MetLife 2004 Annual Report Download - page 43

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The table below provides additional detail regarding the potential loss in fair value of the Company’s interest sensitive financial instruments at
December 31, 2004 by type of asset or liability.
As of December 31, 2004
Assuming a
10% increase
Notional in the yield
Amount Fair Value curve
(Dollars in millions)
Assets
Fixed maturities *********************************************************************** $ — $176,763 $(3,651)
Mortgage loans on real estate *********************************************************** — 33,902 (534)
Equity securities*********************************************************************** — 2,188 —
Short-term investments***************************************************************** — 2,663 6
Cash and cash equivalents ************************************************************* — 4,051 —
Policy loans ************************************************************************** — 8,899 (290)
Mortgage loan commitments ************************************************************ 1,189 4 (5)
Total assets ********************************************************************** $(4,474)
Liabilities
Policyholder account balances ********************************************************** $ — $ 69,688 $ 450
Short-term debt *********************************************************************** — 1,445 —
Long-term debt *********************************************************************** — 7,818 264
Shares subject to mandatory redemption************************************************** $ — $ 365 $ 1
Payable under securities loaned transactions*********************************************** — 28,678 —
Total liabilities ********************************************************************* $ 715
Other
Derivative instruments (designated hedges or otherwise)
Swaps **************************************************************************** $22,792 $ (884) $ 95
Futures **************************************************************************** 611 (13) 8
Forwards ************************************************************************** 1,339 (52) —
Options**************************************************************************** 17,514 80 6
Total other *********************************************************************** $ 109
Net change ************************************************************************* $(3,650)
In addition to the analysis discussed above, the Company also performs an analysis of the sensitivity of its insurance and interest sensitive liabilities
to changes in interest rates as a part of its asset liability management program. As of December 31, 2004, a hypothetical instantaneous 10% decrease in
interest rates applied to the Company’s insurance and interest sensitive liabilities and their associated operating asset portfolios would reduce the fair
value of equity by $227 million. Management does not expect that this sensitivity would produce a liquidity strain on the Company.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Management’s Annual Report on Internal Control Over Financial Reporting
Management of MetLife, Inc. and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting. In
fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control
procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded
against loss from unauthorized use or disposition, and that transactions are executed in accordance with management’s authorization and recorded
properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America.
Financial management has documented and evaluated the effectiveness of the internal control of the Company as of December 31, 2004 pertaining
to financial reporting in accordance with the criteria established in ‘‘Internal Control — Integrated Framework’’ issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
In the opinion of management, MetLife, Inc. maintained effective internal control over financial reporting as of December 31, 2004.
Deloitte & Touche LLP, an independent registered public accounting firm, has audited the consolidated financial statements and consolidated
financial statement schedules included in the Annual Report on Form 10-K for the year ended December 31, 2004. The Report of the Independent
Registered Public Accounting Firm on their audit of management’s assessment of the Company’s internal control over financial reporting and their audit
on the effectiveness of the Company’s internal control over financial reporting is included at page F-2. The Report of the Independent Registered Public
Accounting Firm on their audit of the consolidated financial statements is included at page F-3.
MetLife, Inc.
40