MetLife 2005 Annual Report Download - page 36

The Holding Company lends funds, as necessary, to its affiliates, some of which are regulated, to meet their capital requirements. Such loans to
affiliates consisted of the following at December 31, 2005 and 2004:
December 31,
Interest
Affiliate Rate Maturity Date 2005 2004
(In millions)
Metropolitan Life ******************************************************** 7.13% December 15, 2032 $ 400 $400
Metropolitan Life ******************************************************** 7.13% January 15, 2033 100 100
Metropolitan Life ******************************************************** 5.00% December 31, 2007 800 —
MetLife Investors USA Insurance Company ********************************** 7.35% April 1, 2035 400 —
Total ****************************************************************** $1,700 $500
Share Repurchase. On October 26, 2004, the Holding Company’s Board of Directors authorized a $1 billion common stock repurchase program.
Under this authorization, the Holding Company may purchase its common stock from the MetLife Policyholder Trust, in the open market and in privately
negotiated transactions.
On December 16, 2004, the Holding Company repurchased 7,281,553 shares of its outstanding common stock at an aggregate cost of
$300 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the stock sold to the Holding Company
from third parties and purchased the common stock in the open market to return to such third parties. In April 2005, the Holding Company received a
cash adjustment of approximately $7 million based on the actual amount paid by the bank to purchase the common stock, for a final purchase price of
approximately $293 million. The Holding Company recorded the shares initially repurchased as treasury stock and recorded the amount received as an
adjustment to the cost of the treasury stock.
At December 31, 2005, the Holding Company had approximately $716 million remaining on its October 26, 2004 common stock repurchase
program. As a result of the acquisition of Travelers, the Holding Company has suspended its common stock repurchase activity. Future common stock
repurchases will be dependent upon several factors, including the Company’s capital position, its financial strength and credit ratings, general market
conditions and the price of the Holding Company’s common stock.
The following table summarizes the 2004 and 2003 common stock repurchase activity of the Holding Company, which includes the accelerated
common stock repurchase activity in the fourth quarter of 2004:
December 31,
2004 2003
(Dollars in millions)
Shares Repurchased*********************************************************************** 26,373,952 2,997,200
Cost ************************************************************************************ $ 1,000 $ 97
Support Agreements. The Holding Company has net worth maintenance agreements with three of its insurance subsidiaries, MetLife Investors,
First MetLife Investors Insurance Company and MetLife Investors Insurance Company of California. Under these agreements, as subsequently amended,
the Holding Company agreed, without limitation as to the amount, to cause each of these subsidiaries to have a minimum capital and surplus of
$10 million, total adjusted capital at a level not less than 150% 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 each of these subsidiaries was
in excess of the minimum capital and surplus amounts referenced above, and their total adjusted capital was in excess of the most recent referenced
RBC-based amount calculated at December 31, 2005.
In connection with the acquisition of Travelers, support agreements regarding certain subsidiaries of the Holding Company were provided to various
insurance regulators. The Holding Company committed to the Delaware Department of Insurance, in the event that at December 31, 2005 the total
adjusted capital of MTL, a Delaware subsidiary of the Holding Company, is below 250% of the company action level RBC, the Holding Company would
make a capital contribution to MTL in an amount that would make up for such shortfall. Pursuant to this commitment, during 2005, the Holding Company
made a capital contribution of $50 million to MTL. At December 31, 2005, MTL’s company action level was in excess of 250%. The Holding Company
also committed to the South Carolina Department of Insurance to take necessary action to maintain the minimum capital and surplus of The Travelers Life
and Annuity Reinsurance Company, a South Carolina subsidiary of the Holding Company, at the greater of $250,000 or 10% of net loss reserves (loss
reserves less deferred acquisition costs).
Based on management’s analysis and comparison of its current and future cash inflows from the dividends it receives from subsidiaries, including
Metropolitan Life, that are permitted to be paid without prior insurance regulatory approval, its portfolio of liquid assets, anticipated securities issuances
and other anticipated cash flows, management believes there will be sufficient liquidity to enable the Holding Company to make payments on debt, make
cash dividend payments on its common and preferred stock, contribute capital to its subsidiaries, pay all operating expenses, and meet its cash needs.
Subsequent Events
On February 21, 2006, the Holding Company’s board of directors declared dividends of $0.3432031 per share, for a total of $9 million, on its
Series A preferred shares, and $0.4062500 per share, for a total of $24 million, on its Series B preferred shares, subject to the final confirmation that it
has met the financial tests specified in the Series A and Series B preferred shares, which the Holding Company anticipates will be made on or about
March 5, 2006, the earliest date permitted in accordance with the terms of the securities. Both dividends will be payable March 15, 2006 to shareholders
of record as of February 28, 2006.
Off-Balance Sheet Arrangements
Commitments to Fund Partnership Investments
The Company makes commitments to fund partnership investments in the normal course of business for the purpose of enhancing the Company’s
total return on its investment portfolio. The amounts of these unfunded commitments were $2,684 million and $1,324 million at December 31, 2005 and
2004, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years. There are no other obligations
or liabilities arising from such arrangements that are reasonably likely to become material.
MetLife, Inc. 33