MetLife 2007 Annual Report Download - page 63

The Company has also guaranteed minimum investment returns on certain international retirement funds in accordance with local laws.
Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to
determine the maximum potential amount that could become due under these guarantees in the future.
During the year ended December 31, 2007, the Company recorded a $1 million liability with respect to a guarantee previously provided
to MLII, a former subsidiary. The Company’s recorded liabilities at December 31, 2007 and 2006 for indemnities, guarantees and
commitments were $6 million and $5 million, respectively.
In connection with synthetically created investment transactions, the Company writes credit default swap obligations that generally
require payment of principal outstanding due in exchange for the referenced credit obligation. If a credit event, as defined by the contract,
occurs the Company’s maximum amount at risk, assuming the value of the referenced credits becomes worthless, was $1.7 billion at
December 31, 2007. The credit default swaps expire at various times during the next ten years.
Other Commitments
MetLife Insurance Company of Connecticut (“MICC”) is a member of the Federal Home Loan Bank of Boston (the “FHLB of Boston”) and
holds $70 million of common stock of the FHLB of Boston at both December 31, 2007 and 2006, which is included in equity securities.
MICC has also entered into funding agreements with the FHLB of Boston whereby MICC has issued such funding agreements in exchange
forcashandforwhichtheFHLBofBostonhasbeengrantedablanketlienoncertainMICCassets,includingresidentialmortgage-backed
securities, to collateralize MICC’s obligations under the funding agreements. MICC maintains control over these pledged assets, and may
use, commingle, encumber or dispose of any portion of the collateral as long as there is no event of default and the remaining qualified
collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by MICC, the FHLB of Boston’s recovery on the
collateral is limited to the amount of MICC’s liability to the FHLB of Boston. The amount of the Company’s liability for funding agreements
with the FHLB of Boston was $726 million and $926 million at December 31, 2007 and 2006, respectively, which is included in policyholder
account balances. The advances on these funding agreements are collateralized by residential mortgage-backed securities with fair values
of $901 million and $1.1 billion at December 31, 2007 and 2006, respectively.
MLIC is a member of the FHLB of NY and holds $339 million and $136 million of common stock of the FHLB of NY at December 31, 2007
and 2006, respectively, which is included in equity securities. MLIC has also entered into funding agreements with the FHLB of NY whereby
MLIC has issued such funding agreements in exchange for cash and for which the FHLB of NY has been granted a lien on certain MLIC
assets, including residential mortgage-backed securities to collateralize MLIC’s obligations under the funding agreements. MLIC maintains
control over these pledged assets, and may use, commingle, encumber or dispose of any portion of the collateral as long as there is no
event of default and the remaining qualified collateral is sufficient to satisfy the collateral maintenance level. Upon any event of default by
MLIC, the FHLB of NY’s recovery on the collateral is limited to the amount of MLIC’s liability to the FHLB of NY. The amount of the
Company’s liability for funding agreements with the FHLB of NY was $4.6 billion at December 31, 2007, which is included in policyholder
account balances. The advances on these agreements are collateralized by residential mortgage-backed securities with fair values of
$4.8 billion at December 31, 2007. MLIC did not have any funding agreements with the FHLB of NY at December 31, 2006.
MetLife Bank is a member of the FHLB of NY and holds $64 million and $54 million of common stock of the FHLB of NY at December 31,
2007 and 2006, respectively, which is included in equity securities. MetLife Bank has also entered into repurchase agreements with 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. MetLife Bank maintains control over these pledged assets, and may use, commingle, encumber or
dispose of any portion of the collateral as long as there is no event of default and the remaining qualified collateral is sufficient to satisfy the
collateral maintenance level. 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. 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. The advances on these repurchase
agreements are collateralized by residential mortgage-backed securities and residential mortgage loans with fair values of $1.3 billion at
both December 31, 2007 and 2006.
Collateral for Securities Lending
The Company has non-cash collateral for securities lending on deposit from customers, which cannot be sold or repledged, and which
has not been recorded on its consolidated balance sheets. The amount of this collateral was $40 million and $100 million at December 31,
2007 and 2006, respectively.
Pensions and Other Postretirement Benefit Plans
Description of Plans
Plan Description Overview
The Subsidiaries sponsor and/or administer various qualified and non-qualified defined benefit pension plans and other postretirement
employee benefit plans covering employees and sales representatives who meet specified eligibility requirements. Pension benefits are
provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of credited
service and either final average or career average earnings. The cash balance formula utilizes hypothetical or notional accounts, which
credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually based upon the
average annual rate of interest on 30-year U.S. Treasury securities, for each account balance. As of December 31, 2007, virtually all of the
Subsidiaries’ obligations have been calculated using the traditional formula. The non-qualified pension plans provide supplemental
benefits, in excess of amounts permitted by governmental agencies, to certain executive level employees.
The Subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance benefits for retired
employees. Employees of the Subsidiaries who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age
and service criteria while working for a covered subsidiary, may become eligible for these other postretirement benefits, at various levels, in
accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement
medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits.
59MetLife, Inc.