MetLife 2005 Annual Report Download - page 102

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
June 15, 2035 at a discount of $2.4 million ($997.6 million). In connection with the offering, the Holding Company incurred approximately
$12.4 million of issuance costs which have been capitalized and included in other assets. These costs are being amortized using the effective
interest method over the respective term of the related senior notes.
On June 29, 2005, the Holding Company issued 400 million pounds sterling ($729.2 million at issuance) aggregate principal amount of
5.25% senior notes due June 29, 2020 at a discount of 4.5 million pounds sterling ($8.1 million at issuance), for aggregate proceeds of
395.5 million pounds sterling ($721.1 million at issuance). The senior notes were initially offered and sold outside the United States in reliance upon
Regulation S under the Securities Act of 1933, as amended. In connection with the offering, the Holding Company incurred approximately
$3.7 million of issuance costs which have been capitalized and included in other assets. These costs are being amortized using the effective interest
method over the term of the related senior notes.
MetLife Bank National Association (‘‘MetLife Bank’’ or ‘‘MetLife Bank, N.A.’’) is a member of the Federal Home Loan Bank of New York (the ‘‘FHLB of
NY’’) and holds $43 million and $7 million of common stock of the FHLB of NY, which is included in equity securities on the Company’s consolidated
balance sheets at December 31, 2005 and 2004, respectively. MetLife Bank has also entered into repurchase agreements with the FHLB of NY whereby
MetLife Bank has issued repurchase agreements in exchange for cash and for which the FHLB of NY has been granted a blanket lien on MetLife Bank’s
residential mortgages and mortgage-backed securities to collateralize MetLife Bank’s obligations under the repurchase agreements. MetLife Bank
maintains control over these pledged assets, and may use, commingle, encumber or dispose of any portion of the collateral as long as there is no event
of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. The repurchase agreements and the related security
agreement represented by this blanket lien, provide that upon any event of default by MetLife Bank, the FHLB of NY’s recovery is limited to the amount of
MetLife Bank’s liability under the outstanding repurchase agreements. The amount of the Company’s liability for repurchase agreements with the FHLB of
NY as of December 31, 2005 and 2004 are $855 million and $105 million, respectively, which is included in long-term debt.
On December 8, 2005, RGA issued junior subordinated debentures with a face amount of $400 million. Interest is payable semi-annually at a fixed
rate of 6.75% until December 15, 2015. Subsequent to December 15, 2015, interest on these debentures will accrue at an annual rate of 3-month
LIBOR plus a margin equal to 266.5 basis points, payable quarterly until maturity in 2065.
Collateralized debt, which consists of repurchase agreements and capital lease obligations, ranks highest in priority, followed by unsecured senior
debt which consists of senior notes, fixed rate notes, other notes with varying interest rates, followed by subordinated debt which consists of junior
subordinated debentures and surplus notes. Payments of interest and principal on the Company’s surplus notes, which are subordinate to all other debt,
may be made only with the prior approval of the insurance department of the state of domicile.
The Company repaid a $250 million 7% surplus note which matured on November 1, 2005 and a $1,006 million, 3.911% senior note which
matured on May 15, 2005.
The aggregate maturities of long-term debt as of December 31, 2005 for the next five years are $803 million in 2006, $113 million in 2007,
$384 million in 2008, $147 million in 2009, $240 million in 2010 and $8,201 million thereafter.
Short-term Debt
At December 31, 2005 and 2004, the Company’s short-term debt consisted of commercial paper with a weighted average interest rate of 3.4% and
2.3%, respectively. The debt was outstanding for an average of 53 days and 27 days at December 31, 2005 and 2004, respectively.
Credit Facilities and Letters of Credit
The Company maintains committed and unsecured credit facilities aggregating $3.85 billion as of December 31, 2005. When drawn upon, these
facilities bear interest at varying rates in accordance with the respective agreements. The facilities can be used for general corporate purposes and
$3.0 billion of the facilities also serve as back-up lines of credit for the Company’s commercial paper programs. The following table provides details on
these facilities as of December 31, 2005:
Letter of
Credit Unused
Borrower(s) Expiration Capacity Issuances Drawdowns Commitments
(In millions)
MetLife, Inc., MetLife Funding, Inc. and Metropolitan Life Insurance
Company *********************************************** April 2009 $1,500 $374 $ — $1,126
MetLife, Inc. and MetLife Funding, Inc. ************************ April 2010 1,500 — — 1,500
MetLife Bank, N.A. ***************************************** July 2006 200 — — 200
Reinsurance Group of America, Incorporated ******************* January 2006 26 — 26 —
Reinsurance Group of America, Incorporated ******************* May 2007 26 — 26 —
Reinsurance Group of America, Incorporated ******************* September 2010 600 320 50 230
Total ***************************************************** $3,852 $694 $102 $3,056
On July 1, 2005, in connection with the closing of the acquisition of Travelers, the $2.0 billion amended and restated five-year letter of credit and
reimbursement agreement (the ‘‘L/C Agreement’’) entered into by The Travelers Life and Annuity Reinsurance Company (‘‘TLARC’’) and various
institutional lenders on April 25, 2005 became effective. Under the L/C Agreement, the Holding Company agreed to unconditionally guarantee
reimbursement obligations of TLARC with respect to reinsurance letters of credit issued pursuant to the L/C Agreement and replaced Citigroup Insurance
Holding Company as guarantor upon closing of the Travelers acquisition. The L/C Agreement expires five years after the closing of the acquisition. Also
during 2005, Exeter Reassurance Company Ltd. (‘‘Exeter’’) entered into three ten-year letter of credit and reimbursement agreements totaling $800 mil-
lion with an institutional lender, and the Holding Company and Exeter entered into a $500 million ten-year letter of credit and reimbursement agreement
MetLife, Inc.
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