MetLife 2009 Annual Report Download - page 140

The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges within net investment gains
(losses). The following table represents the amount of such net investment gains (losses) recognized for the years ended December 31,
2009, 2008 and 2007:
Derivatives in Fair Value
Hedging Relationships Hedged Items in Fair Value Hedging Relationships
Net Investment
Gains (Losses)
Recognized
for Derivatives
Net Investment Gains
(Losses) Recognized
for Hedged Items
Ineffectiveness
Recognized in
Net Investment
Gains (Losses)
(In millions)
For the Year Ended December 31, 2009:
Interestrateswaps: Fixedmaturitysecurities...................... $ 49 $ (42) $ 7
Policyholderaccountbalances(1)................ (963) 951 (12)
Foreign currency
swaps: Foreign-denominated fixed maturity securities . . . . . . . . (13) 10 (3)
Foreign-denominated policyholder account balances(2) . . 462 (449) 13
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(465) $ 470 $ 5
For the Year Ended December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . $ 245 $(248) $ (3)
For the Year Ended December 31, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . $ 334 $(326) $ 8
(1) Fixed rate liabilities
(2) Fixed rate or floating rate liabilities
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Cash Flow Hedges
The Company designates and accounts for the following as cash flow hedges when they have met the requirements of cash flow hedging:
(i) interest rate swaps to convert floating rate investments to fixed rate investments; (ii) interest rate swaps to convert floating rate liabilitiesto
fixed rate liabilities; (iii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated
investments and liabilities; (iv) interest rate forwards and credit forwards to lock in 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 flow hedges. For the years ended December 31, 2008 and 2007, the Company did not recognize any net investment gains
(losses) which represented the ineffective portion of all cash flow hedges. All components of each derivative’s gain or loss were included in
the assessment of hedge effectiveness. In certain instances, the Company discontinued cash flow hedge accounting because the
forecasted transactions did not occur on the anticipated date or within two months of that date. The net amounts reclassified into net
investment losses for the years ended December 31, 2009, 2008 and 2007 related to such discontinued cash flow hedges were $7 million,
$12 million and $3 million, respectively. As of December 31, 2009, the maximum length of time over which the Company is hedging its
exposure to variability in future cash flows for forecasted transactions does not exceed five years. There were no hedged forecasted
transactions, other than the receipt or payment of variable interest payments for the years ended December 31, 2008 and 2007.
The following table presents the components of other comprehensive income (loss), before income tax, related to cash flow hedges:
2009 2008 2007
Years Ended December 31,
(In millions)
Other comprehensive income (loss), balance at January 1, . . . . . . . . . . . . . . . . . . . . . . . . $ 82 $(270) $(208)
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash
flowhedges..................................................... (221) 203 (168)
Amountsreclassifiedtonetinvestmentgains(losses) ........................... 54 140 96
Amountsreclassifiedtonetinvestmentincome................................ 8 9 13
Amortizationoftransitionadjustment ...................................... (2) 1 (1)
Amountsreclassifiedtootherexpenses .................................... 3 (1) (2)
Other comprehensive income (loss), balance at December 31, . . . . . . . . . . . . . . . . . . . . . $ (76) $ 82 $(270)
At December 31, 2009, $47 million of deferred net losses on derivatives accumulated in other comprehensive income (loss) is expected to
be reclassified to earnings within the next 12 months.
F-56 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)