MetLife 2006 Annual Report Download - page 108

Condensed Statement of Net Assets Acquired
The condensed statement of net assets acquired reflects the fair value of Travelers net assets as follows:
As of July 1,
2005
(In millions)
Assets:
Fixedmaturitysecuritiesavailable-for-sale............................................... $ 44,370
Tradingsecurities .............................................................. 555
Equitysecuritiesavailable-for-sale.................................................... 641
Mortgageandconsumerloans...................................................... 2,365
Policyloans.................................................................. 884
Realestateandrealestatejointventuresheld-for-investment.................................. 77
Realestateheld-for-sale.......................................................... 49
Otherlimitedpartnershipinterests.................................................... 1,124
Short-terminvestments........................................................... 2,801
Otherinvestedassets............................................................ 1,686
Totalinvestments ............................................................. 54,552
Cashandcashequivalents ........................................................ 844
Accruedinvestmentincome........................................................ 539
Premiumsandotherreceivables..................................................... 4,886
Valueofbusinessacquired ........................................................ 3,780
Goodwill .................................................................... 4,270
Otherintangibleassets........................................................... 662
Deferredtaxassets ............................................................. 1,088
Otherassets.................................................................. 736
Separateaccountassets.......................................................... 30,799
Total assets acquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,156
Liabilities:
Futurepolicybenefits............................................................ 18,520
Policyholderaccountbalances...................................................... 36,634
Otherpolicyholderfunds.......................................................... 324
Short-termdebt ............................................................... 25
Currentincometaxpayable........................................................ 45
Otherliabilities ................................................................ 3,729
Separateaccountliabilities ........................................................ 30,799
Totalliabilitiesassumed ......................................................... 90,076
Netassetsacquired ........................................................... $ 12,080
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,
2005 Weighted Average Amortization Period
(In millions) (In years)
Valueofbusinessacquired ............................................ $3,780 16
Valueofdistributionagreementsandcustomerrelationshipsacquired................. 662 16
Totalvalueofintangibleassetsacquired,excludinggoodwill ..................... $4,442 16
F-25MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)