MetLife 2006 Annual Report Download - page 44

Other liabilities presented in the table above is principally comprised of amounts due under reinsurance arrangements, payables related
to securities purchased but not yet settled, securities sold short, accrued interest on debt obligations, fair value of derivative
obligations, deferred compensation arrangements, guaranty liabilities, the fair value of forward stock purchase contracts, as well as
general accruals and accounts payable due under contractual obligations. If the timing of any of the other liabilities was sufficiently
uncertain, the amounts were included within the less than one year category.
The other liabilities presented in the table above differs from the amount presented in the consolidated balance sheet by $5.2 billion
due to the exclusion of items such as minority interests, legal contingency reserves, pension and postretirement benefit obligations,
taxes due other than income tax, accrued severance and employee incentive compensation and other liabilities such as deferred gains
and losses. Such items have been excluded from the table above as they represent accounting conventions or are not liabilities due
under contractual obligations.
The net funded status of the Company’s pension and other postretirement liabilities included within other liabilities has been excluded
from the amounts presented in the table above. Rather, the amounts presented represent the discretionary contributions of $150 million
to be made by the Company to the pension plan in 2007 and the discretionary contributions of $132 million, based on the next year’s
expected gross benefit payments to participants, to be made by the Company to the postretirement benefit plans during 2007. Virtually
all contributions to the pension and postretirement benefit plans are made by the insurance subsidiaries of the Holding Company with
little impact on the Holding Company’s cash flows.
See also “— Off-Balance Sheet Arrangements.”
Separate account liabilities are excluded from the table above. Separate account liabilities represent the fair market value of the funds
that are separately administered by the Company. Generally, the separate account owner, rather than the Company, bears the investment
risk of these funds. The separate account liabilities are legally segregated and are not subject to the claims that arise out of any other
business of the Company. Net deposits, net investment income and realized and unrealized capital gains and losses on the separate
accounts are not reflected in the consolidated statements of income. The separate account liabilities will be fully funded by cash flows from
theseparateaccountassets.
The Company also enters into agreements to purchase goods and services in the normal course of business; however, these purchase
obligations are not material to its consolidated results of operations or financial position as of December 31, 2006.
Additionally, the Company has agreements in place for services it conducts, generally at cost, between subsidiaries relating to
insurance, reinsurance, loans, and capitalization. All material intercompany transactions have appropriately been eliminated in consol-
idation. Intercompany transactions among insurance subsidiaries and affiliates have been approved by the appropriate departments of
insurance as required.
Support Agreements. Metropolitan Life entered into a net worth maintenance agreement with New England Life Insurance Company
(“NELICO”) at the time Metropolitan Life merged with New England Mutual Life Insurance Company. Under the agreement, Metropolitan Life
agreed, without limitation as to the amount, to cause NELICO to have a minimum capital and surplus of $10 million, total adjusted capital at
a level not less than the company action level RBC (or not less than 125% of the company action level RBC, if NELICO has a negative
trend), as defined by state insurance statutes, and liquidity necessary to enable it to meet its current obligations on a timely basis. As of the
date of the most recent statutory financial statements filed with insurance regulators, the capital and surplus of NELICO was in excess of
the minimum capital and surplus amount referenced above, and its total adjusted capital was in excess of the most recent referenced RBC-
based amount calculated at December 31, 2006.
In connection with the Company’s acquisition of the parent of General American Life Insurance Company (“General American”),
Metropolitan Life entered into a net worth maintenance agreement with General American. Under the agreement, as subsequently
amended, Metropolitan Life agreed, without limitation as to amount, to cause General American to have a minimum capital and surplus of
$10 million, total adjusted capital at a level not less than 250% of the company action level RBC, as defined by state insurance statutes,
and liquidity necessary to enable it to meet its current obligations on a timely basis. As of the date of the most recent statutory financial
statements filed with insurance regulators, the capital and surplus of General American was in excess of the minimum capital and surplus
amount referenced above, and its total adjusted capital was in excess of the most recent referenced RBC-based amount calculated at
December 31, 2006.
Metropolitan Life has also entered into arrangements for the benefit of some of its other subsidiaries and affiliates to assist such
subsidiaries and affiliates in meeting various jurisdictions’ regulatory requirements regarding capital and surplus and security deposits. In
addition, Metropolitan Life has entered into a support arrangement with respect to a subsidiary under which Metropolitan Life may become
responsible, in the event that the subsidiary becomes the subject of insolvency proceedings, for the payment of certain reinsurance
recoverables due from the subsidiary to one or more of its cedents in accordance with the terms and conditions of the applicable
reinsurance agreements.
General American has agreed to guarantee certain contractual obligations of its former subsidiaries, Paragon Life Insurance Company
(which merged into Metropolitan Life in 2006), MetLife Investors Insurance Company (“MetLife Investors”), First MetLife Investors Insurance
Company and MetLife Investors Insurance Company of California (which merged into MetLife Investors in 2006). In addition, General
American has entered into a contingent reinsurance agreement with MetLife Investors. Under this agreement, in the event that MetLife
Investors’ statutory capital and surplus is less than $10 million or total adjusted capital falls below 180% of the company action level RBC,
as defined by state insurance statutes, General American would assume as assumption reinsurance, subject to regulatory approvals and
required consents, all of MetLife Investors’ life insurance policies and annuity contract liabilities. As of the date of the most recent statutory
financial statements filed with insurance regulators, the capital and surplus of MetLife Investors was in excess of the minimum capital and
surplus amount referenced above, and its total adjusted capital was in excess of the most recent referenced RBC-based amount
calculated at December 31, 2006.
The Holding Company has net worth maintenance agreements with two of its insurance subsidiaries, MetLife Investors and First MetLife
Investors Insurance Company. Under these agreements, as subsequently amended, the Holding Company agreed, without limitation as to
the amount, to cause each of these subsidiaries to have a minimum capital and surplus of $10 million, total adjusted capital at a level not
less than 150% of the company action level RBC, as defined by state insurance statutes, and liquidity necessary to enable it to meet its
current obligations on a timely basis. As of the date of the most recent statutory financial statements filed with insurance regulators, the
41MetLife, Inc.