MetLife 2006 Annual Report Download - page 51

On December 1, 2006, the Holding Company repurchased 3,993,024 shares of its outstanding common stock at an aggregate cost of
$232 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the common stock sold to
the Holding Company from third parties and purchased the common stock in the open market to return to such third parties. In February
2007, the Holding Company paid a cash adjustment of $8 million for a final purchase price of $240 million. The Holding Company recorded
the shares initially repurchased as treasury stock and recorded the amount paid as an adjustment to the cost of the treasury stock.
On December 16, 2004, the Holding Company repurchased 7,281,553 shares of its outstanding common stock at an aggregate cost
of $300 million under an accelerated common stock repurchase agreement with a major bank. The bank borrowed the stock sold to the
Holding Company from third parties and purchased the common stock in the open market to return to such third parties. In April 2005, the
Holding Company received a cash adjustment of $7 million based on the actual amount paid by the bank to purchase the common stock,
for a final purchase price of $293 million. The Holding Company recorded the shares initially repurchased as treasury stock and recorded
the amount received as an adjustment to the cost of the treasury stock.
The following table summarizes the 2006, 2005 and 2004 common stock repurchase activity of the Holding Company, which includes
the accelerated common stock repurchase agreements in the fourth quarters of 2006 and 2004:
2006 2005 2004
December 31,
(In millions, except number of shares)
Shares repurchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,608,824 — 26,373,952
Cost .................................................... $ 500 $ — $ 1,000
Future common stock repurchases will be dependent upon several factors, including the Company’s capital position, its financial
strength and credit ratings, general market conditions and the price of MetLife, Inc.’s common stock.
Support Agreements. 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 capital and surplus of each of these subsidiaries was in excess of the minimum capital and surplus amounts
referenced above, and their total adjusted capital was in excess of the most recent referenced RBC-based amount calculated at
December 31, 2006.
In connection with the acquisition of Travelers, the Holding Company committed to the South Carolina Department of Insurance to take
necessary action to maintain the minimum capital and surplus of MRSC, formerly The Travelers Life and Annuity Reinsurance Company, at
the greater of $250,000 or 10% of net loss reserves (loss reserves less deferred policy acquisition costs).
The Holding Company entered into a net worth maintenance agreement with MSMIC, an investment in Japan of which the Holding
Company owns approximately 50% of the equity. Under the agreement, the Holding Company agreed, without limitation as to amount, to
cause MSMIC to have the amount of capital and surplus necessary for MSMIC to maintain a solvency ratio of at least 400%, as calculated
in accordance with the Insurance Business Law of Japan, and to make such loans to MSMIC as may be necessary to ensure that MSMIC
has sufficient cash or other liquid assets to meet its payment obligations as they fall due. As of the date of the most recent calculation, the
capital and surplus of MSMIC was in excess of the minimum capital and surplus amount referenced above.
Based on management’s analysis and comparison of its current and future cash inflows from the dividends it receives from subsidiaries,
including Metropolitan Life, that are permitted to be paid without prior insurance regulatory approval, its portfolio of liquid assets,
anticipated securities issuances and other anticipated cash flows, management believes there will be sufficient liquidity to enable the
Holding Company to make payments on debt, make cash dividend payments on its common and preferred stock, contribute capital to its
subsidiaries, pay all operating expenses and meet its cash needs.
Subsequent Events
On February 27, 2007, the Holding Company’s Board of Directors authorized an additional $1 billion common stock repurchase
program. See “— Liquidity and Capital Resources — The Holding Company — Liquidity Uses — Share Repurchase” for further information.
On February 16, 2007, the Holding Company’s Board of Directors announced dividends of $0.3975000 per share, for a total of
$10 million, on its Series A preferred shares, and $0.4062500 per share, for a total of $24 million, on its Series B preferred shares, subject
to the final confirmation that it has met the financial tests specified in the Series A and Series B preferred shares, which the Holding
Company anticipates will be made on or about March 5, 2007, the earliest date permitted in accordance with the terms of the securities.
Both dividends will be payable March 15, 2007 to shareholders of record as of February 28, 2007.
Off-Balance Sheet Arrangements
Commitments to Fund Partnership Investments
The Company makes commitments to fund partnership investments in the normal course of business for the purpose of enhancing the
Company’s total return on its investment portfolio. The amounts of these unfunded commitments were $3.0 billion and $2.7 billion at
December 31, 2006 and 2005, respectively. The Company anticipates that these amounts will be invested in partnerships over the next
five years. There are no other obligations or liabilities arising from such arrangements that are reasonably likely to become material.
Mortgage Loan Commitments
The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were
$4.0 billion and $3.0 billion at December 31, 2006 and 2005, respectively. The purpose of these loans is to enhance the Company’s total
return on its investment portfolio. There are no other obligations or liabilities arising from such arrangements that are reasonably likely to
become material.
48 MetLife, Inc.