MetLife 2007 Annual Report Download - page 34

Auto & Home
The following table presents consolidated financial information for the Auto & Home segment for the years indicated:
2007 2006 2005
Years Ended December 31,
(In millions)
Revenues
Premiums ..................................................... $2,966 $2,924 $2,911
Netinvestmentincome............................................. 196 177 181
Otherrevenues.................................................. 45 22 33
Netinvestmentgains(losses) ........................................ 16 4 (12)
Totalrevenues................................................. 3,223 3,127 3,113
Expenses
Policyholderbenefitsandclaims....................................... 1,807 1,717 1,994
Policyholderdividends............................................. 4 6 3
Otherexpenses ................................................. 830 845 828
Totalexpenses ................................................ 2,641 2,568 2,825
Incomebeforeprovisionforincometax.................................. 582 559 288
Provisionforincometax............................................ 146 143 64
Netincome.................................................... $ 436 $ 416 $ 224
Year ended December 31, 2007 compared with the year ended December 31, 2006 — Auto & Home
Net Income
Net income increased by $20 million, or 5%, to $436 million for the year ended December 31, 2007 from $416 million for the
comparable 2006 period.
The increase in net income was primarily attributable to an increase in premiums of $28 million, net of income tax. The increase in
premiums was principally due to an increase of $38 million, net of income tax, related to increased exposures, an increase of $4 million, net
of income tax, from various voluntary and involuntary programs and an increase of $4 million, net of income tax, resulting from the change
in estimate on auto rate refunds due to a regulatory examination. Offsetting these increases was a $14 million, net of income tax, decrease
related to a reduction in average earned premium per policy and an increase in catastrophe reinsurance costs of $4 million, net of
income tax.
In addition, net investment income increased by $12 million, net of income tax, due primarily to a realignment of economic capital and
an increase in net investment income from higher yields, somewhat offset by a lower asset base. Net investment gains (losses) increased
by $11 million, net of income tax, for the year ended December 31, 2007 as compared to the prior year.
In addition, other revenues increased by $16 million, net of income tax, due primarily to slower than anticipated claims payments in
2006 resulting in slower recognition of deferred income in 2006 related to a reinsurance contract as compared to 2007.
Negatively impacting net income were additional policyholder benefits and claims of $60 million, net of income tax, primarily due to
$39 million, $20 million, and $16 million, all net of income tax, of losses related to higher claim frequencies, higher earned exposures and
higher losses due to severity, respectively. In addition, a $13 million increase, net of income tax, in unallocated claims adjusting expenses
and an increase of $12 million, net of income tax, from a reduction in favorable development of prior year losses negatively impacted net
income. Offsetting these increases was a $41 million, net of income tax, decrease in catastrophe losses, which included favorable
development of prior year catastrophe reserves of $10 million, net of income tax.
In addition, there was a decrease of $1 million, net of income tax, in policyholder dividends that positively impacted net income.
Also favorably impacting net income was a reduction of $10 million, net of income tax, in other expenses related to lower information
technology and advertising costs.
Revenues
Total revenues, excluding net investment gains (losses), increased by $84 million, or 3%, to $3,207 million for the year ended
December 31, 2007 from $3,123 million for the comparable 2006 period.
Premiums increased by $42 million due principally to a $59 million increase in premiums related to increased exposures, an increase of
$5 million from various voluntary and involuntary programs and an increase in premiums of $5 million, resulting from the change in estimate
on auto rate refunds due to a regulatory examination. Offsetting these increases was a $21 million decrease related to a reduction in
average earned premium per policy and an increase in catastrophe reinsurance costs of $6 million.
Net investment income increased by $19 million due to a realignment of economic capital and an increase in net investment income
from higher yields, somewhat offset by a lower asset base.
In addition, other revenues increased $23 million due primarily to slower than anticipated claims payments resulting in slower
recognition of deferred income in 2006 related to a reinsurance contract as compared to 2007.
Expenses
Total expenses increased by $73 million, or 3%, to $2,641 million for the year ended December 31, 2007 from $2,568 million for the
comparable 2006 period.
Policyholder benefits and claims increased by $90 million which was primarily due to an increase of $59 million from higher claim
frequencies, as a result of a return to normal weather patterns in 2007 compared to the milder weather in 2006 across the majority of the
30 MetLife, Inc.