MetLife 2008 Annual Report Download - page 43

Revenues
Total revenues, excluding net investment gains (losses), increased by $858 million, or 19%, to $5,362 million for the year ended
December 31, 2007 from $4,504 million for 2006.
Premiums, fees and other revenues increased by $560 million, or 16%, to $4,115 million for the year ended December 31, 2007 from
$3,555 million for 2006.
Premiums, fees and other revenues increased in:
• Mexico by $133 million primarily due to higher fees and growth in its institutional and universal life businesses, a decrease of
$13 million in experience refunds during the first quarter of 2007 on Mexico’s institutional business, as well as the adverse impact in
2006 of an adjustment for experience refunds on Mexico’s institutional business. These increases were offset by lower fees resulting
from management’s update of assumptions used to determine estimated gross profits, and various one-time revenue items for which
2006 benefited by $16 million and 2007 benefited by $4 million.
• Hong Kong by $98 million due to the acquisition of the remaining 50% interest in MetLife Fubon and the resulting consolidation of the
operation, as well as business growth.
• Chile by $94 million primarily due to higher annuity sales resulting from a higher interest rate environment, improved competitive
conditions and an expected rate increase in 2008, higher institutional premiums from its traditional and bank distribution channels, as
well as the decrease in 2006 resulting from management’s decision not to match aggressive pricing in the marketplace.
• South Korea by $90 million primarily due to higher fees from growth in its guaranteed annuity business and variable universal life
business.
• Brazil by $35 million primarily due to changes in foreign currency exchange rates and business growth.
• The Company’s Japan operation by $31 million due to an increase in reinsurance assumed.
• Australia by $26 million as a result of growth in the institutional and reinsurance in-force business, an increase in retention levels and
changes in the foreign currency exchange rates.
• Argentina by $21 million primarily due to an increase in premiums and fees from higher pension contributions resulting from higher
participant salaries and a higher salary threshold subject to fees and growth in bancassurance, partially offset by the reduction of cost
of insurance fees as a result of the new pension system reform regulation.
• Taiwan and India by $21 million and $11 million, respectively, primarily due to business growth.
Partially offsetting these increases, premiums, fees and other revenues decreased in:
• The United Kingdom by $3 million due to an unearned premium calculation refinement partially offset by changes in foreign currency
rates.
The remainder of the change in premiums, fees and other revenues can be attributed to contributions from the other countries.
Net investment income increased by $298 million, or 31%, to $1,247 million for the year ended December 31, 2007 from $949 million
for 2006.
Net investment income increased in:
• Chile by $148 million due to the impact of higher inflation rates on indexed securities, the valuations and returns of which are linked to
inflation rates, higher joint venture income, as well as an increase in invested assets.
• Mexico by $46 million due to an increase in invested assets, partially offset by a decrease in yields, exclusive of inflation.
• Hong Kong by $43 million primarily due to the acquisition of the remaining 50% interest in MetLife Fubon and the resulting
consolidation of the operation.
• Japan by $19 million due to an increase of $52 million from hedging activities associated with Japan’s guaranteed annuity, offset by a
decrease of $33 million, net of income tax, in the Company’s investment in Japan primarily due to an increase in the costs of
guaranteed annuity benefits and the impact of foreign currency transaction losses, partially offset by business growth.
• South Korea and Taiwan by $24 million and $6 million, respectively, primarily due to increases in invested assets.
• Brazil by $14 million primarily due to increases in invested assets as well as changes in foreign currency exchange rates.
• Australia by $12 million due to changes in foreign currency exchange rates, higher yields and increases in invested assets.
• Ireland by $9 million due to an increase in invested assets resulting from capital contributions.
• India by $4 million due to an increase in invested assets, as well as higher yields.
Partially offsetting these increases in net investment income was a decrease in:
• The home office of $25 million primarily due to an increase in the amount charged for economic capital and investment management
expenses.
• Argentina by $7 million primarily due to unfavorable results in the trading portfolio, partially offset by higher invested assets resulting
from capital contributions in 2006. Additionally, net investment income in 2006 did not decrease correspondingly with the decrease in
policyholder benefits and claims discussed below because 2006 did not include interest- and inflation-indexed assets to support
such liabilities.
The remainder of the change in net investment income can be attributed to contributions from the other countries.
Changes in foreign currency exchange rates accounted for a $106 million increase in total revenues, excluding net investment gains
(losses).
Expenses
Total expenses increased by $340 million, or 8%, to $4,567 million for the year ended December 31, 2007 from $4,227 million for 2006.
Policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased by
$122 million, or 5%, to $2,818 million for the year ended December 31, 2007 from $2,696 million for 2006.
Policyholder benefits and claims, policyholder dividends and interest credited to policyholder account balances increased in:
• Chile by $221 million primarily due to an increase in inflation indexed policyholder liabilities as well as growth in its annuity and
institutional businesses.
• Hong Kong by $119 million due to the acquisition of the remaining 50% interest in MetLife Fubon and the resulting consolidation of
the operation.
40 MetLife, Inc.