MetLife 2001 Annual Report Download - page 62

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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.
Short-term and Long-term Debt, Payables Under Securities Loaned Transactions and Company-Obligated Mandatorily Redeem-
able Securities of Subsidiary Trusts
The fair values of short-term and long-term debt, payables under securities loaned transactions and Company-obligated mandatorily redeemable
securities of subsidiary trusts are determined by discounting expected future cash flows, using risk rates currently available for debt with similar terms and
remaining maturities.
Derivative Instruments
The fair value of derivative instruments, including financial futures, financial forwards, interest rate, credit default and foreign currency swaps, floors,
foreign exchange contracts, caps, exchange-traded options and written covered call options are based upon quotations obtained from dealers or other
reliable sources. See Note 4 for derivative fair value disclosures.
6. Employee Benefit Plans
Pension Benefit and Other Benefit Plans
The Company is both the sponsor and administrator of defined benefit pension plans covering all eligible employees and sales representatives of
Metropolitan Life and certain of its subsidiaries. Retirement benefits are based upon years of credited service and final average earnings history.
The Company also provides certain postemployment benefits and certain postretirement health care and life insurance benefits for retired employees
through insurance contracts. Substantially all of the Company’s employees may, in accordance with the plans applicable to the postretirement benefits,
become eligible for these benefits if they attain retirement age, with sufficient service, while working for the Company.
December 31,
Pension Benefits Other Benefits
2001 2000 2001 2000
(Dollars in millions)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year *********************************************** $4,145 $3,737 $1,542 $1,483
Service cost************************************************************************* 104 98 34 29
Interest cost************************************************************************* 308 291 115 113
Acquisitions and divestitures *********************************************************** (12) 107 — 37
Actuarial losses ********************************************************************** 169 176 66 59
Curtailments and terminations ********************************************************** (49) (3) 9 2
Change in benefits ******************************************************************* 29 (2) — (86)
Benefits paid ************************************************************************ (268) (259) (97) (95)
Projected benefit obligation at end of year **************************************************** 4,426 4,145 1,669 1,542
Change in plan assets:
Contract value of plan assets at beginning of year ********************************************* 4,619 4,726 1,318 1,199
Actual return on plan assets *********************************************************** (201) 54 (49) 179
Acquisitions and divestitures *********************************************************** (12) 79 — —
Employer and participant contributions *************************************************** 23 19 1 3
Benefits paid ************************************************************************ (268) (259) (101) (63)
Contract value of plan assets at end of year ************************************************** 4,161 4,619 1,169 1,318
(Under) over funded ********************************************************************** (265) 474 (500) (224)
Unrecognized net asset at transition********************************************************* — (31) — —
Unrecognized net actuarial losses (gains)***************************************************** 693 2 (258) (478)
Unrecognized prior service cost 116 109 (49) (89)
Prepaid (accrued) benefit cost************************************************************** $ 544 $ 554 $ (807) $ (791)
Qualified plan prepaid pension cost ********************************************************* $ 805 $ 775
Non-qualified plan accrued pension cost ***************************************************** (323) (263)
Unamortized prior service cost ************************************************************* 16 14
Accumulated other comprehensive income *************************************************** 46 28
Prepaid benefit cost $ 544 $ 554
MetLife, Inc. F-23