MetLife 2000 Annual Report Download - page 50

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
4. Fair Value Information
The estimated fair values of financial instruments have been determined by using available market information and the valuation methodologies
described below. Considerable judgment is often required in interpreting market data to develop estimates of fair value. Accordingly, the estimates
presented herein may not necessarily be indicative of amounts that could be realized in a current market exchange. The use of different assumptions or
valuation methodologies may have a material effect on the estimated fair value amounts.
Amounts related to the Company’s financial instruments were as follows:
Notional Carrying Estimated
Amount Value Fair Value
(Dollars in millions)
December 31, 2000
Assets:
Fixed maturities ********************************************************************** $112,979 $112,979
Equity securities ********************************************************************* 2,193 2,193
Mortgage loans on real estate********************************************************** 21,951 22,847
Policy loans ************************************************************************* 8,158 8,914
Short-term investments *************************************************************** 1,269 1,269
Cash and cash equivalents ************************************************************ 3,434 3,434
Mortgage loan commitments*********************************************************** $534 — 17
Liabilities:
Policyholder account balances ********************************************************* 43,196 42,958
Short-term debt ********************************************************************* 1,094 1,094
Long-term debt ********************************************************************** 2,426 2,326
Payable under securities loaned transactions ********************************************* 12,301 12,301
Other:
Company-obligated mandatorily redeemable securities of subsidiary trusts********************* 1,090 1,153
Notional Carrying Estimated
Amount Value Fair Value
(Dollars in millions)
December 31, 1999
Assets:
Fixed maturities ************************************************************************ $96,981 $96,981
Equity securities************************************************************************ 2,006 2,006
Mortgage loans on real estate ************************************************************ 19,739 19,452
Policy loans *************************************************************************** 5,598 5,618
Short-term investments****************************************************************** 3,055 3,055
Cash and cash equivalents ************************************************************** 2,789 2,789
Mortgage loan commitments ************************************************************* $465 — (7)
Liabilities:
Policyholder account balances *********************************************************** 37,170 36,893
Short-term debt************************************************************************ 4,208 4,208
Long-term debt ************************************************************************ 2,514 2,466
Payable under securities loaned transactions *********************************************** 6,461 6,461
The methods and assumptions used to estimate the fair values of financial instruments are summarized as follows:
Fixed Maturities and Equity Securities
The fair value of fixed maturities and equity securities are based upon quotations published by applicable stock exchanges or received from
other reliable sources. For securities in which the market values were not readily available, fair values were estimated using quoted market prices of
comparable investments.
Mortgage Loans on Real Estate and Mortgage Loan Commitments
Fair values for mortgage loans on real estate are estimated by discounting expected future cash flows, using current interest rates for similar
loans with similar credit risk. For mortgage loan commitments, the estimated fair value is the net premium or discount of the commitments.
Policy Loans
Fair values for policy loans are estimated by discounting expected future cash flows using U.S. Treasury rates to approximate interest rates and
the Company’s past experiences to project patterns of loan accrual and repayment characteristics.
Cash and Cash Equivalents and Short-term Investments
The carrying values for cash and cash equivalents and short-term investments approximated fair market values due to the short-term maturities
of these instruments.
Policyholder Account Balances
The fair value of policyholder account balances are estimated by discounting expected future cash flows, based upon interest rates currently
being offered for similar contracts with maturities consistent with those remaining for the agreements being valued.
MetLife, Inc. F-19