MetLife 2001 Annual Report Download - page 76

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Weighted
Average
Shares Exercise Price
Granted ********************************************************************************** 12,263,550 $ 29.93
Canceled ********************************************************************************* (1,158,025) 29.95
Outstanding at end of year ****************************************************************** 11,105,525 $ 29.93
Exercisable at end of year ******************************************************************* ——
Weighted average fair value of options granted during 2001*************************************** $ 10.29
The following table summarizes information about stock options outstanding at December 31, 2001:
Number Weighted Average Weighted
Outstanding at Remaining Contractual Average
Range of Exercise Prices December 31, 2001 Life (Years) Exercise Price
$27.30 – $28.30 77,600 9.84 $27.30
28.31 – 29.30 21,216 9.75 29.00
29.31 – 30.30 10,964,925 8.78 29.95
30.31 – 30.95 41,784 9.55 30.94
11,105,525 8.79 $29.93
Statutory Equity and Income
Applicable insurance department regulations require that the insurance subsidiaries prepare statutory financial statements in accordance with
statutory accounting practices prescribed or permitted by the insurance department of the state of domicile. Statutory accounting practices primarily differ
from GAAP by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions,
reporting surplus notes as surplus instead of debt, and valuing securities on a different basis. In addition, New York State Statutory Accounting Practices
do not provide for deferred income taxes. Statutory net income of Metropolitan Life, as filed with the Department, was $2,782 million, $1,027 million and
$789 million for the years ended 2001, 2000 and 1999, respectively; statutory capital and surplus, as filed, was $5,358 million and $7,213 million at
December 31, 2001 and 2000, respectively.
The National Association of Insurance Commissioners (‘‘NAIC’’) adopted the Codification of Statutory Accounting Principles (the ‘‘Codification’’),
which is intended to standardize regulatory accounting and reporting to state insurance departments, and became effective January 1, 2001. However,
statutory accounting principles continue to be established by individual state laws and permitted practices. The Department required adoption of the
Codification, with certain modifications, for the preparation of statutory financial statements effective January 1, 2001. The adoption of the Codification in
accordance with NAIC guidance would have increased Metropolitan Life’s statutory capital and surplus by approximately $1.5 billion. The adoption of the
Codification, as modified by the Department, increased Metropolitan Life’s statutory capital and surplus by approximately $84 million, as of January 1,
2001. Further modifications by state insurance departments may impact the effect of the Codification on Metropolitan Life’s statutory surplus and capital.
18. Other Comprehensive Income (Loss)
The following table sets forth the reclassification adjustments required for the years ended December 31, 2001, 2000 and 1999 to avoid double-
counting in other comprehensive income (loss) items that are included as part of net income for the current year that have been reported as a part of
other comprehensive income (loss) in the current or prior year:
December 31,
2001 2000 1999
(Dollars in millions)
Holding gains (losses) on investments arising during the year *********************************** $1,318 $2,789 $(6,314)
Income tax effect of holding gains or losses************************************************** (520) (969) 2,262
Reclassification adjustments:
Recognized holding losses included in current year income *********************************** 534 989 38
Amortization of premium and discount on investments *************************************** (488) (499) (307)
Recognized holding losses allocated to other policyholder amounts **************************** (134) (54) (67)
Income tax effect ********************************************************************** 35 (151) 120
Allocation of holding (gains) losses on investments relating to other policyholder amounts ************ (68) (971) 3,788
Income tax effect of allocation of holding gains or losses to other policyholder amounts ************* 27 338 (1,357)
Net unrealized investment gains (losses) ***************************************************** 704 1,472 (1,837)
Foreign currency translation adjustment****************************************************** (60) (6) 50
Minimum pension liability adjustment ******************************************************** (18) (9) (7)
Other comprehensive income (loss) ********************************************************* $ 626 $1,457 $(1,794)
19. Earnings Per Share and Earnings After Date of Demutualization
Net income after the date of demutualization is based on the results of operations after March 31, 2000, adjusted for the payments to the former
Canadian policyholders and costs of demutualization recorded in April 2000 which are applicable to the period prior to April 7, 2000.
MetLife, Inc. F-37