MetLife 2010 Annual Report Download - page 155

(1) During the years ended December 31, 2010 and 2008, there were no sales or substantial liquidations of net investments in foreign
operations that would have required the reclassification of gains or losses from accumulated other comprehensive income (loss) into
earnings. During the year ended December 31, 2009, the Company substantially liquidated, through assumption reinsurance (see
Note 2), the portion of its Canadian operations that was being hedged in a net investment hedging relationship. As a result, the Company
reclassified losses of $133 million from accumulated other comprehensive income (loss) into earnings.
(2) There was no ineffectiveness recognized for the Company’s hedges of net investments in foreign operations.
At December 31, 2010 and 2009, the cumulative foreign currency translation gain (loss) recorded in accumulated other comprehensive
income (loss) related to hedges of net investments in foreign operations was ($223) million and ($40) million, respectively.
Non-Qualifying Derivatives and Derivatives for Purposes Other Than Hedging
The Company enters into the following derivatives that do not qualify for hedge accounting or for purposes other than hedging: (i) interest
rate swaps, implied volatility swaps, caps and floors and interest rate futures to economically hedge its exposure to interest rates; (ii) foreign
currency forwards, swaps, option contracts, and future contracts to economically hedge its exposure to adverse movements in exchange
rates; (iii) credit default swaps to economically hedge exposure to adverse movements in credit; (iv) equity futures, equity 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 securities to economically hedge its exposure to interest rates; (vii) credit default swaps and TRRs to synthetically create
investments; (viii) basis swaps to better match the cash flows of assets and related liabilities; (ix) credit default swaps held in relation to
trading portfolios; (x) swaptions to hedge interest rate risk; (xi) inflation swaps to reduce risk generated from inflation-indexed liabilities;
(xii) covered call options for income generation; (xiii) interest rate lock commitments; (xiv) synthetic GICs; and (xv) equity options to
economically hedge certain invested assets against adverse changes in equity indices.
The following tables present the amount and location of gains (losses) recognized in income for derivatives that were not designated or
qualifying as hedging instruments:
Net
Derivative
Gains (Losses)
Net
Investment
Income(1)
Policyholder
Benefits
and Claims(2) Other Revenues(3) Other Expenses(4)
(In millions)
For the Year Ended December 31, 2010:
Interestrateswaps .................... $ 622 $ 4 $ 39 $172 $—
Interestratefloors..................... 144 — — — —
Interestratecaps ..................... (185) — — — —
Interestratefutures .................... 77 (4) — (3) —
Equityfutures........................ (58) (25) (314) — —
Foreigncurrencyswaps ................. 52 — — — —
Foreigncurrencyforwards................ 250 55 — — —
Currencyfutures...................... (23) — — — —
Currencyoptions...................... (83) (1) — — (4)
Equityoptions........................ (683) (16) — — —
Interestrateoptions.................... 25 — — (6) —
Interestrateforwards................... 8 — — (74) —
Varianceswaps....................... (55) — — — —
Creditdefaultswaps ................... 34 (2) — — —
Totalrateofreturnswaps ................ 14 — — — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 139 $ 11 $(275) $ 89 $ (4)
For the Year Ended December 31, 2009:
Interest rate swaps . . . . . . . . . . . . . . . . . . . . $(1,700) $ (5) $ (13) $(161) $—
Interestratefloors..................... (907) — — — —
Interestratecaps ..................... 33 — — — —
Interestratefutures .................... (366) 2 — — —
Equityfutures........................ (681) (38) (363) — —
Foreigncurrencyswaps ................. (405) — — — —
Foreigncurrencyforwards................ (102) (24) — — —
Currencyoptions...................... (36) (1) — — (3)
Equityoptions........................ (1,713) (68) — — —
Interestrateoptions.................... (379) — — — —
Interestrateforwards................... (7) — — (4) —
F-66 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)