MetLife 2006 Annual Report Download - page 136

Company of Canada. Plaintiffs’ allegations concern the way that their policies were treated in connection with the demutualization of
Metropolitan Life; they seek damages, declarations, and other non-pecuniary relief.
Asbestos-Related Claims
Metropolitan Life is and has been a defendant in a large number of asbestos-related suits filed primarily in state courts. These suits
principally allege that the plaintiff or plaintiffs suffered personal injury resulting from exposure to asbestos and seek both actual and punitive
damages. Metropolitan Life has never engaged in the business of manufacturing, producing, distributing or selling asbestos or asbestos-
containing products nor has Metropolitan Life issued liability or workers’ compensation insurance to companies in the business of
manufacturing, producing, distributing or selling asbestos or asbestos-containing products. The lawsuits principally have focused on
allegations with respect to certain research, publication and other activities of one or more of Metropolitan Life’s employees during the
period from the 1920’s through approximately the 1950’s and allege that Metropolitan Life learned or should have learned of certain health
risks posed by asbestos and, among other things, improperly publicized or failed to disclose those health risks. Metropolitan Life believes
that it should not have legal liability in these cases. The outcome of most asbestos litigation matters, however, is uncertain and can be
impacted by numerous variables, including differences in legal rulings in various jurisdictions, the nature of the alleged injury, and factors
unrelated to the ultimate legal merit of the claims asserted against Metropolitan Life. Metropolitan Life employs a number of resolution
strategies to manage its asbestos loss exposure, including seeking resolution of pending litigation by judicial rulings and settling litigation
under appropriate circumstances.
Claims asserted against Metropolitan Life have included negligence, intentional tort and conspiracy concerning the health risks
associated with asbestos. Metropolitan Life’s defenses (beyond denial of certain factual allegations) include that: (i) Metropolitan Life owed
no duty to the plaintiffs — it had no special relationship with the plaintiffs and did not manufacture, produce, distribute or sell the asbestos
products that allegedly injured plaintiffs; (ii) plaintiffs did not rely on any actions of Metropolitan Life; (iii) Metropolitan Life’s conduct was not
the cause of the plaintiffs’ injuries; (iv) that plaintiffs’ exposure occurred after the dangers of asbestos were known; and (v) the applicable
time with respect to filing suit has expired. Since 2002, trial courts in California, Utah, Georgia, New York, Texas, and Ohio have granted
motions dismissing claims against Metropolitan Life. Some courts have denied Metropolitan Life’s motions to dismiss. There can be no
assurance that Metropolitan Life will receive favorable decisions on motions in the future. While most cases brought to date have settled,
Metropolitan Life intends to continue to defend aggressively against claims based on asbestos exposure.
The approximate total number of asbestos personal injury claims pending against Metropolitan Life as of the dates indicated, the
approximate number of new claims during the years ended on those dates and the approximate total settlement payments made to resolve
asbestos personal injury claims during those years are set forth in the following table:
2006 2005 2004
At or For the Years Ended December 31,
(In millions, except number of claims)
Asbestos personal injury claims at year end (approximate) . . . . . . . . . . . . . . . . . . . . . . 87,070 100,250 108,000
Numberofnewclaimsduringtheyear(approximate).......................... 7,870 18,500 23,900
Settlementpaymentsduringtheyear(1) .................................. $ 35.5 $ 74.3 $ 85.5
(1) Settlement payments represent payments madebyMetropolitanLifeduringtheyearinconnectionwithsettlementsmadeinthatyearand
in prior years. Amounts do not include Metropolitan Life’s attorneys’ fees and expenses and do not reflect amounts received from
insurance carriers.
In 2003, Metropolitan Life received approximately 58,750 new claims, ending the year with a total of approximately 111,700 claims, and
paid approximately $84.2 million for settlements reached in 2003 and prior years. The number of asbestos cases that may be brought or
the aggregate amount of any liability that Metropolitan Life may ultimately incur is uncertain.
The Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably
estimable losses for asbestos-related claims. Metropolitan Life’s recorded asbestos liability is based on Metropolitan Life’s estimation of
the following elements, as informed by the facts presently known to it, its understanding of current law, and its past experiences: (i) the
reasonably probable and estimable liability for asbestos claims already asserted against Metropolitan Life including claims settled but not
yet paid; (ii) the reasonably probable and estimable liability for asbestos claims not yet asserted against Metropolitan Life, but which
Metropolitan Life believes are reasonably probable of assertion; and (iii) the legal defense costs associated with the foregoing claims.
Significant assumptions underlying Metropolitan Life’s analysis of the adequacy of its liability with respect to asbestos litigation include:
(i) the number of future claims; (ii) the cost to resolve claims; and (iii) the cost to defend claims.
Metropolitan Life regularly re-evaluates its exposure from asbestos litigation, including studying its claims experience, reviewing
external literature regarding asbestos claims experience in the United States, assessing relevant trends impacting asbestos liability and
considering numerous variables that can affect its asbestos liability exposure on an overall or per claim basis. These variables include
bankruptcies of other companies involved in asbestos litigation, legislative and judicial developments, the number of pending claims
involving serious disease, the number of new claims filed against it and other defendants, and the jurisdictions in which claims are pending.
As previously disclosed, in 2002 Metropolitan Life increased its recorded liability for asbestos-related claims by $402 million from
approximately $820 million to $1,225 million. Metropolitan Life regularly reevaluates its exposure from asbestos litigation and has updated
its liability analysis for asbestos-related claims through December 31, 2006.
The ability of Metropolitan Life to estimate its ultimate asbestos exposure is subject to considerable uncertainty and the conditions
impacting its liability can be dynamic and subject to change. The availability of reliable data is limited and it is difficult to predict with any
certainty the numerous variables that can affect liability estimates, including the number of future claims, the cost to resolve claims, the
disease mix and severity of disease in pending and future claims, the impact of the number of new claims filed in a particular jurisdiction and
variations in the law in the jurisdictions in which claims are filed, the possible impact of tort reform efforts, the willingness of courts to allow
F-53MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)