MetLife 2006 Annual Report Download - page 123

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7. Insurance
Value of Distribution Agreements and Customer Relationships Acquired
Information regarding the value of distribution agreements (“VODA”) and the value of customer relationships acquired (“VOCRA”), which
are reported in other assets, is as follows:
2006 2005 2004
Years Ended
December 31,
(In millions)
BalanceatJanuary1,...................................................... $715 $ — $—
Acquisitions ............................................................ — 716 —
Amortization ............................................................ (6) (1) —
Less:Dispositionsandother,net............................................... (1) — —
BalanceatDecember31, ................................................... $708 $715 $—
The estimated future amortization expense allocated to other expenses for the next five years for VODA and VOCRA is $15 million in
2007, $21 million in 2008, $27 million in 2009, $32 million in 2010 and $27 million in 2011.
Sales Inducements
Information regarding deferred sales inducements, which are reported in other assets, is as follows:
2006 2005 2004
Years Ended December 31,
(In millions)
BalanceatJanuary1, ..................................................... $414 $294 $196
Capitalization........................................................... 194 140 121
Amortization ........................................................... (30) (20) (23)
BalanceatDecember31,................................................... $578 $414 $294
Separate Accounts
Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $127.9 billion
and $111.2 billion at December 31, 2006 and 2005, respectively, for which the policyholder assumes all investment risk, and separate
accounts with a minimum return or account value for which the Company contractually guarantees either a minimum return or account
value to the policyholder which totaled $16.5 billion and $16.7 billion at December 31, 2006 and 2005, respectively. The latter category
consisted primarily of Met Managed GICs and participating close-out contracts. The average interest rate credited on these contracts were
5.1% at both December 31, 2006 and 2005.
Fees charged to the separate accounts by the Company (including mortality charges, policy administration fees and surrender charges)
are reflected in the Company’s revenues as universal life and investment-type product policy fees and totaled $2.4 billion, $1.7 billion and
$1.3 billion for the years ended December 31, 2006, 2005 and 2004, respectively.
The Company’s proportional interest in separate accounts is included in the consolidated balance sheets as follows:
2006 2005
At
December 31,
(In millions)
Fixedmaturitysecurities.......................................................... $30 $29
Equitysecurities............................................................... $36 $34
Cashandcashequivalents........................................................ $ 5 $ 6
For the years ended December 31, 2006, 2005 and 2004, there were no investment gains (losses) on transfers of assets from the
general account to the separate accounts.
Obligations Under Guaranteed Interest Contract Program
The Company issues fixed and floating rate obligations under its GIC program which are denominated in either U.S. dollars or foreign
currencies. During the years ended December 31, 2006, 2005 and 2004, the Company issued $5.2 billion, $4.0 billion and $4.0 billion,
respectively, and repaid $2.6 billion, $1.1 billion and $150 million, respectively, of GICs under this program. In addition, the acquisition of
Travelers increased the balance by $5.3 billion in GICs as of December 31, 2005. Accordingly, at December 31, 2006 and 2005, GICs
outstanding, which are included in policyholder account balances, were $21.5 billion and $17.4 billion, respectively. During the years
ended December 31, 2006, 2005 and 2004, interest credited on the contracts, which are included in interest credited to policyholder
account balances, was $835 million, $464 million and $142 million, respectively.
F-40 MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)