MetLife 2007 Annual Report Download - page 49

part of the RCC, the Holding Company agreed that it will not repay, redeem, or purchase the debentures on or before December 15, 2056,
unless, subject to certain limitations, it has received proceeds from the sale of specified capital securities. The RCC will terminate upon the
occurrence of certain events, including an acceleration of the debentures due to the occurrence of an event of default. The RCC is not
intended for the benefit of holders of the debentures and may not be enforced by them. The RCC is for the benefit of holders of one or more
other designated series of its indebtedness (which will initially be its 5.70% senior notes due June 15, 2035). The Holding Company also
entered into a replacement capital obligation which will commence in 2036 and under which the Holding Company must use reasonable
commercial efforts to raise replacement capital through the issuance of certain qualifying capital securities.
In June 2006, Timberlake Financial L.L.C., (“Timberlake Financial”), a subsidiary of RGA, completed an offering of $850 million of
Series A Floating Rate Insured Notes due June 2036 in a private placement. Interest on the notes accrues at an annual rate of 1-month
LIBOR plus 29 basis points payable monthly. The payment of interest and principal on the notes is insured through a financial guaranty
insurance policy with a third party. The notes represent senior, secured indebtedness of Timberlake Financial with no recourse to RGA or its
other subsidiaries. Up to $150 million of additional notes may be offered in the future. In order to make payments of principal and interest on
the notes, Timberlake Financial will rely upon the receipt of interest and principal payments on surplus note and dividend payments from its
wholly-owned subsidiary, Timberlake Reinsurance Company II (“Timberlake Re”), a South Carolina captive insurance company. The ability
of Timberlake Re to make interest and principal payments on the surplus note and dividend payments to Timberlake Financial is contingent
upon South Carolina regulatory approval and the performance of specified term life insurance policies with guaranteed level premiums
retroceded by RGA’s subsidiary, RGA Reinsurance Company (“RGA Reinsurance”), to Timberlake Re. Proceeds from the offering of the
notes, along with a $113 million direct investment by RGA, collateralize the notes and are not available to satisfy the general obligations of
RGA or the Company. Most of these assets were placed in a trust and provide long-term collateral as support for statutory reserves
required by U.S. Valuation of Life Policies Model Regulation (commonly referred to as Regulation XXX) on term life insurance policies with
guaranteed level premium periods reinsured by RGA Reinsurance. The trust is consolidated by Timberlake Re which in-turn is consolidated
by Timberlake Financial. Timberlake Financial is considered to be a VIE and RGA is considered to be the primary beneficiary. As such, the
results of Timberlake Financial have been consolidated by RGA and ultimately by the Company. At December 31, 2007, the Company held
assets in trust of $899 million associated with the transaction. In addition the Company held $50 million in custody as of December 31,
2007.
MetLife Bank has entered into several repurchase agreements with the Federal Home Loan Bank of New York (the “FHLB of NY”)
whereby MetLife Bank has issued repurchase agreements in exchange for cash and for which the FHLB of NY has been granted a blanket
lien on MetLife Bank’s residential mortgages and mortgage-backed securities to collateralize MetLife Bank’s obligations under the
repurchase agreements. The repurchase agreements and the related security agreement represented by this blanket lien provide that
upon any event of default by MetLife Bank, the FHLB of NY’s recovery is limited to the amount of MetLife Bank’s liability under the
outstanding repurchase agreements. During the years ended December 31, 2007, 2006, and 2005, MetLife Bank received advances
totaling $390 million, $260 million and $775 million, respectively, from the FHLB of NY, which were included in long-term debt. MetLife Bank
also made repayments of $175 million, $117 million and $25 million to the FHLB of NY during the years ended December 31, 2007, 2006
and 2005, respectively. The amount of the Company’s liability for repurchase agreements with the FHLB of NY was $1.2 billion and
$998 million at December 31, 2007 and 2006, respectively, which is included in long-term debt.
In December 2005, RGA issued junior subordinated debentures with a face amount of $400 million. Interest is payable semi-annually at
a fixed rate of 6.75% up to but not including the scheduled redemption date, December 15, 2015. The debentures may be redeemed (i) in
whole or in part, at any time on or after December 15, 2015 at their principal amount plus accrued and unpaid interest to the date of
redemption, or (ii) in whole or in part, prior to December 15, 2015 at their principal amount plus accrued and unpaid interest to the date of
redemption or, if greater, a make-whole price. In the event the debentures are not redeemed on or before the scheduled redemption date of
December 15, 2015, interest on these debentures will accrue at an annual rate of 3-month LIBOR plus a margin equal to 2.665%, payable
quarterly in arrears. The final maturity of the debentures is December 15, 2065. RGA has the right to, and in certain circumstances the
requirement to, defer interest payments on the debentures for a period up to ten years. Upon an optional or mandatory deferral of interest
payments, RGA is generally not permitted to pay common stock dividends or make payments of interest or principal on securities which
rank equal or junior to the subordinated debentures, until the accrued and unpaid interest on the subordinated debentures is paid. Interest
compounds during periods of deferral.
In June 2005, the Company issued, in connection with the common equity units more fully described in “— Liquidity and Capital
Resources — The Holding Company — Liquidity Sources — Common Equity Units”, $1,067 million 4.82% Series A and $1,067 million
4.91% Series B junior subordinated debentures due no later than February 15, 2039 and February 15, 2040, respectively, for a total of
$2,134 million.
In June 2005, the Holding Company issued 400 million pounds sterling ($729.2 million at issuance) aggregate principal amount of
5.25% senior notes due June 29, 2020 at a discount of 4.5 million pounds sterling ($8.1 million at issuance), for aggregate proceeds of
395.5 million pounds sterling ($721.1 million at issuance). The senior notes were initially offered and sold outside the United States in
reliance upon Regulation S under the Securities Act of 1933, as amended (the “Securities Act”).
In June 2005, the Holding Company issued $1.0 billion aggregate principal amount of 5.00% senior notes due June 15, 2015 at a
discount of $2.7 million ($997.3 million), and $1.0 billion aggregate principal amount of 5.70% senior notes due June 15, 2035 at a
discount of $2.4 million ($997.6 million).
MetLife Funding, Inc. (“MetLife Funding”), a subsidiary of MLIC, serves as a centralized finance unit for the Company. Pursuant to a
support agreement, MLIC has agreed to cause MetLife Funding to have a tangible net worth of at least one dollar. At December 31, 2007
and 2006, MetLife Funding had a tangible net worth of $12 million and $11 million, respectively. MetLife Funding raises cash from various
funding sources and uses the proceeds to extend loans, through MetLife Credit Corp., another subsidiary of MLIC, to the Holding
Company, MLIC and other affiliates. MetLife Funding manages its funding sources to enhance the financial flexibility and liquidity of MLIC
and other affiliated companies. At December 31, 2007 and 2006, MetLife Funding had total outstanding liabilities, including accrued
interest payable, of $358 million and $840 million, respectively, consisting primarily of commercial paper.
Credit Facilities. The Company maintains committed and unsecured credit facilities aggregating $4.0 billion as of December 31, 2007.
When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements. The facilities can be used
45MetLife, Inc.