MetLife 2001 Annual Report Download - page 61

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For the year ended December 31, 2001, the Company recognized net investment income of $24 million and net investment gains of $100 million
from derivatives not designated as accounting hedges. The use of these non-speculative derivatives is permitted by the Department.
5. 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, 2001
Assets:
Fixed maturities ********************************************************************** $115,398 $115,398
Equity securities ********************************************************************* 3,063 3,063
Mortgage loans on real estate********************************************************** 23,621 24,844
Policy loans ************************************************************************* 8,272 8,272
Short-term investments *************************************************************** 1,203 1,203
Cash and cash equivalents ************************************************************ 7,473 7,473
Mortgage loan commitments*********************************************************** $423 — (4)
Liabilities:
Policyholder account balances ********************************************************* 47,977 48,318
Short-term debt ********************************************************************* 355 355
Long-term debt ********************************************************************** 3,628 3,685
Payable under securities loaned transactions ********************************************* 12,661 12,661
Other:
Company-obligated mandatorily redeemable securities of subsidiary trusts********************* 1,256 1,311
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 8,158
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 ********************************************************************* 1,085 1,085
Long-term debt ********************************************************************** 2,400 2,237
Payable under securities loaned transactions ********************************************* 12,301 12,301
Other:
Company-obligated mandatorily redeemable securities of subsidiary trusts********************* 1,090 1,153
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
The carrying values for policy loans approximate fair value.
Cash and Cash Equivalents and Short-term Investments
The carrying values for cash and cash equivalents and short-term investments approximated fair values due to the short-term maturities of
these instruments.
MetLife, Inc.
F-22