MetLife 2003 Annual Report Download - page 28

MetLife Funding had total outstanding liabilities, including accrued interest payable, of $1,042 million and $400 million, respectively, consisting primarily of
commercial paper.
Credit Facilities. The Company maintains committed and unsecured credit facilities aggregating $2.5 billion ($1 billion expiring in 2004, $1.3 billion
expiring in 2005 and $175 million expiring in 2006). If these facilities were drawn upon, they would bear interest at varying rates in accordance with the
respective agreements. The facilities can be used for general corporate purposes and also as back-up lines of credit for the Company’s commercial
paper programs. At December 31, 2003, the Company had drawn approximately $49 million under the facilities expiring in 2005 at interest rates ranging
from 4.08% to 5.48% and approximately $50 million under a facility expiring in 2006 at an interest rate of 1.69%. In April 2003, the Company replaced an
expiring $1 billion five-year credit facility with a $1 billion 364-day credit facility. In May 2003, the Company replaced an expiring $140 million three-year
credit facility with a $175 million three-year credit facility, which expires in 2006.
Liquidity Uses
Insurance Liabilities. The Company’s principal cash outflows primarily relate to the liabilities associated with its various life insurance, property and
casualty, annuity and group pension products, operating expenses and income taxes, as well as principal and interest on its outstanding debt
obligations. Liabilities arising from its insurance activities primarily relate to benefit payments under the aforementioned products, as well as payments for
policy surrenders, withdrawals and loans.
Investment and Other. Additional cash outflows include those related to obligations of securities lending and dollar roll activities, investments in real
estate, limited partnerships and joint ventures, as well as litigation-related liabilities.
The following table summarizes the Company’s major contractual obligations as of December 31, 2003:
Contractual Obligations Total 2004 2005 2006 2007 2008 Thereafter
(Dollars in millions)
Other long-term liabilities(1)****************************** $87,086 $4,391 $3,812 $3,475 $3,763 $2,934 $68,711
Long-term debt(2) ************************************* 5,646 126 1,413 653 28 32 3,394
Partnership investments(3) ****************************** 1,380 1,380 ———— —
Operating leases ************************************** 1,545 210 192 168 145 113 717
Mortgage commitments ******************************** 679679———— —
Shares subject to mandatory redemption(2)**************** 350—————350
Capital leases***************************************** 74 8 9 10 11 12 24
Total************************************************* $96,760 $6,794 $5,426 $4,306 $3,947 $3,091 $73,196
(1) Other long-term liabilities include guaranteed interest contracts, structured settlements, pension closeouts and certain annuity policies.
(2) Amounts differ from the balances presented on the consolidated balance sheets. The amounts above do not include related premiums and discounts
or capital leases which are presented separately.
(3) The Company anticipates that these amounts could be invested in these partnerships any time over the next five years, but are presented in the
current period, as the timing of the fulfillment of the obligation cannot be predicted.
As of December 31, 2003, the Company had no material, individually or in the aggregate, purchase obligations and pension and other
postretirement benefit obligations.
On April 11, 2003, an affiliate of the Company elected not to make future payments required by the terms of a non-recourse loan obligation. The
book value of this loan was $15 million at December 31, 2003. The Company’s exposure under the terms of the applicable loan agreement is limited
solely to its investment in certain securities held by an affiliate.
Letters of Credit. At December 31, 2003 and 2002, the Company had outstanding approximately $828 million and $625 million, respectively, in
letters of credit from various banks, all of which expire within one year. Since commitments associated with letters of credit and financing arrangements
may expire unused, these amounts do not necessarily reflect the actual future cash funding requirements.
Support Agreements. In addition to the support agreements described above, Metropolitan Life entered into a net worth maintenance agreement
with New England Life Insurance Company (‘‘NELICO’’) at the time Metropolitan Life merged with New England Mutual Life Insurance Company. Under
the agreement, Metropolitan Life agreed, without limitation as to the amount, to cause NELICO to have a minimum capital and surplus of $10 million, total
adjusted capital at a level not less than the company action level RBC, as defined by state insurance statutes, and liquidity necessary to enable it to meet
its current obligations on a timely basis. At December 31, 2003, the capital and surplus of NELICO was in excess of the minimum capital and surplus
amount referenced above, and its total adjusted capital was in excess of the most recent referenced RBC-based amount calculated at December 31,
2003.
In connection with the Company’s acquisition of GenAmerica, Metropolitan Life entered into a net worth maintenance agreement with General
American. Under the agreement, Metropolitan Life agreed, without limitation as to amount, to cause General American to have a minimum capital and
surplus of $10 million, total adjusted capital at a level not less than 180% of the company action level RBC, as defined by state insurance statutes, and
liquidity necessary to enable it to meet its current obligations on a timely basis. The agreement was subsequently amended to provide that, for the five
year period from 2003 through 2007, total adjusted capital must be maintained at a level not less than 200% of the company action level RBC, as
defined by state insurance statutes. At December 31, 2003, the capital and surplus of General American was in excess of the minimum capital and
surplus amount referenced above, and its total adjusted capital was in excess of the most recent referenced RBC-based amount calculated at
December 31, 2003.
Metropolitan Life has also entered into arrangements for the benefit of some of its other subsidiaries and affiliates to assist such subsidiaries and
affiliates in meeting various jurisdictions’ regulatory requirements regarding capital and surplus and security deposits. In addition, Metropolitan Life has
entered into a support arrangement with respect to a subsidiary under which Metropolitan Life may become responsible, in the event that the subsidiary
becomes the subject of insolvency proceedings, for the payment of certain reinsurance recoverables due from the subsidiary to one or more of its
cedents in accordance with the terms and conditions of the applicable reinsurance agreements.
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