MetLife 2004 Annual Report Download - page 72

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
4. Insurance
Deferred Policy Acquisition Costs
Information regarding VOBA and DAC for the years ended December 31, 2002, 2003 and 2004 is as follows:
Deferred
Value of Policy
Business Acquisition
Acquired Costs Total
(Dollars in millions)
Balance at January 1, 2002*************************************************************** $1,678 $ 9,489 $11,167
Capitalizations ************************************************************************** — 2,340 2,340
Acquisitions **************************************************************************** 369 — 369
Total ****************************************************************************** 2,047 11,829 13,876
Amortization related to:
Net investment gains (losses) *********************************************************** 16 (11) 5
Unrealized investment gains (losses)****************************************************** 154 384 538
Other expenses *********************************************************************** 132 1,507 1,639
Total amortization ******************************************************************** 302 1,880 2,182
Dispositions and other ******************************************************************* (6) 39 33
Balance at December 31, 2002 *********************************************************** 1,739 9,988 11,727
Capitalizations ************************************************************************** — 2,792 2,792
Acquisitions **************************************************************************** 40 218 258
Total ****************************************************************************** 1,779 12,998 14,777
Amortization related to:
Net investment gains (losses) *********************************************************** (7) (24) (31)
Unrealized investment gains (losses)****************************************************** (31) 146 115
Other expenses *********************************************************************** 162 1,656 1,818
Total amortization ******************************************************************** 124 1,778 1,902
Dispositions and other ******************************************************************* 26668
Balance at December 31, 2003 *********************************************************** 1,657 11,286 12,943
Capitalizations ************************************************************************** — 3,101 3,101
Acquisitions **************************************************************************** 6— 6
Total ****************************************************************************** 1,663 14,387 16,050
Amortization related to:
Net investment gains (losses) *********************************************************** 4711
Unrealized investment gains (losses)****************************************************** (92) (41) (133)
Other expenses *********************************************************************** 140 1,754 1,894
Total amortization ******************************************************************** 52 1,720 1,772
Dispositions and other ******************************************************************* (27) 85 58
Balance at December 31, 2004 *********************************************************** $1,584 $12,752 $14,336
The estimated future amortization expense allocated to other expenses for VOBA is $137 million in 2005, $130 million in 2006, $124 million in 2007,
$119 million in 2008 and $117 million in 2009.
Amortization of VOBA and DAC is related to (i) investment gains and losses and the impact of such gains and losses on the amount of the
amortization, (ii) unrealized investment gains and losses to provide information regarding the amount that would have been amortized if such gains and
losses had been recognized, and (iii) other expenses to provide amounts related to the gross margins or profits originating from transactions other than
investment gains and losses.
Sales Inducements
Changes in deferred sales inducements are as follows:
Sales Inducements
(Dollars in millions)
Balance at January 1, 2004 ****************************************************************************** $196
Capitalization ******************************************************************************************* 121
Amortization******************************************************************************************** (23)
Balance at December 31, 2004*************************************************************************** $294
MetLife, Inc. F-29