MetLife 2005 Annual Report Download - page 30

The following table summarizes the Company’s major contractual obligations as of December 31, 2005:
Less Than Three to More than
Contractual Obligations Total Three Years Five Years Five Years
(In millions)
Other long-term liabilities(1)(2) ****************************************************** $106,522 $19,089 $ 8,026 $79,407
Payables for collateral under securities loaned and other transactions ********************* 34,515 34,515 — —
Long-term debt(3) **************************************************************** 19,506 2,836 1,376 15,294
Mortgage commitments *********************************************************** 2,974 2,030 296 648
Partnership investments(4) ********************************************************* 2,684 2,684 — —
Junior subordinated debt securities underlying common equity units(5)******************** 2,433 1,359 1,074 —
Operating leases***************************************************************** 1,338 579 235 524
Shares subject to mandatory redemption(3) ****************************************** 350 — — 350
Capital leases ******************************************************************* 73 38 9 26
Contracts to purchase real estate*************************************************** 36 36 — —
Total *************************************************************************** $170,431 $63,166 $11,016 $96,249
(1) Other long-term liabilities include various investment-type products with contractually scheduled maturities, including guaranteed interest contracts,
structured settlements, pension closeouts, certain annuity policies and certain indemnities.
(2) Other long-term liabilities include benefit and claim liabilities for which the Company believes the amount and timing of the payment is essentially fixed
and determinable. Such amounts generally relate to (i) policies or contracts where the Company is currently making payments and will continue to do
so until the occurrence of a specific event, such as death; and (ii) life insurance and property and casualty incurred and reported claims. Liabilities for
future policy benefits of $82.4 billion and policyholder account balances of $113.4 billion, both at December 31, 2005, have been excluded from this
table. Amounts excluded from the table are generally comprised of policies or contracts where (i) the Company is not currently making payments and
will not make payments in the future until the occurrence of an insurable event, such as death or disability, or (ii) the occurrence of a payment
triggering event, such as a surrender of a policy or contract, is outside the control of the Company. The determination of these liability amounts and
the timing of payment are not reasonably fixed and determinable since the insurable event or payment triggering event has not yet occurred. Such
excluded liabilities primarily represent future policy benefits of approximately $63.4 billion relating to traditional life, health and disability insurance
products and policyholder account balances of approximately $41.7 billion relating to deferred annuities, $27.3 billion for group and universal life
products and approximately $27.0 billion for funding agreements without fixed maturity dates. Significant uncertainties relating to these liabilities
include mortality, morbidity, expenses, persistency, investment returns, inflation and the timing of payments. See ‘‘— The Company — Asset/Liability
Management.’’
Amounts included in other long-term liabilities reflect estimated cash payments to be made to policyholders. Such cash outflows reflect adjustments
for the estimated timing of mortality, retirement, and other appropriate factors, but are undiscounted with respect to interest. The amount shown in the
More than Five Years column represents the sum of cash flows, also adjusted for the estimated timing of mortality, retirement and other appropriate
factors and undiscounted with respect to interest, extending for more than 100 years from the present date. As a result, the sum of the cash outflows
shown for all years in the table of $104.4 billion exceeds the corresponding liability amounts of $51.4 billion included in the consolidated financial
statements at December 31, 2005. The liability amount in the consolidated financial statements reflects the discounting for interest, as well as
adjustments for the timing of other factors as described above.
(3) Amounts differ from the balances presented on the consolidated balance sheets. The amounts above do not include any fair value adjustments,
related premiums and discounts or capital leases which are presented separately. Amounts include interest to be paid on fixed-rate debt only.
(4) The Company anticipates that these amounts could be invested in these partnerships any time over the next five years, but are presented in the
current period, as the timing of the fulfillment of the obligation cannot be predicted.
(5) Amounts include interest paid on junior subordinated debt.
As of December 31, 2005, and relative to its liquidity program, the Company had no material (individually or in the aggregate) purchase obligations or
material (individually or in the aggregate) unfunded pension or other postretirement benefit obligations due within one year.
Support Agreements. Metropolitan Life entered into a net worth maintenance agreement with New England Life Insurance Company (‘‘NELICO’’) at
the time Metropolitan Life merged with New England Mutual Life Insurance Company. Under the agreement, Metropolitan Life agreed, without limitation
as to the amount, to cause NELICO to have a minimum capital and surplus of $10 million, total adjusted capital at a level not less than the company
action level RBC (or not less than 125% of the company action level RBC, if NELICO has a negative trend), as defined by state insurance statutes, and
liquidity necessary to enable it to meet its current obligations on a timely basis. At December 31, 2005, the capital and surplus of NELICO was in excess
of the minimum capital and surplus amount referenced above, and its total adjusted capital was in excess of the most recently referenced RBC-based
amount calculated at December 31, 2005.
In connection with the Company’s acquisition of the parent of General American Life Insurance Company (‘‘General American’’), Metropolitan Life
entered into a net worth maintenance agreement with General American. Under the agreement, as subsequently amended, Metropolitan Life agreed,
without limitation as to amount, to cause General American to have a minimum capital and surplus of $10 million, total adjusted capital at a level not less
than 250% of the company action level RBC, as defined by state insurance statutes, and liquidity necessary to enable it to meet its current obligations on
a timely basis. At December 31, 2005, the capital and surplus of General American was in excess of the minimum capital and surplus amount referenced
above, and its total adjusted capital was in excess of the most recent referenced RBC-based amount calculated at December 31, 2005.
Metropolitan Life has also entered into arrangements for the benefit of some of its other subsidiaries and affiliates to assist such subsidiaries and
affiliates in meeting various jurisdictions’ regulatory requirements regarding capital and surplus and security deposits. In addition, Metropolitan Life has
entered into a support arrangement with respect to a subsidiary under which Metropolitan Life may become responsible, in the event that the subsidiary
becomes the subject of insolvency proceedings, for the payment of certain reinsurance recoverables due from the subsidiary to one or more of its
cedents in accordance with the terms and conditions of the applicable reinsurance agreements.
General American has agreed to guarantee the contractual obligations of its subsidiary, Paragon Life Insurance Company, and certain contractual
obligations of its former subsidiaries, MetLife Investors Insurance Company (‘‘MetLife Investors’’), First MetLife Investors Insurance Company and MetLife
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