MetLife 2008 Annual Report Download - page 41

Policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased by
$526 million, or 19%, to $3,344 million for the year ended December 31, 2008 from $2,818 million for the prior year. Excluding the
negative impact of changes in foreign currency exchange rates of $68 million, policyholder benefits and claims, policyholder dividends and
interest credited to policyholder account balances increased by $594 million, or 22%, from the prior year.
Policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased in:
• Chile by $236 million primarily due to an increase in the annuity and institutional businesses mentioned above, as well as an increase
in inflation indexed policyholder liabilities.
• Mexico by $182 million primarily due to increases in liabilities and other policyholder benefits commensurate with the growth in
premiums discussed above, an increase in certain policyholder liabilities caused by lower unrealized investment losses on the
invested assets supporting those liabilities relative to the prior year, and an increase in interest credited to policyholder account
balances commensurate with the growth in investment income from inflation-indexed assets discussed above.
• Argentina by $158 million primarily due to the prior year impact of a release of death and disability liabilities associated with the
pension reform discussed above, a reduction of claim liabilities in the prior year from an experience review as well as growth in the
institutional and bancassurance business, offset by a decrease in claims and market-indexed policyholder liabilities resulting from
pension reform, which eliminated the obligation of plan administrators to provide death and disability coverage effective January 1,
2008.
• The Company’s Japan operations by $39 million due to an increase in guarantee reserves from assumed reinsurance.
• Australia by $38 million due to growth in the institutional business and an increase in retention levels as well as an increase in claim
liabilities based on a review of experience.
• South Korea by $31 million primarily due to higher claim experience and business growth offset by a reduction in claim liabilities due
to a refinement in methodology.
• The United Kingdom by $16 million due to the reduction in claim liabilities in the prior year based on a review of experience as well as
higher claims in the current year and business growth.
• India by $13 million due to business growth.
• Brazil by $12 million due to a decrease in claims liabilities in the prior year from an experience review, higher claim experience in the
current year and business growth offset by a decrease in interest credited to unit-linked policyholder liabilities reflecting net losses in
the trading portfolio.
Partially offsetting these increases in policyholder benefits and claims, policyholder dividends and interest credited to policyholder
account balances were decreases in:
• Hong Kong by $113 million due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and
the resulting consolidation of the operation beginning in the third quarter of 2007, which includes a decrease in interest credited as a
result of a reduction in unit-linked policyholder liabilities reflecting the losses of the trading portfolio backing these liabilities as
discussed in the net investment income section above.
• Ireland by $22 million primarily due to a decrease in interest credited as a result of a reduction in unit-linked policyholder liabilities
reflecting the losses of the trading portfolio backing these liabilities.
Contributions from the other countries account for the remainder ofthechangeinpolicyholderbenefits and claims, policyholder
dividends and interest credited to policyholder account balances.
Other expenses decreased by $78 million, or 4%, to $1,671 million for the year ended December 31, 2008 from $1,749 million for the
prior year. Excluding the negative impact of changes in foreign currency exchange rates of $52 million, total expenses decreased by
$26 million, or 2%, from the prior year.
Other expenses decreased in:
• Argentina by $230 million, primarily due to the establishment in the prior year of a liability for pension servicing obligations due to
pension reform, the elimination of the liability for pension servicing obligations and the elimination of DAC for the pension business in
the current year as a result of Nationalization, as well as the elimination of contingent liabilities for certain cases due to recent
Supreme Court decisions related to the pesification of insurance contracts by the government in 2002. Partially offsetting these
decreases is an increase in severance costs related to Nationalization, as well as higher commissions from growth in the institutional
and bancassurance business.
• Ireland by $12 million due to foreign currency transaction losses in the prior year and foreign currency transaction gains in the current
year, partially offset by higher expenses related to growth initiatives.
Partially offsetting these decreases, other expenses increased in:
• South Korea by $50 million due to an increase in DAC amortization related to market performance as well as higher spending on
advertising and marketing offset by a refinement in DAC capitalization.
• The United Kingdom by $50 million due to business growth as well as lower DAC amortization in the prior year resulting from
calculation refinements, partially offset by foreign currency transaction gains.
• India by $28 million primarily due to increased staffing and growth initiatives.
• The home office by $12 million primarily due to lower expenses in the prior year resulting from the elimination of intercompany
expenses previously charged to the International segment, as well as higher spending on growth and infrastructure initiatives, partially
offset by a decrease in accrued interest on tax liabilities.
• Chile by $12 million primarily due to the business growth discussed above as well as higher commissions and compensation costs
and higher spending on infrastructure and marketing programs.
• Mexico by $11 million primarily due to higher expenses related to business growth and infrastructure costs, a lower increase in
litigation liabilities in the prior year as well as changes in liabilities based on a review of outstanding remittances in both the current
and prior years, partially offset by lower DAC amortization resulting from management’s update of assumptions used to determine
estimated gross profits in both the current and prior years.
• Hong Kong by $11 million due to the acquisition of the remaining 50% interest in MetLife Fubon in the second quarter of 2007 and the
resulting consolidation of the operation beginning in the third quarter of 2007.
38 MetLife, Inc.