MetLife 2007 Annual Report Download - page 57

As described more fully in “— Liquidity and Capital Resources — The Company — Liquidity Sources — Debt Issuances”:
• In December 2007, the Holding Company, in connection with the collateral financing arrangement associated with MRC’s reinsurance
of the closed block liabilities, entered into an agreement with an unaffiliated financial institution under which the Holding Company is
entitled to the interest paid by MRC on the surplus notes of 3-month LIBOR plus 55 basis points in exchange for the payment of
3-month LIBOR plus 112 basis points, payable quarterly. Under this agreement, the Holding Company may also be required to make
payments to the unaffiliated financial institution related to any decline in the market value of the surplus notes and in connection with
any early termination of this agreement. The Holding Company’s net cost of 57 basis points has been allocated to MRC. For the year
ended December 31, 2007, this amount was immaterial.
• In May 2007, the Holding Company, in connection with the collateral financing arrangement associated with MRSC’s reinsurance of
universal life secondary guarantees, entered into an agreement with an unaffiliated financial institution under which the Holding
Company is entitled to the return on the investment portfolio held by the trust established in connection with this collateral financing
arrangement in exchange for the payment of a stated rate of return to the unaffiliated financial institution of 3-month LIBOR plus
70 basis points, payable quarterly. The Holding Company may also be required to make payments to the unaffiliated financial
institution, for deposit into the trust, related to any decline in the market value of the assets held by the trust, as well as amounts
outstanding upon maturity or early termination of the collateral financing arrangement. As a result of this agreement, the Holding
Company effectively assumed the $2.4 billion liability under the collateral financing arrangement along with a beneficial interest in the
trust holding the associated assets. The Holding Company simultaneously contributed to MRSC its beneficial interest in the trust,
along with any return to be received on the investment portfolio held by the trust. The Holding Company allocates the financing costs
associated with the collateral financing arrangement to MRSC.
In December 2006, the Holding Company issued junior subordinated debentures with a face amount of $1.25 billion. See “— Liquidity
and Capital Resources — The Company — Liquidity Sources — Debt Issuances” for further information.
In September 2006, the Holding Company issued $204 million of affiliated long-term debt with an interest rate of 6.07% maturing in
2016.
In March 2006, the Holding Company issued $10 million of affiliated long-term debt with an interest rate of 5.70% maturing in 2016.
In December 2005, the Holding Company issued $286 million of affiliated long-term debt with an interest rate of 5.24% maturing in
2015.
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).
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). These notes were initially offered and sold outside the United States in reliance
upon Regulation S under the Securities Act.
The following table summarizes the Holding Company’s outstanding senior notes issuances, excluding any premium or discount:
Issue Date Principal Interest Rate Maturity
(In millions)
June 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000 5.00% 2015
June 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,000 5.70% 2035
June 2005(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 794 5.25% 2020
December 2004(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 695 5.38% 2024
June 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 350 5.50% 2014
June 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 750 6.38% 2034
November 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 500 5.00% 2013
November 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200 5.88% 2033
December 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 400 5.38% 2012
December 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 600 6.50% 2032
November 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 750 6.13% 2011
(1) This amount represents the translation of pounds sterling into U.S. dollars using the noon buying rate on December 31, 2007 of
$1.9843 as announced by the Federal Reserve Bank of New York.
See also “— Liquidity and Capital Resources — The Holding Company — Liquidity Sources — Common Equity Units” for a description
of $2,134 million of junior subordinated debt securities issued in connection with the issuance of common equity units.
Preferred Stock. During the year ended December 31, 2007, the Holding Company issued no new preferred stock.
In June 2005, the Holding Company issued 24 million shares of Floating Rate Non-Cumulative Preferred Stock, Series A (the “Series A
preferred shares”) with a $0.01 par value per share, and a liquidation preference of $25 per share, for aggregate proceeds of $600 million.
In June 2005, the Holding Company issued 60 million shares of 6.50% Non-Cumulative Preferred Stock, Series B (the “Series B
preferred shares,” together with the Series A preferred shares, collectively, the “Preferred Shares”) with a $0.01 par value per share, and a
liquidation preference of $25 per share for aggregate proceeds of $1.5 billion.
The Preferred Shares rank senior to the common stock with respect to dividends and liquidation rights. Dividends on the Preferred
Shares are not cumulative. Holders of the Preferred Shares will be entitled to receive dividend payments only when, as and if declared by
the Holding Company’s Board of Directors or a duly authorized committee of the board. If dividends are declared on the Series A preferred
shares, they will be payable quarterly, in arrears, at an annual rate of the greater of: (i) 1.00% above 3-month LIBOR on the related LIBOR
determination date; or (ii) 4.00%. Any dividends declared on the Series B preferred shares will be payable quarterly, in arrears, at an annual
fixed rate of 6.50%. Accordingly, in the event that dividends are not declared on the Preferred Shares for payment on any dividend payment
date, then those dividends will cease to accrue and be payable. If a dividend is not declared before the dividend payment date, the Holding
53MetLife, Inc.