MetLife 2008 Annual Report Download - page 44

• Taiwan by $65 million primarily due to a decrease of $14 million in 2006 from liability refinements associated with the conversion to a
new valuation system, as well as higher policyholder liabilities related to loss recognition in the fourth quarter of 2006 and growth in
the business.
• South Korea by $27 million primarily due to business growth as well as changes in foreign currency exchange rates, partially offset by
a lower increase in claims liabilities resulting from a change in the reinsurance allowance in 2006.
• Australia by $23 million due to higher claims, an increase in retention levels, business growth and changes in foreign currency
exchange rates.
• India by $4 million due to higher claims and business growth, partially offset by management’s update of assumptions used to
determine estimated gross profits.
Partially offsetting these increases in policyholder benefits and claims, policyholder dividends and interest credited to policyholder
account balances were decreases in:
• Argentina by $250 million primarily due to the elimination of liabilities for claims and premium deficiencies of $208 million resulting
from pension reform. Under the reform plan, which is effective January 1, 2008, fund administrators are no longer liable for new death
and disability claims of the plan participants. Also contributing is a decrease in interest- and market-indexed policyholder liabilities
and the favorable impact of reductions in claim liabilities resulting from experience reviews in both the current and prior years.
• Mexico by $63 million, primarily due to a decrease in certain policyholder liabilities of $117 million caused by a decrease in the
unrealized investment results on the invested assets supporting those liabilities relative to 2006 and a reduction in claim liabilities
resulting from experience reviews, offset by an increase of $10 million due to a decrease in 2006 of policyholder benefits associated
with a large group policy that was not renewed by the policyholder, an increase of $6 million due to a benefit in 2006 from the
elimination of liabilities for pending claims that were determined to be invalid following a review, as well as business growth.
• Brazil of $13 million primarily due to the impact in 2006 of increases in policyholder liabilities from higher than expected mortality on
specific blocks of business, partially offset by changes in foreign currency exchange rates.
• The United Kingdom by $8 million, due to a reduction of claim liabilities based on a review of experience.
Decreases in other countries accounted for the remainder of the change.
Other expenses increased by $218 million, or 14%, to $1,749 million for the year ended December 31, 2007 from $1,531 million for
2006.
Other expenses increased in:
• Argentina by $153 million, primarily due to a liability of $128 million for servicing obligations that was established as a result of
pension reform. Under the reform plan, which is effective January 1, 2008, the Company retains the obligation for administering
certain existing and future participants’ accounts for which they receive no revenue. Also contributing is an increase in commissions
on bancassurance business, an increase in retention incentives related to pension reform, the impact of management’s update of
DAC assumptions as a result of pension reform and growth, partially offset by a lower increase in liabilities due to inflation and
exchange rate indexing.
• South Korea by $92 million, primarily due to the favorable impact in 2006 of $60 million in DAC amortization associated with the
implementation of a more refined reserve valuation system and additional expenses in 2007 associated with growth and infrastructure
initiatives, as well as business growth and higher bank insurance fees, partially offset by a decrease in DAC amortization related to
market performance.
• Mexico by $27 million primarily due to higher expenses related to business growth and the favorable impact in 2006 of liabilities
related to employment matters that were reduced, offset by a decrease in DAC amortization resulting from management’s update of
assumptions used to determine estimated gross profits in both the current and prior years, and a decrease in liabilities based on a
review of outstanding remittances.
• India by $14 million primarily due to headcount increases and growth initiatives, partially offset by the impact of management’s update
of assumptions used to determine estimated gross profits.
• Australia by $12 million primarily due to business growth and changes in foreign currency exchange rates.
• Chile by $12 million primarily due to higher compensation costs, higher spending on infrastructure and marketing programs and
growth, partially offset by a decrease in DAC amortization related to inflation indexing.
• Hong Kong by $11 million due to the acquisition of the remaining 50% interest in MetLife Fubon and the resulting consolidation of the
operation.
• Ireland by $10 million due to additional start-up costs, as well as $5 million of foreign currency transaction losses.
• Brazil by $9 million primarily due to changes in foreign currency exchange rates, partially offset by an increase in litigation liabilities in
2006.
• The United Kingdom by $2 million due to changes in foreign currency rates and higher spending on business initiatives, partially offset
by lower DAC amortization resulting from calculation refinements.
Partially offsetting these increases in other expenses were decreases in:
• Taiwan by $118 million primarily due to a one-time increase in DAC amortization in 2006 of $77 million due to a loss recognition
adjustment resulting from low interest rates relative to product guarantees coupled with high persistency rates on certain blocks of
business, an increase in DAC amortization in 2006 associated with the implementation of a new valuation system, expenses of
$17 million in 2006 related the termination of the agency distribution channel and expense reductions recognized in 2007 due to
elimination of the agency distribution channel.
• The home office of $4 million primarily due to the elimination of certain intercompany expenses previously charged to the International
Segment, offset by higher spending on growth and infrastructure initiatives.
Decreases in other countries accounted for the remainder of the change.
Changes in foreign currency exchange rates accounted for a $105 million increase in total expenses.
41MetLife, Inc.