MetLife 2003 Annual Report Download - page 38

Mortgage Loans on Real Estate
The Company’s mortgage loans on real estate are collateralized by commercial, agricultural and residential properties. Mortgage loans on real estate
comprised 11.8% and 13.2% of the Company’s total cash and invested assets at December 31, 2003 and 2002, respectively. The carrying value of
mortgage loans on real estate is stated at original cost net of repayments, amortization of premiums, accretion of discounts and valuation allowances. The
following table shows the carrying value of the Company’s mortgage loans on real estate by type at:
December 31, 2003 December 31, 2002
Carrying % of Carrying % of
Value Total Value Total
(Dollars in millions)
Commercial *********************************************************************** $20,300 77.3% $19,552 78.0%
Agricultural ************************************************************************ 5,327 20.3 5,146 20.5
Residential ************************************************************************ 622 2.4 388 1.5
Total ********************************************************************* $26,249 100.0% $25,086 100.0%
Commercial Mortgage Loans. The Company diversifies its commercial mortgage loans by both geographic region and property type, and
manages these investments through a network of regional offices overseen by its investment department. The following table presents the distribution
across geographic regions and property types for commercial mortgage loans at:
December 31, 2003 December 31, 2002
Carrying % of Carrying % of
Value Total Value Total
(Dollars in millions)
Region
South Atlantic******************************************************************* $ 4,978 24.5% $ 5,076 26.0%
Pacific ************************************************************************* 5,005 24.7 4,180 21.4
Middle Atlantic ****************************************************************** 3,455 17.0 3,441 17.6
East North Central *************************************************************** 1,821 9.0 2,147 11.0
West South Central ************************************************************** 1,370 6.8 1,097 5.6
New England ******************************************************************* 1,278 6.3 1,323 6.8
International ******************************************************************** 836 4.1 632 3.2
Mountain*********************************************************************** 740 3.6 833 4.2
West North Central ************************************************************** 619 3.0 645 3.3
East South Central ************************************************************** 198 1.0 178 0.9
Total******************************************************************* $20,300 100.0% $19,552 100.0%
Property Type
Office ************************************************************************* $ 9,170 45.2% $ 9,340 47.8%
Retail ************************************************************************** 5,006 24.7 4,320 22.1
Apartments ********************************************************************* 2,832 13.9 2,793 14.3
Industrial *********************************************************************** 1,911 9.4 1,910 9.7
Hotel ************************************************************************** 1,032 5.1 942 4.8
Other************************************************************************** 349 1.7 247 1.3
Total******************************************************************* $20,300 100.0% $19,552 100.0%
The following table presents the scheduled maturities for the Company’s commercial mortgage loans at:
December 31, 2003 December 31, 2002
Carrying % of Carrying % of
Value Total Value Total
(Dollars in millions)
Due in one year or less ********************************************************** $ 708 3.5% $ 713 3.6%
Due after one year through two years*********************************************** 1,065 5.2 1,204 6.2
Due after two years through three years********************************************* 2,020 10.0 1,939 9.9
Due after three years through four years********************************************* 2,362 11.6 2,048 10.5
Due after four years through five years ********************************************** 3,157 15.6 2,443 12.5
Due after five years ************************************************************** 10,988 54.1 11,205 57.3
Total******************************************************************* $20,300 100.0% $19,552 100.0%
Potential Problem, Problem and Restructured Mortgage Loans. The Company monitors its mortgage loan investments on an ongoing basis.
Through this monitoring process, the Company reviews loans that are restructured, delinquent or under foreclosure and identifies those that management
considers to be potentially delinquent. These loan classifications are consistent with those used in industry practice.
The Company defines potentially delinquent loans as loans that, in management’s opinion, have a high probability of becoming delinquent. The
Company defines delinquent mortgage loans, consistent with industry practice, as loans in which two or more interest or principal payments are past
due. The Company defines mortgage loans under foreclosure as loans in which foreclosure proceedings have formally commenced. The Company
defines restructured mortgage loans as loans in which the Company, for economic or legal reasons related to the debtor’s financial difficulties, grants a
concession to the debtor that it would not otherwise consider.
The Company reviews all mortgage loans on an ongoing basis. These reviews may include an analysis of the property financial statements and rent
roll, lease rollover analysis, property inspections, market analysis and tenant creditworthiness. The Company also reviews loan-to-value ratios and debt
MetLife, Inc. 35