MetLife 2000 Annual Report Download - page 55

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Metropolitan Life and certain of its subsidiaries maintain committed and unsecured credit facilities aggregating $2,000 million (five-year facility of
$1,000 million expiring in April 2003 and a 364-day facility of $1,000 million expiring in April of 2001). Both facilities bear interest at LIBOR plus 20 basis
points. The facilities can be used for general corporate purposes and also provide backup for the Company’s commercial paper program. At
December 31, 2000, there were no outstanding borrowings under either of the facilities.
Reinsurance Group of America, Incorporated (‘‘RGA’’), a subsidiary of the Company, maintains committed and unsecured credit facilities aggregat-
ing $178 million (two three-year facilities of $140 million and $22 million expiring May 2003 and a three month $16 million revolving line of credit). The
interest on borrowing is based on the terms of each specific borrowing. At December 31, 2000 there was $98 million outstanding under these facilities.
Subsequent to December 31, 2000, RGA amended its revolving line of credit agreement into a $20 million facility.
Payments of interest and principal on the surplus notes, subordinated to all other indebtedness, may be made only with the prior approval of the
insurance department of the state of domicile. Subject to the prior approval of the Superintendent, the $300 million 7.45% surplus notes due 2023 may
be redeemed, in whole or in part, at the election of Metropolitan Life at any time on or after November 1, 2003.
Each issue of investment related debt is payable in cash or by delivery of an underlying security owned by the Company. The amount of the debt
payable at maturity is greater than the principal of the debt if the market value of the underlying security appreciates above certain levels at the date of
debt repayment as compared to the market value of the underlying security at the date of debt issuance. At December 31, 2000, the underlying
securities pledged as collateral had a market value of $295 million.
The aggregate maturities of long-term debt for the Company are $172 million in 2001, $210 million in 2002, $500 million in 2003, $14 million in
2004, $381 million in 2005 and $1,149 million thereafter.
Short-term debt of the Company consisted of commercial paper with a weighted average interest rate of 6.60% and 6.05% and a weighted average
maturity of 44 days and 74 days at December 31, 2000 and 1999, respectively.
Interest expense related to the Company’s indebtedness was $377 million, $384 million and $333 million for the years ended December 31, 2000,
1999 and 1998, respectively.
9. Company-Obligated Mandatorily Redeemable Securities of Subsidiary Trusts
On April 7, 2000, MetLife Capital Trust I, a Delaware statutory business trust wholly owned by the Holding Company, issued 20,125,000 8.00%
equity security units (‘‘units’’). Each unit consists of (i) a purchase contract under which the holder agrees to purchase, for $50.00, shares of common
stock of the Holding Company on May 15, 2003 (52,771,250 shares at December 31, 2000 based on the average market price at December 31, 2000)
and (ii) a capital security, with a stated liquidation amount of $50.00 and mandatorily redeemable on May 15, 2005. The number of shares to be
purchased at such date will be determined based on the average trading price of the Holding Company’s common stock. The proceeds from the sale of
the units were used to acquire $1,006 million 8.00% debentures of the Holding Company (‘‘MetLife debentures’’). The capital securities represent
undivided beneficial ownership interests in MetLife Capital Trust I’s assets, which consist solely of the MetLife debentures. These securities are pledged
to collateralize the obligations of the unit holder under the related purchase contracts. Holders of the capital securities are entitled to receive cumulative
cash distributions accruing from April 7, 2000 and payable quarterly in arrears commencing August 15, 2000 at an annual rate of 8.00%. The Holding
Company irrevocably guarantees, on a senior and unsecured basis, the payment in full of distributions on the capital securities and the stated liquidation
amount of the capital securities, in each case to the extent of available trust funds. Holders of the capital securities generally have no voting rights. Capital
securities outstanding at December 31, 2000 were $972 million, net of unamortized discount of $34 million.
The MetLife debentures bear interest at an annual rate of 8.00% of the principal amount, payable quarterly in arrears commencing August 15, 2000
and mature on May 15, 2005. These debentures are unsecured. The Holding Company’s right to participate in the distribution of assets of any subsidiary
upon the subsidiary’s liquidation, reorganization or otherwise, is subject to the prior claims of creditors of the subsidiary, except to the extent the Holding
Company may be recognized as a creditor of that subsidiary. Accordingly, the Holding Company’s obligations under the debentures are effectively
subordinated to all existing and future liabilities of its subsidiaries.
In connection with the contribution to Metropolitan Life of the net proceeds from the initial public offering, the private placements and the units
offering, Metropolitan Life issued to the Holding Company a $1,006 million 8.00% mandatorily convertible note due 2005 having the same interest and
payment terms as set forth in the MetLife debentures issued to MetLife Capital Trust I. The principal amount of the capital note is mandatorily convertible
into common stock of Metropolitan Life upon maturity or acceleration of the capital note and without any further action by the Holding Company or
Metropolitan Life. In addition, the capital note provides that Metropolitan Life may not make any payment of principal or interest on the capital note so long
as specified payment restrictions exist and have not been waived by the Superintendent. Payment restrictions would exist if Metropolitan Life fails to
exceed certain thresholds relative to the level of its statutory risk-based capital or the amount of its outstanding capital notes, surplus notes or similar
obligations. At December 31, 2000, Metropolitan Life’s statutory total adjusted capital exceeded these limitations.
In June 1997, GenAmerica Corporation (‘‘GenAmerica’’) issued $125 million of 8.525% capital securities through a wholly-owned subsidiary trust,
GenAmerica Capital I. GenAmerica has fully and unconditionally guaranteed, on a subordinated basis, the obligation of the trust under the capital
securities and is obligated to mandatorily redeem the securities on June 30, 2027. GenAmerica may prepay the securities any time after June 30, 2007.
Capital securities outstanding at December 31, 2000 were $118 million, net of unamortized discount of $7 million.
MetLife, Inc.
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