MetLife 2003 Annual Report Download - page 73

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
eliminate the impact of related amounts in accumulated other comprehensive income) represents the estimated maximum future earnings from the
closed block expected to result from operations attributed to the closed block after income taxes. Earnings of the closed block are recognized in income
over the period the policies and contracts in the closed block remain in-force. Management believes that over time the actual cumulative earnings of the
closed block will approximately equal the expected cumulative earnings due to the effect of dividend changes. If, over the period the closed block
remains in existence, the actual cumulative earnings of the closed block is greater than the expected cumulative earnings of the closed block, the
Company will pay the excess of the actual cumulative earnings of the closed block over the expected cumulative earnings to closed block policyholders
as additional policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected
cumulative earnings in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the
closed block is less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income. However,
the Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings until the actual
cumulative earnings equal the expected cumulative earnings.
Closed block liabilities and assets designated to the closed block are as follows:
December 31,
2003 2002
(Dollars in millions)
CLOSED BLOCK LIABILITIES
Future policy benefits ************************************************************************ $41,928 $41,207
Other policyholder funds ********************************************************************* 260 279
Policyholder dividends payable **************************************************************** 682 719
Policyholder dividend obligation **************************************************************** 2,130 1,882
Payables under securities loaned transactions *************************************************** 6,418 4,851
Other liabilities ****************************************************************************** 180 433
Total closed block liabilities *********************************************************** 51,598 49,371
ASSETS DESIGNATED TO THE CLOSED BLOCK
Investments:
Fixed maturities available-for-sale, at fair value (amortized cost: $30,381 and $28,339, respectively) **** 32,348 29,981
Equity securities, at fair value (cost: $217 and $236, respectively)********************************* 250 218
Mortgage loans on real estate *************************************************************** 7,431 7,032
Policy loans ****************************************************************************** 4,036 3,988
Short-term investments********************************************************************* 123 24
Other invested assets********************************************************************** 108 604
Total investments******************************************************************** 44,296 41,847
Cash and cash equivalents ******************************************************************* 531 435
Accrued investment income******************************************************************* 527 540
Deferred income taxes *********************************************************************** 1,043 1,151
Premiums and other receivables *************************************************************** 164 130
Total assets designated to the closed block ********************************************* 46,561 44,103
Excess of closed block liabilities over assets designated to to the closed block *********************** 5,037 5,268
Amounts included in accumulated other comprehensive loss:
Net unrealized investment gains net of deferred income tax of $730 and $577, respectively *********** 1,270 1,047
Unrealized derivative gains (losses), net of deferred income tax (benefit) expense of $(28) and $7,
respectively **************************************************************************** (48) 13
Allocated to policyholder dividend obligation, net of deferred income tax benefit of ($778) and ($668),
respectively **************************************************************************** (1,352) (1,214)
(130) (154)
Maximum future earnings to be recognized from closed block assets and liabilities********************* $ 4,907 $ 5,114
Information regarding the policyholder dividend obligation is as follows:
Years Ended December 31,
2003 2002 2001
(Dollars in millions)
Balance at beginning of year********************************************************************* $1,882 $ 708 $385
Impact on net income before amounts allocated from policyholder dividend obligation ********************* 144 157 159
Net investment gains (losses) ******************************************************************** (144) (157) (159)
Change in unrealized investment and derivative gains ************************************************ 248 1,174 323
Balance at end of year************************************************************************** $2,130 $1,882 $708
MetLife, Inc.
F-28