MetLife 2006 Annual Report Download - page 142

agreements with the FHLB of NY was $998 million and $855 million at December 31, 2006 and 2005, respectively, which is included in
long-term debt.
Metropolitan Life is a member of the FHLB of NY and holds $136 million of common stock of the FHLB of NY, which is included in equity
securities on the Company’s consolidated balance sheet. Metropolitan Life had no funding agreements with the FHLB of NY at
December 31, 2006 or 2005.
On December 12, 2005, RGA repurchased 1.6 million shares of its outstanding common stock at an aggregate price of $76 million
under an accelerated share repurchase agreement with a major bank. The bank borrowed the stock sold to RGA from third parties and
purchased the shares in the open market over the subsequent few months to return to the lenders. RGA would either pay or receive an
amount based on the actual amount paid by the bank to purchase the shares. These repurchases resulted in an increase in the Company’s
ownership percentage of RGA to approximately 53% at December 31, 2005 from approximately 52% at December 31, 2004. In February
2006, the final purchase price was determined, resulting in a cash settlement substantially equal to the aggregate cost. RGA recorded the
initial repurchase of shares as treasury stock and recorded the amount received as an adjustment to the cost of the treasury stock. At
December 31, 2006, the Company’s ownership was approximately 53% of RGA.
Guarantees
In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties
pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other
transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific
liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or
covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counter-
parties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These
obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of
law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is
subject to a contractual limitation ranging from less than $1 million to $2 billion, with a cumulative maximum of $3.6 billion, while in other
cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does
not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future.
In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies
its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not
subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum
potential amount that could become due under these indemnities in the future.
The Company has also guaranteed minimum investment returns on certain international retirement funds in accordance with local laws.
Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to
determine the maximum potential amount that could become due under these guarantees in the future.
During the year ended December 31, 2006, the Company did not record any additional liabilities for indemnities, guarantees and
commitments. In the fourth quarter of 2006, the Company eliminated $4 million of a liability that was previously recorded with respect to
indemnities provided in connection with a certain disposition. The Company’s recorded liabilities at December 31, 2006 and 2005 for
indemnities, guarantees and commitments were $5 million and $9 million, respectively.
In connection with synthetically created investment transactions, the Company writes credit default swap obligations requiring payment
of principal due in exchange for the referenced credit obligation, depending on the nature or occurrence of specified credit events for the
referenced entities. In the event of a specified credit event, the Company’s maximum amount at risk, assuming the value of the referenced
credits becomes worthless, was $396 million at December 31, 2006. The credit default swaps expire at various times during the next ten
years.
16. Employee Benefit Plans
Pension and Other Postretirement Benefit Plans
The Subsidiaries sponsor and/or administer various qualified and non-qualified defined benefit pension plans and other postretirement
employee benefit plans covering eligible employees and sales representatives who meet specified eligibility requirements. Pension benefits
are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of
credited service and either final average or career average earnings. The cash balance formula utilizes hypothetical or notional accounts
which credit participants with benefits equal to a percentage of eligible pay as well as earnings credits, determined annually based upon
the average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. As of December 31, 2006, virtually all of
the Subsidiaries’ obligations have been calculated using the traditional formula. The non-qualified pension plans provide supplemental
benefits, in excess of amounts permitted by governmental agencies, to certain executive level employees.
The Subsidiaries also provide certain postemployment benefits and certain postretirement health and life insurance benefits for retired
employees. Employees of the Subsidiaries who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age
and service criteria while working for one of the Subsidiaries, may become eligible for these other postretirement benefits, at various levels,
in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement
medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits.
In connection with the acquisition of Travelers, the employees of Travelers and any other Citigroup affiliate in the United States who
became employees of certain Subsidiaries in connection with that acquisition (including those who remained employees of companies
acquired in that acquisition) will be credited with service recognized by Citigroup for purposes of determining eligibility and vesting under
the Plan with respect to benefits earned under the Plan subsequent to the closing date of the acquisition. Neither the Holding Company nor
its subsidiaries assumed an obligation for benefits earned under defined benefit plans of Citigroup or Travelers prior to the acquisition.
F-59MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)