MetLife 2010 Annual Report Download - page 217

Balance,
January 1, Earnings
Other
Comprehensive
Income (Loss)
Purchases,
Sales,
Issuances and
Settlements
Transfer Into
and/or Out
of Level 3 Balance, December 31,
Total Realized/Unrealized
Gains (Losses) included in:
(In millions)
Year Ended December 31, 2009:
Pension:
Fixed maturity securities:
Corporate................ $ 57 $ (5) $ 21 $ (3) $(2) $ 68
Foreignbonds ............. 4 (1) 5 (3) — 5
Total fixed maturity securities . . 61 (6) 26 (6) (2) 73
Equity securities:
Common stock — domestic . . . . 460 — (232) 13 — 241
Total equity securities . . . . . . . 460 — (232) 13 — 241
Pass-throughsecurities......... 80 (2) 8 (24) 7 69
Derivativesecurities........... 40 36 (39) (37) — —
Otherinvestedassets.......... 392 4 (59) 36 — 373
Total pension assets . . . . . . $1,033 $ 32 $(296) $(18) $ 5 $756
Other postretirement:
Pass-throughsecurities......... $ 13 $(17) $ 17 $ (4) $— $ 9
Total other postretirement
assets .............. $ 13 $(17) $ 17 $ (4) $— $ 9
Totalassets........... $1,046 $15 $(279) $(22) $5 $765
The U.S. Subsidiaries provide employees with benefits under various ERISA benefit plans. These include qualified pension plans,
postretirement medical plans and certain retiree life insurance coverage. The assets of the Subsidiaries’ qualified pension plans are held in
insurance group annuity contracts, and the vast majority of the assets of the postretirement medical plan and backing the retiree life coverage
are held in insurance contracts. All of these contracts are issued by Company insurance affiliates, and the assets under the contracts are held
in insurance separate accounts that have been established by the Company. The insurance contract provider engages investment
management firms (“Managers”) to serve as sub-advisors for the separate accounts based on the specific investment needs and requests
identified by the plan fiduciary. These Managers have portfolio management discretion over the purchasing and selling of securities and other
investment assets pursuant to the respective investment management agreements and guidelines established for each insurance separate
account. The assets of the qualified pension plans and postretirement medical plans (the “Invested Plans”) are well diversified across multiple
asset categories and across a number of different Managers, with the intent of minimizing risk concentrations within any given asset category
or with any given Manager.
The Invested Plans, other than those held in participant directed investment accounts, are managed in accordance with investment
policies consistent with the longer-term nature of related benefit obligations and within prudent risk parameters. Specifically, investment
policies are oriented toward (i) maximizing the Invested Plan’s funded status; (ii) minimizing the volatility of the Invested Plan’s funded status;
(iii) generating asset returns that exceed liability increases; and (iv) targeting rates of return in excess of a custom benchmark and industry
standards over appropriate reference time periods. These goals are expected to be met through identifying appropriate and diversified asset
classes and allocations, ensuring adequate liquidity to pay benefits and expenses when due and controlling the costs of administering and
managing the Invested Plan’s investments. Independent investment consultants are periodically used to evaluate the investment risk of
Invested Plan’s assets relative to liabilities, analyze the economic and portfolio impact of various asset allocations and management
strategies and to recommend asset allocations.
Certain foreign subsidiaries sponsor defined benefit plans that cover employees and sales representatives who meet specified eligibility
requirements. Pension benefits are provided utilizing either a traditional formula or cash balance formula, similar to the U.S. plans discussed
above. The investment objectives are also similar, subject to local regulations. Generally, these international pension plans invest directly in
high quality equity and fixed maturity securities. The assets of the foreign pension plans are comprised of cash and cash equivalents, equity
and fixed maturity securities, real estate and hedge fund investments.
Derivative contracts may be used to reduce investment risk, to manage duration and to replicate the risk/return profile of an asset or asset
class. Derivatives may not be used to leverage a portfolio in any manner, such as to magnify exposure to an asset, asset class, interest rates
or any other financial variable. Derivatives are also prohibited for use in creating exposures to securities, currencies, indices or any other
financial variable that are otherwise restricted.
F-128 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)