MetLife 2005 Annual Report Download - page 19

and 1.30% to 1.50% for the group life, retirement & savings and the non-medical health & other businesses, respectively. Earnings from interest rate
spreads are influenced by several factors, including business growth, movement in interest rates, and certain investment and investment-related
transactions, such as corporate joint venture income and bond and commercial mortgage prepayment fees for which the timing and amount are generally
unpredictable. As a result, income from these investment transactions may fluctuate from period to period. Also contributing to the increase in income
from continuing operations is a reduction in a premium tax liability of $31 million in the second quarter of 2004, net of income taxes. These increases in
income from continuing operations are partially offset by less favorable underwriting results, which are estimated to have declined $40 million, net of
income taxes, compared to the prior year period. Management attributes this decrease to mixed claim experience in the non-medical health & other and
group life business. Underwriting results are significantly influenced by mortality and morbidity trends, as well as claim experience and, as a result, can
fluctuate from period to period.
Total revenues, excluding net investment gains (losses), increased by $1,497 million, or 10%, to $15,984 million for the year ended December 31,
2004 from $14,487 million for the comparable 2003 period. Growth of $1,061 million in premiums, fees, and other revenues contributed to the revenue
increase. Group life insurance premiums, fees and other revenues increased by $452 million, which management primarily attributes to improved sales
and favorable persistency, as well as the acquisition of the John Hancock group life insurance business in late 2003, which contributed $20 million to the
increase. Non-medical health & other business premiums, fees and other revenues increased by $421 million partly due to the continued growth in long-
term care of $149 million, of which $41 million is related to the 2004 acquisition of TIAA/CREF’s long-term care business. Growth in the disability
business, dental business and AD&D products contributed $260 million to the year over year increase. Retirement & savings’ premiums, fees and other
revenues increased by $188 million, which is largely due to a growth in premiums of $172 million, resulting primarily from an increase in structured
settlement sales and pension close-outs. Premiums, fees and other revenues from retirement & savings products are significantly influenced by large
transactions, and as a result, can fluctuate from year to year. In addition, an increase of $436 million in net investment income, which is primarily due to
higher income from growth in the asset base, earnings on corporate joint venture income and bond and commercial mortgage prepayment fees
contributed to the overall increase in revenues. This increase is a component of the favorable interest rate spreads discussed above.
Total expenses increased by $1,311 million, or 10%, to $14,161 million for the year ended December 31, 2004 from $12,850 million for the
comparable 2003 period. This increase is comprised of higher policyholder benefits and claims of $1,150 million, an increase to interest credited to
policyholder account balances of $42 million and an increase in other expenses of $118 million. The increase in policyholder benefits and claims of
$1,150 million is primarily attributable to a $453 million, $412 million, and $285 million increase in the group life, non-medical health & other and
retirement & savings businesses, respectively. These increases are predominantly attributable to the business growth discussed in the revenue
discussion above. The increases in group life and the non-medical health & other businesses include the impact of the acquisition of certain businesses
from John Hancock and TIAA/CREF of $11 million and $39 million, respectively. Also included in the increase is the impact of less favorable claim
experience, primarily in the non-medical health & other business. Interest credited to policyholder account balances increased by $42 million over the
prior year period primarily as a result of the impact of growth in guaranteed interest contracts within the retirement & savings business. Other operating
expenses increased $118 million. The largest component of this expense growth is an increase of $92 million related to increases in direct business
support expenses. In addition, non-deferrable commissions and premium taxes increased by $25 million. This item is net of a $49 million reduction in a
premium tax liability in the second quarter of 2004. Excluding this item, non-deferrable commissions and premium taxes increased by $74 million, which
is commensurate with the aforementioned revenue growth. In addition, the Company incurred infrastructure improvement costs of $34 million and
expenses of $12 million related to the closing of one of the Company’s disability claims centers which were partially offset by a decline of $45 million
primarily relating to expenses incurred in the prior year for office closures and consolidations and an impairment of related assets.
Individual
The following table presents consolidated financial information for the Individual segment for the years indicated:
Year Ended December 31,
2005 2004 2003
(In millions)
Revenues
Premiums****************************************************************************** $ 4,502 $ 4,204 $ 4,363
Universal life and investment-type product policy fees ***************************************** 2,476 1,805 1,564
Net investment income ****************************************************************** 6,535 6,031 6,069
Other revenues ************************************************************************* 477 422 380
Net investment gains (losses) ************************************************************* (50) 91 (311)
Total revenues************************************************************************ 13,940 12,553 12,065
Expenses
Policyholder benefits and claims *********************************************************** 5,420 5,107 5,048
Interest credited to policyholder account balances ******************************************** 1,775 1,618 1,734
Policyholder dividends ******************************************************************* 1,670 1,657 1,721
Other expenses ************************************************************************ 3,272 2,879 2,783
Total expenses *********************************************************************** 12,137 11,261 11,286
Income from continuing operations before provision for income taxes **************************** 1,803 1,292 779
Provision for income taxes**************************************************************** 595 428 260
Income from continuing operations********************************************************* 1,208 864 519
Income from discontinued operations, net of income taxes************************************* 295 21 51
Net income **************************************************************************** $ 1,503 $ 885 $ 570
MetLife, Inc.
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