MetLife 2010 Annual Report Download - page 72

stock with a market value of $1.3 billion and, in exchange, delivered 29,243,539 shares of RGA Class B common stock with a net book value
of $1.7 billion resulting in a loss on disposition, including transaction costs, of $458 million.
Contractual Obligations. The following table summarizes the Company’s major contractual obligations at December 31, 2010:
Contractual Obligations Total One Year or Less
More Than
One Year to
Three Years
More Than
Three Years
to Five Years More Than Five Years
(In millions)
Future policy benefits . . . . . . . . . . . . . . . . . . . . . . $319,565 $ 6,271 $10,295 $12,205 $290,794
Policyholder account balances . . . . . . . . . . . . . . . . 289,823 35,981 46,274 35,280 172,288
Other policyholder liabilities . . . . . . . . . . . . . . . . . . 9,983 7,995 485 124 1,379
Payables for collateral under securities loaned and
othertransactions....................... 27,272 27,272 — — —
Bankdeposits........................... 10,406 8,879 1,499 28 —
Short-termdebt.......................... 306 306 — — —
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 31,184 2,340 4,773 5,932 18,139
Collateral financing arrangements . . . . . . . . . . . . . . 6,696 64 127 127 6,378
Junior subordinated debt securities . . . . . . . . . . . . . 10,191 258 517 516 8,900
Commitments to lend funds . . . . . . . . . . . . . . . . . . 12,537 11,215 710 55 557
Operatingleases ......................... 2,151 366 517 303 965
Other................................. 15,356 14,873 52 3 428
Total................................ $735,470 $115,820 $65,249 $54,573 $499,828
Future policy benefits — Future policy benefits include liabilities related to traditional whole life policies, term life policies, pension
closeout and other group annuity contracts, structured settlements, master terminal funding agreements, single premium immediate
annuities, long-term disability policies, individual disability income policies, LTC policies and property and casualty contracts. Included
within future policy benefits are contracts where the Company is currently making payments and will continue to do so until the occurrence of a
specific event such as death, as well as those where the timing of a portion of the payments has been determined by the contract. Also
included are contracts where the Company is not currently making payments and will not make payments until the occurrence of an insurable
event, such as death or illness, or where the occurrence of the payment triggering event, such as a surrender of a policy or contract, is outside
the control of the Company. The Company has estimated the timing of the cash flows related to these contracts based on historical
experience, as well as its expectation of future payment patterns.
Liabilities related to accounting conventions, or which are not contractually due, such as shadow liabilities, excess interest reserves and
property and casualty loss adjustment expenses, of $1.4 billion have been excluded from amounts presented in the table above.
Amounts presented in the table above, excluding those related to property and casualty contracts, represent the estimated cash
payments for benefits under such contracts including assumptions related to the receipt of future premiums and assumptions related to
mortality, morbidity, policy lapse, renewal, retirement, inflation, disability incidence, disability terminations, policy loans and other contingent
events as appropriate to the respective product type. Payments for case reserve liabilities and incurred but not reported liabilities associated
with property and casualty contracts of $1.5 billion have been included using an estimate of the ultimate amount to be settled under the
policies based upon historical payment patterns. The ultimate amount to be paid under property and casualty contracts is not determined until
the Company reaches a settlement with the claimant, which may vary significantly from the liability or contractual obligation presented above
especially as it relates to incurred but not reported liabilities. All estimated cash payments presented in the table above are undiscounted as to
interest, net of estimated future premiums on policies currently in-force and gross of any reinsurance recoverable. The more than five years
category includes estimated payments due for periods extending for more than 100 years from the present date.
The sum of the estimated cash flows shown for all years in the table of $319.6 billion exceeds the liability amount of $173.4 billion included
on the consolidated balance sheet principally due to the time value of money, which accounts for at least 80% of the difference, as well as
differences in assumptions, most significantly mortality, between the date the liabilities were initially established and the current date.
For the majority of the Company’s insurance operations, estimated contractual obligations for future policy benefits and policyholder
account balance liabilities as presented in the table above are derived from the annual asset adequacy analysis used to develop actuarial
opinions of statutory reserve adequacy for state regulatory purposes. These cash flows are materially representative of the cash flows under
GAAP. (See “— Policyholder account balances” below.)
Actual cash payments to policyholders may differ significantly from the liabilities as presented in the consolidated balance sheet and the
estimated cash payments as presented in the table above due to differences between actual experience and the assumptions used in the
establishment of these liabilities and the estimation of these cash payments.
Policyholder account balances — Policyholder account balances include liabilities related to conventional guaranteed interest contracts,
guaranteed interest contracts associated with formal offering programs, funding agreements, individual and group annuities, total control
accounts, individual and group universal life, variable universal life and company-owned life insurance.
Included within policyholder account balances are contracts where the amount and timing of the payment is essentially fixed and
determinable. These amounts relate to policies where the Company is currently making payments and will continue to do so, as well as those
where the timing of the payments has been determined by the contract. Other contracts involve payment obligations where the timing of future
payments is uncertain and where the Company is not currently making payments and will not make payments until the occurrence of an
insurable event, such as death, or where the occurrence of the payment triggering event, such as a surrender of or partial withdrawal on a
policy or deposit contract, is outside the control of the Company. The Company has estimated the timing of the cash flows related to these
contracts based on historical experience, as well as its expectation of future payment patterns.
69MetLife, Inc.