MetLife 2007 Annual Report Download - page 138

Secondary
Guarantees Paid-Up Guarantees Secondary Guarantees Paid-Up Guarantees
2007 2006
December 31,
(In millions)
Universal and Variable Life Contracts(1)
Accountvalue(generalandseparateaccount).................... $ 9,347 $ 4,302 $ 8,357 $ 4,468
Net amount at risk(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $141,840(3) $ 33,855(3) $131,808(3) $ 36,447(3)
Averageattainedageofpolicyholders ......................... 49years 55years 49years 54years
(1) The Company’s annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the
amounts listed above may not be mutually exclusive.
(2) The net amount at risk is based on the direct amount at risk (excluding reinsurance).
(3) The net amount at risk for guarantees of amounts in the event of death is defined as the current guaranteed minimum death benefit in
excess of the current account balance at the balance sheet date.
(4) The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity
payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account
balance.
(5) The net amount at risk for two tier annuities is based on the excess of the upper tier, adjusted for a profit margin, less the lower tier.
Information regarding the liabilities for guarantees (excluding base policy liabilities) relating to annuity and universal and variable life
contracts is as follows:
Guaranteed
Death
Benefits
Guaranteed
Annuitization
Benefits Secondary Guarantees
Paid
Up
Guarantees Total
Annuity Contracts Universal and Variable Life Contracts
(In millions)
Balance at January 1, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . $24 $19 $ 6 $29 $ 78
Incurredguaranteedbenefits......................... 22 10 10 10 52
Paidguaranteedbenefits........................... (5) — (1) — (6)
Balance at December 31, 2005 . . . . . . . . . . . . . . . . . . . . . . . 41 29 15 39 124
Incurredguaranteedbenefits......................... 17 7 29 1 54
Paidguaranteedbenefits........................... (6) — — — (6)
Balance at December 31, 2006 . . . . . . . . . . . . . . . . . . . . . . . 52 36 44 40 172
Incurredguaranteedbenefits......................... 28 38 53 6 125
Paidguaranteedbenefits........................... (8) — — — (8)
Balance at December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . $72 $74 $97 $46 $289
Account balances of contracts with insurance guarantees are invested in separate account asset classes as follows:
2007 2006
December 31,
(In millions)
Mutual Fund Groupings
Equity................................................................ $69,477 $70,187
Bond ................................................................ 6,284 6,139
Balanced.............................................................. 15,977 4,403
MoneyMarket........................................................... 1,775 1,302
Specialty.............................................................. 870 1,088
Total ............................................................... $94,383 $83,119
8. Reinsurance
The Company’s life insurance operations participate in reinsurance activities in order to limit losses, minimize exposure to large risks,
and provide additional capacity for future growth. The Company has historically reinsured the mortality risk on new individual life insurance
policies primarily on an excess of retention basis or a quota share basis. Until 2005, the Company reinsured up to 90% of the mortality risk
for all new individual life insurance policies that it wrote through its various franchises. This practice was initiated by the different franchises
for different products starting at various points in time between 1992 and 2000. During 2005, the Company changed its retention practices
for certain individual life insurance. Amounts reinsured in prior years remain reinsured under the original reinsurance; however, under the
new retention guidelines, the Company reinsures up to 90% of the mortality risk in excess of $1 million for most new individual life insurance
policies that it writes through its various franchises and for certain individual life policies the retention limits remained unchanged. On a
case by case basis, the Company may retain up to $20 million per life and reinsure 100% of amounts in excess of the Company’s retention
limits. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time. In addition, the
Company reinsures a significant portion of the mortality risk on its individual universal life policies issued since 1983. Placement of
reinsuranceisdoneprimarilyonanautomaticbasisandalsoonafacultative basis for risks with specific characteristics.
F-42 MetLife, Inc.
MetLife, Inc.
Notes to Consolidated Financial Statements — (Continued)