MetLife 2006 Annual Report Download - page 122

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5. Deferred Policy Acquisition Costs and Value of Business Acquired
Information regarding DAC and VOBA is as follows:
DAC VOBA Total
(In millions)
Balance at January 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,280 $1,657 $12,937
Capitalizations.................................................... 3,101 — 3,101
Acquisitions ..................................................... — 6 6
Subtotal..................................................... 14,381 1,663 16,044
Less: Amortization related to:
Netinvestmentgains(losses) ........................................ 7 4 11
Unrealizedinvestmentgains(losses).................................... (41) (92) (133)
Otherexpenses ................................................. 1,757 140 1,897
Totalamortization............................................... 1,723 52 1,775
Less:Dispositionsandother .......................................... (85) 27 (58)
Balance at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,743 1,584 14,327
Capitalizations.................................................... 3,604 — 3,604
Acquisitions ..................................................... — 3,780 3,780
Subtotal..................................................... 16,347 5,364 21,711
Less: Amortization related to:
Netinvestmentgains(losses) ........................................ 12 (25) (13)
Unrealizedinvestmentgains(losses).................................... (323) (139) (462)
Otherexpenses ................................................. 2,128 336 2,464
Totalamortization............................................... 1,817 172 1,989
Less:Dispositionsandother .......................................... 102 (21) 81
Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,428 5,213 19,641
Capitalizations.................................................... 3,589 — 3,589
Subtotal..................................................... 18,017 5,213 23,230
Less: Amortization related to:
Netinvestmentgains(losses) ........................................ (158) (74) (232)
Unrealizedinvestmentgains(losses).................................... 79 31 110
Otherexpenses ................................................. 2,247 406 2,653
Totalamortization............................................... 2,168 363 2,531
Less:Dispositionsandother .......................................... (152) — (152)
Balance at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,001 $4,850 $20,851
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $524 million in 2007,
$490 million in 2008, $458 million in 2009, $393 million in 2010, and $359 million in 2011.
Amortization of VOBA and DAC is related to (i) investment gains and losses and the impact of such gains and losses on the amount of
the amortization; (ii) unrealized investment gains and losses to provide information regarding the amount that would have been amortized if
such gains and losses had been recognized; and (iii) other expenses to provide amounts related to the gross margins or profits originating
from transactions other than investment gains and losses.
6. Goodwill
Goodwill is the excess of cost over the fair value of net assets acquired. Information regarding goodwill is as follows:
2006 2005
December 31,
(In millions)
BalanceatJanuary1,......................................................... $4,797 $ 633
Acquisitions............................................................... 93 4,180
Dispositionsandother,net ..................................................... 7 (16)
BalanceatDecember31, ...................................................... $4,897 $4,797
F-39MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)