — | ||||||
Other liabilities | 2,177 | 2,604 | ||||||
Separate account liabilities | 49,449 | 35,892 | ||||||
Total liabilities | 121,128 | 107,090 | ||||||
Contingencies, Commitments and Guarantees (Note 11) | ||||||||
Stockholders’ Equity | ||||||||
Common stock, par value $2.50 per share; 40,000,000 shares authorized; 34,595,317 shares issued and outstanding at December 31, 2009 and 2008 | 86 | 86 | ||||||
Additional paid-in capital | 6,719 | 6,719 | ||||||
Retained earnings | 541 | 965 | ||||||
Accumulated other comprehensive loss | (785 | ) | (2,836 | ) | ||||
Total stockholders’ equity | 6,561 | 4,934 | ||||||
Total liabilities and stockholders’ equity | $ | 127,689 | $ | 112,024 | ||||
F-2
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated Statements of Operations
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Revenues | ||||||||||||
Premiums | $ | 1,312 | $ | 634 | $ | 353 | ||||||
Universal life and investment-type product policy fees | 1,380 | 1,378 | 1,411 | |||||||||
Net investment income | 2,335 | 2,494 | 2,893 | |||||||||
Other revenues | 598 | 230 | 251 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (552 | ) | (401 | ) | (28 | ) | ||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive loss | 165 | — | — | |||||||||
Other net investment gains (losses), net | (1,479 | ) | 950 | (114 | ) | |||||||
Total net investment gains (losses) | (1,866 | ) | 549 | (142 | ) | |||||||
Total revenues | 3,759 | 5,285 | 4,766 | |||||||||
Expenses | ||||||||||||
Policyholder benefits and claims | 2,065 | 1,446 | 978 | |||||||||
Interest credited to policyholder account balances | 1,301 | 1,130 | 1,299 | |||||||||
Other expenses | 1,207 | 1,933 | 1,446 | |||||||||
Total expenses | 4,573 | 4,509 | 3,723 | |||||||||
Income (loss) from continuing operations before provision for income tax | (814 | ) | 776 | 1,043 | ||||||||
Provision for income tax expense (benefit) | (368 | ) | 203 | 303 | ||||||||
Income (loss) from continuing operations, net of income tax | (446 | ) | 573 | 740 | ||||||||
Income (loss) from discontinued operations, net of income tax | — | — | 4 | |||||||||
Net income (loss) | $ | (446 | ) | $ | 573 | $ | 744 | |||||
F-3
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated Statements of Stockholders’ Equity
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||||
Net | Foreign | |||||||||||||||||||||||||||
Additional | Unrealized | Other-Than- | Currency | |||||||||||||||||||||||||
Common | Paid-in | Retained | Investment | Temporary | Translation | Total | ||||||||||||||||||||||
Stock | Capital | Earnings | Gains (Losses) | Impairments | Adjustments | Equity | ||||||||||||||||||||||
Balance at December 31, 2006 | $ | 86 | $ | 7,123 | $ | 520 | $ | (314 | ) | $ | — | $ | — | $ | 7,415 | |||||||||||||
Cumulative effect of change in accounting principle, net of income tax (Note 1) | (86 | ) | (86 | ) | ||||||||||||||||||||||||
Balance at January 1, 2007 | 86 | 7,123 | 434 | (314 | ) | — | — | 7,329 | ||||||||||||||||||||
Dividend paid to MetLife | (404 | ) | (286 | ) | (690 | ) | ||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||
Net income | 744 | 744 | ||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | (2 | ) | (2 | ) | ||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | (45 | ) | (45 | ) | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | 12 | 12 | ||||||||||||||||||||||||||
Other comprehensive loss | (35 | ) | ||||||||||||||||||||||||||
Comprehensive income | 709 | |||||||||||||||||||||||||||
Balance at December 31, 2007 | 86 | 6,719 | 892 | (361 | ) | — | 12 | 7,348 | ||||||||||||||||||||
Dividend paid to MetLife | (500 | ) | (500 | ) | ||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||
Net income | 573 | 573 | ||||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | 21 | 21 | ||||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | (2,342 | ) | (2,342 | ) | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | (166 | ) | (166 | ) | ||||||||||||||||||||||||
Other comprehensive loss | (2,487 | ) | ||||||||||||||||||||||||||
Comprehensive loss | (1,914 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2008 | 86 | 6,719 | 965 | (2,682 | ) | — | (154 | ) | 4,934 | |||||||||||||||||||
Cumulative effect of changes in accounting principle, net of income tax (Note 1) | 22 | (22 | ) | — | ||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||
Net loss | (446 | ) | (446 | ) | ||||||||||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||
Unrealized gains (losses) on derivative instruments, net of income tax | (14 | ) | (14 | ) | ||||||||||||||||||||||||
Unrealized investment gains (losses), net of related offsets and income tax | 2,103 | (61 | ) | 2,042 | ||||||||||||||||||||||||
Foreign currency translation adjustments, net of income tax | 45 | 45 | ||||||||||||||||||||||||||
Other comprehensive income | 2,073 | |||||||||||||||||||||||||||
Comprehensive income | 1,627 | |||||||||||||||||||||||||||
Balance at December 31, 2009 | $ | 86 | $ | 6,719 | $ | 541 | $ | (593 | ) | $ | (83 | ) | $ | (109 | ) | $ | 6,561 | |||||||||||
F-4
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | (446 | ) | $ | 573 | $ | 744 | |||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||||||
Depreciation and amortization expenses | 29 | 29 | 26 | |||||||||
Amortization of premiums and accretion of discounts associated with investments, net | (198 | ) | (18 | ) | 11 | |||||||
(Gains) losses from sales of investments and businesses, net | 1,866 | (546 | ) | 145 | ||||||||
Gain from recapture of ceded reinsurance | — | — | (22 | ) | ||||||||
Undistributed equity earnings of real estate joint ventures and other limited partnership interests | 98 | 97 | (121 | ) | ||||||||
Interest credited to policyholder account balances | 1,301 | 1,130 | 1,299 | |||||||||
Universal life and investment-type product policy fees | (1,380 | ) | (1,378 | ) | (1,411 | ) | ||||||
Change in accrued investment income | (29 | ) | 150 | (35 | ) | |||||||
Change in premiums and other receivables | (2,307 | ) | (2,561 | ) | 360 | |||||||
Change in deferred policy acquisition costs, net | (559 | ) | 330 | 61 | ||||||||
Change in insurance-related liabilities | 1,648 | 997 | 71 | |||||||||
Change in trading securities | (597 | ) | (218 | ) | — | |||||||
Change in income tax recoverable (payable) | (303 | ) | 262 | 308 | ||||||||
Change in other assets | 449 | 598 | 675 | |||||||||
Change in other liabilities | (166 | ) | 1,176 | 234 | ||||||||
Other, net | 32 | 38 | — | |||||||||
Net cash (used in) provided by operating activities | (562 | ) | 659 | 2,345 | ||||||||
Cash flows from investing activities | ||||||||||||
Sales, maturities and repayments of: | ||||||||||||
Fixed maturity securities | 13,076 | 20,183 | 21,546 | |||||||||
Equity securities | 141 | 126 | 146 | |||||||||
Mortgage loans | 444 | 522 | 1,208 | |||||||||
Real estate and real estate joint ventures | 4 | 15 | 155 | |||||||||
Other limited partnership interests | 142 | 203 | 465 | |||||||||
Purchases of: | ||||||||||||
Fixed maturity securities | (16,192 | ) | (14,027 | ) | (19,365 | ) | ||||||
Equity securities | (74 | ) | (65 | ) | (357 | ) | ||||||
Mortgage loans | (783 | ) | (621 | ) | (2,030 | ) | ||||||
Real estate and real estate joint ventures | (31 | ) | (102 | ) | (458 | ) | ||||||
Other limited partnership interests | (203 | ) | (458 | ) | (515 | ) | ||||||
Net change in short-term investments | 1,445 | (1,887 | ) | (558 | ) | |||||||
Net change in other invested assets | (194 | ) | 445 | (175 | ) | |||||||
Net change in policy loans | 3 | (279 | ) | 5 | ||||||||
Other, net | (2 | ) | — | 16 | ||||||||
Net cash (used in) provided by investing activities | (2,224 | ) | 4,055 | 83 | ||||||||
Cash flows from financing activities | ||||||||||||
Policyholder account balances: | ||||||||||||
Deposits | 20,783 | 7,146 | 11,395 | |||||||||
Withdrawals | (20,067 | ) | (5,307 | ) | (13,563 | ) | ||||||
Net change in payables for collateral under securities loaned and other transactions | (702 | ) | (2,600 | ) | 1,316 | |||||||
Net change in short-term debt | (300 | ) | 300 | — | ||||||||
Long-term debt issued — affiliated | — | 750 | 200 | |||||||||
Long-term debt repaid — affiliated | — | (435 | ) | — | ||||||||
Debt issuance costs | — | (8 | ) | — | ||||||||
Financing element on certain derivative instruments | (53 | ) | (46 | ) | 33 | |||||||
Dividends on common stock | — | (500 | ) | (690 | ) | |||||||
Net cash used in financing activities | (339 | ) | (700 | ) | (1,309 | ) | ||||||
Effect of change in foreign currency exchange rates on cash balances | 43 | (132 | ) | 6 | ||||||||
Change in cash and cash equivalents | (3,082 | ) | 3,882 | 1,125 | ||||||||
Cash and cash equivalents, beginning of year | 5,656 | 1,774 | 649 | |||||||||
Cash and cash equivalents, end of year | $ | 2,574 | $ | 5,656 | $ | 1,774 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Net cash paid (received) during the year for: | ||||||||||||
Interest | $ | 73 | $ | 64 | $ | 33 | ||||||
Income tax | $ | (63 | ) | $ | (48 | ) | $ | (6 | ) | |||
Non-cash transactions during the year: | ||||||||||||
Contribution of equity securities to MetLife Foundation | $ | — | $ | — | $ | 12 | ||||||
F-5
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements
1. | Business, Basis of Presentation and Summary of Significant Accounting Policies |
F-6
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
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. |
F-7
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-8
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
(i) | The Company calculates the recovery value of fixed maturity securities by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the effective interest rate of the fixed maturity security prior to impairment. | |
(ii) | When determining the collectability and the period over which the fixed maturity security is expected to recover, the Company applies the same considerations utilized in its overall impairment evaluation process which incorporates information regarding the specific security, fundamentals of the industry and geographic area in which the security issuer operates, and overall macroeconomic conditions. Projected future cash flows are estimated using assumptions derived from management’s best estimates of likely scenario-based outcomes after giving consideration to a variety of variables that include, but are not limited to: general payment terms of the security; the likelihood that the issuer can service the scheduled interest and principal payments; the quality and amount of any credit enhancements; the security’s position within the capital structure of the issuer; possible |
F-9
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
corporate restructurings or asset sales by the issuer; and changes to the rating of the security or the issuer by rating agencies. |
(iii) | Additional considerations are made when assessing the unique features that apply to certain structured securities such as residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”) and asset-backed securities (“ABS”). These additional factors for structured securities include, but are not limited to: the quality of underlying collateral; expected prepayment speeds; current and forecasted loss severity; consideration of the payment terms of the underlying assets backing a particular security; and the payment priority within the tranche structure of the security. | |
(iv) | When determining the amount of the credit loss for U.S. and foreign corporate securities, foreign government securities and state and political subdivision securities, management considers the estimated fair value as the recovery value when available information does not indicate that another value is more appropriate. When information is identified that indicates a recovery value other than estimated fair value, management considers in the determination of recovery value the same considerations utilized in its overall impairment evaluation process which incorporates available information and management’s best 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. |
F-10
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-11
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-12
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-13
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-14
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-15
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-16
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-17
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-18
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-19
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
• | Guaranteed minimum death benefit (“GMDB”) liabilities are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the GMDB liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility are consistent with the historical experience of the Standard & Poor’s (“S&P”) 500 Index. The benefit assumptions used in calculating the liabilities are based on the average benefits payable over a range of scenarios. | |
• | Guaranteed minimum income benefit (“GMIB”) liabilities are determined by estimating the expected value of the income benefits in excess of the projected account balance at any future date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used for estimating the GMIB liabilities are consistent with those used for estimating the GMDB liabilities. In addition, the calculation of guaranteed annuitization benefit liabilities incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder. Certain GMIBs have settlement features that result in a portion of that guarantee being accounted for as an embedded derivative and are recorded in policyholder account balances as described below. |
• | Guaranteed minimum withdrawal benefits (“GMWB”) guarantee the contractholder a return of their purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that the contractholder’s cumulative withdrawals in a contract year do not exceed a certain limit. The initial guaranteed withdrawal amount is equal to the initial benefit base as defined in the contract (typically, the |
F-20
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
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. |
F-21
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-22
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
(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. |
F-23
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-24
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-25
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
• | 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 new guidance on the recognition of interest income and impairment on purchased beneficial interests and beneficial interests that continue to be held by a transferor in securitized financial assets. This new guidance more closely aligns the determination of whether an OTTI has occurred for a beneficial interest in a securitized financial asset with the original guidance for fixed maturity securities classified asavailable-for-sale orheld-to-maturity. | |
• | Effective January 1, 2008, the Company adopted new guidance relating to application of the shortcut method of accounting for derivative instruments and hedging activities. This guidance permits interest rate swaps to |
F-26
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
have a non-zero fair value at inception when applying the shortcut method of assessing hedge effectiveness as long as the difference between the transaction price (zero) and the fair value (exit price), as defined by current accounting guidance on fair value measurements, is solely attributable to a bid-ask spread. In addition, entities are not precluded from applying the shortcut method of assessing hedge effectiveness in a hedging relationship of interest rate risk involving an interest bearing asset or liability in situations where the hedged item is not recognized for accounting purposes until settlement date as long as the period between trade date and settlement date of the hedged item is consistent with generally established conventions in the marketplace. |
• | Effective January 1, 2008, the Company adopted new guidance that permits a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset. This new guidance also includes certain terminology modifications. Upon adoption of this guidance, the Company did not change its accounting policy of not offsetting fair value amounts recognized for derivative instruments under master netting arrangements. |
• | All business combinations (whether full, partial or “step” acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions. | |
• | Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date. | |
• | The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date. | |
• | Assets acquired and liabilities assumed in a business combination that arise from contingencies are recognized at fair value if the acquisition-date fair value can be reasonably determined. If the fair value is not estimable, an asset or liability is recorded if existence or incurrence at the acquisition date is probable and its amount is reasonably estimable. | |
• | Changes in deferred income tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. | |
• | Noncontrolling interests (formerly known as “minority interests”) are valued at fair value at the acquisition date and are presented as equity rather than liabilities. | |
• | Net income (loss) includes amounts attributable to noncontrolling interests. | |
• | When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized. | |
• | 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. |
F-27
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
• | In February 2007, the FASB issued guidance related to the fair value option for financial assets and financial liabilities. This guidance permits entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to recognize related unrealized gains and losses in earnings. The fair value option is applied on aninstrument-by-instrument basis upon adoption of the standard, upon the acquisition of an eligible financial asset, financial liability or firm commitment or when certain specified reconsideration events occur. The fair value election is an irrevocable election. Effective January 1, 2008, the Company did not elect the fair value option for any instruments. |
F-28
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
• | Effective September 30, 2008, the Company adopted new guidance relating to the fair value measurements of financial assets when the market for those assets is not active. It provides guidance on how a company’s internal cash flow and discount rate assumptions should be considered in the measurement of fair value when relevant market data does not exist, how observable market information in an inactive market affects fair value measurement and how the use of market quotes should be considered when assessing the relevance of observable and unobservable data available to measure fair value. | |
• | Effective January 1, 2009, the Company implemented fair value measurements guidance for certain nonfinancial assets and liabilities that are recorded at fair value on a non-recurring basis. This guidance applies to such items as: (i) nonfinancial assets and nonfinancial liabilities initially measured at estimated fair value in a business combination; (ii) reporting units measured at estimated fair value in the first step of a goodwill impairment test; and (iii) indefinite-lived intangible assets measured at estimated fair value for impairment assessment. | |
• | Effective January 1, 2009, the Company adopted prospectively guidance on issuer’s accounting for liabilities measured at fair value with a third-party credit enhancement. This guidance states that an issuer of a liability with a third-party credit enhancement should not include the effect of the credit enhancement in the fair value measurement of the liability. In addition, it requires disclosures about the existence of any third-party credit enhancement related to liabilities that are measured at fair value. | |
• | Effective December 31, 2009, the Company adopted new guidance on: (i) measuring the fair value of investments in certain entities that calculate NAV per share; (ii) how investments within its scope would be classified in the fair value hierarchy; and (iii) enhanced disclosure requirements, for both interim and annual periods, about the nature and risks of investments measured at fair value on a recurring or non-recurring basis. | |
• | Effective December 31, 2009, the Company adopted new guidance on measuring liabilities at fair value. This guidance provides clarification for measuring fair value in circumstances in which a quoted price in an active market for the identical liability is not available. In such circumstances a company is required to measure fair value using either a valuation technique that uses: (i) the quoted price of the identical liability when traded as an asset; or (ii) quoted prices for similar liabilities or similar liabilities when traded as assets; or (iii) another valuation technique that is consistent with the principles of fair value measurement such as an income approach (e.g., present value technique) or a market approach (e.g., “entry” value technique). |
F-29
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
• | Effective January 1, 2008, the Company prospectively adopted new guidance on the sale of real estate when the agreement includes a buy-sell clause. This guidance addresses whether the existence of a buy-sell arrangement would preclude partial sales treatment when real estate is sold to a jointly owned entity and concludes that the existence of a buy-sell clause does not necessarily preclude partial sale treatment under current guidance. | |
• | Effective January 1, 2007, the Company adopted new guidance on income taxes. This guidance clarifies the accounting for uncertainty in income tax recognized in a company’s financial statements. It requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. |
• | The financial instrument transfer guidance eliminates the concept of a “QSPE,” eliminates the guaranteed mortgage securitization exception, changes the criteria for achieving sale accounting when transferring a financial asset and changes the initial recognition of retained beneficial interests. The guidance also requires additional disclosures about transfers of financial assets, including securitized transactions, as well as a |
F-30
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
company’s continuing involvement in transferred financial assets. The Company does not expect the adoption of the new guidance to have a material impact on the Company’s consolidated financial statements. |
• | The consolidation guidance relating to VIEs changes the determination of the primary beneficiary of a VIE from a quantitative model to a qualitative model. Under the new qualitative model, the primary beneficiary must have both the ability to direct the activities of the VIE and the obligation to absorb either losses or gains that could be significant to the VIE. The guidance also changes when reassessment is needed, as well as requires enhanced disclosures, including the effects of a company’s involvement with VIEs on its financial statements. The Company does not expect the adoption of the new guidance to have a material impact on the Company’s consolidated financial statements. Subsequently, this guidance was indefinitely deferred for an interest in an entity that has the attributes of an investment company or for which it is industry practice to apply measurement principles for financial reporting purposes that are consistent with those followed by investment companies (ASU2010-10,Consolidation (Topic 810): Amendments to Statement 167 for Certain Investment Funds). |
2. | Investments |
December 31, 2009 | ||||||||||||||||||||||||
Cost or | Gross Unrealized | Estimated | ||||||||||||||||||||||
Amortized | Temporary | OTTI | Fair | % of | ||||||||||||||||||||
Cost | Gain | Loss | Loss | Value | Total | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 15,598 | $ | 441 | $ | 639 | $ | 2 | $ | 15,398 | 37.3 | % | ||||||||||||
Foreign corporate securities | 7,292 | 307 | 255 | 6 | 7,338 | 17.8 | ||||||||||||||||||
U.S. Treasury and agency securities | 6,503 | 35 | 281 | — | 6,257 | 15.2 | ||||||||||||||||||
RMBS | 6,183 | 153 | 402 | 82 | 5,852 | 14.2 | ||||||||||||||||||
CMBS | 2,808 | 43 | 216 | 18 | 2,617 | 6.3 | ||||||||||||||||||
ABS | 2,152 | 33 | 163 | 33 | 1,989 | 4.8 | ||||||||||||||||||
State and political subdivision securities | 1,291 | 12 | 124 | — | 1,179 | 2.8 | ||||||||||||||||||
Foreign government securities | 608 | 46 | 9 | — | 645 | 1.6 | ||||||||||||||||||
Total fixed maturity securities (1), (2) | $ | 42,435 | $ | 1,070 | $ | 2,089 | $ | 141 | $ | 41,275 | 100.0 | % | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Non-redeemable preferred stock (1) | $ | 351 | $ | 10 | $ | 55 | $ | — | $ | 306 | 66.7 | % | ||||||||||||
Common stock | 143 | 11 | 1 | — | 153 | 33.3 | ||||||||||||||||||
Total equity securities (3) | $ | 494 | $ | 21 | $ | 56 | $ | — | $ | 459 | 100.0 | % | ||||||||||||
F-31
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, 2008 | ||||||||||||||||||||
Cost or | Estimated | |||||||||||||||||||
Amortized | Gross Unrealized | Fair | % of | |||||||||||||||||
Cost | Gain | Loss | Value | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||
U.S. corporate securities | $ | 15,440 | $ | 126 | $ | 2,335 | $ | 13,231 | 38.0 | % | ||||||||||
Foreign corporate securities | 6,157 | 41 | 1,136 | 5,062 | 14.5 | |||||||||||||||
U.S. Treasury and agency securities | 3,407 | 926 | — | 4,333 | 12.4 | |||||||||||||||
RMBS | 7,901 | 124 | 932 | 7,093 | 20.4 | |||||||||||||||
CMBS | 2,933 | 6 | 665 | 2,274 | 6.5 | |||||||||||||||
ABS | 2,429 | 1 | 703 | 1,727 | 5.0 | |||||||||||||||
State and political subdivision securities | 880 | 2 | 225 | 657 | 1.9 | |||||||||||||||
Foreign government securities | 454 | 48 | 33 | 469 | 1.3 | |||||||||||||||
Total fixed maturity securities (1), (2) | $ | 39,601 | $ | 1,274 | $ | 6,029 | $ | 34,846 | 100.0 | % | ||||||||||
Equity Securities: | ||||||||||||||||||||
Non-redeemable preferred stock (1) | $ | 551 | $ | 1 | $ | 196 | $ | 356 | 75.1 | % | ||||||||||
Common stock | 122 | 1 | 5 | 118 | 24.9 | |||||||||||||||
Total equity securities (3) | $ | 673 | $ | 2 | $ | 201 | $ | 474 | 100.0 | % | ||||||||||
(1) | At time of acquisition, the Company classifies perpetual securities that have attributes of both debt and equity as fixed maturity securities if the security has a punitive interest ratestep-up feature, as it believes in most instances this feature will compel the issuer to redeem the security at the specified call date. Perpetual securities that do not have a punitive interest ratestep-up feature are classified as equity securities within non-redeemable preferred stock. Many of such securities have been issued bynon-U.S. financial institutions that are accorded Tier 1 and Upper Tier 2 capital treatment by their respective regulatory bodies and are commonly referred to as “perpetual hybrid securities.” The following table presents the perpetual hybrid securities held by the Company at: |
December 31, | ||||||||||||
2009 | 2008 | |||||||||||
Estimated | Estimated | |||||||||||
Classification | Fair | Fair | ||||||||||
Consolidated Balance Sheets | Sector Table | Primary Issuers | Value | Value | ||||||||
(In millions) | ||||||||||||
Equity securities | Non-redeemable preferred stock | Non-U.S. financial institutions | $ | 237 | $ | 304 | ||||||
Equity securities | Non-redeemable preferred stock | U.S. financial institutions | $ | 43 | $ | 52 | ||||||
Fixed maturity securities | Foreign corporate securities | Non-U.S. financial institutions | $ | 580 | $ | 425 | ||||||
Fixed maturity securities | U.S. corporate securities | U.S. financial institutions | $ | 17 | $ | 16 |
(2) | The Company held $513 million and $385 million at estimated fair value of redeemable preferred stock which have stated maturity dates at December 31, 2009 and 2008, respectively. These securities, commonly referred to as “capital securities,” are primarily issued by U.S. financial institutions, have cumulative interest deferral features and are included in the U.S. corporate securities sector within fixed maturity securities. | |
(3) | Equity securities primarily consist of investments in common and preferred stocks, including certain perpetual hybrid securities and mutual fund interests. Privately-held equity securities represented $82 million and $102 million at estimated fair value at December 31, 2009 and 2008, respectively. |
F-32
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Below investment grade or non-rated fixed maturity securities (1): | ||||||||
Estimated fair value | $ | 3,866 | $ | 2,559 | ||||
Net unrealized loss | $ | 467 | $ | 1,130 | ||||
Non-income producing fixed maturity securities (1): | ||||||||
Estimated fair value | $ | 67 | $ | 17 | ||||
Net unrealized gain (loss) | $ | 2 | $ | (2 | ) | |||
Fixed maturity securities credit enhanced by financial guarantor insurers — by sector — at estimated fair value: | ||||||||
State and political subdivision securities | $ | 493 | $ | 415 | ||||
U.S. corporate securities | 458 | 525 | ||||||
ABS | 107 | 145 | ||||||
RMBS | 7 | 8 | ||||||
CMBS | 3 | 3 | ||||||
Total fixed maturity securities credit enhanced by financial guarantor insurers | $ | 1,068 | $ | 1,096 | ||||
Ratings of the financial guarantor insurers providing the credit enhancement: | ||||||||
Portion rated Aa/AA | 25 | % | 20 | % | ||||
Portion rated A | — | % | — | % | ||||
Portion rated Baa/BBB | 39 | % | 65 | % | ||||
(1) | Based on rating agency designations and equivalent ratings of the National Association of Insurance Commissioners (“NAIC”), with the exception of non-agency RMBS held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA. Non-agency RMBS held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA, at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-33
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Corporate fixed maturity securities — by industry type: | ||||||||||||||||
Foreign (1) | $ | 7,338 | 32.3 | % | $ | 5,062 | 27.6 | % | ||||||||
Consumer | 3,507 | 15.4 | 2,666 | 14.6 | ||||||||||||
Utility | 3,328 | 14.6 | 2,810 | 15.4 | ||||||||||||
Finance | 3,145 | 13.8 | 3,397 | 18.6 | ||||||||||||
Industrial | 3,047 | 13.4 | 1,775 | 9.7 | ||||||||||||
Communications | 1,669 | 7.4 | 1,305 | 7.1 | ||||||||||||
Other | 702 | 3.1 | 1,278 | 7.0 | ||||||||||||
Total | $ | 22,736 | 100.0 | % | $ | 18,293 | 100.0 | % | ||||||||
(1) | Includes U.S. Dollar-denominated debt obligations of foreign obligors and other foreign fixed maturity security investments. |
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of Total | Fair | % of Total | |||||||||||||
Value | Investments | Value | Investments | |||||||||||||
(In millions) | ||||||||||||||||
Concentrations within corporate fixed maturity securities: | ||||||||||||||||
Largest exposure to a single issuer | $ | 204 | 0.4 | % | $ | 313 | 0.6 | % | ||||||||
Holdings in ten issuers with the largest exposures | $ | 1,695 | 3.2 | % | $ | 1,732 | 3.6 | % |
F-34
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
By security type: | ||||||||||||||||
Collateralized mortgage obligations | $ | 3,646 | 62.3 | % | $ | 5,028 | 70.9 | % | ||||||||
Pass-through securities | 2,206 | 37.7 | 2,065 | 29.1 | ||||||||||||
Total RMBS | $ | 5,852 | 100.0 | % | $ | 7,093 | 100.0 | % | ||||||||
By risk profile: | ||||||||||||||||
Agency | $ | 4,095 | 70.0 | % | $ | 4,856 | 68.4 | % | ||||||||
Prime | 1,118 | 19.1 | 1,531 | 21.6 | ||||||||||||
Alternative residential mortgage loans | 639 | 10.9 | 706 | 10.0 | ||||||||||||
Total RMBS | $ | 5,852 | 100.0 | % | $ | 7,093 | 100.0 | % | ||||||||
Portion rated Aaa/AAA (1) | $ | 4,347 | 74.3 | % | $ | 6,514 | 91.8 | % | ||||||||
Portion rated NAIC 1 (2) | $ | 4,835 | 82.6 | % | $ | 6,753 | 95.2 | % | ||||||||
(1) | Based on rating agency designations, without adjustment for the revised NAIC methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA. Non-agency RMBS held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA, at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-35
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Vintage Year: | ||||||||||||||||
2004 & Prior | $ | 15 | 2.3 | % | $ | 51 | 7.2 | % | ||||||||
2005 | 336 | 52.6 | 387 | 54.8 | ||||||||||||
2006 | 83 | 13.0 | 102 | 14.5 | ||||||||||||
2007 | 205 | 32.1 | 166 | 23.5 | ||||||||||||
2008 | — | — | — | — | ||||||||||||
2009 | — | — | — | — | ||||||||||||
Total | $ | 639 | 100.0 | % | $ | 706 | 100.0 | % | ||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Total | Amount | Total | |||||||||||||
(In millions) | ||||||||||||||||
Net unrealized loss | $ | 235 | $ | 376 | ||||||||||||
Rated Aa/AA or better (1) | 2.3 | % | 64.9 | % | ||||||||||||
Rated NAIC 1 (2) | 16.6 | % | 66.6 | % | ||||||||||||
Fixed rate | 95.6 | % | 96.4 | % | ||||||||||||
Hybrid ARM | 4.4 | 3.6 | ||||||||||||||
Total Alt-A RMBS | 100.0 | % | 100.0 | % | ||||||||||||
(1) | Based on rating agency designations, without adjustment for the revised NAIC methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA. Non-agency RMBS held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA, at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-36
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Vintage Year: | ||||||||||||||||
2003 & Prior | $ | 1,202 | 45.9 | % | $ | 915 | 40.2 | % | ||||||||
2004 | 512 | 19.6 | 559 | 24.6 | ||||||||||||
2005 | 472 | 18.0 | 438 | 19.3 | ||||||||||||
2006 | 407 | 15.6 | 341 | 15.0 | ||||||||||||
2007 | 24 | 0.9 | 21 | 0.9 | ||||||||||||
2008 | — | — | — | — | ||||||||||||
2009 | — | — | — | — | ||||||||||||
Total | $ | 2,617 | 100.0 | % | $ | 2,274 | 100.0 | % | ||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
% of | % of | |||||||||||||||
Amount | Total | Amount | Total | |||||||||||||
(In millions) | ||||||||||||||||
Net unrealized loss | $ | 191 | $ | 659 | ||||||||||||
Rated Aaa/AAA | 83 | % | 90 | % |
F-37
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Fair | % of | Fair | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
By collateral type: | ||||||||||||||||
Credit card loans | $ | 920 | 46.3 | % | $ | 706 | 40.9 | % | ||||||||
RMBS backed bysub-prime mortgage loans | 247 | 12.4 | 335 | 19.4 | ||||||||||||
Automobile loans | 205 | 10.3 | 206 | 11.9 | ||||||||||||
Student loans | 158 | 7.9 | 100 | 5.8 | ||||||||||||
Other loans | 459 | 23.1 | 380 | 22.0 | ||||||||||||
Total | $ | 1,989 | 100.0 | % | $ | 1,727 | 100.0 | % | ||||||||
Portion rated Aaa/AAA (1) | $ | 1,292 | 65.0 | % | $ | 1,110 | 64.3 | % | ||||||||
Portion rated NAIC 1 (2) | $ | 1,767 | 88.8 | % | $ | 1,512 | 87.6 | % | ||||||||
RMBS backed bysub-prime mortgage loans — portion credit enhanced by financial guarantor insurers | 20.6 | % | 18.0 | % | ||||||||||||
Of the 20.6% and 18.0% credit enhanced, the financial guarantor insurers were rated as follows: | ||||||||||||||||
By financial guarantor insurers rated Aa/AA | 0.7 | % | 1.0 | % | ||||||||||||
By financial guarantor insurers rated A | 0.2 | % | — | % | ||||||||||||
By financial guarantor insurers rated Baa/BBB | — | % | 52.1 | % |
(1) | Based on rating agency designations, without adjustment for the revised NAIC methodology which became effective December 31, 2009. | |
(2) | Based on rating agency designations and equivalent ratings of the NAIC, with the exception of non-agency RMBS backed bysub-prime mortgage loans held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA. Non-agency RMBS backed bysub-prime mortgage loans held by MetLife Insurance Company of Connecticut and its domestic insurance subsidiary, MLI-USA, at December 31, 2009 are included based on final ratings from the revised NAIC rating methodology which became effective December 31, 2009 (which may not correspond to rating agency designations). |
F-38
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Estimated | Estimated | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(In millions) | ||||||||||||||||
Due in one year or less | $ | 1,023 | $ | 1,029 | $ | 993 | $ | 966 | ||||||||
Due after one year through five years | 9,048 | 9,202 | 6,337 | 5,755 | ||||||||||||
Due after five years through ten years | 7,882 | 7,980 | 7,329 | 6,195 | ||||||||||||
Due after ten years | 13,339 | 12,606 | 11,679 | 10,836 | ||||||||||||
Subtotal | 31,292 | 30,817 | 26,338 | 23,752 | ||||||||||||
RMBS, CMBS and ABS | 11,143 | 10,458 | 13,263 | 11,094 | ||||||||||||
Total fixed maturity securities | $ | 42,435 | $ | 41,275 | $ | 39,601 | $ | 34,846 | ||||||||
F-39
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Fixed maturity securities that were temporarily impaired | $ | (1,019 | ) | $ | (4,755 | ) | $ | (593 | ) | |||
Fixed maturity securities with noncredit OTTI losses in other comprehensive loss | (141 | ) | — | — | ||||||||
Total fixed maturity securities | (1,160 | ) | (4,755 | ) | (593 | ) | ||||||
Equity securities | (35 | ) | (199 | ) | (40 | ) | ||||||
Derivatives | (4 | ) | 12 | (16 | ) | |||||||
Short-term investments | (10 | ) | (100 | ) | — | |||||||
Other | (3 | ) | (3 | ) | — | |||||||
Subtotal | (1,212 | ) | (5,045 | ) | (649 | ) | ||||||
Amounts allocated from: | ||||||||||||
DAC and VOBA on which noncredit OTTI losses have been recognized | 12 | — | — | |||||||||
DAC and VOBA | 151 | 916 | 93 | |||||||||
Subtotal | 163 | 916 | 93 | |||||||||
Deferred income tax benefit (expense) on which noncredit OTTI losses have been recognized | 46 | — | — | |||||||||
Deferred income tax benefit (expense) | 327 | 1,447 | 195 | |||||||||
Net unrealized investment gains (losses) | $ | (676 | ) | $ | (2,682 | ) | $ | (361 | ) | |||
F-40
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance, beginning of period | $ | (2,682 | ) | $ | (361 | ) | $ | (314 | ) | |||
Cumulative effect of changes in accounting principle, net of income tax | (22 | ) | — | — | ||||||||
Fixed maturity securities on which noncredit OTTI losses have been recognized | (105 | ) | — | — | ||||||||
Unrealized investment gains (losses) during the year | 3,974 | (4,396 | ) | (98 | ) | |||||||
Unrealized investment gains (losses) relating to: | ||||||||||||
DAC and VOBA on which noncredit OTTI losses have been recognized | 10 | — | — | |||||||||
DAC and VOBA | (765 | ) | 823 | 27 | ||||||||
Deferred income tax benefit (expense) on which noncredit OTTI losses have been recognized | 34 | — | — | |||||||||
Deferred income tax benefit (expense) | (1,120 | ) | 1,252 | 24 | ||||||||
Balance, end of period | $ | (676 | ) | $ | (2,682 | ) | $ | (361 | ) | |||
Change in net unrealized investment gains (losses) | $ | 2,006 | $ | (2,321 | ) | $ | (47 | ) | ||||
F-41
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, 2009 | ||||||||||||||||||||||||
Equal to or Greater | ||||||||||||||||||||||||
Less than 12 Months | than 12 Months | Total | ||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | |||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
(In millions, except number of securities) | ||||||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 2,164 | $ | 87 | $ | 4,314 | $ | 554 | $ | 6,478 | $ | 641 | ||||||||||||
Foreign corporate securities | 759 | 27 | 1,488 | 234 | 2,247 | 261 | ||||||||||||||||||
U.S. Treasury and agency securities | 5,265 | 271 | 26 | 10 | 5,291 | 281 | ||||||||||||||||||
RMBS | 703 | 12 | 1,910 | 472 | 2,613 | 484 | ||||||||||||||||||
CMBS | 334 | 3 | 1,054 | 231 | 1,388 | 234 | ||||||||||||||||||
ABS | 125 | 11 | 821 | 185 | 946 | 196 | ||||||||||||||||||
State and political subdivision securities | 413 | 16 | 433 | 108 | 846 | 124 | ||||||||||||||||||
Foreign government securities | 132 | 4 | 25 | 5 | 157 | 9 | ||||||||||||||||||
Total fixed maturity securities | $ | 9,895 | $ | 431 | $ | 10,071 | $ | 1,799 | $ | 19,966 | $ | 2,230 | ||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Non-redeemable preferred stock | $ | 21 | $ | 9 | $ | 198 | $ | 46 | $ | 219 | $ | 55 | ||||||||||||
Common stock | 3 | 1 | 3 | — | 6 | 1 | ||||||||||||||||||
Total equity securities | $ | 24 | $ | 10 | $ | 201 | $ | 46 | $ | 225 | $ | 56 | ||||||||||||
Total number of securities in an unrealized loss position | 708 | 1,236 | ||||||||||||||||||||||
December 31, 2008 | ||||||||||||||||||||||||
Equal to or Greater | ||||||||||||||||||||||||
Less than 12 Months | than 12 Months | Total | ||||||||||||||||||||||
Estimated | Gross | Estimated | Gross | Estimated | Gross | |||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Loss | Value | Loss | Value | Loss | |||||||||||||||||||
(In millions, except number of securities) | ||||||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||||||
U.S. corporate securities | $ | 6,302 | $ | 1,001 | $ | 4,823 | $ | 1,334 | $ | 11,125 | $ | 2,335 | ||||||||||||
Foreign corporate securities | 2,684 | 517 | 1,530 | 619 | 4,214 | 1,136 | ||||||||||||||||||
U.S. Treasury and agency securities | 34 | — | — | — | 34 | — | ||||||||||||||||||
RMBS | 1,740 | 501 | 934 | 431 | 2,674 | 932 | ||||||||||||||||||
CMBS | 1,485 | 289 | 679 | 376 | 2,164 | 665 | ||||||||||||||||||
ABS | 961 | 221 | 699 | 482 | 1,660 | 703 | ||||||||||||||||||
State and political subdivision securities | 348 | 91 | 220 | 134 | 568 | 225 | ||||||||||||||||||
Foreign government securities | 229 | 21 | 20 | 12 | 249 | 33 | ||||||||||||||||||
Total fixed maturity securities | $ | 13,783 | $ | 2,641 | $ | 8,905 | $ | 3,388 | $ | 22,688 | $ | 6,029 | ||||||||||||
Equity securities | $ | 124 | $ | 59 | $ | 191 | $ | 142 | $ | 315 | $ | 201 | ||||||||||||
Total number of securities in an unrealized loss position | 2,634 | 1,340 | ||||||||||||||||||||||
F-42
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
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 | $ | 8,310 | $ | 790 | $ | 173 | $ | 199 | 609 | 74 | ||||||||||||||
Six months or greater but less than nine months | 1,084 | 132 | 114 | 37 | 33 | 24 | ||||||||||||||||||
Nine months or greater but less than twelve months | 694 | 362 | 74 | 102 | 30 | 29 | ||||||||||||||||||
Twelve months or greater | 8,478 | 2,346 | 737 | 794 | 867 | 260 | ||||||||||||||||||
Total | $ | 18,566 | $ | 3,630 | $ | 1,098 | $ | 1,132 | ||||||||||||||||
Percentage of cost or amortized cost | 6 | % | 31 | % | ||||||||||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Less than six months | $ | 3 | $ | 9 | $ | — | $ | 3 | 7 | 3 | ||||||||||||||
Six months or greater but less than nine months | — | — | — | — | — | — | ||||||||||||||||||
Nine months or greater but less than twelve months | 10 | 20 | 1 | 8 | 2 | 3 | ||||||||||||||||||
Twelve months or greater | 161 | 78 | 21 | 23 | 17 | 6 | ||||||||||||||||||
Total | $ | 174 | $ | 107 | $ | 22 | $ | 34 | ||||||||||||||||
Percentage of cost | 13 | % | 32 | % | ||||||||||||||||||||
F-43
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, 2008 | ||||||||||||||||||||||||
Cost or Amortized Cost | Gross Unrealized Loss | Number of Securities | ||||||||||||||||||||||
Less than | 20% or | Less than | 20% or | Less than | 20% or | |||||||||||||||||||
20% | more | 20% | more | 20% | more | |||||||||||||||||||
(In millions, except number of securities) | ||||||||||||||||||||||||
Fixed Maturity Securities: | ||||||||||||||||||||||||
Less than six months | $ | 5,444 | $ | 9,799 | $ | 392 | $ | 3,547 | 1,314 | 1,089 | ||||||||||||||
Six months or greater but less than nine months | 2,737 | 542 | 213 | 271 | 349 | 54 | ||||||||||||||||||
Nine months or greater but less than twelve months | 3,554 | 810 | 392 | 470 | 342 | 95 | ||||||||||||||||||
Twelve months or greater | 5,639 | 192 | 614 | 130 | 642 | 28 | ||||||||||||||||||
Total | $ | 17,374 | $ | 11,343 | $ | 1,611 | $ | 4,418 | ||||||||||||||||
Percentage of cost or amortized cost | 9 | % | 39 | % | ||||||||||||||||||||
Equity Securities: | ||||||||||||||||||||||||
Less than six months | $ | 23 | $ | 298 | $ | 3 | $ | 130 | 13 | 50 | ||||||||||||||
Six months or greater but less than nine months | 18 | 53 | 3 | 20 | 2 | 5 | ||||||||||||||||||
Nine months or greater but less than twelve months | — | 102 | — | 43 | — | 9 | ||||||||||||||||||
Twelve months or greater | 22 | — | 2 | — | 6 | — | ||||||||||||||||||
Total | $ | 63 | $ | 453 | $ | 8 | $ | 193 | ||||||||||||||||
Percentage of cost | 13 | % | 43 | % | ||||||||||||||||||||
F-44
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
Sector: | ||||||||
U.S. corporate securities | 28 | % | 37 | % | ||||
RMBS | 21 | 15 | ||||||
U.S. Treasury and agency securities | 12 | — | ||||||
Foreign corporate securities | 11 | 18 | ||||||
CMBS | 10 | 11 | ||||||
ABS | 9 | 11 | ||||||
State and political subdivision securities | 5 | 4 | ||||||
Other | 4 | 4 | ||||||
Total | 100 | % | 100 | % | ||||
Industry: | ||||||||
Mortgage-backed | 31 | % | 26 | % | ||||
Finance | 22 | 25 | ||||||
U.S. Treasury and agency securities | 12 | — | ||||||
Asset-backed | 9 | 11 | ||||||
Consumer | 6 | 10 | ||||||
State and political subdivision securities | 5 | 4 | ||||||
Utility | 4 | 9 | ||||||
Communications | 3 | 7 | ||||||
Industrial | 2 | 4 | ||||||
Other | 6 | 4 | ||||||
Total | 100 | % | 100 | % | ||||
F-45
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Fixed | Fixed | |||||||||||||||
Maturity | Equity | Maturity | Equity | |||||||||||||
Securities | Securities | Securities | Securities | |||||||||||||
(In millions, except number of securities) | ||||||||||||||||
Number of securities | 33 | — | 103 | 6 | ||||||||||||
Total gross unrealized loss | $ | 510 | $ | — | $ | 1,758 | $ | 84 | ||||||||
Percentage of total gross unrealized loss | 23 | % | — | % | 29 | % | 42 | % |
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 | |||||||||||||||||||||||||
Loss | Loss | Securities | Loss | Preferred Stock | Loss | Industries | or Better | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
Less than six months | $ | 3 | $ | 1 | 33 | % | $ | 1 | 100 | % | $ | 1 | 100 | % | — | % | ||||||||||||||||
Six months or greater but less than twelve months | 8 | 8 | 100 | % | 8 | 100 | % | 8 | 100 | % | 100 | % | ||||||||||||||||||||
Twelve months or greater | 23 | 23 | 100 | % | 23 | 100 | % | 23 | 100 | % | 28 | % | ||||||||||||||||||||
All equity securities with a gross unrealized loss of 20% or more | $ | 34 | $ | 32 | 94 | % | $ | 32 | 100 | % | $ | 32 | 100 | % | 44 | % | ||||||||||||||||
F-46
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Total losses on fixed maturity securities: | ||||||||||||
Total OTTI losses recognized | $ | (552 | ) | $ | (401 | ) | $ | (28 | ) | |||
Less: Noncredit portion of OTTI losses transferred to and recognized in other comprehensive loss | 165 | — | — | |||||||||
Net OTTI losses on fixed maturity securities recognized in earnings | (387 | ) | (401 | ) | (28 | ) | ||||||
Fixed maturity securities — net gains (losses) on sales and disposals | (115 | ) | (255 | ) | (244 | ) | ||||||
Total losses on fixed maturity securities | (502 | ) | (656 | ) | (272 | ) | ||||||
Other net investment gains (losses): | ||||||||||||
Equity securities | (119 | ) | (60 | ) | 15 | |||||||
Mortgage loans | (32 | ) | (44 | ) | (2 | ) | ||||||
Real estate and real estate joint ventures | (61 | ) | (1 | ) | 1 | |||||||
Other limited partnership interests | (72 | ) | (9 | ) | (19 | ) | ||||||
Freestanding derivatives | (717 | ) | 558 | 189 | ||||||||
Embedded derivatives | (314 | ) | 436 | 116 | ||||||||
Other | (49 | ) | 325 | (170 | ) | |||||||
Total net investment gains (losses) | $ | (1,866 | ) | $ | 549 | $ | (142 | ) | ||||
F-47
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Fixed Maturity Securities | Equity Securities | Total | ||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||||||
Proceeds | $ | 8,766 | $ | 11,450 | $ | 14,693 | $ | 113 | $ | 76 | $ | 133 | $ | 8,879 | $ | 11,526 | $ | 14,826 | ||||||||||||||||||
Gross investment gains | $ | 180 | $ | 126 | $ | 120 | $ | 6 | $ | 15 | $ | 26 | $ | 186 | $ | 141 | $ | 146 | ||||||||||||||||||
Gross investment losses | (295 | ) | (381 | ) | (364 | ) | (28 | ) | (25 | ) | (9 | ) | (323 | ) | (406 | ) | (373 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings: | ||||||||||||||||||||||||||||||||||||
Credit-related | (348 | ) | (366 | ) | (20 | ) | — | — | — | (348 | ) | (366 | ) | (20 | ) | |||||||||||||||||||||
Other (1) | (39 | ) | (35 | ) | (8 | ) | (97 | ) | (50 | ) | (2 | ) | (136 | ) | (85 | ) | (10 | ) | ||||||||||||||||||
Total OTTI losses recognized in earnings | (387 | ) | (401 | ) | (28 | ) | (97 | ) | (50 | ) | (2 | ) | (484 | ) | (451 | ) | (30 | ) | ||||||||||||||||||
Net investment gains (losses) | $ | (502 | ) | $ | (656 | ) | $ | (272 | ) | $ | (119 | ) | $ | (60 | ) | $ | 15 | $ | (621 | ) | $ | (716 | ) | $ | (257 | ) | ||||||||||
(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. |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
U.S. and foreign corporate securities: | ||||||||||||
Communications | $ | 88 | $ | 21 | $ | — | ||||||
Finance | 84 | 225 | 8 | |||||||||
Consumer | 53 | 35 | — | |||||||||
Industrial | 18 | — | 2 | |||||||||
Utility | 6 | — | — | |||||||||
Other | — | 40 | 17 | |||||||||
Total U.S. and foreign corporate securities | 249 | 321 | 27 | |||||||||
CMBS | 69 | 65 | — | |||||||||
ABS | 45 | 15 | 1 | |||||||||
RMBS | 24 | — | — | |||||||||
Total | $ | 387 | $ | 401 | $ | 28 | ||||||
F-48
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Sector: | ||||||||||||
Non-redeemable preferred stock | $ | 92 | $ | 38 | $ | — | ||||||
Common stock | 5 | 12 | 2 | |||||||||
Total | $ | 97 | $ | 50 | $ | 2 | ||||||
Industry: | ||||||||||||
Financial services industry: | ||||||||||||
Perpetual hybrid securities | $ | 72 | $ | 9 | $ | — | ||||||
Common and remaining non-redeemable preferred stock | 3 | 34 | — | |||||||||
Total financial services industry | 75 | 43 | — | |||||||||
Other | 22 | 7 | 2 | |||||||||
Total | $ | 97 | $ | 50 | $ | 2 | ||||||
Year Ended December 31, 2009 | ||||
(In millions) | ||||
Balance, beginning of period | $ | — | ||
Credit loss component of OTTI loss not reclassified to other comprehensive loss in the cumulative effect transition adjustment | 92 | |||
Additions: | ||||
Initial impairments — credit loss OTTI recognized on securities not previously impaired | 97 | |||
Additional impairments — credit loss OTTI recognized on securities previously impaired | 43 | |||
Reductions: | ||||
Due to sales (or maturities, pay downs or prepayments) during the period of securities previously credit loss OTTI impaired | (18 | ) | ||
Due to increases in cash flows — accretion of previous credit loss OTTI | (1 | ) | ||
Balance, end of period | $ | 213 | ||
F-49
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Fixed maturity securities | $ | 2,094 | $ | 2,455 | $ | 2,803 | ||||||
Equity securities | 27 | 44 | 45 | |||||||||
Trading securities | 97 | (19 | ) | — | ||||||||
Mortgage loans | 239 | 255 | 263 | |||||||||
Policy loans | 80 | 64 | 53 | |||||||||
Real estate and real estate joint ventures | (120 | ) | 11 | 81 | ||||||||
Other limited partnership interests | 17 | (69 | ) | 164 | ||||||||
Cash, cash equivalents and short-term investments | 16 | 67 | 104 | |||||||||
International joint ventures | (4 | ) | (4 | ) | (4 | ) | ||||||
Other | (2 | ) | (3 | ) | 11 | |||||||
Total investment income | 2,444 | 2,801 | 3,520 | |||||||||
Less: Investment expenses | 109 | 307 | 627 | |||||||||
Net investment income | $ | 2,335 | $ | 2,494 | $ | 2,893 | ||||||
F-50
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Securities on loan: | ||||||||
Cost or amortized cost | $ | 6,173 | $ | 5,638 | ||||
Estimated fair value | $ | 6,051 | $ | 6,346 | ||||
Aging of cash collateral liability: | ||||||||
Open (1) | $ | 1,325 | $ | 1,222 | ||||
Less than thirty days | 3,342 | 4,284 | ||||||
Thirty days or greater but less than sixty days | 1,323 | 901 | ||||||
Sixty days or greater but less than ninety days | — | — | ||||||
Ninety days or greater | 234 | — | ||||||
Total cash collateral liability | $ | 6,224 | $ | 6,407 | ||||
Security collateral on deposit from counterparties | $ | — | $ | 153 | ||||
Reinvestment portfolio — estimated fair value | $ | 5,686 | $ | 4,988 | ||||
(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. |
F-51
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Invested assets on deposit: | ||||||||
Regulatory agencies (1) | $ | 21 | $ | 23 | ||||
Invested assets pledged as collateral: | ||||||||
Debt and funding agreements — FHLB of Boston (2) | 419 | 1,284 | ||||||
Derivative transactions (3) | 18 | 66 | ||||||
Total invested assets on deposit and pledged as collateral | $ | 458 | $ | 1,373 | ||||
(1) | The Company had investment assets on deposit with regulatory agencies consisting primarily of fixed maturity and equity securities. | |
(2) | The Company has pledged fixed maturity securities in support of its debt and funding agreements with the Federal Home Loan Bank of Boston (“FHLB of Boston”). The nature of these Federal Home Loan Bank arrangements is described in Note 7. | |
(3) | Certain of the Company’s invested assets are pledged as collateral for various derivative transactions as described in Note 3. |
F-52
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Mortgage loansheld-for-investment: | ||||||||||||||||
Commercial mortgage loans | $ | 3,620 | 75.0 | % | $ | 3,301 | 73.4 | % | ||||||||
Agricultural mortgage loans | 1,204 | 25.0 | 1,185 | 26.4 | ||||||||||||
Consumer loans | 1 | — | 7 | 0.2 | ||||||||||||
Total mortgage loansheld-for-investment | 4,825 | 100.0 | % | 4,493 | 100.0 | % | ||||||||||
Less: Valuation allowances | 77 | 46 | ||||||||||||||
Total mortgage loans, net | $ | 4,748 | $ | 4,447 | ||||||||||||
F-53
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Region: | ||||||||||||||||
South Atlantic | $ | 909 | 25.6 | % | $ | 842 | 25.9 | % | ||||||||
Pacific | 879 | 24.8 | 753 | 23.1 | ||||||||||||
Middle Atlantic | 678 | 19.1 | 516 | 15.8 | ||||||||||||
New England | 398 | 11.2 | 412 | 12.6 | ||||||||||||
West South Central | 220 | 6.2 | 264 | 8.1 | ||||||||||||
East North Central | 177 | 5.0 | 152 | 4.7 | ||||||||||||
East South Central | 108 | 3.1 | 130 | 4.0 | ||||||||||||
Mountain | 66 | 1.9 | 67 | 2.1 | ||||||||||||
International | 57 | 1.6 | 59 | 1.8 | ||||||||||||
West North Central | 14 | 0.4 | 22 | 0.7 | ||||||||||||
Other | 40 | 1.1 | 40 | 1.2 | ||||||||||||
Total | $ | 3,546 | 100.0 | % | $ | 3,257 | 100.0 | % | ||||||||
Property Type: | ||||||||||||||||
Office | $ | 1,406 | 39.6 | % | $ | 1,188 | 36.5 | % | ||||||||
Retail | 901 | 25.4 | 760 | 23.3 | ||||||||||||
Apartments | 521 | 14.7 | 553 | 17.0 | ||||||||||||
Hotel | 375 | 10.6 | 396 | 12.2 | ||||||||||||
Industrial | 127 | 3.6 | 151 | 4.6 | ||||||||||||
Other | 216 | 6.1 | 209 | 6.4 | ||||||||||||
Total | $ | 3,546 | 100.0 | % | $ | 3,257 | 100.0 | % | ||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance, January 1, | $ | 46 | $ | 8 | $ | 6 | ||||||
Additions | 36 | 75 | 7 | |||||||||
Deductions | (5 | ) | (37 | ) | (5 | ) | ||||||
Balance, December 31, | $ | 77 | $ | 46 | $ | 8 | ||||||
F-54
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Impaired loans with valuation allowances | $ | 24 | $ | 24 | ||||
Impaired loans without valuation allowances | 12 | 2 | ||||||
Subtotal | 36 | 26 | ||||||
Less: Valuation allowances on impaired loans | 24 | 24 | ||||||
Impaired loans, net | $ | 12 | $ | 2 | ||||
As of and for the | ||||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Impaired loans — average investment during the period | $ | 32 | $ | 42 | $ | 21 | ||||||
Impaired loans — interest income recognized — accrual basis | $ | — | $ | 1 | $ | 3 | ||||||
Impaired loans — interest income recognized — cash basis | $ | 2 | $ | 1 | $ | 1 | ||||||
Restructured loans — amount | $ | — | $ | — | $ | — | ||||||
Restructured loans — interest income recognized | $ | — | $ | — | $ | — | ||||||
Loans 90 days or more past due, interest still accruing — amortized cost | $ | 4 | $ | — | $ | — | ||||||
Loans 90 days or more past due, interest no longer accruing — amortized cost | $ | — | $ | — | $ | — | ||||||
Loans in foreclosure — amortized cost | $ | 6 | $ | 1 | $ | — |
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Real estate | $ | 88 | 19.8 | % | $ | 86 | 14.1 | % | ||||||||
Accumulated depreciation | (17 | ) | (3.8 | ) | (16 | ) | (2.6 | ) | ||||||||
Net real estate | 71 | 16.0 | 70 | 11.5 | ||||||||||||
Real estate joint ventures and funds | 374 | 84.0 | 538 | 88.5 | ||||||||||||
Total real estate holdings | $ | 445 | 100.0 | % | $ | 608 | 100.0 | % | ||||||||
F-55
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Office | $ | 127 | 28.6 | % | $ | 252 | 41.5 | % | ||||||||
Real estate investment funds | 96 | 21.6 | 138 | 22.7 | ||||||||||||
Apartments | 72 | 16.2 | 100 | 16.4 | ||||||||||||
Land | 43 | 9.6 | 32 | 5.3 | ||||||||||||
Industrial | 25 | 5.6 | — | — | ||||||||||||
Retail | 16 | 3.6 | 17 | 2.8 | ||||||||||||
Agriculture | 11 | 2.5 | 14 | 2.3 | ||||||||||||
Other | 55 | 12.3 | 55 | 9.0 | ||||||||||||
Total real estate holdings | $ | 445 | 100.0 | % | $ | 608 | 100.0 | % | ||||||||
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Carrying | % of | Carrying | % of | |||||||||||||
Value | Total | Value | Total | |||||||||||||
(In millions) | ||||||||||||||||
Freestanding derivatives with positive fair values | $ | 1,470 | 98.1 | % | $ | 2,258 | 98.3 | % | ||||||||
Joint venture investments | 26 | 1.8 | 31 | 1.3 | ||||||||||||
Tax credit partnerships | 2 | 0.1 | 4 | 0.2 | ||||||||||||
Other | — | — | 4 | 0.2 | ||||||||||||
Total | $ | 1,498 | 100.0 | % | $ | 2,297 | 100.0 | % | ||||||||
F-56
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Maximum | Maximum | |||||||||||||||
Carrying | Exposure | Carrying | Exposure | |||||||||||||
Amount | to Loss (1) | Amount | to Loss (1) | |||||||||||||
(In millions) | ||||||||||||||||
Other limited partnership interests | $ | 838 | $ | 1,273 | $ | 672 | $ | 1,060 | ||||||||
Fixed maturity securitiesavailable-for-sale: | ||||||||||||||||
Foreign corporate securities | 304 | 304 | 152 | 152 | ||||||||||||
U.S. corporate securities | 247 | 247 | 182 | 182 | ||||||||||||
Real estate joint ventures | 32 | 39 | 41 | 41 | ||||||||||||
Total | $ | 1,421 | $ | 1,863 | $ | 1,047 | $ | 1,435 | ||||||||
(1) | The maximum exposure to loss relating to the real estate joint ventures and other limited partnership interests is equal to the carrying amounts plus any unfunded commitments. The maximum exposure to loss relating to the fixed maturity securitiesavailable-for-sale is equal to the carrying amounts or carrying amounts of retained interests. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. |
F-57
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Estimated fair value of invested assets transferred to affiliates | $ | 717 | $ | 27 | $ | 628 | ||||||
Amortized cost of invested assets transferred to affiliates | $ | 769 | $ | 23 | $ | 629 | ||||||
Net investment gains (losses) recognized on transfers to affiliates | $ | (52 | ) | $ | 4 | $ | (1 | ) | ||||
Estimated fair value of invested assets transferred from affiliates | $ | 143 | $ | 230 | $ | 836 |
3. | Derivative Financial Instruments |
F-58
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||||
Fair | 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 | $ | 5,261 | $ | 534 | $ | 179 | $ | 7,074 | $ | 736 | $ | 347 | |||||||||||||
Interest rate floors | 7,986 | 78 | 34 | 12,071 | 494 | — | ||||||||||||||||||||
Interest rate caps | 4,003 | 15 | — | 3,513 | 1 | — | ||||||||||||||||||||
Interest rate futures | 835 | 2 | 1 | 1,064 | 4 | 11 | ||||||||||||||||||||
Foreign currency | Foreign currency swaps | 2,678 | 689 | 93 | 3,771 | 699 | 219 | |||||||||||||||||||
Foreign currency forwards | 79 | 3 | — | 92 | — | 9 | ||||||||||||||||||||
Credit | Swap spreadlocks | — | — | — | 208 | — | 8 | |||||||||||||||||||
Credit default swaps | 966 | 12 | 31 | 648 | 19 | 8 | ||||||||||||||||||||
Credit forwards | 90 | — | 3 | — | — | — | ||||||||||||||||||||
Equity market | Equity futures | 81 | 1 | — | 370 | — | 5 | |||||||||||||||||||
Equity options | 775 | 112 | — | 813 | 248 | — | ||||||||||||||||||||
Variance swaps | 1,081 | 24 | 6 | 1,081 | 57 | — | ||||||||||||||||||||
Total | $ | 23,835 | $ | 1,470 | $ | 347 | $ | 30,705 | $ | 2,258 | $ | 607 | ||||||||||||||
(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. |
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 | $ | 442 | $ | 2,612 | $ | 933 | $ | 1,274 | $ | 5,261 | ||||||||||
Interest rate floors | — | — | 7,986 | — | 7,986 | |||||||||||||||
Interest rate caps | 3 | 4,000 | — | — | 4,003 | |||||||||||||||
Interest rate futures | 835 | — | — | — | 835 | |||||||||||||||
Foreign currency swaps | 145 | 1,878 | 399 | 256 | 2,678 | |||||||||||||||
Foreign currency forwards | 79 | — | — | — | 79 | |||||||||||||||
Credit default swaps | — | 928 | 38 | — | 966 | |||||||||||||||
Credit forwards | 90 | — | — | — | 90 | |||||||||||||||
Equity futures | 81 | — | — | — | 81 | |||||||||||||||
Equity options | 121 | 577 | 77 | — | 775 | |||||||||||||||
Variance swaps | — | 519 | 562 | — | 1,081 | |||||||||||||||
Total | $ | 1,796 | $ | 10,514 | $ | 9,995 | $ | 1,530 | $ | 23,835 | ||||||||||
F-59
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-60
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-61
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Fair | Fair | |||||||||||||||||||||||
Notional | Value | Notional | Value | |||||||||||||||||||||
Derivatives Designated as Hedging Instruments | Amount | Assets | Liabilities | Amount | Assets | Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Fair Value Hedges: | ||||||||||||||||||||||||
Foreign currency swaps | $ | 850 | $ | 370 | $ | 15 | $ | 707 | $ | 68 | $ | 133 | ||||||||||||
Interest rate swaps | 220 | 11 | 2 | 138 | — | 28 | ||||||||||||||||||
Subtotal | 1,070 | 381 | 17 | 845 | 68 | 161 | ||||||||||||||||||
Cash Flow Hedges: | ||||||||||||||||||||||||
Foreign currency swaps | 166 | 15 | 7 | 486 | 91 | — | ||||||||||||||||||
Credit forwards | 90 | — | 3 | — | — | — | ||||||||||||||||||
Subtotal | 256 | 15 | 10 | 486 | 91 | — | ||||||||||||||||||
Total Qualifying Hedges | $ | 1,326 | $ | 396 | $ | 27 | $ | 1,331 | $ | 159 | $ | 161 | ||||||||||||
F-62
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Fair | Fair | |||||||||||||||||||||||
Derivatives Not Designated or Not | Notional | Value | Notional | Value | ||||||||||||||||||||
Qualifying as Hedging Instruments | Amount | Assets | Liabilities | Amount | Assets | Liabilities | ||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Interest rate swaps | $ | 5,041 | $ | 523 | $ | 177 | $ | 6,936 | $ | 736 | $ | 319 | ||||||||||||
Interest rate floors | 7,986 | 78 | 34 | 12,071 | 494 | — | ||||||||||||||||||
Interest rate caps | 4,003 | 15 | — | 3,513 | 1 | — | ||||||||||||||||||
Interest rate futures | 835 | 2 | 1 | 1,064 | 4 | 11 | ||||||||||||||||||
Foreign currency swaps | 1,662 | 304 | 71 | 2,578 | 540 | 86 | ||||||||||||||||||
Foreign currency forwards | 79 | 3 | — | 92 | — | 9 | ||||||||||||||||||
Swap spreadlocks | — | — | — | 208 | — | 8 | ||||||||||||||||||
Credit default swaps | 966 | 12 | 31 | 648 | 19 | 8 | ||||||||||||||||||
Equity futures | 81 | 1 | — | 370 | — | 5 | ||||||||||||||||||
Equity options | 775 | 112 | — | 813 | 248 | — | ||||||||||||||||||
Variance swaps | 1,081 | 24 | 6 | 1,081 | 57 | — | ||||||||||||||||||
Total non-designated or non-qualifying derivatives | $ | 22,509 | $ | 1,074 | $ | 320 | $ | 29,374 | $ | 2,099 | $ | 446 | ||||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Qualifying hedges: | ||||||||||||
Net investment income | $ | (1 | ) | $ | (2 | ) | $ | — | ||||
Interest credited to policyholder account balances | 40 | 6 | (6 | ) | ||||||||
Non-qualifying hedges: | ||||||||||||
Net investment gains (losses) | (8 | ) | 43 | 82 | ||||||||
Total | $ | 31 | $ | 47 | $ | 76 | ||||||
F-63
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Net Investment | Ineffectiveness | |||||||||||||
Gains (Losses) | Net Investment Gains | Recognized in | ||||||||||||
Derivatives in Fair Value | Hedged Items in Fair Value | Recognized | (Losses) Recognized | Net Investment | ||||||||||
Hedging Relationships | Hedging Relationships | for Derivatives | for Hedged Items | Gains (Losses) | ||||||||||
(In millions) | ||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||
Interest rate swaps: | Fixed maturity securities | $ | 6 | $ | (6 | ) | $ | — | ||||||
Policyholder account balances (1) | (8 | ) | 4 | (4 | ) | |||||||||
Foreign currency swaps: | Foreign-denominated | |||||||||||||
policyholder account balances (2) | 111 | (117 | ) | (6 | ) | |||||||||
Total | $ | 109 | $ | (119 | ) | $ | (10 | ) | ||||||
For the Year Ended December 31, 2008 | $ | (87 | ) | $ | 86 | $ | (1 | ) | ||||||
For the Year Ended December 31, 2007 | $ | 18 | $ | (20 | ) | $ | (2 | ) | ||||||
(1) | Fixed rate liabilities | |
(2) | Fixed rate or floating rate liabilities |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Other comprehensive income (loss), balance at January 1, | $ | 20 | $ | (13 | ) | $ | (9 | ) | ||||
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow hedges | (44 | ) | 9 | 39 | ||||||||
Amounts reclassified to net investment gains (losses) | 23 | 24 | (43 | ) | ||||||||
Other comprehensive income (loss), balance at December 31, | $ | (1 | ) | $ | 20 | $ | (13 | ) | ||||
F-64
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Amount and Location | ||||||||
of Gains (Losses) | ||||||||
Amount of Gains | Reclassified from | |||||||
(Losses) Deferred | Accumulated Other Comprehensive | |||||||
in Accumulated Other | Income (Loss) into Income (Loss) | |||||||
Derivatives in Cash Flow | Comprehensive Income | Net Investment | ||||||
Hedging Relationships | (Loss) on Derivatives | Gains (Losses) | ||||||
(In millions) | ||||||||
For the Year Ended December 31, 2009: | ||||||||
Foreign currency swaps | $ | (58 | ) | $ | (36 | ) | ||
Interest rate forwards | 17 | 13 | ||||||
Credit forwards | (3 | ) | — | |||||
Total | $ | (44 | ) | $ | (23 | ) | ||
For the Year Ended December 31, 2008: | ||||||||
Foreign currency swaps | $ | 9 | $ | (24 | ) | |||
Total | $ | 9 | $ | (24 | ) | |||
For the Year Ended December 31, 2007: | ||||||||
Foreign currency swaps | $ | 39 | $ | 43 | ||||
Total | $ | 39 | $ | 43 | ||||
F-65
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Net | Net | |||||||
Investment | Investment | |||||||
Gains (Losses) | Income (1) | |||||||
(In millions) | ||||||||
For the Year Ended December 31, 2009: | ||||||||
Interest rate swaps | $ | (149 | ) | $ | — | |||
Interest rate floors | (265 | ) | — | |||||
Interest rate caps | 4 | — | ||||||
Interest rate futures | (37 | ) | — | |||||
Equity futures | (71 | ) | — | |||||
Foreign currency swaps | (3 | ) | — | |||||
Foreign currency forwards | (4 | ) | — | |||||
Equity options | (121 | ) | (1 | ) | ||||
Variance swaps | (40 | ) | — | |||||
Credit default swaps | (50 | ) | — | |||||
Total | $ | (736 | ) | $ | (1 | ) | ||
For the Year Ended December 31, 2008 | $ | 514 | $ | — | ||||
For the Year Ended December 31, 2007 | $ | 112 | $ | — | ||||
(1) | Changes in estimated fair value related to economic hedges of equity method investments in joint ventures. |
F-66
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Maximum | Maximum | |||||||||||||||||||||||
Estimated | Amount | Estimated | Amount of | |||||||||||||||||||||
Fair | of Future | Weighted | Fair | Future | Weighted | |||||||||||||||||||
Value of Credit | Payments under | Average | Value 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) | $ | 1 | $ | 25 | 4.0 | $ | — | $ | 25 | 5.0 | ||||||||||||||
Credit default swaps referencing indices | 7 | 437 | 3.5 | (2 | ) | 222 | 4.0 | |||||||||||||||||
Subtotal | 8 | 462 | 3.5 | (2 | ) | 247 | 4.1 | |||||||||||||||||
Baa | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | 5 | 4.0 | — | 10 | 5.0 | ||||||||||||||||||
Credit default swaps referencing indices | — | 10 | 5.0 | — | — | — | ||||||||||||||||||
Subtotal | — | 15 | 4.7 | — | 10 | 5.0 | ||||||||||||||||||
Ba | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | (1 | ) | 20 | 0.7 | |||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | — | — | (1 | ) | 20 | 0.7 | |||||||||||||||||
B | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | — | — | — | — | — | ||||||||||||||||||
Caa and lower | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | — | — | — | — | — | ||||||||||||||||||
In or near default | ||||||||||||||||||||||||
Single name credit default swaps (corporate) | — | — | — | — | — | — | ||||||||||||||||||
Credit default swaps referencing indices | — | — | — | — | — | — | ||||||||||||||||||
Subtotal | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | 8 | $ | 477 | 3.5 | $ | (3 | ) | $ | 277 | 3.9 | |||||||||||||
(1) | The rating agency designations are based on availability and the midpoint of the applicable ratings among Moody’s Investors Service, S&P and Fitch Ratings. If no rating is available from a rating agency, then the MetLife rating is used. | |
(2) | Assumes the value of the referenced credit obligations is zero. | |
(3) | The weighted average years to maturity of the credit default swaps is calculated based on weighted average notional amounts. |
F-67
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Estimated | Estimated | |||||||||||
Fair Value (1) of | Fair Value of | |||||||||||
Derivatives in Net | Collateral | |||||||||||
Liability Position | Provided | Fair Value of Incremental Collateral | ||||||||||
December 31, 2009 | December 31, 2009 | Provided Upon: | ||||||||||
Downgrade in the | ||||||||||||
One Notch | Company’s Credit Rating | |||||||||||
Downgrade | to a Level that Triggers | |||||||||||
in the | Full Overnight | |||||||||||
Company’s | Collateralization or | |||||||||||
Fixed Maturity | Credit | Termination | ||||||||||
Securities (2) | Rating | of the Derivative Position | ||||||||||
(In millions) | ||||||||||||
$42 | $ | — | $ | 8 | $ | 42 |
F-68
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
(1) | After taking into consideration the existence of netting agreements. | |
(2) | Included in fixed maturity securities in the consolidated balance sheets. The counterparties are permitted by contract to sell or repledge this collateral. At December 31, 2009, the Company did not provide any cash collateral. |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Net embedded derivatives within asset host contracts: | ||||||||
Ceded guaranteed minimum benefits | $ | 724 | $ | 2,062 | ||||
Call options in equity securities | (5 | ) | (36 | ) | ||||
Net embedded derivatives within asset host contracts | $ | 719 | $ | 2,026 | ||||
Net embedded derivatives within liability host contracts: | ||||||||
Direct guaranteed minimum benefits | $ | 290 | $ | 1,432 | ||||
Other | (11 | ) | (27 | ) | ||||
Net embedded derivatives within liability host contracts | $ | 279 | $ | 1,405 | ||||
F-69
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Net investment gains (losses) (1), (2) | $ | (314 | ) | $ | 436 | $ | 116 |
(1) | Effective January 1, 2008, the valuation of the Company’s guaranteed minimum benefits includes an adjustment for the Company’s own credit. Included in net investment gains (losses) for the years ended December 31, 2009 and 2008 were gains (losses) of ($567) million and $738 million, respectively, in connection with this adjustment. | |
(2) | See Note 8 for discussion of affiliated net investment gains (losses) included in the table above. |
4. | Fair Value |
F-70
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Estimated | ||||||||||||
Notional | Carrying | Fair | ||||||||||
December 31, 2009 | Amount | Value | Value | |||||||||
(In millions) | ||||||||||||
Assets | ||||||||||||
Fixed maturity securities | $ | 41,275 | $ | 41,275 | ||||||||
Equity securities | $ | 459 | $ | 459 | ||||||||
Trading securities | $ | 938 | $ | 938 | ||||||||
Mortgage loans | $ | 4,748 | $ | 4,345 | ||||||||
Policy loans | $ | 1,189 | $ | 1,243 | ||||||||
Real estate joint ventures (1) | $ | 64 | $ | 62 | ||||||||
Other limited partnership interests (1) | $ | 128 | $ | 151 | ||||||||
Short-term investments | $ | 1,775 | $ | 1,775 | ||||||||
Other invested assets (2) | $ | 16,580 | $ | 1,470 | $ | 1,470 | ||||||
Cash and cash equivalents | $ | 2,574 | $ | 2,574 | ||||||||
Accrued investment income | $ | 516 | $ | 516 | ||||||||
Premiums and other receivables (1) | $ | 4,582 | $ | 4,032 | ||||||||
Separate account assets | $ | 49,449 | $ | 49,449 | ||||||||
Net embedded derivatives within asset host contracts (3) | $ | 724 | $ | 724 | ||||||||
Liabilities | ||||||||||||
Policyholder account balances (1) | $ | 24,591 | $ | 24,233 | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 7,169 | $ | 7,169 | ||||||||
Long-term debt — affiliated | $ | 950 | $ | 1,003 | ||||||||
Other liabilities: (1) | ||||||||||||
Derivative liabilities | $ | 7,255 | $ | 347 | $ | 347 | ||||||
Other | $ | 188 | $ | 188 | ||||||||
Separate account liabilities (1) | $ | 1,367 | $ | 1,367 | ||||||||
Net embedded derivatives within liability host contracts (3) | $ | 279 | $ | 279 | ||||||||
Commitments(4) | ||||||||||||
Mortgage loan commitments | $ | 131 | $ | — | $ | (5 | ) | |||||
Commitments to fund bank credit facilities and private corporate bond investments | $ | 445 | $ | — | $ | (29 | ) |
F-71
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Estimated | ||||||||||||
Notional | Carrying | Fair | ||||||||||
December 31, 2008 | Amount | Value | Value | |||||||||
(In millions) | ||||||||||||
Assets | ||||||||||||
Fixed maturity securities | $ | 34,846 | $ | 34,846 | ||||||||
Equity securities | $ | 474 | $ | 474 | ||||||||
Trading securities | $ | 232 | $ | 232 | ||||||||
Mortgage loans | $ | 4,447 | $ | 4,252 | ||||||||
Policy loans | $ | 1,192 | $ | 1,296 | ||||||||
Real estate joint ventures (1) | $ | 92 | $ | 103 | ||||||||
Other limited partnership interests (1) | $ | 189 | $ | 247 | ||||||||
Short-term investments | $ | 3,127 | $ | 3,127 | ||||||||
Other invested assets (2) | $ | 21,395 | $ | 2,258 | $ | 2,258 | ||||||
Cash and cash equivalents | $ | 5,656 | $ | 5,656 | ||||||||
Accrued investment income | $ | 487 | $ | 487 | ||||||||
Premiums and other receivables (1) | $ | 3,171 | $ | 2,700 | ||||||||
Separate account assets | $ | 35,892 | $ | 35,892 | ||||||||
Net embedded derivatives within asset host contracts (3) | $ | 2,062 | $ | 2,062 | ||||||||
Liabilities | ||||||||||||
Policyholder account balances (1) | $ | 26,316 | $ | 23,937 | ||||||||
Payables for collateral under securities loaned and other transactions | $ | 7,871 | $ | 7,871 | ||||||||
Short-term debt | $ | 300 | $ | 300 | ||||||||
Long-term debt — affiliated | $ | 950 | $ | 671 | ||||||||
Other liabilities: (1) | ||||||||||||
Derivative liabilities | $ | 9,310 | $ | 607 | $ | 607 | ||||||
Other | $ | 158 | $ | 158 | ||||||||
Separate account liabilities (1) | $ | 1,181 | $ | 1,181 | ||||||||
Net embedded derivatives within liability host contracts (3) | $ | 1,405 | $ | 1,405 | ||||||||
Commitments(4) | ||||||||||||
Mortgage loan commitments | $ | 231 | $ | — | $ | (15 | ) | |||||
Commitments to fund bank credit facilities and private corporate bond investments | $ | 332 | $ | — | $ | (101 | ) |
(1) | Carrying values presented herein differ from those presented in the consolidated balance sheets because certain items within the respective financial statement caption are not considered financial instruments. Financial statement captions excluded from the table above are not considered financial instruments. | |
(2) | Other invested assets is comprised of freestanding derivatives with positive estimated fair values. | |
(3) | Net embedded derivatives within asset host contracts are presented within premiums and other receivables. Net embedded derivatives within liability host contracts are presented within policyholder account balances and other liabilities. At December 31, 2009 and 2008, equity securities also included embedded derivatives of ($5) million and ($36) million, respectively. | |
(4) | Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities. |
F-72
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-73
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-74
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-75
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-76
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-77
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-78
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, 2009 | ||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant | Total | ||||||||||||||
Identical Assets | Significant Other | Unobservable | Estimated | |||||||||||||
and Liabilities | Observable Inputs | Inputs | Fair | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | |||||||||||||
(In millions) | ||||||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
U.S. corporate securities | $ | — | $ | 13,793 | $ | 1,605 | $ | 15,398 | ||||||||
Foreign corporate securities | — | 6,344 | 994 | 7,338 | ||||||||||||
U.S. Treasury and agency securities | 3,972 | 2,252 | 33 | 6,257 | ||||||||||||
RMBS | — | 5,827 | 25 | 5,852 | ||||||||||||
CMBS | — | 2,572 | 45 | 2,617 | ||||||||||||
ABS | — | 1,452 | 537 | 1,989 | ||||||||||||
State and political subdivision securities | — | 1,147 | 32 | 1,179 | ||||||||||||
Foreign government securities | — | 629 | 16 | 645 | ||||||||||||
Total fixed maturity securities | 3,972 | 34,016 | 3,287 | 41,275 | ||||||||||||
Equity securities: | ||||||||||||||||
Non-redeemable preferred stock | — | 48 | 258 | 306 | ||||||||||||
Common stock | 72 | 70 | 11 | 153 | ||||||||||||
Total equity securities | 72 | 118 | 269 | 459 | ||||||||||||
Trading securities | 931 | 7 | — | 938 | ||||||||||||
Short-term investments (1) | 1,057 | 703 | 8 | 1,768 | ||||||||||||
Derivative assets (2) | 3 | 1,410 | 57 | 1,470 | ||||||||||||
Net embedded derivatives within asset host contracts (3) | — | — | 724 | 724 | ||||||||||||
Separate account assets (4) | 69 | 49,227 | 153 | 49,449 | ||||||||||||
Total assets | $ | 6,104 | $ | 85,481 | $ | 4,498 | $ | 96,083 | ||||||||
Liabilities | ||||||||||||||||
Derivative liabilities (2) | $ | 1 | $ | 336 | $ | 10 | $ | 347 | ||||||||
Net embedded derivatives within liability host contracts (3) | — | — | 279 | 279 | ||||||||||||
Total liabilities | $ | 1 | $ | 336 | $ | 289 | $ | 626 | ||||||||
F-79
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, 2008 | ||||||||||||||||
Fair Value Measurements at Reporting Date Using | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant | Total | ||||||||||||||
Identical Assets | Significant Other | Unobservable | Estimated | |||||||||||||
and Liabilities | Observable Inputs | Inputs | Fair | |||||||||||||
(Level 1) | (Level 2) | (Level 3) | Value | |||||||||||||
(In millions) | ||||||||||||||||
Assets | ||||||||||||||||
Fixed maturity securities: | ||||||||||||||||
U.S. corporate securities | $ | — | $ | 11,830 | $ | 1,401 | $ | 13,231 | ||||||||
Foreign corporate securities | — | 4,136 | 926 | 5,062 | ||||||||||||
U.S. Treasury and agency securities | 2,107 | 2,190 | 36 | 4,333 | ||||||||||||
RMBS | — | 7,031 | 62 | 7,093 | ||||||||||||
CMBS | — | 2,158 | 116 | 2,274 | ||||||||||||
ABS | — | 1,169 | 558 | 1,727 | ||||||||||||
State and political subdivision securities | — | 633 | 24 | 657 | ||||||||||||
Foreign government securities | — | 459 | 10 | 469 | ||||||||||||
Total fixed maturity securities | 2,107 | 29,606 | 3,133 | 34,846 | ||||||||||||
Equity securities: | ||||||||||||||||
Non-redeemable preferred stock | — | 38 | 318 | 356 | ||||||||||||
Common stock | 40 | 70 | 8 | 118 | ||||||||||||
Total equity securities | 40 | 108 | 326 | 474 | ||||||||||||
Trading securities | 176 | 6 | 50 | 232 | ||||||||||||
Short-term investments (1) | 1,171 | 1,952 | — | 3,123 | ||||||||||||
Derivative assets (2) | 4 | 1,928 | 326 | 2,258 | ||||||||||||
Net embedded derivatives within asset host contracts (3) | — | — | 2,062 | 2,062 | ||||||||||||
Separate account assets (4) | 35,567 | 166 | 159 | 35,892 | ||||||||||||
Total assets | $ | 39,065 | $ | 33,766 | $ | 6,056 | $ | 78,887 | ||||||||
Liabilities | ||||||||||||||||
Derivative liabilities (2) | $ | 16 | $ | 574 | $ | 17 | $ | 607 | ||||||||
Net embedded derivatives within liability host contracts (3) | — | — | 1,405 | 1,405 | ||||||||||||
Total liabilities | $ | 16 | $ | 574 | $ | 1,422 | $ | 2,012 | ||||||||
(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.). | |
(2) | Derivative assets are presented within other invested assets and derivative liabilities are presented within other liabilities. The amounts are presented gross in the tables above to reflect the presentation in the consolidated balance sheets, but are presented net for purposes of the rollforward in the following tables. | |
(3) | Net embedded derivatives within asset host contracts are presented within premiums and other receivables. Net embedded derivatives within liability host contracts are presented within policyholder account balances and other liabilities. At December 31, 2009 and 2008, equity securities also included embedded derivatives of ($5) million and ($36) million, respectively. | |
(4) | Separate account assets are measured at estimated fair value. Investment performance related to separate account assets is fully offset by corresponding amounts credited to contractholders whose liability is reflected within separate account liabilities. Separate account liabilities are set equal to the estimated fair value of separate account assets. |
F-80
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Level 1 | This category includes certain U.S. Treasury and agency fixed maturity securities; exchange-traded common stock; trading securities and certain short-term money market securities. As it relates to derivatives, this level includes exchange-traded equity and interest rate futures. Separate account assets classified within this level are similar in nature to those classified in this level for the general account. | |
Level 2 | This category includes fixed maturity and equity securities priced principally by independent pricing services using observable inputs. Fixed maturity securities classified as Level 2 include most U.S. Treasury and agency securities, as well as the majority of U.S. and foreign corporate securities, RMBS, CMBS, state and political subdivision securities, foreign government securities, and ABS. Equity securities classified as Level 2 securities consist principally of common stock and non-redeemable preferred stock where market quotes are available but are not considered actively traded. Short-term investments and trading securities included within Level 2 are of a similar nature to these fixed maturity and equity securities. As it relates to derivatives, this level includes all types of derivative instruments utilized by the Company with the exception of exchange-traded futures included within Level 1 and those derivative instruments with unobservable inputs as described in Level 3. Separate account assets classified within this level are generally similar to those classified within this level for the general account, with the exception of certain mutual funds without readily determinable fair values given prices are not published publicly. | |
Level 3 | This category includes fixed maturity securities priced principally through independent broker quotations or market standard valuation methodologies using inputs that are not market observable or cannot be derived principally from or corroborated by observable market data. This level primarily consists of less liquid fixed maturity securities with very limited trading activity or where less price transparency exists around the inputs to the valuation methodologies including: U.S. and foreign corporate securities — including below investment grade private placements; CMBS; and ABS — including all of those supported bysub-prime mortgage loans. Equity securities classified as Level 3 securities consist principally of non-redeemable preferred stock and common stock of companies that are privately held or of companies for which there has been very limited trading activity or where less price transparency exists around the inputs to the valuation. Short-term investments and trading securities included within Level 3 are of a similar nature to these fixed maturity and equity securities. As it relates to derivatives, this category includes: swap spreadlocks with maturities which extend beyond observable periods; equity variance swaps with unobservable volatility inputs or that are priced via independent broker quotations; foreign currency swaps priced through independent broker quotations; interest rate swaps with maturities which extend beyond the observable portion of the yield curve; credit default swaps based upon baskets of credits having unobservable credit correlations; equity options with unobservable volatility inputs; implied volatility swaps with unobservable volatility inputs; credit forwards having unobservable repurchase rates and interest rate caps referencing unobservable yield curvesand/or which include liquidity and volatility adjustments. Separate account assets classified within this level are generally similar to those classified within this level for the general account; however, they also include other limited partnership interests. Embedded derivatives classified within this level include embedded derivatives associated with certain variable annuity guarantees and embedded derivatives related to funds withheld on ceded reinsurance. |
F-81
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (1) | ||||||||||||||||||||||||||||||||
Total Realized/Unrealized | ||||||||||||||||||||||||||||||||
Gains (Losses) included in: | Purchases, | |||||||||||||||||||||||||||||||
Other | Sales, | Transfer In | ||||||||||||||||||||||||||||||
Balance, | Impact of | Balance, | Comprehensive | Issuances and | and/or Out | Balance, | ||||||||||||||||||||||||||
December 31, 2007 | Adoption (2) | January 1, | Earnings (3, 4) | Income (Loss) | Settlements (5) | of Level 3 (6) | December 31, | |||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
U.S. corporate securities | $ | 1,401 | $ | (114 | ) | $ | 192 | $ | (172 | ) | $ | 298 | $ | 1,605 | ||||||||||||||||||
Foreign corporate securities | 926 | (95 | ) | 334 | (47 | ) | (124 | ) | 994 | |||||||||||||||||||||||
U.S. Treasury and agency securities | 36 | — | (1 | ) | (2 | ) | — | 33 | ||||||||||||||||||||||||
RMBS | 62 | (4 | ) | 5 | (9 | ) | (29 | ) | 25 | |||||||||||||||||||||||
CMBS | 116 | (42 | ) | 50 | (7 | ) | (72 | ) | 45 | |||||||||||||||||||||||
ABS | 558 | (51 | ) | 171 | (138 | ) | (3 | ) | 537 | |||||||||||||||||||||||
State and political subdivision securities | 24 | — | 6 | 2 | — | 32 | ||||||||||||||||||||||||||
Foreign government securities | 10 | — | 1 | (1 | ) | 6 | 16 | |||||||||||||||||||||||||
Total fixed maturity securities | $ | 3,133 | $ | (306 | ) | $ | 758 | $ | (374 | ) | $ | 76 | $ | 3,287 | ||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Non-redeemable preferred stock | $ | 318 | $ | (101 | ) | $ | 113 | $ | (66 | ) | $ | (6 | ) | $ | 258 | |||||||||||||||||
Common stock | 8 | — | (1 | ) | 4 | — | 11 | |||||||||||||||||||||||||
Total equity securities | $ | 326 | $ | (101 | ) | $ | 112 | $ | (62 | ) | $ | (6 | ) | $ | 269 | |||||||||||||||||
Trading securities | $ | 50 | $ | — | $ | — | $ | (50 | ) | $ | — | $ | — | |||||||||||||||||||
Short-term investments | $ | — | $ | — | $ | — | $ | 8 | $ | — | $ | 8 | ||||||||||||||||||||
Net derivatives (7) | $ | 309 | $ | (40 | ) | $ | (3 | ) | $ | (15 | ) | $ | (204 | ) | $ | 47 | ||||||||||||||||
Separate account assets (8) | $ | 159 | $ | (7 | ) | $ | — | $ | 1 | $ | — | $ | 153 | |||||||||||||||||||
Net embedded derivatives (9) | $ | 657 | $ | (328 | ) | $ | — | $ | 116 | $ | — | $ | 445 | |||||||||||||||||||
For the Year Ended December 31, 2008: | ||||||||||||||||||||||||||||||||
Fixed maturity securities: | ||||||||||||||||||||||||||||||||
U.S. corporate securities | $ | 1,645 | $ | — | $ | 1,645 | $ | (167 | ) | $ | (313 | ) | $ | 101 | $ | 135 | $ | 1,401 | ||||||||||||||
Foreign corporate securities | 1,355 | — | 1,355 | (12 | ) | (504 | ) | (110 | ) | 197 | 926 | |||||||||||||||||||||
U.S. Treasury and agency securities | 19 | — | 19 | — | — | 34 | (17 | ) | 36 | |||||||||||||||||||||||
RMBS | 323 | — | 323 | 2 | (46 | ) | (156 | ) | (61 | ) | 62 | |||||||||||||||||||||
CMBS | 258 | — | 258 | (66 | ) | (76 | ) | — | — | 116 | ||||||||||||||||||||||
ABS | 925 | — | 925 | (20 | ) | (254 | ) | (84 | ) | (9 | ) | 558 | ||||||||||||||||||||
State and political subdivision securities | 44 | — | 44 | (1 | ) | (19 | ) | — | — | 24 | ||||||||||||||||||||||
Foreign government securities | 33 | — | 33 | 1 | (2 | ) | (17 | ) | (5 | ) | 10 | |||||||||||||||||||||
Total fixed maturity securities | $ | 4,602 | $ | — | $ | 4,602 | $ | (263 | ) | $ | (1,214 | ) | $ | (232 | ) | $ | 240 | $ | 3,133 | |||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Non-redeemable preferred stock | $ | 521 | $ | — | $ | 521 | $ | (44 | ) | $ | (109 | ) | $ | (50 | ) | $ | — | $ | 318 | |||||||||||||
Common stock | 35 | — | 35 | (4 | ) | (1 | ) | (22 | ) | — | 8 | |||||||||||||||||||||
Total equity securities | $ | 556 | $ | — | $ | 556 | $ | (48 | ) | $ | (110 | ) | $ | (72 | ) | $ | — | $ | 326 | |||||||||||||
Trading securities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 50 | $ | — | $ | 50 | ||||||||||||||||
Net derivatives (7) | $ | 108 | $ | — | $ | 108 | $ | 266 | $ | — | $ | (65 | ) | $ | — | $ | 309 | |||||||||||||||
Separate account assets (8) | $ | 183 | $ | — | $ | 183 | $ | (22 | ) | $ | — | $ | — | $ | (2 | ) | $ | 159 | ||||||||||||||
Net embedded derivatives (9) | $ | 125 | $ | 92 | $ | 217 | $ | 366 | $ | — | $ | 74 | $ | — | $ | 657 |
(1) | Amounts presented do not reflect any associated hedging activities. Actual earnings associated with Level 3, inclusive of hedging activities, could differ materially. | |
(2) | Impact of adoption of fair value measurement guidance represents the amount recognized in earnings as a change in estimate associated with Level 3 financial instruments held at January 1, 2008. Such amount was offset by a reduction to DAC of $30 million resulting in a net impact of $62 million. This net impact of |
F-82
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
$62 million along with a $3 million reduction in the estimated fair value of Level 2 freestanding derivatives resulted in a total net impact of adoption of $59 million. | ||
(3) | Amortization of premium/discount is included within net investment income which is reported within the earnings caption of total gains (losses). Impairments charged to earnings are included within net investment gains (losses) which are reported within the earnings caption of total gains (losses). Lapses associated with embedded derivatives are included with the earnings caption of total gains (losses). | |
(4) | Interest and dividend accruals, as well as cash interest coupons and dividends received, are excluded from the rollforward. | |
(5) | The amount reported within purchases, sales, issuances and settlements is the purchase/issuance price (for purchases and issuances) and the sales/settlement proceeds (for sales and settlements) based upon the actual date purchased/issued or sold/settled. Items purchased/issued and sold/settled in the same period are excluded from the rollforward. For embedded derivatives, attributed fees are included within this caption along with settlements, if any. | |
(6) | Total gains and losses (in earnings and other comprehensive income (loss)) are calculated assuming transfers in and/or out of Level 3 occurred at the beginning of the period. Items transferred in and out in the same period are excluded from the rollforward. | |
(7) | Freestanding derivative assets and liabilities are presented net for purposes of the rollforward. | |
(8) | 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. |
Total Gains and Losses | ||||||||||||
Classification of Realized/Unrealized Gains | ||||||||||||
(Losses) included in Earnings | ||||||||||||
Net | ||||||||||||
Net | Investment | |||||||||||
Investment | Gains | |||||||||||
Income | (Losses) | Total | ||||||||||
(In millions) | ||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||
Fixed maturity securities: | ||||||||||||
U.S. corporate securities | $ | 3 | $ | (117 | ) | $ | (114 | ) | ||||
Foreign corporate securities | (1 | ) | (94 | ) | (95 | ) | ||||||
RMBS | — | (4 | ) | (4 | ) | |||||||
CMBS | 1 | (43 | ) | (42 | ) | |||||||
ABS | — | (51 | ) | (51 | ) | |||||||
Total fixed maturity securities | $ | 3 | $ | (309 | ) | $ | (306 | ) | ||||
Equity securities: | ||||||||||||
Non-redeemable preferred stock | $ | — | $ | (101 | ) | $ | (101 | ) | ||||
Total equity securities | $ | — | $ | (101 | ) | $ | (101 | ) | ||||
Net derivatives | $ | — | $ | (40 | ) | $ | (40 | ) | ||||
Net embedded derivatives | $ | — | $ | (328 | ) | $ | (328 | ) |
F-83
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Total Gains and Losses | ||||||||||||
Classification of Realized/Unrealized Gains | ||||||||||||
(Losses) included in Earnings | ||||||||||||
Net | ||||||||||||
Net | Investment | |||||||||||
Investment | Gains | �� | ||||||||||
Income | (Losses) | Total | ||||||||||
(In millions) | ||||||||||||
For the Year Ended December 31, 2008: | ||||||||||||
Fixed maturity securities: | ||||||||||||
U.S. corporate securities | $ | 5 | $ | (172 | ) | $ | (167 | ) | ||||
Foreign corporate securities | (3 | ) | (9 | ) | (12 | ) | ||||||
RMBS | — | 2 | 2 | |||||||||
CMBS | 4 | (70 | ) | (66 | ) | |||||||
ABS | — | (20 | ) | (20 | ) | |||||||
State and political subdivision securities | (1 | ) | — | (1 | ) | |||||||
Foreign government securities | 1 | — | 1 | |||||||||
Total fixed maturity securities | $ | 6 | $ | (269 | ) | $ | (263 | ) | ||||
Equity securities: | ||||||||||||
Non-redeemable preferred stock | $ | — | $ | (44 | ) | $ | (44 | ) | ||||
Common stock | — | (4 | ) | (4 | ) | |||||||
Total equity securities | $ | — | $ | (48 | ) | $ | (48 | ) | ||||
Net derivatives | $ | — | $ | 266 | $ | 266 | ||||||
Net embedded derivatives | $ | — | $ | 366 | $ | 366 |
F-84
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Changes in Unrealized Gains (Losses) | ||||||||||||
Relating to Assets and Liabilities Held at | ||||||||||||
December 31, 2009 | ||||||||||||
Net | ||||||||||||
Net | Investment | |||||||||||
Investment | Gains | |||||||||||
Income | (Losses) | Total | ||||||||||
(In millions) | ||||||||||||
For the Year Ended December 31, 2009: | ||||||||||||
Fixed maturity securities: | ||||||||||||
U.S. corporate securities | $ | 6 | $ | (105 | ) | $ | (99 | ) | ||||
Foreign corporate securities | (1 | ) | (43 | ) | (44 | ) | ||||||
CMBS | 1 | (56 | ) | (55 | ) | |||||||
ABS | — | (21 | ) | (21 | ) | |||||||
Total fixed maturity securities | $ | 6 | $ | (225 | ) | $ | (219 | ) | ||||
Equity securities: | ||||||||||||
Non-redeemable preferred stock | $ | — | $ | (38 | ) | $ | (38 | ) | ||||
Total equity securities | $ | — | $ | (38 | ) | $ | (38 | ) | ||||
Net derivatives | $ | — | $ | (33 | ) | $ | (33 | ) | ||||
Net embedded derivatives | $ | — | $ | (332 | ) | $ | (332 | ) |
Changes in Unrealized Gains (Losses) | ||||||||||||
Relating to Assets and Liabilities Held at | ||||||||||||
December 31, 2008 | ||||||||||||
Net | ||||||||||||
Net | Investment | |||||||||||
Investment | Gains | |||||||||||
Income | (Losses) | Total | ||||||||||
(In millions) | ||||||||||||
For the Year Ended December 31, 2008: | ||||||||||||
Fixed maturity securities: | ||||||||||||
U.S. corporate securities | $ | 4 | $ | (139 | ) | $ | (135 | ) | ||||
Foreign corporate securities | (3 | ) | (6 | ) | (9 | ) | ||||||
CMBS | 4 | (69 | ) | (65 | ) | |||||||
ABS | — | (16 | ) | (16 | ) | |||||||
Foreign government securities | 1 | — | 1 | |||||||||
Total fixed maturity securities | $ | 6 | $ | (230 | ) | $ | (224 | ) | ||||
Equity securities: | ||||||||||||
Non-redeemable preferred stock | $ | — | $ | (29 | ) | $ | (29 | ) | ||||
Total equity securities | $ | — | $ | (29 | ) | $ | (29 | ) | ||||
Net derivatives | $ | — | $ | 233 | $ | 233 | ||||||
Net embedded derivatives | $ | — | $ | 353 | $ | 353 |
F-85
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
For the Years Ended December 31, | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
Estimated | Estimated | |||||||||||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||||||||||
Value Prior to | Value After | Gains | Value Prior to | Value After | Gains | |||||||||||||||||||
Impairment | Impairment | (Losses) | Impairment | Impairment | (Losses) | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Mortgage loans (1) | $ | — | $ | — | $ | — | $ | 24 | $ | — | $ | (24 | ) | |||||||||||
Other limited partnership interests (2) | $ | 110 | $ | 44 | $ | (66 | ) | $ | 11 | $ | 6 | $ | (5 | ) | ||||||||||
Real estate joint ventures (3) | $ | 90 | $ | 48 | $ | (42 | ) | $ | — | $ | — | $ | — |
(1) | Mortgage Loans —The impaired mortgage loans presented above were written down to their estimated fair values at the date the impairments were recognized. Estimated fair values for impaired mortgage loans are based on observable market prices or, if the loans are in foreclosure or are otherwise determined to be collateral dependent, on the estimated fair value of the underlying collateral, or the present value of the expected future cash flows. Impairments to estimated fair value represent non-recurring fair value measurements that have been categorized as Level 3 due to the lack of price transparency inherent in the limited markets for such mortgage loans. | |
(2) | Other Limited Partnership Interests —The impaired investments presented above were accounted for using the cost basis. Impairments on these cost basis investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several private equity and debt funds that typically invest primarily in a diversified pool of investments across certain investment strategies including domestic and international leveraged buyout funds; power, energy, timber and infrastructure development 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 $32 million as of December 31, 2009. | |
(3) | Real Estate Joint Ventures —The impaired investments presented above were accounted for using the cost basis. Impairments on these cost basis investments were recognized at estimated fair value determined from information provided in the financial statements of the underlying entities in the period in which the impairment was incurred. These impairments to estimated fair value represent non-recurring fair value measurements that have been classified as Level 3 due to the limited activity and price transparency inherent in the market for such investments. This category includes several real estate funds that typically invest primarily in commercial real estate. The estimated fair values of these investments have been determined using the NAV of the Company’s ownership interest in the partners’ capital. Distributions from these investments will be generated from investment gains, from operating income from the underlying investments of the funds, and from liquidation of the underlying assets of the funds. It is estimated that the underlying assets of the funds will be liquidated over the next 2 to 10 years. Unfunded commitments for these investments were $40 million as of December 31, 2009. |
F-86
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
5. | Deferred Policy Acquisition Costs and Value of Business Acquired |
DAC | VOBA | Total | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, 2007 | $ | 1,991 | $ | 3,120 | $ | 5,111 | ||||||
Effect of adoption of new accounting principle | (7 | ) | (125 | ) | (132 | ) | ||||||
Capitalizations | 682 | — | 682 | |||||||||
Subtotal | 2,666 | 2,995 | 5,661 | |||||||||
Less: Amortization related to: | ||||||||||||
Net investment gains (losses) | 44 | (16 | ) | 28 | ||||||||
Other expenses | 388 | 324 | 712 | |||||||||
Total amortization | 432 | 308 | 740 | |||||||||
Less: Unrealized investment gains (losses) | (18 | ) | (9 | ) | (27 | ) | ||||||
Balance at December 31, 2007 | 2,252 | 2,696 | 4,948 | |||||||||
Capitalizations | 835 | — | 835 | |||||||||
Subtotal | 3,087 | 2,696 | 5,783 | |||||||||
Less: Amortization related to: | ||||||||||||
Net investment gains (losses) | 190 | 35 | 225 | |||||||||
Other expenses | 504 | 434 | 938 | |||||||||
Total amortization | 694 | 469 | 1,163 | |||||||||
Less: Unrealized investment gains (losses) | (389 | ) | (434 | ) | (823 | ) | ||||||
Less: Other | 3 | — | 3 | |||||||||
Balance at December 31, 2008 | 2,779 | 2,661 | 5,440 | |||||||||
Capitalizations | 851 | — | 851 | |||||||||
Subtotal | 3,630 | 2,661 | 6,291 | |||||||||
Less: Amortization related to: | ||||||||||||
Net investment gains (losses) | (225 | ) | (86 | ) | (311 | ) | ||||||
Other expenses | 408 | 197 | 605 | |||||||||
Total amortization | 183 | 111 | 294 | |||||||||
Less: Unrealized investment gains (losses) | 322 | 433 | 755 | |||||||||
Less: Other | (2 | ) | — | (2 | ) | |||||||
Balance at December 31, 2009 | $ | 3,127 | $ | 2,117 | $ | 5,244 | ||||||
F-87
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
DAC | VOBA | Total | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Retirement Products | $ | 1,785 | $ | 1,416 | $ | 1,275 | $ | 1,755 | $ | 3,060 | $ | 3,171 | ||||||||||||
Corporate Benefit Funding | 6 | 5 | 1 | 3 | 7 | 8 | ||||||||||||||||||
Insurance Products | 1,292 | 1,351 | 841 | 903 | 2,133 | 2,254 | ||||||||||||||||||
Corporate & Other | 44 | 7 | — | — | 44 | 7 | ||||||||||||||||||
Total | $ | 3,127 | $ | 2,779 | $ | 2,117 | $ | 2,661 | $ | 5,244 | $ | 5,440 | ||||||||||||
6. | Goodwill |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Retirement Products | $ | 219 | $ | 219 | ||||
Corporate Benefit Funding | 307 | 307 | ||||||
Insurance Products: | ||||||||
Non-medical health | 5 | 5 | ||||||
Individual life | 17 | 17 | ||||||
Total Insurance Products | 22 | 22 | ||||||
Corporate & Other | 405 | 405 | ||||||
Total | $ | 953 | $ | 953 | ||||
F-88
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
7. | Insurance |
Future Policy | ||||||||||||||||||||||||
Benefits | Policyholder Account Balances | Other Policyholder Funds | ||||||||||||||||||||||
December 31, | ||||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Retirement Products | $ | 1,435 | $ | 1,215 | $ | 21,059 | $ | 18,905 | $ | 19 | $ | 30 | ||||||||||||
Corporate Benefit Funding | 12,697 | 12,043 | 9,393 | 12,553 | 5 | 5 | ||||||||||||||||||
Insurance Products | 2,391 | 2,123 | 6,052 | 5,531 | 1,997 | 1,848 | ||||||||||||||||||
Corporate & Other | 5,098 | 4,832 | 938 | 186 | 276 | 202 | ||||||||||||||||||
Total | $ | 21,621 | $ | 20,213 | $ | 37,442 | $ | 37,175 | $ | 2,297 | $ | 2,085 | ||||||||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 224 | $ | 232 | $ | 237 | ||||||
Amortization | (9 | ) | (8 | ) | (5 | ) | ||||||
Balance at December 31, | $ | 215 | $ | 224 | $ | 232 | ||||||
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 422 | $ | 403 | $ | 330 | ||||||
Capitalization | 124 | 111 | 124 | |||||||||
Amortization | (53 | ) | (92 | ) | (51 | ) | ||||||
Balance at December 31, | $ | 493 | $ | 422 | $ | 403 | ||||||
F-89
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-90
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at January 1, | $ | 691 | $ | 612 | $ | 551 | ||||||
Less: Reinsurance recoverables | (589 | ) | (463 | ) | (403 | ) | ||||||
Net balance at January 1, | 102 | 149 | 148 | |||||||||
Incurred related to: | ||||||||||||
Current year | 26 | 8 | 32 | |||||||||
Prior years | (17 | ) | (29 | ) | (5 | ) | ||||||
9 | (21 | ) | 27 | |||||||||
Paid related to: | ||||||||||||
Current year | (1 | ) | (2 | ) | (2 | ) | ||||||
Prior years | (11 | ) | (24 | ) | (24 | ) | ||||||
(12 | ) | (26 | ) | (26 | ) | |||||||
Net balance at December 31, | 99 | 102 | 149 | |||||||||
Add: Reinsurance recoverables | 706 | 589 | 463 | |||||||||
Balance at December 31, | $ | 805 | $ | 691 | $ | 612 | ||||||
F-91
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
In the | At | In the | At | |||||||||||||
Event of Death | Annuitization | Event of Death | Annuitization | |||||||||||||
(In millions) | ||||||||||||||||
Annuity Contracts (1) | ||||||||||||||||
Return of Net Deposits | ||||||||||||||||
Separate account value | $ | 15,705 | N/A | $ | 9,721 | N/A | ||||||||||
Net amount at risk (2) | $ | 1,018 | (3) | N/A | $ | 2,813 | (3) | N/A | ||||||||
Average attained age of contractholders | 62 years | N/A | 62 years | N/A | ||||||||||||
Anniversary Contract Value or Minimum Return | ||||||||||||||||
Separate account value | $ | 35,687 | $ | 22,157 | $ | 27,572 | $ | 13,217 | ||||||||
Net amount at risk (2) | $ | 5,093 | (3) | $ | 4,158 | (4) | $ | 9,876 | (3) | $ | 6,323 | (4) | ||||
Average attained age of contractholders | 60 years | 61 years | 58 years | 61 years |
December 31, | ||||||||
2009 | 2008 | |||||||
Secondary | Secondary | |||||||
Guarantees | Guarantees | |||||||
(In millions) | ||||||||
Universal and Variable Life Contracts (1) | ||||||||
Account value (general and separate account) | $ | 3,805 | $ | 2,917 | ||||
Net amount at risk (2) | $ | 58,134 | (3) | $ | 43,237 | (3) | ||
Average attained age of policyholders | 58 years | 58 years |
(1) | The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. | |
(2) | The net amount at risk is based on the direct amount at risk (excluding reinsurance). | |
(3) | The net amount at risk for guarantees of amounts in the event of death is defined as the current GMDB in excess of the current account balance at the balance sheet date. | |
(4) | The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. |
F-92
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Universal and | ||||||||||||||||
Variable Life | ||||||||||||||||
Annuity Contracts | Contracts | |||||||||||||||
Guaranteed | Guaranteed | |||||||||||||||
Death | Annuitization | Secondary | ||||||||||||||
Benefits | Benefits | Guarantees | Total | |||||||||||||
(In millions) | ||||||||||||||||
Direct: | ||||||||||||||||
Balance at January 1, 2007 | $ | 24 | $ | 17 | $ | 31 | $ | 72 | ||||||||
Incurred guaranteed benefits | 16 | 28 | 34 | 78 | ||||||||||||
Paid guaranteed benefits | (10 | ) | — | — | (10 | ) | ||||||||||
Balance at December 31, 2007 | 30 | 45 | 65 | 140 | ||||||||||||
Incurred guaranteed benefits | 118 | 176 | 43 | 337 | ||||||||||||
Paid guaranteed benefits | (50 | ) | — | — | (50 | ) | ||||||||||
Balance at December 31, 2008 | 98 | 221 | 108 | 427 | ||||||||||||
Incurred guaranteed benefits | 48 | (6 | ) | 187 | 229 | |||||||||||
Paid guaranteed benefits | (89 | ) | — | — | (89 | ) | ||||||||||
Balance at December 31, 2009 | $ | 57 | $ | 215 | $ | 295 | $ | 567 | ||||||||
Ceded: | ||||||||||||||||
Balance at January 1, 2007 | $ | 24 | $ | 17 | $ | — | $ | 41 | ||||||||
Incurred guaranteed benefits | 10 | — | — | 10 | ||||||||||||
Paid guaranteed benefits | (6 | ) | — | — | (6 | ) | ||||||||||
Balance at December 31, 2007 | 28 | 17 | — | 45 | ||||||||||||
Incurred guaranteed benefits | 94 | 55 | — | 149 | ||||||||||||
Paid guaranteed benefits | (36 | ) | — | — | (36 | ) | ||||||||||
Balance at December 31, 2008 | 86 | 72 | — | 158 | ||||||||||||
Incurred guaranteed benefits | 38 | 2 | 142 | 182 | ||||||||||||
Paid guaranteed benefits | (68 | ) | — | — | (68 | ) | ||||||||||
Balance at December 31, 2009 | $ | 56 | $ | 74 | $ | 142 | $ | 272 | ||||||||
Net: | ||||||||||||||||
Balance at January 1, 2007 | $ | — | $ | — | $ | 31 | $ | 31 | ||||||||
Incurred guaranteed benefits | 6 | 28 | 34 | 68 | ||||||||||||
Paid guaranteed benefits | (4 | ) | — | — | (4 | ) | ||||||||||
Balance at December 31, 2007 | 2 | 28 | 65 | 95 | ||||||||||||
Incurred guaranteed benefits | 24 | 121 | 43 | 188 | ||||||||||||
Paid guaranteed benefits | (14 | ) | — | — | (14 | ) | ||||||||||
Balance at December 31, 2008 | 12 | 149 | 108 | 269 | ||||||||||||
Incurred guaranteed benefits | 10 | (8 | ) | 45 | 47 | |||||||||||
Paid guaranteed benefits | (21 | ) | — | — | (21 | ) | ||||||||||
Balance at December 31, 2009 | $ | 1 | $ | 141 | $ | 153 | $ | 295 | ||||||||
F-93
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Fund Groupings: | ||||||||
Equity | $ | 27,202 | $ | 21,738 | ||||
Balanced | 14,693 | 6,971 | ||||||
Bond | 2,682 | 2,280 | ||||||
Money Market | 1,454 | 1,715 | ||||||
Specialty | 824 | 228 | ||||||
Total | $ | 46,855 | $ | 32,932 | ||||
8. | Reinsurance |
F-94
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Premiums: | ||||||||||||
Direct premiums | $ | 1,782 | $ | 1,042 | $ | 654 | ||||||
Reinsurance assumed | 14 | 15 | 17 | |||||||||
Reinsurance ceded | (484 | ) | (423 | ) | (318 | ) | ||||||
Net premiums | $ | 1,312 | $ | 634 | $ | 353 | ||||||
Universal life and investment-type product policy fees: | ||||||||||||
Direct universal life and investment-type product policy fees | $ | 1,681 | $ | 1,710 | $ | 1,680 | ||||||
Reinsurance assumed | 115 | 197 | 119 | |||||||||
Reinsurance ceded | (416 | ) | (529 | ) | (388 | ) | ||||||
Net universal life and investment-type product policy fees | $ | 1,380 | $ | 1,378 | $ | 1,411 | ||||||
Policyholder benefits and claims: | ||||||||||||
Direct policyholder benefits and claims | $ | 3,314 | $ | 2,775 | $ | 1,722 | ||||||
Reinsurance assumed | 10 | 23 | 22 | |||||||||
Reinsurance ceded | (1,259 | ) | (1,352 | ) | (766 | ) | ||||||
Net policyholder benefits and claims | $ | 2,065 | $ | 1,446 | $ | 978 | ||||||
F-95
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, 2009 | ||||||||||||||||
Total | ||||||||||||||||
Balance | Total, Net of | |||||||||||||||
Sheet | Assumed | Ceded | Reinsurance | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums and other receivables | $ | 13,444 | $ | 30 | $ | 13,135 | $ | 279 | ||||||||
Deferred policy acquisition costs and value of business acquired | 5,244 | 230 | (414 | ) | 5,428 | |||||||||||
Total assets | $ | 18,688 | $ | 260 | $ | 12,721 | $ | 5,707 | ||||||||
Liabilities: | ||||||||||||||||
Future policy benefits | $ | 21,621 | $ | 80 | $ | — | $ | 21,541 | ||||||||
Policyholder account balances | 37,442 | — | — | 37,442 | ||||||||||||
Other policyholder funds | 2,297 | 1,393 | 294 | 610 | ||||||||||||
Other liabilities | 2,177 | 10 | 1,332 | 835 | ||||||||||||
Total liabilities | $ | 63,537 | $ | 1,483 | $ | 1,626 | $ | 60,428 | ||||||||
December 31, 2008 | ||||||||||||||||
Total | ||||||||||||||||
Balance | Total, Net of | |||||||||||||||
Sheet | Assumed | Ceded | Reinsurance | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums and other receivables | $ | 12,463 | $ | 48 | $ | 12,073 | $ | 342 | ||||||||
Deferred policy acquisition costs and value of business acquired | 5,440 | 312 | (292 | ) | 5,420 | |||||||||||
Total assets | $ | 17,903 | $ | 360 | $ | 11,781 | $ | 5,762 | ||||||||
Liabilities: | ||||||||||||||||
Future policy benefits | $ | 20,213 | $ | 87 | $ | — | $ | 20,126 | ||||||||
Policyholder account balances | 37,175 | — | (19 | ) | 37,194 | |||||||||||
Other policyholder funds | 2,085 | 1,369 | 172 | 544 | ||||||||||||
Other liabilities | 2,604 | 10 | 1,061 | 1,533 | ||||||||||||
Total liabilities | $ | 62,077 | $ | 1,466 | $ | 1,214 | $ | 59,397 | ||||||||
F-96
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Premiums: | ||||||||||||
Reinsurance assumed | $ | 14 | $ | 15 | $ | 17 | ||||||
Reinsurance ceded (1) | (166 | ) | (116 | ) | (20 | ) | ||||||
Net premiums | $ | (152 | ) | $ | (101 | ) | $ | (3 | ) | |||
Universal life and investment-type product policy fees: | ||||||||||||
Reinsurance assumed | $ | 115 | $ | 197 | $ | 119 | ||||||
Reinsurance ceded (1) | (168 | ) | (278 | ) | (166 | ) | ||||||
Net universal life and investment-type product policy fees | $ | (53 | ) | $ | (81 | ) | $ | (47 | ) | |||
Other revenues: | ||||||||||||
Reinsurance assumed | $ | — | $ | — | $ | — | ||||||
Reinsurance ceded | 477 | 83 | 85 | |||||||||
Net other revenues | $ | 477 | $ | 83 | $ | 85 | ||||||
Policyholder benefits and claims: | ||||||||||||
Reinsurance assumed | $ | 8 | $ | 19 | $ | 18 | ||||||
Reinsurance ceded (1) | (239 | ) | (274 | ) | (43 | ) | ||||||
Net policyholder benefits and claims | $ | (231 | ) | $ | (255 | ) | $ | (25 | ) | |||
Interest credited to policyholder account balances: | ||||||||||||
Reinsurance assumed | $ | 64 | $ | 57 | $ | 53 | ||||||
Reinsurance ceded | (33 | ) | (22 | ) | — | |||||||
Net interest credited to policyholder account balances | $ | 31 | $ | 35 | $ | 53 | ||||||
Other expenses: | ||||||||||||
Reinsurance assumed | $ | 105 | $ | 97 | $ | 39 | ||||||
Reinsurance ceded (1) | 102 | 76 | 35 | |||||||||
Net other expenses | $ | 207 | $ | 173 | $ | 74 | ||||||
(1) | In September 2008, MICC’s parent, MetLife, completed a tax-free split-off of its majority owned subsidiary, Reinsurance Group of America, Incorporated (“RGA”). After the split-off, reinsurance transactions with RGA were no longer considered affiliated transactions. For purposes of comparison, the 2008 affiliated transactions with RGA have been removed from the presentation in the table above. Affiliated transactions with RGA at December 31, 2008 include ceded premiums, ceded fees, ceded benefits and ceded interest costs of $9 million, $36 million, $47 million and ($1) million, respectively, and at December 31, 2007 include ceded premiums, ceded fees, ceded benefits and ceded interest costs of $12 million, $50 million, $52 million and ($2) million, respectively. |
F-97
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||||||||||
2009 | 2008 | |||||||||||||||
Assumed | Ceded | Assumed | Ceded | |||||||||||||
(In millions) | ||||||||||||||||
Assets: | ||||||||||||||||
Premiums and other receivables | $ | 30 | $ | 7,157 | $ | 34 | $ | 6,547 | ||||||||
Deferred policy acquisition costs and value of business acquired | 230 | (399 | ) | 312 | (279 | ) | ||||||||||
Total assets | $ | 260 | $ | 6,758 | $ | 346 | $ | 6,268 | ||||||||
Liabilities: | ||||||||||||||||
Future policy benefits | $ | 27 | $ | — | $ | 25 | $ | — | ||||||||
Other policyholder funds | 1,393 | 284 | 1,368 | 168 | ||||||||||||
Other liabilities | 9 | 1,150 | 8 | 890 | ||||||||||||
Total liabilities | $ | 1,429 | $ | 1,434 | $ | 1,401 | $ | 1,058 | ||||||||
F-98
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
9. | Debt |
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Surplus notes, interest rate 8.595%, due 2038 | $ | 750 | $ | 750 | ||||
Surplus notes, interest rate3-month LIBOR plus 1.15%, maturity date 2009 | — | 200 | ||||||
Surplus notes, interest rate6-month LIBOR plus 1.80%, maturity date 2011 | 200 | — | ||||||
Total long-term debt — affiliated | 950 | 950 | ||||||
Total short-term debt | — | 300 | ||||||
Total | $ | 950 | $ | 1,250 | ||||
F-99
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
10. | Income Tax |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Current: | ||||||||||||
Federal | $ | 24 | $ | (50 | ) | $ | 9 | |||||
State and local | 1 | (2 | ) | 4 | ||||||||
Foreign | (4 | ) | — | 1 | ||||||||
Subtotal | 21 | (52 | ) | 14 | ||||||||
Deferred: | ||||||||||||
Federal | (380 | ) | 260 | 306 | ||||||||
Foreign | (9 | ) | (5 | ) | (17 | ) | ||||||
Subtotal | (389 | ) | 255 | 289 | ||||||||
Provision for income tax expense (benefit) | $ | (368 | ) | $ | 203 | $ | 303 | |||||
F-100
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Tax provision at U.S. statutory rate | $ | (285 | ) | $ | 273 | $ | 365 | |||||
Tax effect of: | ||||||||||||
Tax-exempt investment income | (69 | ) | (65 | ) | (65 | ) | ||||||
Prior year tax | (17 | ) | (4 | ) | 9 | |||||||
Foreign tax rate differential and change in valuation allowance | 3 | — | (7 | ) | ||||||||
State tax, net of federal benefit | — | (1 | ) | 3 | ||||||||
Other, net | — | — | (2 | ) | ||||||||
Provision for income tax expense (benefit) | $ | (368 | ) | $ | 203 | $ | 303 | |||||
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Deferred income tax assets: | ||||||||
Benefit, reinsurance and other reserves | $ | 1,574 | $ | 1,548 | ||||
Net operating loss carryforwards | 111 | 94 | ||||||
Net unrealized investment losses | 372 | 1,447 | ||||||
Operating lease reserves | 4 | 8 | ||||||
Capital loss carryforwards | 423 | 269 | ||||||
Investments, including derivatives | 304 | — | ||||||
Tax credit carryforwards | 102 | 45 | ||||||
Other | 16 | 24 | ||||||
2,906 | 3,435 | |||||||
Deferred income tax liabilities: | ||||||||
Investments, including derivatives | — | 113 | ||||||
DAC and VOBA | 1,748 | 1,479 | ||||||
Other | 11 | — | ||||||
1,759 | 1,592 | |||||||
Net deferred income tax asset | $ | 1,147 | $ | 1,843 | ||||
F-101
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Balance at beginning of the period | $ | 48 | $ | 53 | $ | 64 | ||||||
Additions for tax positions of prior years | 2 | — | — | |||||||||
Reductions for tax positions of prior years | — | — | (2 | ) | ||||||||
Additions for tax positions of current year | — | 2 | 5 | |||||||||
Reductions for tax positions of current year | (6 | ) | (7 | ) | (8 | ) | ||||||
Settlements with tax authorities | — | — | (6 | ) | ||||||||
Balance at end of the period | $ | 44 | $ | 48 | $ | 53 | ||||||
F-102
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
11. | Contingencies, Commitments and Guarantees |
F-103
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-104
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
December 31, | ||||||||
2009 | 2008 | |||||||
(In millions) | ||||||||
Other Assets: | ||||||||
Premium tax offset for future undiscounted assessments | $ | 8 | $ | 6 | ||||
Premium tax offsets currently available for paid assessments | 1 | 1 | ||||||
$ | 9 | $ | 7 | |||||
Other Liabilities: | ||||||||
Insolvency assessments | $ | 13 | $ | 10 | ||||
Gross | ||||||||
Rental | Rental | |||||||
Income | Payments | |||||||
(In millions) | ||||||||
2010 | $ | 3 | $ | 6 | ||||
2011 | $ | 3 | $ | 6 | ||||
2012 | $ | 3 | $ | — | ||||
2013 | $ | 3 | $ | — | ||||
2014 | $ | 3 | $ | — | ||||
Thereafter | $ | 73 | $ | — |
F-105
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-106
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
12. | Equity |
F-107
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
F-108
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Holding gains (losses) on investments arising during the year | $ | 3,365 | $ | (5,022 | ) | $ | (358 | ) | ||||
Income tax effect of holding gains (losses) | (1,174 | ) | 1,760 | 122 | ||||||||
Reclassification adjustments: | ||||||||||||
Recognized holding (gains) losses included in current year income | 588 | 674 | 260 | |||||||||
Amortization of premiums and accretion of discounts associated with investments | (83 | ) | (48 | ) | — | |||||||
Income tax effect | (176 | ) | (220 | ) | (88 | ) | ||||||
Allocation of holding (gains) losses on investments relating to other policyholder amounts | (755 | ) | 823 | 27 | ||||||||
Income tax effect of allocation of holding (gains) losses to other policyholder amounts | 263 | (288 | ) | (10 | ) | |||||||
Net unrealized investment gains (losses), net of income tax | 2,028 | (2,321 | ) | (47 | ) | |||||||
Foreign currency translation adjustment, net of income tax | 45 | (166 | ) | 12 | ||||||||
Other comprehensive income (loss), excluding cumulative effect of change in accounting principle | 2,073 | (2,487 | ) | (35 | ) | |||||||
Cumulative effect of change in accounting principle, net of income tax of $12 million, effective April 1, 2009 (See Note 1) | (22 | ) | — | — | ||||||||
Other comprehensive income (loss) | $ | 2,051 | $ | (2,487 | ) | $ | (35 | ) | ||||
13. | Other Expenses |
Years Ended December 31, | ||||||||||||
2009 | 2008 | 2007 | ||||||||||
(In millions) | ||||||||||||
Compensation | $ | 148 | $ | 118 | $ | 121 | ||||||
Commissions | 794 | 733 | 633 | |||||||||
Interest and debt issue costs | 72 | 74 | 35 | |||||||||
Affiliated interest costs on ceded reinsurance | 107 | 96 | 31 | |||||||||
Amortization of DAC and VOBA | 294 | 1,163 | 740 | |||||||||
Capitalization of DAC | (851 | ) | (835 | ) | (682 | ) | ||||||
Rent | 4 | 4 | 5 | |||||||||
Insurance tax | 45 | 38 | 44 | |||||||||
Other | 594 | 542 | 519 | |||||||||
Total other expenses | $ | 1,207 | $ | 1,933 | $ | 1,446 | ||||||
F-109
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
14. | Business Segment Information |
F-110
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Operating Earnings | ||||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||
Retirement | Benefit | Insurance | Corporate | Total | ||||||||||||||||||||||||
Year Ended December 31, 2009: | Products | Funding | Products | & Other | Total | Adjustments | Consolidated | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Premiums | $ | 339 | $ | 849 | $ | 124 | $ | — | $ | 1,312 | $ | — | $ | 1,312 | ||||||||||||||
Universal life and investment-type product policy fees | 748 | 29 | 618 | 5 | 1,400 | (20 | ) | 1,380 | ||||||||||||||||||||
Net investment income | 884 | 1,061 | 381 | 40 | 2,366 | (31 | ) | 2,335 | ||||||||||||||||||||
Other revenues | 264 | 6 | 328 | — | 598 | — | 598 | |||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | (1,866 | ) | (1,866 | ) | |||||||||||||||||||
Total revenues | 2,235 | 1,945 | 1,451 | 45 | 5,676 | (1,917 | ) | 3,759 | ||||||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||
Policyholder benefits and claims | 420 | 1,360 | 223 | 1 | 2,004 | 61 | 2,065 | |||||||||||||||||||||
Interest credited to policyholder account balances | 741 | 265 | 243 | 91 | 1,340 | (39 | ) | 1,301 | ||||||||||||||||||||
Capitalization of DAC | (528 | ) | (2 | ) | (285 | ) | (36 | ) | (851 | ) | — | (851 | ) | |||||||||||||||
Amortization of DAC and VOBA | 329 | 3 | 271 | 2 | 605 | (311 | ) | 294 | ||||||||||||||||||||
Interest expense | — | 2 | — | 69 | 71 | — | 71 | |||||||||||||||||||||
Other expenses | 928 | 34 | 648 | 84 | 1,694 | (1 | ) | 1,693 | ||||||||||||||||||||
Total benefits and expenses | 1,890 | 1,662 | 1,100 | 211 | 4,863 | (290 | ) | 4,573 | ||||||||||||||||||||
Provision for income tax expense (benefit) | 121 | 97 | 123 | (138 | ) | 203 | (571 | ) | (368 | ) | ||||||||||||||||||
Operating earnings | $ | 224 | $ | 186 | $ | 228 | $ | (28 | ) | 610 | ||||||||||||||||||
�� | ||||||||||||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||
Total revenues | (1,917 | ) | ||||||||||||||||||||||||||
Total benefits and expenses | 290 | |||||||||||||||||||||||||||
Provision for income tax (expense) benefit | 571 | |||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | (446 | ) | $ | (446 | ) | ||||||||||||||||||||||
Corporate | ||||||||||||||||||||
Retirement | Benefit | Insurance | Corporate | |||||||||||||||||
At December 31, 2009: | Products | Funding | Products | & Other | Total | |||||||||||||||
(In millions) | ||||||||||||||||||||
Total assets | $ | 73,840 | $ | 28,046 | $ | 13,647 | $ | 12,156 | $ | 127,689 | ||||||||||
Separate account assets | $ | 47,000 | $ | 1,502 | $ | 947 | $ | — | $ | 49,449 | ||||||||||
Separate account liabilities | $ | 47,000 | $ | 1,502 | $ | 947 | $ | — | $ | 49,449 |
F-111
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Operating Earnings | ||||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||
Retirement | Benefit | Insurance | Corporate | Total | ||||||||||||||||||||||||
Year Ended December 31, 2008: | Products | Funding | Products | & Other | Total | Adjustments | Consolidated | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Premiums | $ | 118 | $ | 415 | $ | 90 | $ | 11 | $ | 634 | $ | — | $ | 634 | ||||||||||||||
Universal life and investment-type product policy fees | 831 | 41 | 486 | 3 | 1,361 | 17 | 1,378 | |||||||||||||||||||||
Net investment income | 788 | 1,334 | 337 | 59 | 2,518 | (24 | ) | 2,494 | ||||||||||||||||||||
Other revenues | 160 | 9 | 55 | 6 | 230 | — | 230 | |||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | 549 | 549 | |||||||||||||||||||||
Total revenues | 1,897 | 1,799 | 968 | 79 | 4,743 | 542 | 5,285 | |||||||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||
Policyholder benefits and claims | 384 | 893 | 193 | 29 | 1,499 | (53 | ) | 1,446 | ||||||||||||||||||||
Interest credited to policyholder account balances | 479 | 430 | 223 | (21 | ) | 1,111 | 19 | 1,130 | ||||||||||||||||||||
Capitalization of DAC | (474 | ) | (5 | ) | (347 | ) | (9 | ) | (835 | ) | — | (835 | ) | |||||||||||||||
Amortization of DAC and VOBA | 640 | 13 | 283 | 2 | 938 | 225 | 1,163 | |||||||||||||||||||||
Interest expense | 1 | 2 | — | 69 | 72 | — | 72 | |||||||||||||||||||||
Other expenses | 769 | 36 | 683 | 45 | 1,533 | — | 1,533 | |||||||||||||||||||||
Total benefits and expenses | 1,799 | 1,369 | 1,035 | 115 | 4,318 | 191 | 4,509 | |||||||||||||||||||||
Provision for income tax expense (benefit) | 34 | 150 | (24 | ) | (79 | ) | 81 | 122 | 203 | |||||||||||||||||||
Operating earnings | $ | 64 | $ | 280 | $ | (43 | ) | $ | 43 | 344 | ||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||
Total revenues | 542 | |||||||||||||||||||||||||||
Total benefits and expenses | (191 | ) | ||||||||||||||||||||||||||
Provision for income tax (expense) benefit | (122 | ) | ||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 573 | $ | 573 | ||||||||||||||||||||||||
Corporate | ||||||||||||||||||||
Retirement | Benefit | Insurance | Corporate | |||||||||||||||||
At December 31, 2008: | Products | Funding | Products | & Other | Total | |||||||||||||||
(In millions) | ||||||||||||||||||||
Total assets | $ | 57,743 | $ | 28,796 | $ | 12,217 | $ | 13,268 | $ | 112,024 | ||||||||||
Separate account assets | $ | 33,763 | $ | 1,398 | $ | 731 | $ | — | $ | 35,892 | ||||||||||
Separate account liabilities | $ | 33,763 | $ | 1,398 | $ | 731 | $ | — | $ | 35,892 |
F-112
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
Operating Earnings | ||||||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||
Retirement | Benefit | Insurance | Corporate | Total | ||||||||||||||||||||||||
Year Ended December 31, 2007: | Products | Funding | Products | & Other | Total | Adjustments | Consolidated | |||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Premiums | $ | 136 | $ | 25 | $ | 168 | $ | 24 | $ | 353 | $ | — | $ | 353 | ||||||||||||||
Universal life and investment-type product policy fees | 885 | 39 | 496 | 2 | 1,422 | (11 | ) | 1,411 | ||||||||||||||||||||
Net investment income | 801 | 1,528 | 320 | 293 | 2,942 | (49 | ) | 2,893 | ||||||||||||||||||||
Other revenues | 173 | 14 | 64 | — | 251 | — | 251 | |||||||||||||||||||||
Net investment gains (losses) | — | — | — | — | — | (142 | ) | (142 | ) | |||||||||||||||||||
Total revenues | 1,995 | 1,606 | 1,048 | 319 | 4,968 | (202 | ) | 4,766 | ||||||||||||||||||||
Benefits and Expenses | ||||||||||||||||||||||||||||
Policyholder benefits and claims | 239 | 492 | 239 | 33 | 1,003 | (25 | ) | 978 | ||||||||||||||||||||
Interest credited to policyholder account balances | 447 | 604 | 214 | — | 1,265 | 34 | 1,299 | |||||||||||||||||||||
Capitalization of DAC | (493 | ) | (8 | ) | (179 | ) | (2 | ) | (682 | ) | — | (682 | ) | |||||||||||||||
Amortization of DAC and VOBA | 475 | 23 | 214 | — | 712 | 28 | 740 | |||||||||||||||||||||
Interest expense | 2 | — | 1 | 30 | 33 | — | 33 | |||||||||||||||||||||
Other expenses | 798 | 33 | 485 | 39 | 1,355 | — | 1,355 | |||||||||||||||||||||
Total benefits and expenses | 1,468 | 1,144 | 974 | 100 | 3,686 | 37 | 3,723 | |||||||||||||||||||||
Provision for income tax expense (benefit) | 187 | 158 | 27 | 17 | 389 | (86 | ) | 303 | ||||||||||||||||||||
Operating earnings | $ | 340 | $ | 304 | $ | 47 | $ | 202 | 893 | |||||||||||||||||||
Adjustments to: | ||||||||||||||||||||||||||||
Total revenues | (202 | ) | ||||||||||||||||||||||||||
Total benefits and expenses | (37 | ) | ||||||||||||||||||||||||||
Provision for income tax (expense) benefit | 86 | |||||||||||||||||||||||||||
Income (loss) from continuing operations, net of income tax | $ | 740 | $ | 740 | ||||||||||||||||||||||||
15. | Discontinued Operations |
F-113
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Notes to the Consolidated Financial Statements — (Continued)
16. | Related Party Transactions |
17. | Subsequent Event |
F-114
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Other Than Investments in Related Parties
December 31, 2009
(In millions)
Estimated | Amount at | |||||||||||
Cost or | Fair | Which Shown on | ||||||||||
Type of Investments | Amortized Cost (1) | Value | Balance Sheet | |||||||||
Fixed maturity securities: | ||||||||||||
Bonds: | ||||||||||||
U.S. Treasury and agency securities | $ | 6,503 | $ | 6,257 | $ | 6,257 | ||||||
Foreign government securities | 608 | 645 | 645 | |||||||||
Public utilities | 2,380 | 2,396 | 2,396 | |||||||||
State and political subdivision securities | 1,291 | 1,179 | 1,179 | |||||||||
All other corporate bonds | 19,186 | 19,230 | 19,230 | |||||||||
Total bonds | 29,968 | 29,707 | 29,707 | |||||||||
Mortgage-backed and asset-backed securities | 11,143 | 10,458 | 10,458 | |||||||||
Redeemable preferred stock | 1,324 | 1,110 | 1,110 | |||||||||
Total fixed maturity securities | 42,435 | 41,275 | 41,275 | |||||||||
Trading securities | 868 | 938 | 938 | |||||||||
Equity securities: | ||||||||||||
Non-redeemable preferred stock | 351 | 306 | 306 | |||||||||
Common stock: | ||||||||||||
Industrial, miscellaneous and all other | 143 | 153 | 153 | |||||||||
Total equity securities | 494 | 459 | 459 | |||||||||
Mortgage loans | 4,748 | 4,748 | ||||||||||
Policy loans | 1,189 | 1,189 | ||||||||||
Real estate and real estate joint ventures | 445 | 445 | ||||||||||
Other limited partnership interests | 1,236 | 1,236 | ||||||||||
Short-term investments | 1,775 | 1,775 | ||||||||||
Other invested assets | 1,498 | 1,498 | ||||||||||
Total investments | $ | 54,688 | $ | 53,563 | ||||||||
(1) | The Company’s trading securities portfolio is mainly comprised of fixed maturity and equity securities. Cost or amortized cost for fixed maturity securities and mortgage loans 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-115
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
December 31, 2009 and 2008
(In millions, except share and per share data)
2009 | 2008 | |||||||
Condensed Balance Sheets | ||||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturity securitiesavailable-for-sale, at estimated fair value (amortized cost: $33,325 and $34,567, respectively) | $ | 32,132 | $ | 30,172 | ||||
Equity securitiesavailable-for-sale, at estimated fair value (cost: $484 and $662, respectively) | 448 | 467 | ||||||
Trading securities, at estimated fair value (cost: $0 and $50, respectively) | — | 50 | ||||||
Mortgage loans (net of valuation allowances of $52 and $19, respectively) | 4,122 | 4,060 | ||||||
Policy loans | 1,139 | 1,151 | ||||||
Real estate and real estate joint ventures | 278 | 367 | ||||||
Other limited partnership interests | 925 | 947 | ||||||
Short-term investments | 923 | 1,539 | ||||||
Investment in subsidiaries | 4,131 | 3,411 | ||||||
Other invested assets | 1,467 | 2,136 | ||||||
Total investments | 45,565 | 44,300 | ||||||
Cash and cash equivalents | 1,817 | 4,753 | ||||||
Accrued investment income | 397 | 421 | ||||||
Premiums and other receivables | 5,827 | 5,501 | ||||||
Receivables from subsidiaries | 627 | 348 | ||||||
Deferred policy acquisition costs and value of business acquired | 2,640 | 3,344 | ||||||
Deferred income tax assets | 1,513 | 2,272 | ||||||
Goodwill | 885 | 885 | ||||||
Other assets | 162 | 167 | ||||||
Separate account assets | 19,491 | 17,375 | ||||||
Total assets | $ | 78,924 | $ | 79,366 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Liabilities | ||||||||
Future policy benefits | $ | 19,036 | $ | 18,993 | ||||
Policyholder account balances | 26,127 | 28,283 | ||||||
Other policyholder funds | 466 | 415 | ||||||
Payables for collateral under securities loaned and other transactions | 5,562 | 6,983 | ||||||
Short-term debt | — | 300 | ||||||
Long-term debt — affiliated | 950 | 950 | ||||||
Current income tax payable | 7 | 64 | ||||||
Other liabilities | 724 | 1,069 | ||||||
Separate account liabilities | 19,491 | 17,375 | ||||||
Total liabilities | 72,363 | 74,432 | ||||||
Stockholders’ Equity | ||||||||
Common stock, par value $2.50 per share; 40,000,000 shares authorized; 34,595,317 shares issued and outstanding at December 31, 2009 and 2008, respectively | 86 | 86 | ||||||
Additional paid-in capital | 6,719 | 6,719 | ||||||
Retained earnings | 541 | 965 | ||||||
Accumulated other comprehensive loss | (785 | ) | (2,836 | ) | ||||
Total stockholders’ equity | 6,561 | 4,934 | ||||||
Total liabilities and stockholders’ equity | $ | 78,924 | $ | 79,366 | ||||
F-116
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Condensed Financial Information of Registrant — (Continued)
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Condensed Statements of Operations | ||||||||||||
Revenues | ||||||||||||
Premiums | $ | 141 | $ | 110 | $ | 177 | ||||||
Universal life and investment-type product policy fees | 631 | 741 | 841 | |||||||||
Net investment income | 1,895 | 2,226 | 2,588 | |||||||||
Equity in earnings from subsidiaries | (316 | ) | 278 | 248 | ||||||||
Other income | 328 | 60 | 66 | |||||||||
Net investment gains (losses): | ||||||||||||
Other-than-temporary impairments on fixed maturity securities | (534 | ) | (386 | ) | (28 | ) | ||||||
Other-than-temporary impairments on fixed maturity securities transferred to other comprehensive loss | 160 | — | — | |||||||||
Other net investment gains (losses), net | (823 | ) | 207 | (317 | ) | |||||||
Total net investment gains (losses) | (1,197 | ) | (179 | ) | (345 | ) | ||||||
Total revenues | 1,482 | 3,236 | 3,575 | |||||||||
Expenses | ||||||||||||
Policyholder benefits and claims | 801 | 682 | 741 | |||||||||
Interest credited to policyholder account balances | 801 | 896 | 1,057 | |||||||||
Other expenses | 494 | 1,006 | 796 | |||||||||
Total expenses | 2,096 | 2,584 | 2,594 | |||||||||
Income (loss) from continuing operations before provision for income tax | (614 | ) | 652 | 981 | ||||||||
Provision for income tax expense (benefit) | (168 | ) | 79 | 241 | ||||||||
Income (loss) from continuing operations | (446 | ) | 573 | 740 | ||||||||
Income (loss) from discontinued operations, net of income tax | — | — | 4 | |||||||||
Net income (loss) | $ | (446 | ) | $ | 573 | $ | 744 | |||||
F-117
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Condensed Financial Information of Registrant — (Continued)
For the Years Ended December 31, 2009, 2008 and 2007
(In millions)
2009 | 2008 | 2007 | ||||||||||
Condensed Statements of Cash Flows | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net cash provided by operating activities | $ | 993 | $ | 856 | $ | 2,333 | ||||||
Cash flows from investing activities | ||||||||||||
Sales, maturities and repayments of: | ||||||||||||
Fixed maturity securities | 10,125 | 18,221 | 19,995 | |||||||||
Equity securities | 129 | 119 | 172 | |||||||||
Mortgage loans | 429 | 458 | 1,103 | |||||||||
Real estate and real estate joint ventures | 3 | 15 | 117 | |||||||||
Other limited partnership interests | 94 | 181 | 423 | |||||||||
Purchases of: | ||||||||||||
Fixed maturity securities | (9,247 | ) | (11,263 | ) | (17,608 | ) | ||||||
Equity securities | (61 | ) | (65 | ) | (277 | ) | ||||||
Mortgage loans | (531 | ) | (560 | ) | (1,996 | ) | ||||||
Real estate and real estate joint ventures | (19 | ) | (47 | ) | (241 | ) | ||||||
Other limited partnership interests | (127 | ) | (340 | ) | (325 | ) | ||||||
Net change in short-term investments | 619 | (934 | ) | (320 | ) | |||||||
Net change in other invested assets | (1,150 | ) | (66 | ) | (984 | ) | ||||||
Net change in policy loans | 12 | (277 | ) | 6 | ||||||||
Other, net | — | — | 2 | |||||||||
Net cash provided by investing activities | 276 | 5,442 | 67 | |||||||||
Cash flows from financing activities | ||||||||||||
Policyholder account balances: | ||||||||||||
Deposits | 15,236 | 3,275 | 2,830 | |||||||||
Withdrawals | (17,667 | ) | (4,008 | ) | (5,330 | ) | ||||||
Net change in payables for collateral under securities loaned and other transactions | (1,421 | ) | (2,560 | ) | 1,288 | |||||||
Net change in short-term debt | (300 | ) | 300 | — | ||||||||
Long-term debt issued — affiliated | — | 750 | 200 | |||||||||
Debt issuance costs | — | (8 | ) | — | ||||||||
Financing element on certain derivative instruments | (53 | ) | (46 | ) | 33 | |||||||
Dividends on common stock | — | (500 | ) | (690 | ) | |||||||
Net cash used in financing activities | (4,205 | ) | (2,797 | ) | (1,669 | ) | ||||||
Change in cash and cash equivalents | (2,936 | ) | 3,501 | 731 | ||||||||
Cash and cash equivalents, beginning of year | 4,753 | 1,252 | 521 | |||||||||
Cash and cash equivalents, end of year | $ | 1,817 | $ | 4,753 | $ | 1,252 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Net cash paid (received) during the year for: | ||||||||||||
Interest | $ | 73 | $ | 44 | $ | 1 | ||||||
Income tax | $ | 76 | $ | (41 | ) | $ | 79 | |||||
Non-cash transactions during the year: | ||||||||||||
Contribution of equity securities to MetLife Foundation | $ | — | $ | — | $ | 12 | ||||||
F-118
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
F-119
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
December 31, 2009, 2008 and 2007
(In millions)
DAC | Future Policy | Policyholder | ||||||||||||||
and | Benefits and Other | Account | Unearned | |||||||||||||
Segment | VOBA | Policyholder Funds | Balances | Revenue (1) | ||||||||||||
2009 | ||||||||||||||||
Retirement Products | $ | 3,060 | $ | 1,454 | $ | 21,059 | $ | — | ||||||||
Corporate Benefit Funding | 7 | 12,702 | 9,393 | — | ||||||||||||
Insurance Products | 2,133 | 4,388 | 6,052 | 286 | ||||||||||||
Corporate & Other | 44 | 5,374 | 938 | 14 | ||||||||||||
Total | $ | 5,244 | $ | 23,918 | $ | 37,442 | $ | 300 | ||||||||
2008 | ||||||||||||||||
Retirement Products | $ | 3,171 | $ | 1,245 | $ | 18,905 | $ | — | ||||||||
Corporate Benefit Funding | 8 | 12,048 | 12,553 | — | ||||||||||||
Insurance Products | 2,254 | 3,971 | 5,531 | 545 | ||||||||||||
Corporate & Other | 7 | 5,034 | 186 | 3 | ||||||||||||
Total | $ | 5,440 | $ | 22,298 | $ | 37,175 | $ | 548 | ||||||||
2007 | ||||||||||||||||
Retirement Products | $ | 2,983 | $ | 979 | $ | 15,059 | $ | — | ||||||||
Corporate Benefit Funding | 16 | 12,044 | 13,543 | — | ||||||||||||
Insurance Products | 1,947 | 3,569 | 5,041 | 342 | ||||||||||||
Corporate & Other | 2 | 4,761 | 172 | 1 | ||||||||||||
Total | $ | 4,948 | $ | 21,353 | $ | 33,815 | $ | 343 | ||||||||
(1) | Amounts are included within the future policy benefits and other policyholder funds. |
F-120
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
Consolidated Supplementary Insurance Information — (Continued)
December 31, 2009, 2008 and 2007
(In millions)
Amortization of | ||||||||||||||||||||||||
Premium | Net | Policyholder | DAC and VOBA | Other | ||||||||||||||||||||
Revenue and | Investment | Benefits and | Charged to | Operating | Premiums Written | |||||||||||||||||||
Segment | Policy Charges | Income | Interest Credited | Other Expenses | Expenses (1) | (Excluding Life) | ||||||||||||||||||
2009 | ||||||||||||||||||||||||
Retirement Products | $ | 1,087 | $ | 854 | $ | 1,161 | $ | 77 | $ | 399 | $ | — | ||||||||||||
Corporate Benefit Funding | 878 | 1,069 | 1,647 | 3 | 34 | — | ||||||||||||||||||
Insurance Products | 722 | 375 | 466 | 213 | 362 | 4 | ||||||||||||||||||
Corporate & Other | 5 | 37 | 92 | 1 | 118 | — | ||||||||||||||||||
Total | $ | 2,692 | $ | 2,335 | $ | 3,366 | $ | 294 | $ | 913 | $ | 4 | ||||||||||||
2008 | ||||||||||||||||||||||||
Retirement Products | $ | 949 | $ | 773 | $ | 863 | $ | 860 | $ | 296 | $ | — | ||||||||||||
Corporate Benefit Funding | 456 | 1,334 | 1,289 | 13 | 33 | — | ||||||||||||||||||
Insurance Products | 593 | 333 | 416 | 288 | 336 | 5 | ||||||||||||||||||
Corporate & Other | 14 | 54 | 8 | 2 | 105 | 12 | ||||||||||||||||||
Total | $ | 2,012 | $ | 2,494 | $ | 2,576 | $ | 1,163 | $ | 770 | $ | 17 | ||||||||||||
2007 | ||||||||||||||||||||||||
Retirement Products | $ | 1,021 | $ | 783 | $ | 686 | $ | 524 | $ | 306 | $ | — | ||||||||||||
Corporate Benefit Funding | 64 | 1,497 | 1,105 | 23 | 25 | — | ||||||||||||||||||
Insurance Products | 653 | 320 | 453 | 193 | 308 | 7 | ||||||||||||||||||
Corporate & Other | 26 | 293 | 33 | — | 67 | 25 | ||||||||||||||||||
Total | $ | 1,764 | $ | 2,893 | $ | 2,277 | $ | 740 | $ | 706 | $ | 32 | ||||||||||||
(1) | Includes other expenses, excluding amortization of DAC and VOBA charged to other expenses. |
F-121
Table of Contents
(A Wholly-Owned Subsidiary of MetLife, Inc.)
December 31, 2009, 2008 and 2007
(In millions)
% Amount | ||||||||||||||||||||
Assumed | ||||||||||||||||||||
Gross Amount | Ceded | Assumed | Net Amount | to Net | ||||||||||||||||
2009 | ||||||||||||||||||||
Life insurance in-force | $ | 278,335 | $ | 242,647 | $ | 9,044 | $ | 44,732 | 20.2 | % | ||||||||||
Insurance premium | ||||||||||||||||||||
Life insurance | $ | 1,525 | $ | 235 | $ | 14 | $ | 1,304 | 1.1 | % | ||||||||||
Accident and health | 257 | 249 | — | 8 | — | % | ||||||||||||||
Total insurance premium | $ | 1,782 | $ | 484 | $ | 14 | $ | 1,312 | 1.1 | % | ||||||||||
2008 | ||||||||||||||||||||
Life insurance in-force | $ | 226,418 | $ | 191,146 | $ | 8,800 | $ | 44,072 | 20.0 | % | ||||||||||
Insurance premium | ||||||||||||||||||||
Life insurance | $ | 779 | $ | 181 | $ | 15 | $ | 613 | 2.4 | % | ||||||||||
Accident and health | 263 | 242 | — | 21 | — | % | ||||||||||||||
Total insurance premium | $ | 1,042 | $ | 423 | $ | 15 | $ | 634 | 2.4 | % | ||||||||||
2007 | ||||||||||||||||||||
Life insurance in-force | $ | 189,630 | $ | 152,943 | $ | 13,934 | $ | 50,621 | 27.5 | % | ||||||||||
Insurance premium | ||||||||||||||||||||
Life insurance | $ | 384 | $ | 82 | $ | 17 | $ | 319 | 5.3 | % | ||||||||||
Accident and health | 270 | 236 | — | 34 | — | % | ||||||||||||||
Total insurance premium | $ | 654 | $ | 318 | $ | 17 | $ | 353 | 4.8 | % | ||||||||||
F-122
Table of Contents
Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A(T). | Controls and Procedures |
Item 9B. | Other Information |
66
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 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Item 14. | Principal Accountant Fees and Services |
2009 | 2008 | |||||||
(In millions) | ||||||||
Audit Fees (1) | $ | 5.52 | $ | 5.95 | ||||
Audit-Related Fees (2) | $ | 0.12 | $ | 0.11 | ||||
Tax Fees (3) | $ | — | $ | 0.02 | ||||
All Other Fees (4) | $ | — | $ | — |
(1) | Fees for services to perform an audit or review in accordance with auditing standards of the Public Company Accounting Oversight Board and services that generally only the Company’s independent auditor can reasonably provide, such as comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the U.S. Securities and Exchange Commission (“SEC”). | |
(2) | Fees for assurance and related services that are traditionally performed by the Company’s independent auditor, such as audit and related services for due diligence related to mergers and acquisitions, accounting consultations and audits in connection with proposed or consummated acquisitions, control reviews, attest services not required by statute or regulation, and consultation concerning financial accounting and reporting standards. | |
(3) | Fees for tax compliance, consultation and planning services. Tax compliance generally involves preparation of original and amended tax returns, claims for refunds and tax payment planning services. Tax consultation and tax planning encompass a diverse range of services, including assistance in connection with tax audits and filing appeals, tax advice related to mergers and acquisitions, advice related to employee benefit plans and requests for rulings or technical advice from taxing authorities. | |
(4) | Fees for other types of permitted services. |
67
Table of Contents
68
Table of Contents
Item 15. | Exhibits and Financial Statement Schedules |
69
Table of Contents
By: | /s/ Michael K. Farrell |
Title: | Chairman of the Board, President and Chief Executive Officer |
Signature | Title | Date | ||||
/s/ Maria R. Morris Maria R. Morris | Director | March 24, 2010 | ||||
/s/ Robert E. Sollmann, Jr. Robert E. Sollmann, Jr. | Director | March 24, 2010 | ||||
/s/ Michael K. Farrell Michael K. Farrell | Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) | March 24, 2010 | ||||
/s/ Stanley J. Talbi Stanley J. Talbi | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | March 24, 2010 | ||||
/s/ Peter M. Carlson Peter M. Carlson | Executive Vice President and Chief Accounting Officer (Principal Accounting Officer) | March 24, 2010 |
70
Table of Contents
Exhibit | |||||||
No. | Description | ||||||
2 | .1 | 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) | |||||
3 | .1 | Charter of The Travelers Insurance Company (now MetLife Insurance Company of Connecticut), as effective October 19, 1994 (Incorporated by reference to Exhibit 3.1 to MetLife Insurance Company of Connecticut’s Annual Report onForm 10-K for the fiscal year ended December 31, 2005 (the “2005 Annual Report”)) | |||||
3 | .2 | Certificate of Amendment of the Charter as Amended and Restated of MetLife Insurance Company of Connecticut, as effective May 1, 2006 (the “Certificate of Amendment”) (Incorporated by reference to Exhibit 3.2 to the 2005 Annual Report) | |||||
3 | .3 | Certificate of Correction to the Certificate of Amendment. Filed April 9, 2007 (Incorporated by reference to Exhibit 3.3 to MetLife Insurance Company of Connecticut’s Quarterly Report onForm 10-Q for the quarter ended June 30, 2007) | |||||
3 | .4 | By-laws of MetLife Insurance Company of Connecticut, as effective October 20, 1994 (Incorporated by reference to Exhibit 3.3 to the 2005 Annual Report) | |||||
31 | .1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||
31 | .2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||||
32 | .1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||||
32 | .2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
E-1