MetLife 2005 Annual Report Download - page 29

liability for repurchase agreements with the FHLB of NY by $750 million. As of December 31, 2005 and 2004, the Company’s total liability was
$855 million and $105 million, respectively, which is included in long-term debt.
MetLife Funding, Inc. (‘‘MetLife Funding’’), a subsidiary of Metropolitan Life, serves as a centralized finance unit for the Company. Pursuant to a
support agreement, Metropolitan Life has agreed to cause MetLife Funding to have a tangible net worth of at least one dollar. At December 31, 2005 and
2004, MetLife Funding had a tangible net worth of $11.2 million and $10.9 million, respectively. MetLife Funding raises cash from various funding
sources and uses the proceeds to extend loans, through MetLife Credit Corp., another subsidiary of Metropolitan Life, to the Holding Company,
Metropolitan Life and other affiliates. MetLife Funding manages its funding sources to enhance the financial flexibility and liquidity of Metropolitan Life and
other affiliated companies. At December 31, 2005 and 2004, MetLife Funding had total outstanding liabilities, including accrued interest payable, of
$456 million and $1,448 million, respectively, consisting primarily of commercial paper.
Credit Facilities. 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
Letters of Credit. 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
with another institutional lender. The following table provides details on the capacity and outstanding balances of such committed facilities as of
December 31, 2005:
Letter of
Credit Unused
Account Party Expiration Capacity Issuances Commitments
(In millions)
The Travelers Life and Annuity Reinsurance Company *************************** July 2010 $2,000 $1,930 $ 70
Exeter Reassurance Company Ltd. ****************************************** March 2015 225 225 —
Exeter Reassurance Company Ltd. ****************************************** June 2015 250 250 —
Exeter Reassurance Company Ltd. ****************************************** September 2015 325 — 325
Exeter Reassurance Company Ltd. and MetLife, Inc. **************************** December 2015 500 280 220
Total********************************************************************* $3,300 $2,685 $615
Note: The Holding Company is a guarantor under the first four agreements and a party to the fifth agreement above.
At December 31, 2005 and 2004, the Company had outstanding $3.6 billion and $961 million, respectively, in letters of credit from various banks,
of which $3.4 billion and $470 million, respectively, were part of committed facilities. The letters of credit outstanding at December 31, 2005 and 2004 all
automatically renew for one year periods except for $755 million in the current period which expires in ten years. Since commitments associated with
letters of credit and financing arrangements may expire unused, these amounts do not necessarily reflect the Company’s actual future cash funding
requirements.
Liquidity Uses
Insurance Liabilities. The Company’s principal cash outflows primarily relate to the liabilities associated with its various life insurance, property and
casualty, annuity and group pension products, operating expenses and income taxes, as well as principal and interest on its outstanding debt
obligations. Liabilities arising from its insurance activities primarily relate to benefit payments under the aforementioned products, as well as payments for
policy surrenders, withdrawals and loans.
Investment and Other. Additional cash outflows include those related to obligations of securities lending and dollar roll activities, investments in real
estate, limited partnerships and joint ventures, as well as litigation-related liabilities.
MetLife, Inc.
26