MetLife 2005 Annual Report Download - page 82

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METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Condensed Statement of Net Assets Acquired
The condensed statement of net assets acquired reflects the fair value of Travelers net assets as of July 1, 2005 as follows:
As of
July 1,
2005
(In millions)
Assets:
Fixed maturities available-for-sale***************************************************************************** $44,346
Trading securities ****************************************************************************************** 555
Equity securities available-for-sale **************************************************************************** 641
Mortgage and consumer loans ****************************************************************************** 2,365
Policy loans ********************************************************************************************** 884
Real estate and real estate joint ventures held-for-investment ***************************************************** 77
Real estate held-for-sale ************************************************************************************ 49
Other limited partnership interests **************************************************************************** 1,124
Short-term investments ************************************************************************************* 2,801
Other invested assets ************************************************************************************** 1,686
Total investments **************************************************************************************** 54,528
Cash and cash equivalents ********************************************************************************* 844
Accrued investment income ********************************************************************************* 539
Premiums and other receivables ***************************************************************************** 4,886
Value of business acquired ********************************************************************************* 3,780
Goodwill ************************************************************************************************* 4,177
Other intangible assets ************************************************************************************* 662
Deferred tax assets **************************************************************************************** 1,087
Other assets ********************************************************************************************* 737
Separate account assets *********************************************************************************** 30,799
Total assets acquired ************************************************************************************ 102,039
Liabilities:
Future policy benefits ************************************************************************************** 18,501
Policyholder account balances******************************************************************************* 36,633
Other policyholder funds************************************************************************************ 324
Short-term debt ******************************************************************************************* 25
Current income taxes payable ******************************************************************************* 66
Other liabilities ******************************************************************************************** 3,725
Separate account liabilities ********************************************************************************** 30,799
Total liabilities assumed*********************************************************************************** 90,073
Net assets acquired ************************************************************************************* $11,966
Other Intangible Assets
VOBA reflects the estimated fair value of in-force contracts acquired and represents the portion of the purchase price that is allocated to the value of
the right to receive future cash flows from the life insurance and annuity contracts in force at the acquisition date. VOBA is based on actuarially
determined projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account
performance, surrenders, operating expenses, investment returns and other factors. Actual experience on the purchased business may vary from these
projections. If estimated gross profits or premiums differ from expectations, the amortization of VOBA is adjusted to reflect actual experience.
The value of the other identifiable intangibles reflects the estimated fair value of Citigroup/Travelers distribution agreement and customer relationships
acquired at July 1, 2005 and will be amortized in relation to the expected economic benefits of the agreement. If actual experience under the distribution
agreements or with customer relationships differs from expectations, the amortization of these intangibles will be adjusted to reflect actual experience.
The use of discount rates was necessary to establish the fair value of VOBA, as well as the other identifiable intangible assets. In selecting the
appropriate discount rates, management considered its weighted average cost of capital as well as the weighted average cost of capital required by
market participants. A discount rate of 11.5% was used to value these intangible assets.
The fair values of business acquired, distribution agreements and customer relationships acquired are as follows:
As of
July 1, Weighted Average
2005 Amortization Period
(In millions) (In years)
Value of business acquired ******************************************************************* $3,780 16
Value of distribution agreements and customer relationships acquired****************************** 662 16
Total value of amortizable intangible assets acquired ****************************************** 4,442
Non-amortizable intangible assets acquired**************************************************** —
Total value of intangible assets acquired, excluding goodwill************************************ $4,442 16
MetLife, Inc.
F-20