MetLife 2007 Annual Report Download - page 46

certain cases, lower other legal costs of $3 million partially offset by higher amortization and valuation of an asbestos insurance recoverable
of $27 million. Also included as a component of total expenses were the elimination of intersegment amounts which were offset within total
revenues.
Year ended December 31, 2006 compared with the year ended December 31, 2005 — Corporate & Other
Income (Loss) from Continuing Operations
Income (loss) from continuing operations increased by $15 million, or 71%, to ($6) million for the year ended December 31, 2006 from
($21) million for the comparable 2005 period. The acquisition of Travelers, excluding Travelers financing and integration costs incurred by
the Company, contributed $111 million during the first six months of 2006 to income (loss) from continuing operations, which included
$3 million, net of income tax, of net investment losses. Excluding the impact of Travelers, income (loss) from continuing operations
decreased by $96 million for the year ended December 31, 2006 from the comparable 2005 period. Included in this decrease were higher
investment losses of $66 million, net of income tax. Excluding the impact of Travelers and the increase of net investment losses, income
(loss) from continuing operations decreased by $30 million.
The increase in income (loss) from continuing operations was primarily attributable to higher net investment income, lower integration
costs and higher other revenues of $104 million, $62 million, and $4 million, respectively, all of which were net of income tax. This was
partially offset by higher interest expense on debt (principally associated with the issuance of debt to finance the Travelers acquisition),
corporate support expenses, interest credited to bankholder deposits, policyholder benefits and claims and legal-related liabilities of
$125 million, $111 million, $55 million, $30 million and $5 million, respectively, all of which were net of income tax. Tax benefits increased
by $113 million over the comparable 2005 period due to the difference of finalizing the Company’s 2005 tax return in 2006 when compared
to finalizing the Company’s 2004 tax return in 2005 and the difference between the actual and the estimated tax rate allocated to the
various segments.
Revenues
Total revenues, excluding net investment gains (losses), increased by $363 million, or 48%, to $1,115 million for the year ended
December 31, 2006 from $752 million for the comparable 2005 period. The acquisition of Travelers contributed $200 million during the first
six months of 2006 to the period over period increase. Excluding the impact of Travelers, revenues increased by $163 million, or 22%, from
the comparable 2005 period. This increase was primarily attributable to increased net investment income of $171 million primarily from
increases in income on fixed maturity securities due to improved yields from lengthening of the duration and a higher asset base, and the
impact of higher short-term interest rates on cash equivalents and short-term investments. The increase also resulted from a higher asset
base invested in mortgage loans on real estate, real estate joint ventures, and other limited partnership interests and was partially offset by
a decline in securities lending results and leveraged leases. The remainder of the increase was primarily attributable to increased other
revenues of $5 million, which primarily consisted of increased surrender values on corporate owned life insurance policies. Also included
as a component of total revenues were the intersegment eliminations which were offset within total expenses.
Expenses
Total expenses increased by $446 million, or 47%, to $1,386 million for the year ended December 31, 2006 from $940 million for the
comparable 2005 period. The acquisition of Travelers, excluding Travelers financing and integration costs, contributed $59 million during
the first six months of 2006 to the period over period increase. Excluding the impact of Travelers, total expenses increased by $387 million,
or 41%, for the year ended December 31, 2006 from the comparable 2005 period.
This increase was primarily attributable to higher interest expense of $192 million. The principal reason was a result of the issuance of
senior notes in 2005, which included $119 million of expenses from the financing of the acquisition of Travelers. Additionally, as a result of
the issuance of commercial paper, short-term interest expense increased by $67 million. Corporate support expenses were higher by
$170 million primarily due to higher corporate support expenses of $107 million, which included advertising, start-up costs for new
products and information technology costs, a $35 million MetLife foundation contribution in the 2006 period and a $28 million benefit, in
the 2005 period, associated with the reduction of a previously established real estate transfer tax liability related to MLIC’s demutualization
in 2000. As a result of growth in the business and higher interest rates, interest credited to bankholder deposits increased by $85 million at
MetLife Bank. Policyholder benefits and claims increased $47 million from a 2005 period benefit associated with a reduction of a previously
established liability for settlement death benefits related to the Company’s sales practices class action settlement recorded in 1999. Legal-
related costs were higher by $8 million, predominantly from the reduction of previously established liabilities related to legal disputes during
the 2005 period. Integration costs were lower by $95 million. Also included as a component of total expenses were the elimination of
intersegment amounts which were offset within total revenues.
42 MetLife, Inc.