MetLife 2008 Annual Report Download - page 224

Amounts related to the Company’s financial instruments are as follows:
December 31, 2007 Notional Amount Carrying Value Estimated Fair Value
(In millions)
Assets:
Fixedmaturitysecurities....................................... $232,336 $232,336
Equitysecurities............................................ $ 5,911 $ 5,911
Tradingsecurities ........................................... $ 779 $ 779
Mortgageandconsumerloans................................... $ 46,154 $ 46,714
Policyloans............................................... $ 9,326 $ 9,326
Short-terminvestments ....................................... $ 2,544 $ 2,544
Cashandcashequivalents..................................... $ 9,961 $ 9,961
Accruedinvestmentincome .................................... $ 3,545 $ 3,545
Assetsofsubsidiariesheld-for-sale................................ $ 12,609 $ 12,618
Liabilities:
Policyholderaccountbalances .................................. $110,371 $110,199
Short-termdebt ............................................ $ 667 $ 667
Long-termdebt ............................................ $ 9,100 $ 9,015
Collateralfinancingarrangements................................. $ 4,882 $ 4,604
Juniorsubordinateddebtsecurities ............................... $ 4,075 $ 3,982
Payables for collateral under securities loaned and other transactions . . . . . . . . . $ 44,136 $ 44,136
Liabilitiesofsubsidiariesheld-for-sale.............................. $ 6,963 $ 6,092
Commitments:(1)
Mortgageloancommitments.................................... $4,030 $ — $ (43)
Commitments to fund bank credit facilities, bridge loans and private corporate
bondinvestments ......................................... $1,196 $ — $ (59)
(1) Commitments are off-balance sheet obligations. Negative estimated fair values represent off-balance sheet liabilities.
The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows:
Fixed Maturity Securities, Equity Securities and Trading Securities — The estimated fair values of publicly held fixed maturity securities
and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases
where quoted market prices are not available, such as for private fixed maturity securities, fair values are estimated using present value or
valuation techniques. The determination of estimated fair values is based on: (i) market standard valuation methodologies; (ii) securities the
Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The value estimates based on
available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future
cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include; coupon rate, maturity,
estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of
comparable securities.
Mortgage and Consumer Loans, Mortgage Loan Commitments and Commitments to Fund Bank Credit Facilities, Bridge Loans, and
Private Corporate Bond Investments — Fair values for mortgage and consumer loans are estimated by discounting expected future cash
flows, using current interest rates for similar loans with similar credit risk. For mortgage loan commitments and commitments to fund bank
credit facilities, bridge loans, and private corporate bond investments the estimated fair value is the net premium or discount of the
commitments.
Policy Loans — The estimated fair values for policy loans approximate carrying values.
Cash and Cash Equivalents and Short-term Investments — The estimated fair values for cash and cash equivalents and short-term
investments approximate carrying values due to the short-term maturities of these instruments.
Accrued Investment Income — The estimated fair value for accrued investment income approximates carrying value.
Policyholder Account Balances — The fair value of policyholder account balances which have final contractual maturities are estimated
by discounting expected future cash flows based upon interest rates currently being offered for similar contracts with maturities consistent
with those remaining for the agreements being valued. The estimated fair value of policyholder account balances without final contractual
maturities are assumed to equal their current net surrender value.
F-101MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)