MetLife 2010 Annual Report Download - page 213

2010 2009 2008
Years Ended
December 31,
(In millions)
Reduction in net periodic other postretirement benefit costs:
Servicecosts .................................................... $ 3 $ 2 $ 5
Interestcosts .................................................... 16 16 20
Amortizationofnetactuarialgains(losses).................................. 10 11 —
Totalreductioninnetperiodicbenefitcosts ............................... $29 $29 $25
The Company received subsidies of $8 million, $12 million and $12 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
Assumptions
Assumptions used in determining benefit obligations were as follows:
2010 2009 2010 2009
December 31,
Other
Postretirement
Benefits
Pension
Benefits
Weightedaveragediscountrate ....................... 5.80% 6.25% 5.80% 6.25%
Rateofcompensationincrease........................ 3.5%-7.5% 2.0%-7.5% N/A N/A
Assumptions used in determining net periodic benefit costs were as follows:
2010 2009 2008 2010 2009 2008
December 31,
Other Postretirement
BenefitsPension Benefits
Weighted average discount rate . . . . . . . . . . . . . 6.25% 6.60% 6.65% 6.25% 6.60% 6.65%
Weighted average expected rate of return on plan
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.00% 8.25% 8.25% 7.20% 7.36% 7.33%
Rateofcompensationincrease.............. 3.5%-7.5% 3.5%-7.5% 3.5%-8% N/A N/A N/A
The weighted average discount rate for most plans is determined annually based on the yield, measured on a yield to worst basis, of a
hypothetical portfolio constructed of high quality debt instruments available on the valuation date, which would provide the necessary future
cash flows to pay the aggregate projected benefit obligation when due.
The weighted average expected rate of return on plan assets is based on anticipated performance of the various asset sectors in which the
plans invest, weighted by target allocation percentages. Anticipated future performance is based on long-term historical returns of the plan
assets by sector, adjusted for the Subsidiaries’ long-term expectations on the performance of the markets. While the precise expected return
derived using this approach will fluctuate from year to year, the policy of most of the Subsidiaries’ is to hold this long-term assumption
constant as long as it remains within reasonable tolerance from the derived rate.
The weighted average expected return on plan assets for use in that plan’s valuation in 2011 is currently anticipated to be 7.25% for
pension benefits and postretirement medical benefits and 5.25% for postretirement life benefits.
The assumed healthcare costs trend rates used in measuring the APBO and net periodic benefit costs were as follows:
2010 2009
December 31,
Pre-and Post-Medicare eligible
claims....................
7.8% in 2011, gradually decreasing
each year until 2083 reaching the
ultimate rate of 4.4%.
8.2% in 2010, gradually decreasing
each year until 2079 reaching the
ultimate rate of 4.1%.
Assumed healthcare costs trend rates may have a significant effect on the amounts reported for healthcare plans. A one-percentage point
change in assumed healthcare costs trend rates would have the following effects:
One Percent
Increase One Percent Decrease
(In millions)
Effectontotalofserviceandinterestcostscomponents......................... $ 8 $ (8)
Effect of accumulated postretirement benefit obligations . . . . . . . . . . . . . . . . . . . . . . . . . $86 $(104)
Plan Assets
Most Subsidiaries have issued group annuity and life insurance contracts supporting the pension and other postretirement benefit plans
assets, which are invested primarily in separate accounts.
F-124 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)