MetLife 2003 Annual Report Download - page 32

Investment Results
Net investment income, including net investment income from discontinued operations and scheduled periodic settlement payments on derivative
instruments that do not qualify for hedge accounting under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended
(‘‘SFAS 133’’), on general account cash and invested assets totaled $11,772 million, $11,453 million and $11,380 million for the years ended
December 31, 2003, 2002 and 2001, respectively. The annualized yields on general account cash and invested assets, including net investment
income from discontinued operations and scheduled periodic settlement payments on derivative instruments that do not qualify for hedge accounting
under SFAS No. 133, and excluding all net investment gains and losses, were 6.67%, 7.20% and 7.56% for the years ended December 31, 2003, 2002
and 2001, respectively. The decline in annualized yields is due primarily to the decline in interest rates during these years.
The following table illustrates the net investment income and annualized yields on average assets for each of the components of the Company’s
investment portfolio for the years ended December 31, 2003, 2002 and 2001:
2003 2002 2001
Yield(1) Amount Yield(1) Amount Yield(1) Amount
(Dollars in millions)
Fixed Maturities:(2)
Investment income **************************************** 6.89% $ 8,502 7.46% $ 8,076 7.89% $ 8,018
Net investment gains (losses)******************************** (398) (917) (645)
Total ************************************************** $ 8,104 $ 7,159 $ 7,373
Ending assets ******************************************** $167,752 $140,288 $115,150
Mortgage Loans on Real Estate:(3)
Investment income **************************************** 7.48% $ 1,903 7.84% $ 1,883 8.17% $ 1,848
Net investment gains (losses)******************************** (56) (22) (91)
Total ************************************************** $ 1,847 $ 1,861 $ 1,757
Ending assets ******************************************** $ 26,249 $ 25,086 $ 23,621
Policy Loans:
Investment income **************************************** 6.40% $ 554 6.49% $ 543 6.56% $ 536
Ending assets ******************************************** $ 8,749 $ 8,580 $ 8,272
Cash, Cash Equivalents and Short-term Investments:
Investment income **************************************** 2.73% $ 165 4.17% $ 232 5.54% $ 279
Net investment gains (losses)******************************** 1 — (5)
Total ************************************************** $ 166 $ 232 $ 274
Ending assets ******************************************** $ 5,559 $ 4,244 $ 8,676
Real Estate and Real Estate Joint Ventures:(4)
Investment income, net of expenses************************** 10.78% $ 518 11.41% $ 637 10.58% $ 584
Net investment gains (losses)******************************** 440 576 (4)
Total ************************************************** $ 958 $ 1,213 $ 580
Ending assets ******************************************** $ 4,803 $ 4,725 $ 5,730
Equity Securities and Other Limited Partnership Interests:
Investment income **************************************** 2.66% $ 106 2.47% $ 99 2.56% $ 110
Net investment gains (losses)******************************** (43) 222 (96)
Total ************************************************** $63 $321 $14
Ending assets ******************************************** $ 4,075 $ 4,008 $ 4,948
Other Invested Assets:(5)
Investment income **************************************** 6.84% $ 290 6.42% $ 218 7.60% $ 249
Net investment gains (losses)******************************** (180) (206) 79
Total ************************************************** $ 110 $ 12 $ 328
Ending assets ******************************************** $ 4,645 $ 3,727 $ 3,298
Total Investments:
Investment income before expenses and fees****************** 6.82 % $ 12,038 7.35 % $ 11,688 7.72 % $ 11,624
Investment expenses and fees ****************************** (0.15)% (266) (0.15)% (235) (0.16)% (244)
Net investment income ************************************* 6.67 % $ 11,772 7.20 % $ 11,453 7.56 % $ 11,380
Net investment gains (losses)******************************** (236) (347) (762)
Adjustments to investment gains (losses)(6) ******************** 215 145 134
Gains from sales of subsidiaries ***************************** ——25
Total ************************************************** $ 11,751 $ 11,251 $ 10,777
(1) Yields are based on quarterly average asset carrying values, excluding recognized and unrealized gains and losses, and for yield calculation
purposes, average assets exclude collateral associated with the Company’s securities lending program.
(2) Included in fixed maturities are equity-linked notes of $880 million, $834 million, and $1,004 million at December 31, 2003, 2002 and 2001, respectively,
which include an equity-like component as part of the notes’ return. Investment income for fixed maturities includes prepayment fees and income from the
securities lending program. Fixed maturity investment income has been reduced by rebates paid under the securities lending program.
(3) Investment income from mortgage loans on real estate includes prepayment fees.
(4) Real estate and real estate joint venture income is shown net of depreciation of $183 million, $227 million and $220 million for the years ended
December 31, 2003, 2002 and 2001, respectively. Real estate and real estate joint venture income includes amounts classified as discontinued
operations of $52 million, $160 million and $169 million for the years ended December 31, 2003, 2002 and 2001, respectively. These amounts are
net of depreciation of $15 million, $66 million and $93 million for the years ended December 31, 2003, 2002 and 2001, respectively. Net investment
MetLife, Inc. 29