MetLife 2008 Annual Report Download - page 110

Variable Interest Entities
The following table presents the total assets and total liabilities relating to VIEs for which the Company has concluded that it is the
primary beneficiary and which are consolidated in the Company’s financial statements at December 31, 2008. Generally, creditors or
beneficial interest holders of VIEs where the Company is the primary beneficiary have no recourse to the general credit of the Company.
Total Assets Total Liabilities
December 31, 2008
(In millions)
MRSCcollateralfinancingarrangement(1).................................. $ 2,361 $ —
Realestatejointventures(2)........................................... 26 15
Otherlimitedpartnershipinterests(3) ..................................... 20 3
Otherinvestedassets(4) ............................................. 10 3
Total...................................................... $ 2,417 $ 21
(1) These assets are reflected at estimated fair value, and consist of fixed maturity securities available-for-sale of $2,137 million and cash and
cash equivalents of $224 million, of which $60 million is cash held-in-trust. Included within fixed maturity securities available-for-sale are
$948 million of U.S. corporate securities, $561 million of residential mortgage-backed securities, $409 million of asset-backed securities,
$98 million of commercial mortgage-backed securities, $95 million of foreign corporate securities, $21 million of state and political
subdivision securities and $5 million of foreign government securities.
(2) Real estate joint ventures include partnerships and other ventures which engage in the acquisition, development, management and
disposal of real estate investments. Upon consolidation, the assets and liabilities are reflected at the VIE’s carrying amounts. The assets
consist of $20 million of real estate and real estate joint ventures held-for-investment, $5 million of cash and cash equivalents and
$1 million of other assets. The liabilities of $15 million are included within other liabilities.
(3) Other limited partnership interests include partnerships established for the purpose of investing in public and private debt and equity
securities. Upon consolidation, the assets and liabilities are reflected at the VIE’s carrying amounts. The assets of $20 million are included
within other limited partnership interests, while the liabilities of $3 million are included within other liabilities.
(4) Other invested assets include tax-credit partnerships and other investments established for the purpose of investing in low-income
housing and other social causes, where the primary return on investment is in the form of tax credits. Upon consolidation, the assets and
liabilities are reflected at the VIE’s carrying amounts. The assets of $10 million are included within other invested assets. The liabilities
consist of $2 million of long-term debt and $1 million of other liabilities.
The following table presents the carrying amount and maximum exposure to loss relating to VIEs for which the Company holds
significant variable interests but is not the primary beneficiary and which have not been consolidated at December 31, 2008:
Carrying
Amount(1) Maximum Exposure to Loss(2)
December 31, 2008
(In millions)
Fixed maturity securities available-for-sale:
Foreigncorporatesecurities ....................................... $ 1,080 $ 1,080
U.S.Treasury/agencysecurities .................................... 992 992
Realestatejointventures .......................................... 32 32
Otherlimitedpartnershipinterests..................................... 3,496 4,004
Otherinvestedassets ............................................ 318 108
Total........................................................ $ 5,918 $ 6,216
(1) See Note 1 of the Notes to the Consolidated Financial Statements for further discussion of the Company’s significant accounting policies
with regards to the carrying amounts of these investments.
(2) The maximum exposure to loss relating to the fixed maturity securities available-for-sale and equity securities available-for-sale is equal to
the carrying amounts or carrying amounts of retained interests. The maximum exposure to loss relating to the real estate joint ventures and
other limited partnership interests is equal to the carrying amounts plus any unfunded commitments. Such a maximum loss would be
expected to occur only upon bankruptcy of the issuer or investee. For certain of its investments in other invested assets, the Company’s
return is in the form of tax credits which are guaranteed by a creditworthy third party. For such investments, the maximum exposure to loss
is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by third parties.
As discussed in Note 16 of the Notes to the Consolidated Financial Statements, the Company makes commitments to fund partnership
investments in the normal course of business. Excluding these commitments, MetLife did not provide financial or other support to
investees designated as VIEs during the years ended December 31, 2008, 2007 and 2006.
Separate Accounts
The Company had $120.8 billion and $160.1 billion held in its separate accounts, for which the Company does not bear investment risk,
at December 31, 2008 and 2007, respectively. The Company manages each separate account’s assets in accordance with the prescribed
investment policy that applies to that specific separate account. The Company establishes separate accounts on a single client and multi-
client commingled basis in compliance with insurance laws. Effective with the adoption of SOP 03-1, Accounting and Reporting by
Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts, on January 1, 2004, the Company
reported separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if:
• such separate accounts are legally recognized;
• assets supporting the contract liabilities are legally insulated from the Company’s general account liabilities;
107MetLife, Inc.