MetLife 2006 Annual Report Download - page 42

The following table summarizes the Company’s major contractual obligations as of December 31, 2006:
Contractual Obligations Total Less Than One Year
More Than
One Year and
Less Than
Three Years
More Than
Three Years
and Less
Than Five
Years More Than Five Years
(In millions)
Future policy benefits(1) . . . . . . . . . . . . . . . . . . . . . . . . . $321,852 $ 5,982 $ 8,864 $10,160 $296,846
Policyholder account balances(2) . . . . . . . . . . . . . . . . . . . 176,106 25,386 28,884 23,022 98,814
Other policyholder liabilities(3) . . . . . . . . . . . . . . . . . . . . . 10,139 7,574 94 114 2,357
Short-termdebt(4)............................. 1,457 1,457 — — —
Long-termdebt(4)............................. 18,069 647 1,807 2,147 13,468
Junior subordinated debt securities(4) . . . . . . . . . . . . . . . . 6,618 210 2,440 214 3,754
Shares subject to mandatory redemption(4) . . . . . . . . . . . . 350 — — — 350
Payables for collateral under securities loaned and other
transactions(5).............................. 45,846 45,846 — — —
Commitments to lend funds(6) . . . . . . . . . . . . . . . . . . . . . 8,934 7,583 579 397 375
Operatingleases(7)............................ 2,165 247 394 318 1,206
Other(8) ................................... 7,285 6,743 — — 542
Total .................................... $598,821 $101,675 $43,062 $36,372 $417,712
(1) Future policyholder benefits include liabilities related to traditional whole life policies, term life policies, closeout and other group annuity
contracts, structured settlements, MTF agreements, single premium immediate annuities, long-term disability policies, individual
disability income policies, LTC policies and property and casualty contracts.
Included within future policyholder benefits are contracts where the Company is currently making payments and will continue to do so until
the occurrence of a specific event such as death as well as those where the timing of a portion of the payments has been determined by
the contract. Also included are contracts where the Company is not currently making payments and will not make payments until the
occurrence of an insurable event, such as death or illness, or where the occurrence of the payment triggering event, such as a surrender
of a policy or contract, which is outside the control of the Company. The Company has estimated the timing of the cash flows related to
these contracts based on historical experience as well as its expectation of future payment patterns.
Liabilities related to accounting conventions, or which are not contractually due, such as shadow liabilities, excess interest reserves
and property and casualty loss adjustment expenses of $1.7 billion have been excluded from amounts presented in the table above.
Amounts presented in the table above, excluding those related to property and casualty contracts, represent the estimated cash
payments for benefits under such contracts including assumptions related to the receipt of future premiums and assumptions related to
mortality, morbidity, policy lapse, renewal, retirement, inflation, disability incidence, disability terminations, policy loans and other
contingent events as appropriate to the respective product type. Payments for case reserve liabilities and incurred but not reported
liabilities associated with property and casualty contracts of $2.2 billion have been included using an estimate of the ultimate amount to
be settled under the policies based upon historical payment patterns. The ultimate amount to be paid under property and casualty
contracts is not determined until the Company reaches a settlement with the claimant, which may vary significantly from the liability or
contractual obligation presented above especially as it relates to incurred but not reported liabilities. All estimated cash payments
presented in the table above are undiscounted as to interest, net of estimated future premiums on policies currently in-force and gross
of any reinsurance recoverable. The more than five years category displays estimated payments due for periods extending for more
than 100 years from the present date.
The sum of the estimated cash flows shown for all years in the table of $321.9 billion exceeds the liability amount of $127.5 billion
included on the consolidated balance sheet principally due to the time value of money, which accounts for at least 80% of the
difference, as well as differences in assumptions, most significantly mortality, between the date the liabilities were initially established
and the current date.
For the majority of the Company’s insurance operations, estimated contractual obligations for future policyholder benefits and policy-
holder account balance liabilities as presented in the table above are derived from the annual asset adequacy analysis used to develop
actuarial opinions of statutory reserve adequacy for state regulatory purposes. These cash flows are materially representative of the cash
flows under generally accepted accounting principles.
Actual cash payments to policyholders may differ significantly from the liabilities as presented in the consolidated balance sheet and
the estimated cash payments as presented in the table above due to differences between actual experience and the assumptions used
in the establishment of these liabilities and the estimation of these cash payments. See “— Liquidity and Capital Resources — The
Company — Asset/Liability Management.”
(2) Policyholder account balances include liabilities related to conventional guaranteed investment contracts, guaranteed investment
contracts associated with formal offering programs, funding agreements, individual and group annuities, total control accounts, bank
deposits, individual and group universal life, variable universal life and company owned life insurance.
Included within policyholder account balances are contracts where the amount and timing of the payment is essentially fixed and
determinable. These amounts relate to policies where the Company is currently making payments and will continue to do so, as well as
those where the timing of the payments has been determined by the contract. Other contracts involve payment obligations where the
timing of future payments is uncertain and where the Company is not currently making payments and will not make payments until the
occurrence of an insurable event, such as death, or where the occurrence of the payment triggering event, such as a surrender of or
partial withdrawal on a policy or deposit contract, which is outside the control of the Company. The Company has estimated the timing of
the cash flows related to these contracts based on historical experience as well as its expectation of future payment patterns.
Excess interest reserves representing purchase accounting adjustments of $836 million have been excluded from amounts presented in
the table above as they represent an accounting convention and not a contractual obligation.
39MetLife, Inc.