MetLife 2005 Annual Report Download - page 129

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Amounts related to the Company’s financial instruments were as follows:
Notional Carrying Estimated
December 31, 2005 Amount Value Fair Value
(In millions)
Assets:
Fixed maturities************************************************************************ $230,050 $230,050
Trading securities ********************************************************************** $ 825 $ 825
Equity securities *********************************************************************** $ 3,338 $ 3,338
Mortgage and consumer loans *********************************************************** $ 37,190 $ 37,820
Policy loans*************************************************************************** $ 9,981 $ 9,981
Short-term investments ***************************************************************** $ 3,306 $ 3,306
Cash and cash equivalents************************************************************** $ 4,018 $ 4,018
Mortgage loan commitments************************************************************* $2,974 $ — $ (4)
Commitments to fund partnership investments ********************************************** $2,684 $ — $ —
Liabilities:
Policyholder account balances *********************************************************** $109,694 $107,083
Short-term debt *********************************************************************** $ 1,414 $ 1,414
Long-term debt************************************************************************ $ 9,888 $ 10,296
Junior subordinated debt securities underlying common equity units**************************** $ 2,134 $ 2,098
Shares subject to mandatory redemption ************************************************** $ 278 $ 362
Payables for collateral under securities loaned and other transactions*************************** $ 34,515 $ 34,515
Notional Carrying Estimated
December 31, 2004 Amount Value Fair Value
(In millions)
Assets:
Fixed maturities************************************************************************ $176,377 $176,377
Equity securities *********************************************************************** $ 2,188 $ 2,188
Mortgage and consumer loans *********************************************************** $ 32,406 $ 33,902
Policy loans*************************************************************************** $ 8,899 $ 8,899
Short-term investments ***************************************************************** $ 2,662 $ 2,662
Cash and cash equivalents************************************************************** $ 4,048 $ 4,048
Mortgage loan commitments************************************************************* $1,189 $ — $ 4
Commitments to fund partnership investments ********************************************** $1,324 $ — $ —
Liabilities:
Policyholder account balances *********************************************************** $ 70,739 $ 69,790
Short-term debt *********************************************************************** $ 1,445 $ 1,445
Long-term debt************************************************************************ $ 7,412 $ 7,835
Shares subject to mandatory redemption ************************************************** $ 278 $ 361
Payables for collateral under securities loaned and other transactions*************************** $ 28,678 $ 28,678
The methods and assumptions used to estimate the fair values of financial instruments are summarized as follows:
Fixed Maturities, Trading Securities and Equity Securities
The fair value of fixed maturities, trading securities 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 and Consumer Loans, Mortgage Loan Commitments and Commitments to Fund Partnership Investments
Fair values for mortgage and consumer loans 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 which have final contractual maturities are 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.
The fair value of policyholder account balances without final contractual maturities are assumed to equal their current net surrender.
Short-term and Long-term Debt, Payables for Collateral Under Securities Loaned and Other Transactions and Shares Subject
to Mandatory Redemption
The fair values of short-term and long-term debt, payables under securities loaned transactions and shares subject to mandatory redemption are
determined by discounting expected future cash flows using risk rates currently available for debt with similar terms and remaining maturities.
MetLife, Inc. F-67