MetLife 2006 Annual Report Download - page 125

Secondary
Guarantees Paid Up Guarantees Secondary Guarantees Paid Up Guarantees
2006 2005
At December 31,
(In millions)
Universal and Variable Life Contracts(1)
Accountvalue(generalandseparateaccount).................... $ 8,357 $ 4,468 $ 7,357 $ 4,505
Net amount at risk(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $131,808(3) $ 36,447(3) $124,702(3) $ 39,979(3)
Averageattainedageofpolicyholders ......................... 49years 54years 48years 54years
(1) The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the
amounts listed above may not be mutually exclusive.
(2) The net amount at risk is based on the direct amount at risk (excluding reinsurance).
(3) The net amount at risk for guarantees of amounts in the event of death is defined as the current guaranteed minimum death benefit in
excess of the current account balance at the balance sheet date.
(4) The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity
payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account
balance.
(5) The net amount at risk for two tier annuities is based on the excess of the upper tier, adjusted for a profit margin, less the lower tier.
Information regarding the liabilities for guarantees (excluding base policy liabilities) relating to annuity and universal and variable life
contracts is as follows:
Guaranteed
Death Benefits
Guaranteed
Annuitization
Benefits Secondary Guarantees Paid Up Guarantees Total
Annuity Contracts Universal and Variable
Life Contracts
(In millions)
Balance at January 1, 2004 . . . . . . . . . . . . . . . . . . . . . . . $ 9 $17 $ 6 $25 $ 57
Incurredguaranteedbenefits....................... 23 2 4 4 33
Paidguaranteedbenefits ......................... (8) — (4) — (12)
Balance at December 31, 2004 . . . . . . . . . . . . . . . . . . . . . 24 19 6 29 78
Incurredguaranteedbenefits....................... 22 10 10 10 52
Paidguaranteedbenefits ......................... (5) — (1) — (6)
Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . 41 29 15 39 124
Incurredguaranteedbenefits....................... 17 7 29 1 54
Paidguaranteedbenefits ......................... (6) — — — (6)
Balance at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . $52 $36 $44 $40 $172
Account balances of contracts with insurance guarantees are invested in separate account asset classes as follows:
2006 2005
At December 31,
(In millions)
Mutual Fund Groupings
Equity................................................................ $70,187 $58,461
Bond ................................................................ 6,139 6,133
Balanced.............................................................. 4,403 4,804
MoneyMarket........................................................... 1,302 1,075
Specialty.............................................................. 1,088 1,004
Total ............................................................... $83,119 $71,477
8. Reinsurance
The Company’s life insurance operations participate in reinsurance activities in order to limit losses, minimize exposure to large risks,
and provide additional capacity for future growth. The Company has historically reinsured the mortality risk on new individual life insurance
policies primarily on an excess of retention basis or a quota share basis. Until 2005, the Company reinsured up to 90% of the mortality risk
for all new individual life insurance policies that it wrote through its various franchises. This practice was initiated by the different franchises
for different products starting at various points in time between 1992 and 2000. During 2005, the Company changed its retention practices
for certain individual life insurance. Amounts reinsured in prior years remain reinsured under the original reinsurance; however, under the
new retention guidelines, the Company reinsures up to 90% of the mortality risk in excess of $1 million for most new individual life insurance
policies that it writes through its various franchises and for certain individual life policies the retention limits remained unchanged. On a
case by case basis, the Company may retain up to $25 million per life on single life individual policies and $30 million per life on survivorship
individual policies and reinsure 100% of amounts in excess of the Company’s retention limits. The Company evaluates its reinsurance
programs routinely and may increase or decrease its retention at any time. In addition, the Company reinsures a significant portion of the
F-42 MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)