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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In 2002, the Company acquired Aseguradora Hidalgo S.A. (‘‘Hidalgo’’), an insurance company based in Mexico with approximately $2.5 billion in
assets as of the date of acquisition (June 20, 2002). During the second quarter of 2003, as a part of its acquisition and integration strategy, the
International segment completed the legal merger of Hidalgo into its original Mexican subsidiary, Seguro Genesis, S.A., forming MetLife Mexico, S.A. As a
result of the merger of these companies, the Company recorded $62 million of earnings, net of income taxes, from the merger and a reduction in
policyholder liabilities resulting from a change in reserve methodology. Such benefit was recorded in the second quarter of 2003 in the International
segment.
See also Note 20 for Subsequent Events.
18. Discontinued Operations
Real Estate
The Company actively manages its real estate portfolio with the objective to maximize earnings through selective acquisitions and dispositions.
Income related to real estate classified as held-for-sale or sold is presented as discontinued operations. These assets are carried at the lower of
depreciated cost or fair value less expected disposition costs.
The following table presents the components of income from discontinued real estate operations:
Years Ended December 31,
2004 2003 2002
(Dollars in millions)
Investment income ******************************************************************************* $136 $ 231 $ 530
Investment expense ****************************************************************************** (82) (138) (351)
Net investment gains****************************************************************************** 139 420 582
Total revenues ********************************************************************************* 193 513 761
Interest expense ********************************************************************************* 13 4 1
Provision for income taxes ************************************************************************* 63 186 276
Income from discontinued operations, net of income taxes ******************************************** $117 $ 323 $ 484
The carrying value of real estate related to discontinued operations was $252 million and $1,170 million at December 31, 2004 and 2003,
respectively.
The following table shows the real estate discontinued operations by segment:
Year Ended December 31,
2004 2003 2002
(Dollars in millions)
Net investment income
Institutional *********************************************************************************** $6 $12 $42
Individual************************************************************************************* 71257
Corporate & Other***************************************************************************** 41 69 80
Total net investment income*************************************************************** $ 54 $ 93 $179
Net investment gains (losses)
Institutional *********************************************************************************** $ 9 $ 45 $156
Individual************************************************************************************* (3) 43 262
Corporate & Other***************************************************************************** 133 332 164
Total net investment gains (losses) ********************************************************* $139 $420 $582
Interest Expense
Individual************************************************************************************* $— $1 $1
Corporate & Other***************************************************************************** 13 3 —
Total interest expense ******************************************************************** $13 $ 4 $ 1
In April of 2004, MetLife sold one of its real estate investments, Sears Tower. The sale resulted in a gain of $85 million, net of income taxes.
Operations
During the third quarter of 2004, the Company entered into an agreement to sell its wholly-owned subsidiary, SSRM, to a third party, which was sold
on January 31, 2005. Accordingly, the assets, liabilities and operations of SSRM have been reclassified into discontinued operations for all periods
presented. The operations of SSRM include affiliated revenues of $59 million, $54 million and $56 million, for the years ended December 31, 2004, 2003
and 2002, respectively, related to asset management services provided by SSRM to the Company that have not been eliminated from discontinued
MetLife, Inc. F-53