MetLife 2003 Annual Report Download - page 95

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Notional Carrying Estimated
December 31, 2002 Amount Value Fair Value
(Dollars in millions)
Assets:
Fixed maturities********************************************************************** $140,288 $140,288
Equity securities ********************************************************************* $ 1,613 $ 1,613
Mortgage loans on real estate ********************************************************* $ 25,086 $ 27,778
Policy loans************************************************************************* $ 8,580 $ 8,580
Short-term investments *************************************************************** $ 1,921 $ 1,921
Cash and cash equivalents************************************************************ $ 2,323 $ 2,323
Mortgage loan commitments*********************************************************** $ 859 $ — $ 12
Commitments to fund partnership investments ******************************************** $1,667 $ — $ —
Liabilities:
Policyholder account balances ********************************************************* $ 55,285 $ 55,909
Short-term debt ********************************************************************* $ 1,161 $ 1,161
Long-term debt********************************************************************** $ 4,425 $ 4,731
Payable under securities loaned transactions ********************************************* $ 17,862 $ 17,862
Other:
Company-obligated mandatorily redeemable securities of subsidiary trusts********************* $ 1,265 $ 1,337
The methods and assumptions used to estimate the fair values of financial instruments are summarized as follows:
Fixed Maturities and Equity Securities
The fair value of fixed maturities and equity securities are based upon quotations published by applicable stock exchanges or received from other
reliable sources. For securities for which the market values were not readily available, fair values were estimated using quoted market prices of
comparable investments.
Mortgage Loans on Real Estate, Mortgage Loan Commitments and Commitments to Fund Partnership Investments
Fair values for mortgage loans on real estate are estimated by discounting expected future cash flows, using current interest rates for similar loans
with similar credit risk. For mortgage loan commitments, the estimated fair value is the net premium or discount of the commitments. Commitments to
fund partnership investments have no stated interest rate and are assumed to have a fair value of zero.
Policy Loans
The carrying values for policy loans approximate fair value.
Cash and Cash Equivalents and Short-term Investments
The carrying values for cash and cash equivalents and short-term investments approximated fair values due to the short-term maturities of these
instruments.
Policyholder Account Balances
The fair value of policyholder account balances is estimated by discounting expected future cash flows based upon interest rates currently being
offered for similar contracts with maturities consistent with those remaining for the agreements being valued.
Short-term and Long-term Debt, Payables Under Securities Loaned Transactions, Shares Subject to Mandatory Redemption
and Company-Obligated Mandatorily Redeemable Securities of Subsidiary Trusts
The fair values of short-term and long-term debt, payables under securities loaned transactions, shares subject to mandatory redemption and
Company-obligated mandatorily redeemable securities of subsidiary trusts are determined by discounting expected future cash flows using risk rates
currently available for debt with similar terms and remaining maturities.
Derivative Financial Instruments
The fair value of derivative instruments, including financial futures, financial forwards, interest rate, credit default and foreign currency swaps, foreign
currency forwards, caps, floors, options and written covered calls are based upon quotations obtained from dealers or other reliable sources. See Note 3
for derivative fair value disclosures.
MetLife, Inc.
F-50