MetLife 2008 Annual Report Download - page 8

earnings at January 1, 2008, resulted from the adoption of SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities (“SFAS 159”).
(6) The cumulative effect of a change in accounting, net of income tax, of $744 million resulted from the adoption of SFAS No. 158,
Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, which decreased accumulated other comprehensive
income (loss) at December 31, 2006. The cumulative effect of a change in accounting principle, net of income tax, of $10 million resulted
from the adoption of SFAS 159, which decreased accumulated other comprehensive income (loss) at January 1, 2008.
(7) Return on common equity is defined as net income available to common shareholders divided by average common stockholders’ equity.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
For purposes of this discussion, “MetLife” or the “Company” refers to MetLife, Inc., a Delaware corporation incorporated in 1999 (the
“Holding Company”), and its subsidiaries, including Metropolitan Life Insurance Company (“MLIC”). Following this summary is a discussion
addressing the consolidated results of operations and financial condition of the Company for the periods indicated. This discussion should
be read in conjunction with the forward-looking statement information included below, “Risk Factors’’ contained in MetLife, Inc.’s Annual
Report on Form 10-K for the year ended December 31, 2008, “Selected Financial Data” and the Company’s consolidated financial
statements included elsewhere herein.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations may contain or incorporate by reference
information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they
do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,”
“believe” and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In
particular, these include statements relating to future actions, prospective services or products, future performance or results of current
and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in
operations and financial results.
Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or
unknown risks and uncertainties. Many such factors will be important in determining MetLife’s actual future results. These statements are
based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to
predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied
in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties
and other factors identified in MetLife, Inc.’s filings with the U.S. Securities and Exchange Commission (“SEC”). These factors include:
(i) difficult and adverse conditions in the global and domestic capital and credit markets; (ii) continued volatility and further deterioration of
the capital and credit markets, which may affect the Company’s ability to seek financing or access its credit facilities; (iii) uncertainty about
the effectiveness of the U.S. government’s plan to stabilize the financial system by injecting capital into financial institutions, purchasing
large amounts of illiquid, mortgage-backed and other securities from financial institutions, or otherwise; (iv) the impairment of other financial
institutions; (v) potential liquidity and other risks resulting from MetLife’s participation in a securities lending program and other transactions;
(vi) exposure to financial and capital market risk; (vii) changes in general economic conditions, including the performance of financial
markets and interest rates, which may affect the Company’s ability to raise capital, generate fee income and market-related revenue and
finance statutory reserve requirements and may require the Company to pledge collateral or make payments related to declines in value of
specified assets; (viii) defaults on the Company’s mortgage and consumer loans; (ix) investment losses and defaults, and changes to
investment valuations; (x) impairments of goodwill and realized losses or market value impairments to illiquid assets; (xi) unanticipated
changes in industry trends; (xii) heightened competition, including with respect to pricing, entry of new competitors, consolidation of
distributors, the development of new products by new and existing competitors and for personnel; (xiii) discrepancies between actual
claims experience and assumptions used in setting prices for the Company’s products and establishing the liabilities for the Company’s
obligations for future policy benefits and claims; (xiv) discrepancies between actual experience and assumptions used in establishing
liabilities related to other contingencies or obligations; (xv) ineffectiveness of risk management policies and procedures, including with
respect to guaranteed benefit riders (which may be affected by fair value adjustments arising from changes in our own credit spread) on
certain of the Company’s variable annuity products; (xvi) increased expenses relating to pension and post-retirement benefit plans,
(xvii) catastrophe losses; (xviii) changes in assumptions related to deferred policy acquisition costs (“DAC”), value of business acquired
(“VOBA”) or goodwill; (xix) downgrades in MetLife, Inc.’s and its affiliates’ claims paying ability, financial strength or credit ratings;
(xx) economic, political, currency and other risks relating to the Company’s international operations; (xx) availability and effectiveness of
reinsurance or indemnification arrangements, (xxi) regulatory, legislative or tax changes that may affect the cost of, or demand for, the
Company’s products or services; (xxii) changes in accounting standards, practices and/or policies; (xxiii) adverse results or other
consequences from litigation, arbitration or regulatory investigations; (xxiv) deterioration in the experience of the “closed block” established
in connection with the reorganization of MLIC; (xxv) the effects of business disruption or economic contraction due to terrorism, other
hostilities, or natural catastrophes; (xxvi) MetLife’s ability to identify and consummate on successful terms any future acquisitions, and to
successfully integrate acquired businesses with minimal disruption; (xxvii) MetLife, Inc.’s primary reliance, as a holding company, on
dividends from its subsidiaries to meet debt payment obligations and the applicable regulatory restrictions on the ability of the subsidiaries
to pay such dividends; and (xxviii) other risks and uncertainties described from time to time in MetLife, Inc.’s filings with the SEC.
MetLife, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if MetLife, Inc. later
becomes aware that such statement is not likely to be achieved. Please consult any further disclosures MetLife, Inc. makes on related
subjects in reports to the SEC.
Executive Summary
MetLife is a leading provider of individual insurance, employee benefits and financial services with operations throughout the United
States and the regions of Latin America, Europe, and Asia Pacific. Through its subsidiaries and affiliates, MetLife offers life insurance,
annuities, automobile and homeowners insurance, retail banking and other financial services to individuals, as well as group insurance and
retirement & savings products and services to corporations and other institutions. Subsequent to the disposition of Reinsurance Group of
5MetLife, Inc.