MetLife 2006 Annual Report Download - page 157

Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide
a basis upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in
MetLife’s businesses. As a part of the economic capital process, a portion of net investment income is credited to the segments based on
the level of allocated equity.
Institutional offers a broad range of group insurance and retirement & savings products and services, including group life insurance,
non-medical health insurance, such as short and long-term disability, long-term care, and dental insurance, and other insurance products
and services. Individual offers a wide variety of protection and asset accumulation products, including life insurance, annuities and mutual
funds. Auto & Home provides personal lines property and casualty insurance, including private passenger automobile, homeowners and
personal excess liability insurance. International provides life insurance, accident and health insurance, annuities and retirement & savings
products to both individuals and groups. Through the Company’s majority-owned subsidiary, RGA, the Reinsurance segment provides
reinsurance of life and annuity policies in North America and various international markets. Additionally, reinsurance of critical illness
policies is provided in select international markets.
Corporate & Other contains the excess capital not allocated to the business segments, various start-up entities, MetLife Bank and run-
off entities, as well as interest expense related to the majority of the Company’s outstanding debt and expenses associated with certain
legal proceedings and income tax audit issues. Corporate & Other also includes the elimination of all intersegment amounts, which
generally relate to intersegment loans, which bear interest rates commensurate with related borrowings, as well as intersegment
transactions. Additionally, the Company’s asset management business, including amounts reported as discontinued operations, is
included in the results of operations for Corporate & Other. See Note 22 for disclosures regarding discontinued operations, including
real estate.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for
the years ended December 31, 2006, 2005 and 2004. The accounting policies of the segments are the same as those of the Company,
except for the method of capital allocation and the accounting for gains (losses) from intercompany sales, which are eliminated in
consolidation. The Company allocates equity to each segment based upon the economic capital model that allows the Company to
effectively manage its capital. The Company evaluates the performance of each segment based upon net income excluding net investment
gains (losses), net of income tax, adjustments related to net investment gains (losses), net of income tax, the impact from the cumulative
effect of changes in accounting, net of income tax and discontinued operations, other than discontinued real estate, net of income tax,
less preferred stock dividends. The Company allocates certain non-recurring items, such as expenses associated with certain legal
proceedings, to Corporate & Other.
For the Year Ended
December 31, 2006 Institutional Individual Auto & Home International Reinsurance Corporate & Other Total
(In millions)
Statement of Income:
Premiums ....................... $ 11,867 $ 4,516 $2,924 $ 2,722 $ 4,348 $ 35 $ 26,412
Universal life and investment- type product
policyfees ..................... 775 3,201 — 804 — — 4,780
Net investment income . . . . . . . . . . . . . . . 7,267 6,912 177 1,050 732 1,054 17,192
Otherrevenues.................... 685 527 22 28 66 34 1,362
Net investment gains (losses) . . . . . . . . . . . (631) (598) 4 22 7 (154) (1,350)
Policyholder benefits and claims . . . . . . . . . 13,367 5,409 1,717 2,411 3,490 37 26,431
Interest credited to policyholder account
balances....................... 2,593 2,035 — 364 254 — 5,246
Policyholderdividends ............... — 1,697 6 (2) — — 1,701
Other expenses. . . . . . . . . . . . . . . . . . . . 2,314 3,519 845 1,543 1,227 1,349 10,797
Income (loss) from continuing operations
before provision (benefit) for income tax. . . 1,689 1,898 559 310 182 (417) 4,221
Provision (benefit) for income tax. . . . . . . . . 563 652 143 110 64 (416) 1,116
Income (loss) from discontinued operations,
netofincometax ................. 41 18 — — — 3,129 3,188
Cumulative effect of a change in accounting,
netofincometax ................. — — — — — — —
Netincome ...................... $ 1,167 $ 1,264 $ 416 $ 200 $ 118 $ 3,128 $ 6,293
Balance Sheet:
Total assets . . . . . . . . . . . . . . . . . . . . . . $190,963 $243,604 $5,467 $22,724 $18,818 $46,139 $527,715
DAC and VOBA . . . . . . . . . . . . . . . . . . . . $ 1,370 $ 13,996 $ 190 $ 2,130 $ 3,152 $ 13 $ 20,851
Goodwill ........................ $ 977 $ 2,957 $ 157 $ 301 $ 96 $ 409 $ 4,897
Separate account assets . . . . . . . . . . . . . . $ 47,047 $ 94,124 $ — $ 3,178 $ 16 $ — $144,365
Policyholder liabilities . . . . . . . . . . . . . . . . $113,205 $117,866 $3,453 $15,139 $13,332 $ 9,199 $272,194
Separate account liabilities . . . . . . . . . . . . $ 47,047 $ 94,124 $ — $ 3,178 $ 16 $ — $144,365
F-74 MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)