MetLife 2007 Annual Report Download - page 156

In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies
its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not
subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum
potential amount that could become due under these indemnities in the future.
The Company has also guaranteed minimum investment returns on certain international retirement funds in accordance with local laws.
Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to
determine the maximum potential amount that could become due under these guarantees in the future.
During the year ended December 31, 2007, the Company recorded a $1 million liability with respect to a guarantee previously provided
to MLII, a former subsidiary. The Company’s recorded liabilities at December 31, 2007 and 2006 for indemnities, guarantees and
commitments were $6 million and $5 million, respectively.
In connection with synthetically created investment transactions, the Company writes credit default swap obligations that generally
require payment of principal outstanding due in exchange for the referenced credit obligation. If a credit event, as defined by the contract,
occurs the Company’s maximum amount at risk, assuming the value of the referenced credits becomes worthless, was $1.7 billion at
December 31, 2007. The credit default swaps expire at various times during the next ten years.
17. Employee Benefit Plans
Pension and Other Postretirement Benefit Plans
The Subsidiaries sponsor and/or administer various qualified and non-qualified defined benefit pension plans and other postretirement
employee benefit plans covering employees and sales representatives who meet specified eligibility requirements. Pension benefits are
provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of credited
service and either final average or career average earnings. The cash balance formula utilizes hypothetical or notional accounts which
credit participants with benefits equal to a percentage of eligible pay as well as earnings credits, determined annually based upon the
average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. As of December 31, 2007, virtually all of the
Subsidiaries’ obligations have been calculated using the traditional formula. The non-qualified pension plans provide supplemental
benefits, in excess of amounts permitted by governmental agencies, to certain executive level employees.
The Subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance benefits for retired
employees. Employees of the Subsidiaries who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age
and service criteria while working for one of the Subsidiaries, may become eligible for these other postretirement benefits, at various levels,
in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement
medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits.
In connection with the acquisition of Travelers, the employees of Travelers and any other Citigroup affiliate in the United States who
became employees of certain Subsidiaries in connection with that acquisition (including those who remained employees of companies
acquired in that acquisition) will be credited with service recognized by Citigroup for purposes of determining eligibility and vesting under
the Plan with respect to benefits earned under the Plan subsequent to the closing date of the acquisition. Neither the Holding Company nor
its subsidiaries assumed an obligation for benefits earned under defined benefit plans of Citigroup or Travelers prior to the acquisition.
As described more fully in Note 1, effective December 31, 2006, the Company adopted SFAS 158. The adoption of SFAS 158 required
the recognition of the funded status of defined benefit pension and other postretirement plans and eliminated the additional minimum
pension liability provision of SFAS 87. The Company’s additional minimum pension liability was $78 million, and the intangible asset was
$12 million, at December 31, 2005. The excess of the additional minimum pension liability over the intangible asset of $66 million,
$41 million net of income tax, was recorded as a reduction of accumulated other comprehensive income. At December 31, 2006,
immediately prior to adopting SFAS 158, the Company’s additional minimum pension liability was $92 million. The additional minimum
pension liability of $59 million, net of income tax of $33 million, was recorded as a reduction of accumulated other comprehensive income.
The change in the additional minimum pension liability of $18 million, net of income tax, was reflected as a component of comprehensive
income for the year ended December 31, 2006. Upon adoption of SFAS 158, the Company eliminated the additional minimum pension
liability and recognized as an adjustment to accumulated other comprehensive income, net of income tax, those amounts of actuarial gains
and losses, prior service costs and credits, and the remaining net transition asset or obligation that had not yet been included in net
periodicbenefitcostatthedateofadoption.
F-60 MetLife, Inc.
MetLife, Inc.
Notes to Consolidated Financial Statements — (Continued)