MetLife 2008 Annual Report Download - page 70

Off-Balance Sheet Arrangements
Commitments to Fund Partnership Investments
The Company makes commitments to fund partnership investments in the normal course of business for the purpose of enhancing the
Company’s total return on its investment portfolio. The amounts of these unfunded commitments were $4.5 billion and $4.2 billion at
December 31, 2008 and 2007, respectively. Once funded, those commitments are classified in the consolidated balance sheet according
to their nature as other limited partnership interests, real estate joint ventures or other invested assets. The Company anticipates that these
amounts will be invested in partnerships over the next five years. There are no other obligations or liabilities arising from such arrangements
that are reasonably likely to become material.
Mortgage Loan Commitments
The Company has issued interest rate lock commitments on certain residential mortgage loan applications totaling $8.0 billion at
December 31, 2008. The Company intends to sell the majority of these originated residential mortgage loans. Interest rate lock
commitments to fund mortgage loans that will be held-for-sale are considered derivatives pursuant to SFAS 133, and their estimated
fair value and notional amounts are included within financial forwards in the Company’s consolidated balance sheets.
The Company also commits to lend funds under certain other mortgage loan commitments that will be held-for-investment. The
amounts of these mortgage loan commitments were $2.7 billion and $4.0 billion at December 31, 2008 and 2007, respectively. The
purpose of these loans is to enhance the Company’s total return on its investment portfolio. There are no other obligations or liabilities
arising from such arrangements that are reasonably likely to become material.
The purpose of the Company’s loan program is to enhance the Company’s total return on its investment portfolio. There are no other
obligations or liabilities arising from such arrangements that are reasonably likely to become material.
Commitments to Fund Bank Credit Facilities, Bridge Loans and Private Corporate Bond Investments
The Company commits to lend funds under bank credit facilities, bridge loans and private corporate bond investments. The amounts of
these unfunded commitments were $1.0 billion and $1.2 billion at December 31, 2008 and 2007, respectively. The purpose of these
commitments and any related fundings is to enhance the Company’s total return on its investment portfolio. There are no other obligations
or liabilities arising from such arrangements that are reasonably likely to become material.
Lease Commitments
The Company, as lessee, has entered into various lease and sublease agreements for office space, data processing and other
equipment. The Company’s commitments under such lease agreements are included within the contractual obligations table. See
“— Liquidity and Capital Resources — The Company — Liquidity and Capital Uses — Investment and Other.”
Credit Facilities, Committed Facilities and Letters of Credit
The Company maintains committed and unsecured credit facilities and letters of credit with various financial institutions. See
“— Liquidity and Capital Resources — The Company — Liquidity and Capital Sources — Credit Facilities,” “— Committed Facilities”
and “— Letters of Credit” for further descriptions of such arrangements.
Share-Based Arrangements
In connection with the issuance of common equity units, the Holding Company issued forward stock purchase contracts under which
the Holding Company delivered 44,587,703 shares of its common stock in settlements of the stock purchase contracts. In February 2009,
24,343,154 shares of common stock were delivered. See “— Liquidity and Capital Resources — The Company — Liquidity and Capital
Sources — Remarketing of Securities and Settlement of Stock Purchase Contracts Underlying Common Equity Units” for further
information.
Guarantees
In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties
pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other
transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific
liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or
covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counter-
parties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These
obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of
law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is
subject to a contractual limitation ranging from less than $1 million to $800 million, with a cumulative maximum of $1.6 billion, while in other
cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does
not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future.
Management believes that it is unlikely the Company will have to make any material payments under these indemnities, guarantees, or
commitments.
In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies
its agents for liabilities incurred as a result of their representation of the Company’s interests. Since these indemnities are generally not
subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum
potential amount that could become due under these indemnities in the future.
The Company has also guaranteed minimum investment returns on certain international retirement funds in accordance with local laws.
Since these guarantees are not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to
determine the maximum potential amount that could become due under these guarantees in the future.
During the year ended December 31, 2008, the Company recorded $7 million of additional liabilities for guarantees related to certain
investment transactions. The term for these guarantees and their associated liabilities varies, with a maximum of 18 years. The maximum
potential amount of future payments the Company could be required to pay under these guarantees is $202 million. During the year ended
December 31, 2008, the Company reduced $7 million of previously recorded liabilities related to indemnifications provided in connection
67MetLife, Inc.