MetLife 2010 Annual Report Download - page 208

Although it no longer received compensation, the Company continued to be responsible for managing the funds of those participants that
transferred to the government system. This change resulted in the establishment of a liability for future servicing obligations and the
elimination of the Company’s obligations under death and disability policy coverages. During 2008, the future servicing obligation was
reduced by $23 million, net of income tax, when information regarding the level of participation in the government pension plan became fully
available.
In September 2008, the Argentine Supreme Court ruled against the validity of the 2002 Pesification Law enacted by the Argentine
government. This ruling applied to certain social security pension annuity contractholders that had filed a lawsuit against the 2002 Pesification
Law. The annuity contracts impacted by this ruling, which were deemed peso denominated under the 2002 Pesification Law, are now
considered to be U.S. dollar denominated obligations of the Company. The applicable contingent liabilities were then adjusted and refined to
be consistent with this ruling. The impact of the refinements resulting from the change in these contingent liabilities and the associated future
policyholder benefits was an increase to net income of $34 million, net of income tax, during the year ended December 31, 2008.
In October 2008, the Argentine government announced its intention to nationalize private pensions and, in December 2008, the Argentine
government nationalized the private pension system seizing the underlying investments of participants which were being managed by the
Company. With this action, the Company’s pension business in Argentina ceased to exist and the Company eliminated certain assets and
liabilities held in connection with the pension business. Deferred acquisition costs, deferred tax assets, and liabilities — primarily the liability
for future servicing obligation referred to above — were eliminated and the Company incurred severance costs associated with the
termination of employees. The impact of the elimination of assets and liabilities and the incurral of severance costs was an increase to
net income of $6 million, net of income tax, during the year ended December 31, 2008.
In March 2009, in light of market developments resulting from the Supreme Court ruling contrary to the Pesification Law and the
implementation by the Company of a program to allow the contractholders that had not filed a lawsuit to convert to U.S. dollars the social
security annuity contracts denominated in pesos by the Pesification Law, the Company further reduced the outstanding contingent liabilities
by $108 million, net of income tax, which was partially offset by the establishment of contingent liabilities from the implementation of the
program to convert these contracts to U.S. dollars of $13 million, net of income tax, resulting in a decrease to net loss of $95 million, net of
income tax, for the year ended December 31, 2009.
Further governmental or legal actions are possible in Argentina. Such actions may impact the level of existing liabilities or may create
additional obligations or benefits to the Company’s operations in Argentina. Management has made its best estimate of its obligations based
upon information currently available; however, further governmental or legal actions could result in changes in obligations which could
materially impact the amounts presented within the consolidated financial statements.
Commitments
Leases
In accordance with industry practice, certain of the Company’s income from lease agreements with retail tenants are contingent upon the
level of the tenants’ revenues. Additionally, the Company, as lessee, has entered into various lease and sublease agreements for office
space, information technology and other equipment. Future minimum rental and sublease income, and minimum gross rental payments
relating to these lease agreements are as follows:
Rental
Income Sublease Income
Gross
Rental
Payments
(In millions)
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $444 $18 $366
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $375 $17 $280
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $331 $16 $237
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $286 $10 $167
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $236 $ 6 $136
Thereafter.................................................... $724 $44 $965
During 2008, the Company moved certain of its operations in New York from Long Island City, Queens to Manhattan. As a result of this
movement 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 Manhattan, the Company incurred a lease impairment charge of $38 million which is included within other
expenses in Banking, Corporate & Other. The impairment charge was determined based upon the present value of the gross rental payments
less sublease income discounted at a risk-adjusted rate over the remaining lease terms which range from 15-20 years. The Company has
made assumptions with respect to the timing and amount of future sublease income in the determination of this impairment charge. During
2009, pending sublease deals were impacted by the further decline of market conditions, which resulted in an additional lease impairment
charge of $52 million. See Note 19 for discussion of $28 million of such charges related to restructuring. Additional impairment charges could
be incurred should market conditions deteriorate further or last for a period significantly longer than anticipated.
Commitments to Fund Partnership Investments
The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded
commitments were $3.8 billion and $4.1 billion at December 31, 2010 and 2009, respectively. The Company anticipates that these amounts
will be invested in partnerships over the next five years.
F-119MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)