MetLife 2009 Annual Report Download - page 176

Total fees expensed associated with these committed facilities were $55 million and $35 million for the years ended December 31, 2009
and 2008, respectively. Information on these committed facilities at December 31, 2009 is as follows:
Account Party/Borrower(s) Expiration Capacity
Letter of
Credit
Issuances Drawdowns Unused Commitments Maturity (Years)
(In millions)
MetLife, Inc. . . . . . . . . . . . . . . . August 2010 $300 $ 300 $ — $ — —
MetLife, Inc. . . . . . . . . . . . . . . . December 2010 1,500 412 — 1,088 —
Exeter Reassurance Company Ltd.,
MetLife, Inc., & Missouri
Reinsurance (Barbados), Inc. . . June 2016 (1) 500 490 — 10 6
Exeter Reassurance Company
Ltd. . . . . . . . . . . . . . . . . . . . December 2027 (2) 650 490 — 160 18
MetLife Reinsurance Company of
South Carolina & MetLife, Inc. . . June 2037 3,500 — 2,797 703 27
MetLife Reinsurance Company of
Vermont & MetLife, Inc. . . . . . . December 2037 (2) 2,896 1,483 — 1,413 28
MetLife Reinsurance Company of
Vermont & MetLife, Inc. . . . . . . September 2038 (2) 3,500 1,508 — 1,992 28
Total . . . . . . . . . . . . . . . . . . . . $12,846 $4,683 $2,797 $5,366
(1) Letters of credit and replacements or renewals thereof issued under this facility of $280 million, $10 million and $200 million are set to
expire no later than December 2015, March 2016 and June 2016, respectively.
(2) The Holding Company is a guarantor under this agreement.
12. Collateral Financing Arrangements
Associated with the Closed Block
In December 2007, MLIC reinsured a portion of its closed block liabilities to MRC, a wholly-owned subsidiary of the Company. In
connection with this transaction, MRC issued, to investors placed by an unaffiliated financial institution, $2.5 billion in aggregate principal
amount of 35-year surplus notes to provide statutory reserve support for the assumed closed block liabilities. Interest on the surplus notes
accrues at an annual rate of 3-month LIBOR plus 0.55%, payable quarterly. The ability of MRC to make interest and principal payments on the
surplus notes is contingent upon South Carolina regulatory approval. At both December 31, 2009 and 2008, the amount of the surplus notes
outstanding was $2.5 billion.
Simultaneous with the issuance of the surplus notes, the Holding Company entered into an agreement with the unaffiliated financial
institution, under which the Holding Company is entitled to the interest paid by MRC on the surplus notes of 3-month LIBOR plus 0.55% in
exchange for the payment of 3-month LIBOR plus 1.12%, payable quarterly on such amount as adjusted, as described below. The Holding
Company may also be required to pledge collateral or make payments to the unaffiliated financial institution related to any decline in the
estimated fair value of the surplus notes. Any such payments would be accounted for as a receivable and included in other assets on the
Company’s consolidated balance sheets and would not reduce the principal amount outstanding of the surplus notes. Such payments would,
however, reduce the amount of interest payments due from the Holding Company under the agreement. Any payment received from the
unaffiliated financial institution would reduce the receivable by an amount equal to such payment and would also increase the amount of
interest payments due from the Holding Company under the agreement. In addition, the unaffiliated financial institution may be required to
pledge collateral to the Holding Company related to any increase in the estimated fair value of the surplus notes. During 2008, the Holding
Company paid an aggregate of $800 million to the unaffiliated financial institution relating to declines in the estimated fair value of the surplus
notes. The Holding Company did not receive any payments from the unaffiliated financial institution during 2008. During 2009, on a net basis,
the Holding Company received $375 million from the unaffiliated financial institution related to changes in the estimated fair value of the
surplus notes. No payments were made or received by the Holding Company during 2007. Since the closing of the collateral financing
arrangement in December 2007, on a net basis, the Holding Company has paid $425 million to the unaffiliated financial institution related to
changes in the estimated fair value of the surplus notes. In addition, at December 31, 2008, the Holding Company had pledged collateral with
an estimated fair value of $230 million to the unaffiliated financial institution. At December 31, 2009, the Holding Company had no collateral
pledged to the unaffiliated financial institution in connection with this agreement. The Holding Company may also be required to make a
payment to the unaffiliated financial institution in connection with any early termination of this agreement.
A majority of the proceeds from the offering of the surplus notes was placed in a trust, which is consolidated by the Company, to support
MRC’s statutory obligations associated with the assumed closed block liabilities. During 2007, MRC deposited $2.0 billion into the trust, from
the proceeds of the surplus notes issued in 2007. During 2008, MRC deposited an additional $314 million into the trust. No amounts were
deposited into the trust during 2009. At December 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 included within net investment income in the Company’s consolidated
statements of operations. Interest on the collateral financing arrangement is included as a component of other expenses.
Total interest expense related to the collateral financing arrangement was $51 million, $117 million and $5 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
F-92 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)