MetLife 2001 Annual Report Download - page 56

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Structured Investment Transactions
The Company securitizes high yield debt securities, investment grade bonds and structured finance securities. The Company has sponsored four
securitizations with a total of approximately $1.5 billion in financial assets as of December 31, 2001. Two of these transactions included the transfer of
assets totaling approximately $289 million from which investment gains, recognized by the Company, were insignificant. The Company’s beneficial
interests in these SPEs and the related investment income were insignificant as of and for the year ended December 31, 2001.
The Company invests in structured notes and similar type instruments which generally provide equity-based returns on debt securities. The carrying
value of such investments was approximately $1.6 billion and $1.3 billion at December 31, 2001 and 2000, respectively. The related income recognized
was $44 million and $62 million for the years ended December 31, 2001 and 2000, respectively.
Assets on Deposit and Held in Trust
The Company had investment assets on deposit with regulatory agencies with a fair market value of $845 million and $932 million at December 31,
2001 and 2000, respectively. Company securities held in trust to satisfy collateral requirements had an amortized cost of $1,218 million and $1,234
million at December 31, 2001 and 2000, respectively.
Mortgage Loans on Real Estate
Mortgage loans on real estate were categorized as follows:
December 31,
2001 2000
Amount Percent Amount Percent
(Dollars in millions)
Commercial mortgage loans************************************************** $18,093 76% $16,944 77%
Agricultural mortgage loans*************************************************** 5,277 22% 4,980 22%
Residential mortgage loans*************************************************** 395 2% 110 1%
Total****************************************************************** 23,765 100% 22,034 100%
Less: Valuation allowances 144 83
Mortgage loans $23,621 $21,951
Mortgage loans on real estate are collateralized by properties primarily located throughout the United States. At December 31, 2001, approximately
17%, 8% and 8% of the properties were located in California, New York and Florida, respectively. Generally, the Company (as the lender) requires that a
minimum of one-fourth of the purchase price of the underlying real estate be paid by the borrower.
Certain of the Company’s real estate joint ventures have mortgage loans with the Company. The carrying values of such mortgages were $644
million and $540 million at December 31, 2001 and 2000, respectively.
Changes in mortgage loan valuation allowances were as follows:
Years ended December 31,
2001 2000 1999
(Dollars in millions)
Balance at January 1 ********************************************************************** $ 83 $ 90 $ 173
Additions********************************************************************************* 106 38 40
Deductions for writedowns and dispositions**************************************************** (45) (74) (123)
Acquisitions of affiliates ********************************************************************* —29 —
Balance at December 31 ******************************************************************* $144 $ 83 $ 90
A portion of the Company’s mortgage loans on real estate was impaired and consisted of the following:
December 31,
2001 2000
(Dollars in millions)
Impaired mortgage loans with valuation allowances ********************************************************** $ 816 $592
Impaired mortgage loans without valuation allowances******************************************************** 324 330
Total ********************************************************************************************* 1,140 922
Less: Valuation allowances ****************************************************************************** 140 77
Impaired mortgage loans **************************************************************************** $1,000 $845
The average investment in impaired mortgage loans on real estate was $947 million, $912 million and $1,134 million for the years ended
December 31, 2001, 2000 and 1999, respectively. Interest income on impaired mortgage loans was $92 million, $76 million and $101 million for the
years ended December 31, 2001, 2000 and 1999, respectively.
The investment in restructured mortgage loans on real estate was $685 million and $784 million at December 31, 2001 and 2000, respectively.
Interest income of $52 million, $62 million and $80 million was recognized on restructured loans for the years ended December 31, 2001, 2000 and
1999, respectively. Gross interest income that would have been recorded in accordance with the original terms of such loans amounted to $60 million,
$74 million and $92 million for the years ended December 31, 2001, 2000 and 1999, respectively.
MetLife, Inc. F-17