MetLife 2009 Annual Report Download - page 69

Operating leases — As a lessee, the Company has various operating leases, primarily for office space. Contractual provisions exist that
could increase or accelerate those lease obligations presented, including various leases with early buyouts and/or escalation clauses.
However, the impact of any such transactions would not be material to the Company’s financial position or results of operations. See “— Off-
Balance Sheet Arrangements.”
Other — Includes other miscellaneous contractual obligations of $15 million not included elsewhere in the table above. Other liabilities
presented in the table above are principally comprised of amounts due under reinsurance arrangements, payables related to securities
purchased but not yet settled, securities sold short, accrued interest on debt obligations, estimated fair value of derivative obligations,
deferred compensation arrangements, guaranty liabilities, the estimated fair value of forward stock purchase contracts, as well as general
accruals and accounts payable due under contractual obligations. If the timing of any of the other liabilities is sufficiently uncertain, the
amounts are included within the less than one year category.
The other liabilities presented in the table above differs from the amount presented in the consolidated balance sheet by $4.2 billion due
primarily to the exclusion of items such as legal liabilities, pension and postretirement benefit obligations, taxes due other than income tax,
unrecognized tax benefits and related accrued interest, accrued severance and employee incentive compensation and other liabilities such
as deferred gains and losses. Such items have been excluded from the table above as they represent accounting conventions or are not
liabilities due under contractual obligations.
The net funded status of the Company’s pension and other postretirement liabilities included within other liabilities has been excluded from
the amounts presented in the table above. Rather, the amounts presented represent the discretionary contributions of $150 million to be
made by the Company to our pension plan in 2010 and the discretionary contributions of $119 million, based on the current year’s expected
gross benefit payments to participants, to be made by the Company to the postretirement benefit plans during 2010. Virtually all contributions
to the pension and postretirement benefit plans are made by the insurancesubsidiariesoftheHoldingCompanywithlittleimpactonthe
Holding Company’s cash flows.
Excluded from the table above are unrecognized tax benefits and accrued interest of $773 million and $198 million, respectively, for which
the Company cannot reliably determine the timing of payment. Current income tax payable is also excluded from the table.
See also “— Off-Balance Sheet Arrangements.”
Separate account liabilities are excluded from the table above. Generally, the separate account owner, rather than the Company, bears the
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 by corresponding amounts credited to contractholders whose liability is reflected with the separate account
liabilities. Separate account liabilities are fully funded by cash flows from the separate account assets and are set equal to the estimated fair
valueofseparateaccountassets.
The Company also enters into agreements to purchase goods and services in the normal course of business; however, these purchase
obligations were not material to its consolidated results of operations or financial position at December 31, 2009.
Additionally, the Company has agreements in place for services it conducts, generally at cost, between subsidiaries relating to insurance,
reinsurance, loans, and capitalization. Intercompany transactions have appropriately been eliminated in consolidation. Intercompany
transactions among insurance subsidiaries and affiliates have been approved by the appropriate departments of insurance as required.
Support Agreements. The Holding Company and several of its subsidiaries (each, an “Obligor”) are parties to various capital support
commitments, guarantees and contingent reinsurance agreements with certain subsidiaries of the Holding Company and a corporation in
which the Holding Company owns 50% of the equity. Under these arrangements, each Obligor, with respect to the applicable entity, has
agreed to cause such entity to meet specified capital and surplus levels, has guaranteed certain contractual obligations or has agreed to
provide, upon the occurrence of certain contingencies, reinsurance for such entity’s insurance liabilities. We anticipate that in the event that
these arrangements place demands upon the Company, there will be sufficient liquidity and capital to enable the Company to meet
anticipated demands. See “— The Holding Company — Liquidity and Capital Uses — Support Agreements.”
Litigation. Putative or certified class action litigation and other litigation, and claims and assessments against the Company, in addition to
those discussed elsewhere herein and those otherwise provided for in the Company’s consolidated financial statements, have arisen in the
course of the Company’s business, including, but not limited to, in connection with its activities as an insurer, employer, investor, investment
advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state authorities regularly make inquiries and
conduct investigations concerning the Company’s compliance with applicable insurance and other laws and regulations.
It is not possible to predict or determine the ultimate outcome of all pending investigations and legal proceedings or provide reasonable
ranges of potential losses except as noted elsewhere herein in connection with specific matters. In some of the matters referred to herein,
very large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations, it is
possible that an adverse outcome in certain cases could have a material adverse effect upon the Company’s financial position, based on
information currently known by the Company’s management, in its opinion, the outcome of such pending investigations and legal
proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters
and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material
adverse effect on the Company’s consolidated net income or cash flows in particular quarterly or annual periods.
Consolidated Cash Flows. Net cash provided by operating activities was $3.8 billion for the year ended December 31, 2009 as
compared to $10.7 billion for the year ended December 31, 2008. Accordingly, net cash provided by operating activities decreased by
$6.9 billion for the year ended December 31, 2009 as compared to the year ended December 31, 2008. Cash flows from operations
represent the net income (loss) adjusted for non-cash earnings items and changes in operating assets and liabilities. Net loss for the year
ended December 31, 2009 was $2.3 billion as compared to net income of $3.3 billion for the year ended December 31, 2008. Accordingly,
the decrease in earnings of $5.6 billion accounted for most of the $6.9 billion decrease in net cash provided by operating activities for the year
ended December 31, 2009 as compared to the year ended December 31, 2008. Excluding the change in earnings, the Company’s net cash
provided by operating activities was $6.1 billion for the year ended December 31, 2009 compared with $7.4 billion for the year ended
December 31, 2008. The net cash generated from operating activities is used to meet the Company’s liquidity needs, such as debt and
dividend payments, and provides cash available for investing activities. Cash flows from operations are affected by the timing of receipt of
premiums and other revenues, as well as the payment of the Company’s insurance liabilities.
63MetLife, Inc.