MetLife 2007 Annual Report Download - page 41

were partially offset by a decrease in certain policyholder liabilities of $18 million caused by a decrease in the unrealized investment
gains on the invested assets supporting those liabilities, a $10 million benefit from a decrease in policyholder benefits associated with
a large group policy that was not renewed by the policyholder, and a $6 million benefit in the current year from the elimination of
liabilities for pending claims that were determined to be invalid following a review.
• Brazilby$49millionprimarilyduetoanincreaseinpolicyholderliabilities on these specific blocks of business as discussed above, an
increase in amounts retained under reinsurance arrangements, as well as adverse claim experience in other lines of business.
• South Korea by $44 million commensurate with the business growth discussed above, as well as the impact of foreign currency
exchange rates of $33 million.
Partially offsetting these increases, policyholder benefits and claims, policyholder dividends, and interest credited to policyholder
account balances decreased in:
• Australia by $22 million due to reserve strengthening in the prior year on a block of reinsurance business.
• Chile by $7 million primarily due to a decrease in annuity liabilities related to the decrease in the inflation index and the decrease in
annuity premiums discussed above, partially offset by growth in the institutional business, as well as the impact of foreign currency
exchange rates of $17 million.
• Taiwan by $2 million primarily due to a decrease of $14 million from reserve refinements associated with the implementation of a new
valuation system, partially offset by an increase of $12 million primarily due to business growth.
• Argentina by $2 million primarily due to the elimination of liabilities for pending claims that were determined to be invalid following a
review, partially offset by business growth. Increases in other countries accounted for the remainder of the change.
Other expenses increased by $324 million, or 32%, to $1,321 million for the year ended December 31, 2006 from $997 million for the
comparable 2005 period.
Other expenses increased in:
• Taiwan by $110 million primarily due to a one-time increase in DAC amortization of $77 million due to a loss recognition adjustment
resulting from low interest rates relative to product guarantees coupled with high persistency rates on certain blocks of business, an
increase of $17 million related to the termination of the agency distribution channel in Taiwan, an increase of $9 million from
refinements associated with the implementation of a new valuation system, as well as business growth.
• Mexico by $49 million primarily due to an increase in commissions commensurate with the revenue growth discussed above, higher
DAC amortization resulting from management’s update of assumptions used to determine estimated gross profits in both the current
and prior years, higher expenses related to growth initiatives, and additional expenses associated with the Mexican pension
business, partially offset by the favorable impact of contingent liabilities that were established in the prior year related to potential
employment matters and which were eliminated in the current year.
• South Korea by $25 million, primarily due to an increase in DAC amortization and general expenses, which were both due to the
growth in business, the impact in the prior year of an accrual for an early retirement program and the impact of foreign currency
exchange rates of $15 million. These were partially offset by a decrease of $60 million in DAC amortization associated with the
implementation of a more refined reserve valuation system.
• Brazil by $25 million primarily due to the growth in business discussed above, as well as an increase in litigation liabilities.
• Chile by $13 million due to increased commissions and other expenses associated with its institutional business, as well as the
impact of foreign currency exchange rates of $4 million.
• The United Kingdom and Australia by $15 million and $3 million, respectively, primarily due to business growth.
• Homeofficeby$57millionprimarilyduetoanincreaseinexpendituresforinformationtechnologyprojects,growthinitiativeprojects
and integration costs, as well as an increase in compensation resulting from an increase in headcount from the comparable 2005
period.
• Ireland by $34 million primarily related to the start-up of the Company’s operation in Ireland.
Offsetting these increases, other expenses decreased in:
• Argentina by $9 million primarily due to the favorable impact of foreign currency exchange rates and inflation rates on certain
contingent liabilities.
Increases in other countries accounted for the remainder of the change.
Changes in foreign currency exchange rates accounted for $90 million of the increase in total expenses.
37MetLife, Inc.