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ANNUAL REPORT
MetLife, Inc. 2009

Table of contents

  • Page 1
    ANNUAL REPORT MetLife, Inc. 2009

  • Page 2

  • Page 3
    ...up our Corporate Benefit Funding business. During 2009, we continued to capture market share in the structured settlement business, growing premiums for this product line 53% over 2008. In addition, our long history of developing innovative pension risk transfer solutions enabled us to generate $944...

  • Page 4
    ..., net unrealized losses dropped dramatically. At year-end 2009, our book value was $37.54 per share, a 37% increase over year-end 2008. In addition, we took a number of proactive steps in 2008 and 2009 to further improve shareholder value. Not only did we pay an annual common stock dividend of $0.74...

  • Page 5
    ... to our disciplined focus on risk management, underwriting and improving our expense margins. We will continue to bring an intense focus to executing our growth strategies, enabling us to meet the expanding financial needs of customers around the world. This is what MetLife is all about. Thank you...

  • Page 6
    (This page intentionally left blank)

  • Page 7
    ... on Accounting and Financial Disclosure Management's Annual Report on Internal Control Over Financial Reporting ...Attestation Report of the Company's Registered Public Accounting Firm ...Financial Statements ...Board of Directors ...Executive Officers ...Contact Information ...Corporate Information...

  • Page 8
    ...' claims paying ability, financial strength or credit ratings; (xv) ineffectiveness of risk management policies and procedures, including with respect to guaranteed benefits (which may be affected by fair value adjustments arising from changes in our own credit spread) on certain of the Company...

  • Page 9
    ...,979 Universal life and investment-type product policy fees ...5,203 5,381 5,238 4,711 3,775 Net investment income ...Other revenues ...Net investment gains (losses) ...Total revenues ...Expenses: Policyholder benefits and claims ...Interest credited to policyholder account balances ...Policyholder...

  • Page 10
    December 31, 2009 2008 2007 (In millions) 2006 2005 Balance Sheet Data(1) Assets: General account assets ...Separate account assets ...Total assets ...Liabilities: Policyholder liabilities(2) ...Payables for collateral under securities Bank deposits ...Short-term debt ...Long-term debt ......

  • Page 11
    ... Products, Retirement Products, Corporate Benefit Funding and Auto & Home (collectively, "U.S. Business") and International. In addition, the Company reports certain of its results of operations in Banking, Corporate & Other, which is comprised of MetLife Bank, National Association ("MetLife Bank...

  • Page 12
    ... and credit-related losses. We responded to the extraordinary market conditions by increasing levels of cash, cash equivalents, short-term investments and high quality, lower yielding fixed maturity securities particularly in two operating segments: Corporate Benefit Funding and Retirement Products...

  • Page 13
    ... declining financial markets and economic conditions have negatively impacted our investment income, our net investment gains (losses), and the demand for and the cost and profitability of certain of our products, including variable annuities and guarantee benefits. See "- Results of Operations" and...

  • Page 14
    ... time, these changes may have adverse short-term effects on our business as plan sponsors may react to these changes in a variety of ways as the new rules and related regulations begin to take effect. In response to the current financial and economic environment, President Bush signed into the law...

  • Page 15
    ... fair value for impairment assessment. Estimated Fair Value of Investments The Company's investments in fixed maturity and equity securities, investments in trading securities, certain short-term investments, most mortgage loans held-for-sale, and mortgage servicing rights ("MSRs") are reported at...

  • Page 16
    ... changes in forecasted cash flows on mortgage-backed and asset-backed securities; and (ix) other subjective factors, including concentrations and information obtained from regulators and rating agencies. The cost of fixed maturity and equity securities is adjusted for the credit loss component...

  • Page 17
    ... to manage various risks relating to its ongoing business operations. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The estimated fair value of...

  • Page 18
    ... Company also reviews periodically other long-term assumptions underlying the projections of estimated gross margins and profits. These include investment returns, policyholder dividend scales, interest crediting rates, mortality, persistency, and expenses to administer business. We annually update...

  • Page 19
    ... projected operating earnings, current book value (with and without accumulated other comprehensive income), the level of economic capital required to support the mix of business, long term growth rates, comparative market multiples, the account value of in-force business, projections of new and...

  • Page 20
    ... but not reported on life and non-medical health insurance. Liabilities for unpaid claims are estimated based upon the Company's historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs, reduced for...

  • Page 21
    ... net income or cash flows in particular quarterly or annual periods. Economic Capital Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis upon which capital is deployed. The economic capital model accounts...

  • Page 22
    ... Years Ended December 31, 2009 2008 (In millions) Change % Change Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Net investment gains (losses) ...Total revenues ...Expenses Policyholder benefits and claims and policyholder...

  • Page 23
    ... financial performance, credit rating and collateral valuation, and internal factors such as portfolio rebalancing that can generate gains and losses. As an investor in the fixed income, equity security, mortgage loan and certain other invested asset classes, we are exposed to the above stated risks...

  • Page 24
    ...operating expenses Year Ended December 31, 2009 Insurance Products Retirement Products Corporate Benefit Funding Auto & Home (In millions) International Banking Corporate & Other Total Total revenues ...Less: Net investment gains (losses) ...Less: Adjustments related to net investment gains (losses...

  • Page 25
    ...Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization...

  • Page 26
    ... Premiums ...$ Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization...

  • Page 27
    ... account balances in the current year versus prior year. Corporate Benefit Funding Years Ended December 31, 2009 2008 (In millions) Change % Change Operating Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating...

  • Page 28
    ... initiative. Auto & Home Years Ended December 31, 2009 2008 (In millions) Change % Change Operating Revenues Premiums ...$2,902 Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Capitalization of...

  • Page 29
    .... International Years Ended December 31, 2009 2008 (In millions) Change % Change Operating Revenues Premiums ...$3,187 Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims...

  • Page 30
    ...% Change Operating Revenues Premiums ...Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Interest credited to bank deposits ...Capitalization...

  • Page 31
    ...type product policy fees ...Net investment income ...Other revenues ...Net investment gains (losses) ...Total revenues ...Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Interest credited to bank deposits ...Capitalization...

  • Page 32
    ... to common shareholders Year Ended December 31, 2008 Insurance Products Retirement Products Corporate Benefit Funding Auto & Home (In millions) International Banking Corporate & Other Total Income (loss) from continuing operations, net of income tax ...Less: Net investment gains (losses) ...Less...

  • Page 33
    ...operating expenses Year Ended December 31, 2008 Insurance Products Retirement Products Corporate Benefit Funding Auto & Home (In millions) International Banking Corporate & Other Total Total revenues ...Less: Net investment gains (losses) ...Less: Adjustments related to net investment gains (losses...

  • Page 34
    ...Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization...

  • Page 35
    ...Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization...

  • Page 36
    ... ...$3,470 Universal life and investment-type product policy fees ...1,095 Net investment income ...Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Capitalization of...

  • Page 37
    ...) Change % Change Operating Revenues Premiums ...$ 27 Net investment income ...808 Other revenues ...Total operating revenues ...Operating Expenses Policyholder benefits and claims and policyholder dividends ...Interest credited to policyholder account balances ...Interest credited to bank deposits...

  • Page 38
    ..., property type and product type diversification and asset allocation. The Company manages interest rate risk as part of its asset and liability management strategies; product design, such as the use of market value adjustment features and surrender charges; and proactive monitoring and management...

  • Page 39
    ... Years Ended December 31, 2009 2008 (In millions) 2007 Cash and Short-Term Investments Yield(1) ...Investment income ...Investment gains ...Ending carrying value ...Other Invested Assets(4), (5), (6), (7) Investment income ...Investment gains (losses) ...Ending carrying value ...Total Investments...

  • Page 40
    ... fixed maturity, equity and trading securities, as well as short-term securities is determined by management after considering one of three primary sources of information: quoted market prices in active markets, independent pricing services, or independent broker quotations. The number of quotes...

  • Page 41
    ... fair value pricing sources and fair value hierarchy are as follows: December 31, 2009 Fixed Maturity Equity Securities Securities (In millions) Quoted prices in active markets for identical assets (Level 1) ...Independent pricing source ...Internal matrix pricing or discounted cash flow...

  • Page 42
    ...fair value on a recurring basis using significant unobservable (Level 3) inputs for the year ended December 31, 2009 is as follows: Year Ended December 31, 2009 Fixed Maturity Securities Equity Securities (In millions) Balance, beginning of year ...Total realized/unrealized gains (losses) included...

  • Page 43
    ...assumptions used to estimate expected losses from non-agency RMBS. The following three tables present information about the Company's fixed maturity securities holdings by credit quality ratings. Amounts presented for non-agency RMBS, including RMBS backed by sub-prime mortgage loans reported within...

  • Page 44
    ... sector, and the ratings of the financial guarantor insurers providing the credit enhancement at December 31, 2009 and 2008. Concentrations of Credit Risk (Equity Securities). The Company is not exposed to any significant concentrations of credit risk in its equity securities portfolio of any single...

  • Page 45
    ... of fixed rate mortgages which have performed better than both option ARMs and hybrid ARMs in the overall Alt-A market. Additionally, 90% and 83% at December 31, 2009 and 2008, respectively, of the Company's Alt-A securities portfolio has super senior credit enhancement, which typically provides...

  • Page 46
    ... of Credit Risk (Fixed Maturity Securities) - ABS" for a table that presents the Company's ABS by collateral type, portion rated Aaa/AAA and portion credit enhanced held by the Company at December 31, 2009 and 2008. The slowing U.S. housing market, greater use of affordable mortgage products and...

  • Page 47
    ... such market value decline will recover. The following table presents certain information about the Company's equity securities available-for-sale with a gross unrealized loss of 20% or more at December 31, 2009: Non-Redeemable Preferred Stock All Equity Securities Gross Unrealized Loss All Types of...

  • Page 48
    ... of fixed maturity and equity securities in 2008 compared to 2007 was a result of the stress in the global financial markets, particularly in the financial services industry causing an increase in financial restructurings, bankruptcy filings, ratings downgrades, or difficult underlying operating...

  • Page 49
    ... above, fixed maturity and equity securities impairments on the Company's financial services industry holdings and total impairments across all industries sectors were higher in 2008 than 2007, as presented in the tables below. Fixed maturity security OTTI losses recognized in earnings relates to...

  • Page 50
    ... of total cash and invested assets at estimated fair value, at December 31, 2009 and 2008, respectively. See Note 3 of the Notes to the Consolidated Financial Statements "Investments- Trading Securities" for tables which present information about the trading securities, related short sale agreement...

  • Page 51
    ... loans, home equity lines of credit, and automobile loans held-for-investment. Mortgage Loan Credit Quality - Monitoring Process - Commercial and Agricultural Loans. The Company reviews all commercial mortgage loans on an ongoing basis. These reviews may include an analysis of the property financial...

  • Page 52
    ... insurance coverage which reduces the loan-to-value ratio to less than 80%. Additionally, the Company's investment in traditional residential interest-only loans was $323 million at December 31, 2009. Mortgage Loans Valuation Allowances. Recent economic events causing deteriorating market conditions...

  • Page 53
    ... Financial Statements "Investments - Other Invested Assets" for a table that presents the carrying value of the Company's other invested assets by type at December 31, 2009 and 2008, and related supporting tables for leveraged leases and MSRs included within other invested assets. Short-term...

  • Page 54
    ...its ongoing business operations, including interest rate risk, foreign currency risk, credit risk, and equity market risk. The Company uses a variety of strategies to manage these risks, including the use of derivative instruments. See Note 4 of the Notes to the Consolidated Financial Statements for...

  • Page 55
    ... Company manages credit risk related to its freestanding derivatives, including the use of master netting agreements and collateral arrangements. Credit Derivatives. See Note 4 of the Notes to Consolidated Financial Statements for information about the estimated fair value and maximum amount at risk...

  • Page 56
    ...Life Insurance Company is a member of the Federal Home Loan Bank of New York (the "FHLB of NY") and holds $742 million and $830 million of common stock of the FHLB of NY at December 31, 2009 and 2008, respectively, which is included in equity securities. MLIC has also entered into funding agreements...

  • Page 57
    ... benefit insurance, long term care policies, active life policies and premium stabilization and other contingency liabilities held under participating life insurance contracts. In order to manage risk, the Company has often reinsured a portion of the mortality risk on new individual life insurance...

  • Page 58
    ... insurance policies, specialized life insurance products for benefit programs, general account universal life policies, and the fixed account of variable life insurance policies. Policyholder account balances are credited interest at a rate set by the Company, which are influenced by current market...

  • Page 59
    ... account balances at: December 31, 2009 2008 (In millions) U.S. Business: Guaranteed minimum accumulation benefit ...Guaranteed minimum withdrawal benefit ...Guaranteed minimum income benefit ...International: Guaranteed minimum accumulation benefit ...Guaranteed minimum withdrawal benefit ...Total...

  • Page 60
    ... payments for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or payments are made. The unearned revenue liability relates to universal life-type and investment-type products and represents policy charges for services to be provided...

  • Page 61
    ... products (generally group annuities, including funding agreements, and certain deposit fund liabilities) sold to employee benefit plan sponsors. Certain of these provisions prevent the customer from making withdrawals prior to the maturity date of the product. In the event of significant cash...

  • Page 62
    ... Financial Statements. • As a member of the FHLB of NY, MetLife Bank has entered into repurchase agreements with FHLB of NY on both short- and long-term bases, with a total liability for repurchase agreements with the FHLB of NY of $2.4 billion and $1.8 billion at December 31, 2009 and 2008...

  • Page 63
    ... associated with MetLife Reinsurance Company of South Carolina's ("MRSC") reinsurance of universal life secondary guarantees, entered into an agreement with an unaffiliated financial institution under which the Holding Company is entitled to the return on the investment portfolio held by trusts...

  • Page 64
    ... the FHLB of Boston related to short-term borrowings. Insurance Liabilities. The Company's principal cash outflows primarily relate to the liabilities associated with its various life insurance, property and casualty, annuity and group pension products, operating expenses and income tax, as well as...

  • Page 65
    ..., bank owned life insurance, other fixed annuity contracts, as well as funding agreements and other capital market products (including funding agreements with the FHLB of NY and the FHLB of Boston), most of the business has fixed maturities or fairly predictable surrenders or withdrawals. With...

  • Page 66
    ... the Company's capital position, its financial strength and credit ratings, general market conditions and the price of MetLife, Inc.'s common stock. The Company does not intend to make any purchases under the common stock repurchase program in 2010. MetLife Bank. At December 31, 2009, the Company...

  • Page 67
    ...funding agreements, single premium immediate annuities, long-term disability policies, individual disability income policies, long-term care ("LTC") policies and property and casualty contracts. Included within future policyholder benefits are contracts where the Company is currently making payments...

  • Page 68
    ... not reported claims and claims payable on group term life, long-term disability, LTC and dental; policyholder dividends left on deposit and policyholder dividends due and unpaid related primarily to traditional life and group life and health; and premiums received in advance. Liabilities related to...

  • Page 69
    ...investment risk of these funds. The separate account assets are legally segregated and are not subject to the claims that arise out of any other business of the Company. Net deposits, net investment income and realized and unrealized capital gains and losses on the separate accounts are fully offset...

  • Page 70
    ... Bank of New York under the Term Auction Facility and entered into $0.7 billion of short-term borrowing from the FHLB of NY in order to fund residential mortgage origination operations acquired by the Company in 2008 and provide a cost effective substitute for cash collateral received in connection...

  • Page 71
    ... high credit ratings. See "- The Company - Capital - Rating Agencies." Liquidity is monitored through the use of internal liquidity risk metrics, including the composition and level of the liquid asset portfolio, timing differences in short-term cash flow obligations, access to the financial markets...

  • Page 72
    ... in light of changing requirements and market conditions. The following table summarizes the amounts outstanding under various types of global funding sources available to the Holding Company at: December 31, 2009 2008 (In millions) Short-term debt ...Long-term debt - unaffiliated ...Long-term debt...

  • Page 73
    ... levels or has guaranteed certain contractual obligations. In December 2009, the Holding Company, in connection with MRV's reinsurance of certain universal life and term life insurance risks, committed to the Vermont Department of Banking, Insurance, Securities and Health Care Administration to take...

  • Page 74
    ... used to meet the Holding Company's liquidity needs, such as debt and dividend payments, and provides cash available for investing activities. Cash flows from operations represent net earnings adjusted for non-cash charges and changes in operating assets and liabilities. The 2009 and 2008 operating...

  • Page 75
    ... policyholder account balances related to certain investment type contracts, and net embedded derivatives on variable annuities with guaranteed minimum benefits which have the same type of interest rate exposure (medium- and long-term interest rates) as fixed maturity securities. The Company employs...

  • Page 76
    ...equity performance such as net embedded derivatives on variable annuities with guaranteed minimum benefits, certain policyholder account balances along with investments in equity securities. We manage this risk on an integrated basis with other risks through our asset/liability management strategies...

  • Page 77
    ... loss in estimated fair value for each market risk exposure of the Company's market sensitive assets and liabilities at December 31, 2009: December 31, 2009 (In millions) Non-trading: Interest rate risk ...Foreign currency exchange rate risk ...Equity price risk ...Trading: Interest rate risk...

  • Page 78
    ...-investment ...Held-for-sale ...Mortgage loans, net ...Policy loans ...Real estate joint ventures(1) ...Other limited partnership interests(1) ...Short-term investments ...Other invested assets: Mortgage servicing rights ...Other ...Cash and cash equivalents ...Accrued investment income ...Premiums...

  • Page 79
    ... Exchange Rate Notional Amount Assets: Fixed maturity securities ...Equity securities ...Trading securities ...Mortgage loans: Held-for-investment ...Held-for-sale ...Mortgage loans, net ...Policy loans ...Short-term investments ...Other invested assets: Mortgage servicing rights ...Other ...Cash...

  • Page 80
    ... loss in estimated fair value of the Company's portfolio due to a 10% change in equity at December 31, 2009 by type of asset or liability: December 31, 2009 Estimated Fair Value(1) (In millions) Assuming a 10% Increase in Equity Prices Notional Amount Assets: Equity securities ...Other invested...

  • Page 81
    ... the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance...

  • Page 82
    ... regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the...

  • Page 83
    ...for the Years Ended December 31, 2009, 2008 and 2007: Consolidated Balance Sheets ...Consolidated Statements of Operations ...Consolidated Statements of Stockholders' Equity ...Consolidated Statements of Cash Flows ...Notes to the Consolidated Financial Statements ...F-1 F-2 F-3 F-4 F-7 F-9 MetLife...

  • Page 84
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  • Page 85
    ... balance sheets of MetLife, Inc. and subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2009. These consolidated financial statements...

  • Page 86
    ...-for-sale ...Other limited partnership interests ...Short-term investments ...Other invested assets ...Total investments ...Cash and cash equivalents ...Accrued investment income ...Premiums and other receivables ...Deferred policy acquisition costs and value of business acquired ...Current income...

  • Page 87
    MetLife, Inc. Consolidated Statements of Operations For the Years Ended December 31, 2009, 2008 and 2007 (In millions, except per share data) 2009 Revenues Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Net investment gains (losses): ...

  • Page 88
    ... MetLife, Inc.'s Benefit Additional Unrealized Currency Treasury Other-ThanStockholders' Noncontrolling Plans Preferred Common Paid-in Investment Translation Retained Stock Temporary Equity Interests Stock Stock Capital Earnings at Cost Gains (Losses) Impairments Adjustments Adjustment Total Equity...

  • Page 89
    ... Common Paid-in Plans Stockholders' Discontinued Continuing Capital Earnings at Cost Gains (Losses) Adjustments Adjustment Stock Stock Equity Operations Operations MetLife, Inc. Total Equity Balance at December 31, 2007 ...Cumulative effect of changes in accounting principles, net of income tax...

  • Page 90
    ... Interests Treasury Unrealized Additional Currency Benefit MetLife, Inc.'s Stock Investment Paid-in Retained Translation Plans Stockholders' Discontinued Continuing Capital Earnings at Cost Gains (Losses) Adjustments Adjustment Equity Operations Operations Total Equity Balance at December 31, 2006...

  • Page 91
    ... to policyholder account balances ...Interest credited to bank deposits ...Universal life and investment-type product policy fees ...Change in accrued investment income ...Change in premiums and other receivables ...Change in deferred policy acquisition costs, net ...Change in insurance-related...

  • Page 92
    MetLife, Inc. Consolidated Statements of Cash Flows - (Continued) For the Years Ended December 31, 2009, 2008 and 2007 (In millions) 2009 2008 2007 Cash flows from financing activities Policyholder account balances: Deposits ...Withdrawals ...Net change in payables for collateral under securities ...

  • Page 93
    ...MetLife combined its former institutional and individual businesses, as well as its auto & home unit, into a single U.S. Business organization. U.S. Business consists of Insurance Products, Retirement Products, Corporate Benefit Funding and Auto & Home segments. The Company also has an International...

  • Page 94
    ... fair value in a business combination, reporting units measured at estimated fair value in the first step of a goodwill impairment test and indefinite-lived intangible assets measured at estimated fair value for impairment assessment. Investments The accounting policies for the Company's principal...

  • Page 95
    ... inputs used to determine the amount of the credit loss are as follows: (i) The Company calculates the recovery value of fixed maturity securities by performing a discounted cash flow analysis based on the present value of future cash flows expected to be received. The discount rate is generally the...

  • Page 96
    ... rate. Generally, interest is capitalized on the policy's anniversary date. Real Estate. Real estate held-for-investment, including related improvements, is stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the asset...

  • Page 97
    ... related to the investment portfolio and records it in net investment income. The Company's investments are exposed to four primary sources of risk: credit, interest rate, liquidity risk, and market valuation. The financial statement risks, stemming from such investment risks, are those associated...

  • Page 98
    ...business. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment...

  • Page 99
    ... Financial Statements - (Continued) claims for economic hedges of variable annuity guarantees included in future policy benefits, (ii) in net investment income for economic hedges of equity method investments in joint ventures, or for all derivatives held in relation to the trading portfolios...

  • Page 100
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) reported in net investment gains (losses) except for those in policyholder benefits and claims related to ceded reinsurance of guaranteed minimum income benefits. If the Company is unable to properly identify and measure an ...

  • Page 101
    ... general account interest rate credited. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. The amortization of sales inducements is included in policyholder benefits and claims. Each year the Company...

  • Page 102
    ...of goodwill impairment testing during 2009. Liability for Future Policy Benefits and Policyholder Account Balances The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance, traditional annuities and non-medical health insurance. Generally...

  • Page 103
    ... currency exchange rates; changes in the Company's own credit standing; and variations in actuarial assumptions regarding policyholder behavior, and risk margins related to non-capital market inputs may result in significant fluctuations in the estimated fair value of the guarantees that could...

  • Page 104
    ...surrender charges and are recorded in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are charged to operations include interest credited and benefit claims incurred in excess of related policyholder account balances. Premiums related...

  • Page 105
    ... of in-force blocks, as well as amounts paid (received) related to new business, are recorded as ceded (assumed) premiums and ceded (assumed) future policy benefit liabilities are established. For prospective reinsurance of short-duration contracts that meet the criteria for reinsurance accounting...

  • Page 106
    ... annual rate of interest on 30-year Treasury securities, for each account balance. At December 31, 2008, virtually all the obligations are calculated using the traditional formula. The Subsidiaries also provide certain postemployment benefits and certain postretirement medical and life insurance...

  • Page 107
    ... to general account claims only to the extent the value of such assets exceeds the separate account liabilities. Assets within the Company's separate accounts primarily include: mutual funds, fixed maturity and equity securities, mortgage loans, derivatives, hedge funds, other limited partnership...

  • Page 108
    ... with certain guarantees on variable annuity contracts. The change in valuation of embedded derivatives associated with guarantees on annuity contracts resulted from the incorporation of risk margins associated with non-capital market inputs and the inclusion of the Company's own credit standing in...

  • Page 109
    ...the Company's consolidated financial statements: • Effective September 30, 2008, the Company adopted new guidance relating to the fair value measurements of financial assets when the market for those assets is not active. It provides guidance on how a company's internal cash flow and discount rate...

  • Page 110
    ... indexed to an entity's own stock. • Effective January 1, 2008, the Company adopted new guidance on written loan commitments recorded at fair value through earnings. It provides guidance on (i) incorporating expected net future cash flows when related to the associated servicing of a loan when...

  • Page 111
    ...2008, the Company made five acquisitions for $783 million. As a result of these acquisitions, MetLife's Insurance Products segment increased its product offering of dental and vision benefit plans, MetLife Bank within Banking, Corporate & Other entered the mortgage origination and servicing business...

  • Page 112
    ... reinsurance agreement, the consideration paid by the Company was $259 million, comprised of cash of $14 million and fixed maturity securities, mortgage loans and other assets totaling $245 million. At the date of the assumption reinsurance agreement, the carrying value of insurance liabilities...

  • Page 113
    ... securities and mutual fund interests. Privately-held equity securities represented $1.0 billion and $1.1 billion at estimated fair value at December 31, 2009 and 2008, respectively. The Company held foreign currency derivatives with notional amounts of $9.1 billion to hedge the exchange rate risk...

  • Page 114
    ... 2009 Estimated Fair Value 2008 Estimated Fair Value % of Total % of Total (In millions) By security type: Collateralized mortgage obligations ...Pass-through securities ...Total RMBS ...By risk profile: Agency ...Prime ...Alternative residential mortgage loans ...Total RMBS ...Portion rated Aaa...

  • Page 115
    ... agency or investment bank, which collects the payments, and for a fee, remits or passes these payments through to the holders of the pass-through securities. Prime residential mortgage lending includes the origination of residential mortgage loans to the most credit-worthy borrowers with high...

  • Page 116
    ... Financial Statements - (Continued) The following tables present the Company's holdings of CMBS by rating agency designations and by vintage year at: December 31, 2009 Below Investment Grade Aaa Aa A Baa Total Cost or Estimated Cost or Estimated Cost or Estimated Cost or Estimated Cost...

  • Page 117
    ... present the Company's holdings of ABS supported by sub-prime mortgage loans by rating agency designations and by vintage year at: December 31, 2009 Below Investment Grade Total Aaa Aa A Baa Cost or Estimated Cost or Estimated Cost or Estimated Cost or Estimated Cost or Estimated Cost or Estimated...

  • Page 118
    ...total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company...

  • Page 119
    ... and ability to hold a particular equity security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost. Decisions to sell equity securities are based on current conditions in relation to the same broad portfolio management considerations...

  • Page 120
    ... Financial Statements - (Continued) The changes in net unrealized investment gains (losses) are as follows: Years Ended December 31, 2009 2008 2007 (In millions) Balance, beginning of period ...Cumulative effect of changes in accounting principle, net of income tax ...Fixed maturity securities...

  • Page 121
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) Continuous Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale by Sector The following tables present the estimated fair value and gross unrealized loss of the Company's fixed ...

  • Page 122
    ... Impaired Available for Sale Securities , " the $138 million of equity securities with a gross unrealized loss of 20% or more for twelve months or greater at December 31, 2009 were investment grade non-redeemable preferred stock, of which $136 million were financial services industry investment...

  • Page 123
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) Concentration of Gross Unrealized Loss and OTTI Loss for Fixed Maturity and Equity Securities Available-for-Sale The Company's gross unrealized losses related to its fixed maturity and equity securities, including the portion...

  • Page 124
    ... Financial Statements - (Continued) The following table presents certain information about the Company's equity securities available-for-sale with a gross unrealized loss of 20% or more at December 31, 2009: Non-Redeemable Preferred Stock All Equity Securities Gross Unrealized Loss All Types...

  • Page 125
    ... be required to sell the security before recovery of the decline in estimated fair value. The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to...

  • Page 126
    ... Financial Statements - (Continued) Equity security OTTI losses recognized in earnings relates to the following sectors and industries: Years Ended December 31, 2009 2008 2007 (In millions) Sector: Non-redeemable preferred stock ...Common stock ...Total ...Industry: Financial services industry...

  • Page 127
    ... 31, 2009 2008 2007 (In millions) Fixed maturity securities ...Equity securities ...Trading securities ...Mortgage loans ...Policy loans ...Real estate and real estate joint ventures ...Other limited partnership interests ...Cash, cash equivalents and short-term investments ...International joint...

  • Page 128
    ... lending program. Trading Securities The Company has trading securities portfolios to support investment strategies that involve the active and frequent purchase and sale of securities, the execution of short sale agreements and asset and liability matching strategies for certain insurance products...

  • Page 129
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) The table below presents certain information about the Company's trading securities portfolios: December 31, 2009 2008 (In millions) Trading securities - at estimated fair value ...Short sale agreement liabilities - at ...

  • Page 130
    ... and property type to reduce risk of concentration. Mortgage loans are collateralized by properties primarily located in the United States. The carrying value of the Company's mortgage loans located in California, New York and Texas were 20%, 7% and 6% at December 31, 2009, respectively. Generally...

  • Page 131
    ...held-for-investment for the year ended December 31, 2007. The carrying value of non-income producing real estate was $76 million and $28 million at December 31, 2009 and 2008, respectively. The Company diversifies its real estate holdings by both geographic region and property type to reduce risk of...

  • Page 132
    ...information on MSRs. Joint venture investments are accounted for on the equity method and represent the Company's investment in insurance underwriting joint ventures in Japan, Chile and China. Tax credit partnerships are established for the purpose of investing in low-income housing and other social...

  • Page 133
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) Mortgage Servicing Rights The following table presents the carrying value and changes in capitalized MSRs, which are included in other invested assets: Years Ended December 31, 2009 2008 (In millions) Estimated fair value, ...

  • Page 134
    ... to the Consolidated Financial Statements - (Continued) The Company invests in certain entities that are VIEs, as a passive investor holding a limited partnership interest, or as a sponsor or debt holder. The following table presents the carrying amount and maximum exposure to loss relating to VIEs...

  • Page 135
    ... and Non-Derivative Financial Instruments The Company is exposed to various risks relating to its ongoing business operations, including interest rate risk, foreign currency risk, credit risk and equity market risk. The Company uses a variety of strategies to manage these risks, including the use of...

  • Page 136
    ... swaps are used by the Company primarily as economic hedges of interest rate risk associated with the Company's investments in mortgage-backed securities. In an implied volatility swap, the Company exchanges fixed payments for floating payments that are linked to certain market volatility measures...

  • Page 137
    .... The Company also uses interest rate forwards to sell to be announced securities as economic hedges against the risk of changes in the fair value of mortgage loans held-for-sale and interest rate lock commitments. The Company utilizes interest rate forwards in cash flow and non-qualifying hedging...

  • Page 138
    ... hedge minimum guarantees embedded in certain variable annuity products offered by the Company. To hedge against adverse changes in equity indices, the Company enters into contracts to sell the equity index within a limited time at a contracted price. The contracts will be net settled in cash based...

  • Page 139
    ... for the: Years Ended December 31, 2009 2008 (In millions) 2007 Qualifying hedges: Net investment income ...Interest credited to policyholder account balances ...Other expenses ...Non-qualifying hedges: Net investment income ...Net investment gains (losses) ...Other revenues ...Total ...$ 49 220...

  • Page 140
    ... the price to be paid for forward purchases of investments; and (v) interest rate swaps to hedge the forecasted purchases of fixed-rate investments. For the year ended December 31, 2009, the Company recognized $3 million of net investment losses which represented the ineffective portion of all cash...

  • Page 141
    ... of operations and the consolidated statements of stockholders' equity for the years ended December 31, 2009, 2008 and 2007: Amount and Location of Gains (Losses) Reclassified From Accumulated Other Comprehensive Income (Loss) into Income (Loss) (Effective Portion) Net Investment Gains (Losses...

  • Page 142
    ... index options, interest rate futures, TRRs and equity variance swaps to economically hedge liabilities embedded in certain variable annuity products; (v) swap spreadlocks to economically hedge invested assets against the risk of changes in credit spreads; (vi) interest rate forwards to buy and sell...

  • Page 143
    ... Financial Statements - (Continued) Credit Derivatives In connection with synthetically created investment transactions and credit default swaps held in relation to the trading portfolio, the Company writes credit default swaps for which it receives a premium to insure credit risk. Such credit...

  • Page 144
    ...connection with its derivative instruments. At December 31, 2009 and 2008, the Company was obligated to return cash collateral under its control of $2,680 million and $7,758 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents or in short-term investments...

  • Page 145
    ...; ceded reinsurance contracts of guaranteed minimum benefits related to GMABs and certain GMIBs; and funding agreements with equity or bond indexed crediting rates. The following table presents the estimated fair value of the Company's embedded derivatives at: December 31, 2009 2008 (In millions...

  • Page 146
    ... Fair Value 5. Assets: Fixed maturity securities ...Equity securities ...Trading securities ...Mortgage loans: Held-for-investment ...Held-for-sale ...Mortgage loans, net ...Policy loans ...Real estate joint ventures(1) ...Other limited partnership interests(1) ...Short-term investments ...Other...

  • Page 147
    ... Value Assets: Fixed maturity securities ...Equity securities ...Trading securities ...Mortgage loans: Held-for-investment ...Held-for-sale ...Mortgage loans, net ...Policy loans ...Real estate joint ventures(1) ...Other limited partnership interests (1) ...Short-term investments ...Other invested...

  • Page 148
    ...of the past performance of policyholder repayment behavior for similar loans. These cash flows are discounted using current risk-free interest rates with no adjustment for borrower credit risk as these loans are fully collateralized by the cash surrender value of the underlying insurance policy. The...

  • Page 149
    ... loan prepayments and servicing costs. The estimated fair value of the investment in funding agreements is estimated by discounting the expected future cash flows using current market rates and the credit risk of the note issuer. For funds withheld at interest and the various interest-bearing assets...

  • Page 150
    ... using current market risk-free interest rates and adding a spread for the Company's own credit which is determined using publicly available information relating to the Company's debt, as well as its claims paying ability. Bank Deposits - Due to frequency of interest rate resets on customer bank...

  • Page 151
    ... agreements with equity or bond indexed crediting rates. Embedded derivatives are recorded in the financial statements at estimated fair value with changes in estimated fair value reported in net income. The Company issues certain variable annuity products with guaranteed minimum benefit guarantees...

  • Page 152
    ... values for mortgage loan commitments and commitments to fund bank credit facilities, bridge loans and private corporate bond investments reflected in the above table represent the difference between the discounted expected future cash flows using interest rates that incorporate current credit risk...

  • Page 153
    ... the tables above differ from the amounts presented in the consolidated balance sheets because certain short-term investments are not measured at estimated fair value (e.g. time deposits, money market funds, etc.). (2) Mortgage loans as presented in the tables above differ from the amount presented...

  • Page 154
    ... stock; certain trading securities; and certain short-term money market securities. As it relates to derivatives, this level includes exchange-traded equity and interest rate futures, as well as interest rate forwards to sell certain to be announced securities. Separate account assets classified...

  • Page 155
    ... securities ...Total fixed maturity securities ...Equity securities: Common stock ...Non-redeemable preferred stock ...Total equity securities ...Trading securities ...Short-term investments ...Mortgage loans ...Net derivatives(7) ...Mortgage servicing rights(8), (9) ...Separate account assets...

  • Page 156
    ... securities ...Total fixed maturity securities ...Equity securities: Common stock ...Non-redeemable preferred stock ...Total equity securities ...Trading securities ...Short-term investments ...Mortgage loans ...Net derivatives(7) ...Mortgage servicing rights(8), (9) ...Separate account assets...

  • Page 157
    ..., 2009 and 2008 due to changes in estimated fair value recorded in earnings for Level 3 assets and liabilities: Total Gains and Losses Classification of Realized/Unrealized Gains (Losses) included in Earnings Net Investment Income Net Investment Gains (Losses) Policyholder Benefits and Claims Other...

  • Page 158
    ... 31, 2009 and 2008, respectively. Changes in Unrealized Gains (Losses) Relating to Assets and Liabilities Held at December 31, 2009 Net Investment Income Net Investment Gains (Losses) Policyholder Benefits and Claims Other Revenues Other Expenses Total (In millions) For the Year Ended December...

  • Page 159
    ...) Changes in Unrealized Gains (Losses) Relating to Assets and Liabilities Held at December 31, 2009 Net Net Policyholder Investment Investment Benefits and Other Gains Other Income Claims Expenses (Losses) Revenues (In millions) Total Trading securities ...Short-term investments ...Mortgage loans...

  • Page 160
    ...for such mortgage loans. (2) Other Limited Partnership Interests - The impaired investments presented above were accounted for using the cost basis. Impairments on these cost basis investments were recognized at estimated fair value determined from information provided in the financial statements of...

  • Page 161
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 6. Deferred Policy Acquisition Costs and Value of Business Acquired Information regarding DAC and VOBA is as follows: DAC VOBA (In millions) Total Balance at January 1, 2007 ...Effect of adoption of new accounting principle ...

  • Page 162
    ... 2008 VOBA December 31, 2009 2008 2009 (In millions) Total 2008 U.S. Business: Insurance Products: Group life ...$ Individual life ...Non-medical health ...Total Insurance Products ...Retirement Products ...Corporate Benefit Funding ...Auto & Home ...Total U.S. Business ...International ...Banking...

  • Page 163
    ... unit is as follows: December 31, 2009 2008 (In millions) U.S. Business: Insurance Products: Group life ...Individual life ...Non-medical health ...Total Insurance Products ...Retirement Products ...Corporate Benefit Funding ...Auto & Home ...Total U.S. Business ...International: Latin America...

  • Page 164
    ... 31, 2009 2008 2009 2008 (In millions) Other Policyholder Funds U.S. Business: Insurance Products: Group life ...Individual life ...Non-medical health ...Total Insurance Products ...Retirement Products ...Corporate Benefit Funding ...Auto & Home ...Total U.S. Business ...International ...Banking...

  • Page 165
    ...$21 Equity securities ...$57 $19 Cash and cash equivalents ...$ 2 $ 3 For the years ended December 31, 2009, 2008 and 2007, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. Obligations Under Funding Agreements The Company issues fixed...

  • Page 166
    ... value" or "minimum return"). The Company also issues annuity contracts that apply a lower rate of funds deposited if the contractholder elects to surrender the contract for cash and a higher rate if the contractholder elects to annuitize ("two tier annuities"). These guarantees include benefits...

  • Page 167
    ... years N/A N/A N/A 61 years December 31, 2009 2008 Paid-Up Secondary Guarantees Guarantees (In millions) Paid-Up Guarantees Secondary Guarantees Universal and Variable Life Contracts(1) Account value (general and separate account) ...Net amount at risk(2) ...Average attained age of policyholders...

  • Page 168
    ... base policy liabilities) relating to annuity and universal and variable life contracts is as follows: Annuity Contracts Guaranteed Death Benefits Guaranteed Annuitization Benefits Universal and Variable Life Contracts Secondary Guarantees (In millions) Paid-Up Guarantees Total Direct Balance, at...

  • Page 169
    ... in connection with its variable annuities. Under these reinsurance agreements, the Company pays a reinsurance premium generally based on fees associated with the guarantees collected from policyholders, and receives reimbursement for benefits paid or accrued in excess of account values, subject...

  • Page 170
    ...of reinsurance. Information regarding the effect of reinsurance is as follows: Years Ended December 31, 2009 2008 (In millions) 2007 Premiums: Direct premiums ...Reinsurance assumed ...Reinsurance ceded ...Net premiums ...Universal life and investment-type product policy fees: Direct universal life...

  • Page 171
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) December 31, 2008 Total Balance Sheet Total, Net of Reinsurance Assumed Ceded (In millions) Assets: Premiums and other receivables ...Deferred policy acquisition costs and value of business acquired ...Total assets ......

  • Page 172
    ...) ...Equity securities available-for-sale, at estimated fair value (cost: $204 and $280, respectively) . . Mortgage loans ...Policy loans ...Real estate and real estate joint ventures held-for-investment ...Short-term investments ...Other invested assets ...Total investments ...Cash and cash...

  • Page 173
    ... Company's consolidated financial statements. MLIC charges the closed block with federal income taxes, state and local premium taxes and other additive state or local taxes, as well as investment management expenses relating to the closed block as provided in the Plan. MLIC also charges the closed...

  • Page 174
    ... equity units. See Notes 13 and 14. Repurchase Agreements with the Federal Home Loan Bank of New York MetLife Bank is a member of the FHLB of NY and held $124 million and $89 million of common stock of the FHLB of NY at December 31, 2009 and 2008, respectively, which is included in equity securities...

  • Page 175
    ... one year is as follows: December 31, 2009 2008 (In millions) Commercial paper ...MetLife Bank, N.A. - Collateralized borrowings from the Federal Reserve Bank of New York ...MetLife Bank, N.A. - Repurchase agreements with the FHLB of NY ...MetLife Insurance Company of Connecticut - Collateralized...

  • Page 176
    ... 31, 2009 and 2008, the estimated fair value of assets held in trust by the Company was $2.4 billion and $2.1 billion, respectively. The assets are principally invested in fixed maturity securities and are presented as such within the Company's consolidated balance sheets, with the related income...

  • Page 177
    ... associated with the reinsurance of secondary guarantees. The trusts are VIEs which are consolidated by the Company. The unaffiliated financial institution is entitled to the return on the investment portfolio held by the trusts. At December 31, 2009 and 2008, the Company held assets in trust...

  • Page 178
    ...MetLife Capital Trusts II and III were junior subordinated debt securities issued by the Holding Company. The common equity units ceased to exist upon the closing of the remarketing of the underlying debt instruments and the settlement of the stock purchase contracts in August 2008 and February 2009...

  • Page 179
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) 15. Income Tax The provision for income tax from continuing operations is as follows: Years Ended December 31, 2009 2008 2007 (In millions) Current: Federal ...State and local ...Foreign ...Subtotal ...Deferred: Federal ......

  • Page 180
    ...: December 31, 2009 2008 (In millions) Deferred income tax assets: Policyholder liabilities and receivables ...Net operating loss carryforwards ...Employee benefits ...Capital loss carryforwards ...Tax credit carryforwards ...Net unrealized investment losses ...Litigation-related and government...

  • Page 181
    ... income tax payable and paid in 2009 and $2 million reduced current income tax expense. The Company's liability for unrecognized tax benefits may decrease in the next 12 months pending the outcome of remaining issues, taxexempt income and tax credits, associated with the 2000 to 2002 IRS audit...

  • Page 182
    ... information with respect to litigation and contingencies to be reflected in the Company's consolidated financial statements. In 2007, the Company received $39 million upon the resolution of an indemnification claim associated with the 2000 acquisition of General American Life Insurance Company...

  • Page 183
    ..., based on information currently known by management, management does not believe any such charges are likely to have a material adverse effect on the Company's financial position. During 1998, MLIC paid $878 million in premiums for excess insurance policies for asbestos-related claims. The excess...

  • Page 184
    ... have had investigations or inquiries relating to sales of individual life insurance policies or annuities or other products by MLIC, MICC, New England Mutual Life Insurance Company, New England Life Insurance Company and GALIC, and the four Company broker dealers, which are MetLife Securities, Inc...

  • Page 185
    ... the lawsuit. Sales Practices Claims. Over the past several years, the Company has faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. Some of the current cases seek substantial...

  • Page 186
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) insurer engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. Assets and liabilities held for insolvency assessments are as follows: December 31, 2009 2008 (In ...

  • Page 187
    ... of operations and current market conditions, which precluded the Company's immediate and complete sublet of all unused space in both Long Island City and New York City, the Company incurred a lease impairment charge of $38 million which is included within other expenses in Banking, Corporate...

  • Page 188
    ... traditional formula provides benefits based upon years of credited service and final average earnings. The cash balance formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay, as well as earnings credits, determined annually...

  • Page 189
    ... of year ...Service cost ...Interest cost ...Plan participants' contributions ...Net actuarial losses ...Settlements and curtailments ...Change in benefits ...Prescription drug subsidy ...Benefits paid ...Benefit obligation at end of year ...Change in plan assets: Fair value of plan assets at...

  • Page 190
    ... return earned by the accumulated (other) pension fund assets in a particular year. iv) Amortization of Prior Service Cost - This cost relates to the recognition of increases or decreases in pension (other postretirement) benefit obligation due to amendments in plans or initiation of new plans...

  • Page 191
    ...periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) were as follows: Pension Benefits 2009 Other Postretirement Benefits 2007 Years Ended December 31, 2008 2007 2009 2008 (In millions) Net Periodic Benefit Cost Service cost...

  • Page 192
    ... pay the aggregate projected benefit obligation when due. The expected rate of return on plan assets is based on anticipated performance of the various asset sectors in which the plan invests, weighted by target allocation percentages. Anticipated future performance is based on long-term historical...

  • Page 193
    ... & credit)(7) ...Core(8) ...U.S. government and agencies ...Mortgage-backed securities . . Short-term and cash ...Total separate accounts - fixed income securities ...Investments in separate accounts - alternatives: Multi-strategy hedge funds(9) ...Real estate(10) ...Private equity(11) ...Total...

  • Page 194
    ... as cash, short-term money market and bank time deposits, expected to mature within a year. Level 2 This category includes certain separate accounts that are primarily invested in liquid and readily marketable securities. The estimated fair value of such separate account is based upon reported NAV...

  • Page 195
    ... growth ...Small cap core ...Developed international ...Total equity ...Fixed income (target range): Long duration (government and credit) ...Core ...U.S. government and agencies ...Mortgage-backed securities ...Directly held bonds ...Insurance general account ...Short-term and cash ...Total fixed...

  • Page 196
    ...Current regulations do not require funding for these benefits. The Subsidiaries use their general assets, net of participant's contributions, to pay postretirement medical claims as they come due in lieu of utilizing any plan assets. Total payments equaled $158 million and $149 million for the years...

  • Page 197
    MetLife, Inc. Notes to the Consolidated Financial Statements - (Continued) The Holding Company is prohibited from declaring dividends on the Preferred Shares if it fails to meet specified capital adequacy, net income and shareholders' equity levels. In addition, under Federal Reserve Bank of New ...

  • Page 198
    ...the Company's capital position, its financial strength and credit ratings, general market conditions and the price of MetLife, Inc.'s common stock. The Holding Company does not intend to make any purchases under the common stock repurchase program in 2010. Other In September 2008, in connection with...

  • Page 199
    ... related to Stock Options for the year ended December 31, 2009 is presented below. The aggregate intrinsic value was computed using the closing share price on December 31, 2009 of $35.35 and December 31, 2008 of $34.86, as applicable. Weighted Average Remaining Contractual Term (Years) Aggregate...

  • Page 200
    ... 31, 2009 2008 (In millions) 2007 Total intrinsic value of stock options exercised ...Cash received from exercise of stock options ...Tax benefit realized from stock options exercised ... $ $ 1 8 $36 $45 $13 $122 $110 $ 43 $ - Performance Shares Beginning in 2005, certain members of management...

  • Page 201
    .... Performance Share awards are accounted for as equity awards but are not credited with dividend-equivalents for actual dividends paid on the Holding Company's common stock during the performance period. Accordingly, the estimated fair value of Performance Shares is based upon the closing price of...

  • Page 202
    ... recognition to purchase accounting adjustments. Statutory net income (loss) of Metropolitan Life Insurance Company, a New York domiciled insurer, was $1,221 million, ($338) million and $2,123 million for the years ended December 31, 2009, 2008 and 2007, respectively. Statutory capital and surplus...

  • Page 203
    ... whether the financial condition of a stock life insurance company would support the payment of such dividends to its shareholders. Under Delaware State Insurance Law, MTL is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend to the Holding Company as long as the...

  • Page 204
    ... holding (gains) losses included in current year income ...Amortization of premiums and accretion of discounts associated with investments . . Income tax effect ...Allocation of holding (gains) losses on investments relating to other policyholder amounts ...Income tax effect of allocation of holding...

  • Page 205
    ... continues to execute its restructuring plans. Restructuring charges associated with this enterprise-wide initiative are as follows: Years Ended December 31, 2009 2008 (In millions) Balance, beginning of period ...$ 86 Severance charges ...Change in severance charge estimates ...Cash payments ...84...

  • Page 206
    ... interests ...Less: Preferred stock dividends ...Net income (loss) available to MetLife, Inc.'s common shareholders ...Basic ...Diluted ...(1) See Note 14 for a description of the Company's common equity units. (2) For the year ended December 31, 2009, 4,213,700 shares related to the exercise or...

  • Page 207
    ... ...Net income (loss) attributable to MetLife, Inc...Less: Preferred stock dividends ...Net income (loss) available to MetLife, Inc.'s common shareholders ...Basic earnings per share: Income (loss) from continuing operations available to MetLife, Inc.'s common shareholders ...Income (loss) from...

  • Page 208
    ... term life. Individual Life includes variable life, universal life, term life and whole life insurance products. Non-Medical Health includes short- and long-term disability, long-term care, and dental insurance, and other insurance products. Retirement Products offers asset accumulation and income...

  • Page 209
    ... Business Year Ended December 31, 2009: Insurance Products Retirement Products Corporate Benefit Funding Auto & Home Banking, Corporate & Other Total Consolidated Total International (In millions) Total Adjustments Revenues Premiums ...$17,168 Universal life and investment-type product policy...

  • Page 210
    ... Business Insurance Products Retirement Products Corporate Benefit Funding Auto & Home Banking, Corporate & Other Total Consolidated Year Ended December 31, 2008: Total International (In millions) Total Adjustments Revenues Premiums ...$16,402 Universal life and investment-type product policy...

  • Page 211
    ... Business Year Ended December 31, 2007: Insurance Products Retirement Products Corporate Benefit Funding Auto & Home Banking, Corporate & Other Total Consolidated Total International (In millions) Total Adjustments Revenues Premiums ...$15,269 Universal life and investment-type product policy...

  • Page 212
    ... of operations and balance sheet: Years Ended December 31, 2009 2008 (In millions) 2007 Revenues: Premiums ...Universal life and investment-type product policy fees ...Net investment income ...Other revenues ...Net investment gains (losses) ...Total revenues ...Expenses: Policyholder benefits and...

  • Page 213
    ... ...Accrued investment income ...Premiums and other receivables ...DAC and VOBA ...Deferred income tax asset ...Other assets ...Total assets held-for-sale ...Future policy benefits ...Policyholder account balances ...Other policyholder funds ...Policyholder dividends payable ...Current income tax...

  • Page 214
    ... Financial Statements - (Continued) The operations of RGA included direct policies and reinsurance agreements with MetLife and some of its subsidiaries. These agreements are generally terminable by either party upon 90 days written notice with respect to future new business. Agreements related...

  • Page 215
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  • Page 216
    ... Operating Officer, New York Stock Exchange BURTON A. DOLE, JR. Retired Chairman, Dole/Neal, Member, Audit Committee LLC and Corporate Responsibility Member, Audit Committee and Finance and Risk Policy Committee CHERYL W. GRISÉ (Lead Director) Chief Executive Officer, Tupelo Capital Management...

  • Page 217
    ... of Financial Condition and Results of Operations - Liquidity and Capital Resources - The Company - Liquidity and Capital Uses - Dividends" and Note 18 of Notes to Consolidated Financial Statements. The following table presents the high and low closing prices for the common stock of MetLife, Inc...

  • Page 218
    CUMULATIVE TOTAL RETURN Based upon an initial investment of $100 on December 31, 2004 with dividends reinvested $200 $150 $100 $50 $0 31-Dec-04 31-Dec-05 31-Dec-06 31-Dec-07 31-Dec-08 31-Dec-09 MetLife Inc. Source: Capitol IQ S&P 500 S&P 500 Insurance S&P 500 Financials 80 MetLife, Inc.

  • Page 219

  • Page 220
    MetLife, Inc. 200 Park Avenue New York, NY 10166-0188 www.metlife.com 0710-6222 © 2010 METLIFE, INC. PEANUTS © United Feature Syndicate, Inc.