MetLife 2006 Annual Report Download - page 49

aggregate proceeds from the sale of the trust preferred securities by the Trusts and $64 million in trust common securities issued equally
by the Trusts. The common and preferred securities of the Trusts, totaling $2,134 million, represent undivided beneficial ownership
interests in the assets of the Trusts, have no stated maturity and must be redeemed upon maturity of the corresponding series of junior
subordinated debt securities — the sole assets of the respective Trusts. The Series A and Series B Trusts will make quarterly distributions
on the common and preferred securities at an annual rate of 4.82% and 4.91%, respectively.
The Holding Company has directly guaranteed the repayment of the trust preferred securities to the holders thereof to the extent that
there are funds available in the Trusts. The guarantee will remain in place until the full redemption of the trust preferred securities. The trust
preferred securities held by the common equity unit holders are pledged to the Holding Company to collateralize the obligation of the
common equity unit holders under the related stock purchase contracts. The common equity unit holder may substitute certain zero
coupon treasury securities in place of the trust preferred securities as collateral under the stock purchase contract.
The trust preferred securities have remarketing dates which correspond with the initial and subsequent stock purchase dates to provide
the holders of the common equity units with the proceeds to exercise the stock purchase contracts. The initial stock purchase date is
expected to be August 15, 2008, but could be deferred for quarterly periods until February 15, 2009, and the subsequent stock purchase
date is expected to be February 15, 2009, but could be deferred for quarterly periods until February 15, 2010. At the remarketing date, the
remarketing agent will have the ability to reset the interest rate on the trust preferred securities to generate sufficient remarketing proceeds
to satisfy the common equity unit holder’s obligation under the stock purchase contract, subject to a reset cap for each of the first two
attempted remarketings of each series. The interest rate on the supporting junior subordinated debt securities issued by the Holding
Company will be reset at a commensurate rate. If the initial remarketing is unsuccessful, the remarketing agent will attempt to remarket the
trust preferred securities, as necessary, in subsequent quarters through February 15, 2009 for the Series A trust preferred securities and
through February 15, 2010 for the Series B trust preferred securities. The final attempt at remarketing will not be subject to the reset cap. If
all remarketing attempts are unsuccessful, the Holding Company has the right, as a secured party, to apply the liquidation amount on the
trust preferred securities to the common equity unit holders obligation under the stock purchase contract and to deliver to the common
equity unit holder a junior subordinated debt security payable on August 15, 2010 at an annual rate of 4.82% and 4.91% on the Series A
and Series B trust preferred securities, respectively, in payment of any accrued and unpaid distributions.
Each stock purchase contract requires (i) the Holding Company to pay the holder of the common equity unit quarterly contract
payments on the stock purchase contracts at the annual rate of 1.510% on the stated amount of $25 per stock purchase contract until the
initial stock purchase date and at the annual rate of 1.465% on the remaining stated amount of $12.50 per stock purchase contract
thereafter; and (ii) the holder of the common equity unit to purchase, and the Holding Company to sell, for $12.50, on each of the initial
stock purchase date and the subsequent stock purchase date, a number of newly issued or treasury shares of the Holding Company’s
common stock, par value $0.01 per share, equal to the applicable settlement rate. The settlement rate at the respective stock purchase
date will be calculated based on the closing price of the common stock during a specified 20-day period immediately preceding the
applicable stock purchase date. Accordingly, upon settlement in the aggregate, the Holding Company will receive proceeds of $2,070 mil-
lion and issue between 39.0 million and 47.8 million shares of common stock. The stock purchase contract may be exercised at the option
of the holder at any time prior to the settlement date. However, upon early settlement, the holder will receive the minimum settlement rate.
Credit Facilities. The Holding Company maintains committed and unsecured credit facilities aggregating $3.0 billion ($1.5 billion
expiring in each of 2009 and 2010, which it shares with MetLife Funding) as of December 31, 2006. Borrowings under these facilities bear
interest at varying rates as stated in the agreements. These facilities are primarily used for general corporate purposes and as back-up lines
of credit for the borrowers’ commercial paper programs. At December 31, 2006, there were no borrowings against these credit facilities. At
December 31, 2006, $970 million of the unsecured credit facilities support the letters of credit issued on behalf of the Company, all of
which is in support of letters of credit issued on behalf of the Holding Company.
Committed Facilities. Information on the capacity and outstanding balances of all committed facilities as of December 31, 2006 is as
follows:
Account Party Expiration Capacity
Letter of
Credit
Issuances Unused Commitments Maturity (Years)
(In millions)
MetLife Reinsurance Company of South Carolina . . . . . . . . . . July 2010 (1) $2,000 $2,000 $ — 4
Exeter Reassurance Company Ltd., MetLife, Inc., & Missouri
Re . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . June 2016 (2) 500 490 10 10
Exeter Reassurance Company Ltd. . . . . . . . . . . . . . . . . . . . June 2025 (1)(3) 225 225 — 19
ExeterReassuranceCompanyLtd. ................... March2025 (1)(3) 250 250 — 19
Exeter Reassurance Company Ltd. . . . . . . . . . . . . . . . . . . . June 2025 (1)(3) 325 58 267 19
Exeter Reassurance Company Ltd. . . . . . . . . . . . . . . . . . . . December 2026(1) 901 140 761 20
Exeter Reassurance Company Ltd.. . . . . . . . . . . . . . . . . . . . December 2027(1) 650 330 320 21
Total...................................... $4,851 $3,493 $1,358
(1) The Holding Company is a guarantor under this agreement.
(2) Letters of credit and replacements or renewals thereof issued under this facility of $280 million, $10 million and $200 million will expire
no later than December 2015, March 2016 and June 2016, respectively.
(3) On June 1, 2006, the letter of credit issuer elected to extend the initial stated termination date of each respective letter of credit to the
respective dates indicated.
Letters of Credit. At December 31, 2006, the Holding Company had $970 million in outstanding letters of credit from various banks.
Since commitments associated with letters of credit and financing arrangements may expire unused, these amounts do not necessarily
reflect the Holding Company’s actual future cash funding requirements.
46 MetLife, Inc.