MetLife 2011 Annual Report Download - page 149

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
The following table presents the components of accumulated other comprehensive income (loss), before income tax, related to cash flow hedges:
Years Ended December 31,
2011 2010 2009
(In millions)
Accumulated other comprehensive income (loss), balance at January 1, ........................ $ (59) $(76) $ 82
Gains (losses) deferred in other comprehensive income (loss) on the effective portion of cash flow
hedges ......................................................................... 1,552 (51) (221)
Amounts reclassified to net derivative gains (losses) ........................................ 9 65 54
Amounts reclassified to net investment income ............................................ 3 4 8
Amounts reclassified to other expenses .................................................. 9 (1) 3
Amortization of transition adjustment .................................................... — — (2)
Accumulated other comprehensive income (loss), balance at December 31, ..................... $1,514 $(59) $ (76)
At December 31, 2011, $13 million of deferred net gains (losses) on derivatives in accumulated other comprehensive income (loss) was expected to
be reclassified to earnings within the next 12 months.
The following table presents the effects of derivatives in cash flow hedging relationships on the consolidated statements of operations and the
consolidated statements of equity:
Derivatives in Cash Flow
Hedging Relationships
Amount of Gains
(Losses) Deferred
in Accumulated Other
Comprehensive Income
(Loss) on Derivatives
Amount and Location
of Gains (Losses)
Reclassified from
Accumulated Other Comprehensive
Income (Loss) into Income (Loss)
Amount and Location
of Gains (Losses)
Recognized in Income (Loss)
on Derivatives
(Effective Portion) (Effective Portion)
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)
Net Derivative
Gains (Losses) Net Investment Income Other Expenses Net Derivative Gains (Losses) Net Investment Income
(In millions)
For the Year Ended December 31, 2011:
Interest rate swaps ........................... $1,023 $ (42) $ 1 $(10) $ 1 $—
Foreign currency swaps ....................... 175 — (6) 2 2 —
Interest rate forwards ......................... 336 31 1 (1) 2 —
Credit forwards .............................. 18 2 1 — — —
Total .................................. $1,552 $ (9) $ (3) $ (9) $ 5 $—
For the Year Ended December 31, 2010:
Interest rate swaps ........................... $ 13 $ — $— $ (1) $ 3 $—
Foreign currency swaps ....................... 34 (79) (6) 2 — —
Interest rate forwards ......................... (117) 14 2 — (2) —
Credit forwards .............................. 19 — — — — —
Total .................................. $ (51) $ (65) $ (4) $ 1 $ 1 $—
For the Year Ended December 31, 2009:
Interest rate swaps ........................... $ (45) $ — $— $ (4) $ (2) $—
Foreign currency swaps ....................... (319) (133) (6) 1 (1) —
Interest rate forwards ......................... 147 79 — — — —
Credit forwards .............................. (4) — — — — —
Total .................................. $ (221) $ (54) $ (6) $ (3) $ (3) $—
All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.
Hedges of Net Investments in Foreign Operations
The Company uses foreign exchange contracts, which may include foreign currency swaps, forwards and options, to hedge portions of its net
investments in foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on these contracts based
upon the change in forward rates. In addition, the Company may also use non-derivative financial instruments to hedge portions of its net investments in
foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on non-derivative financial instruments
based upon the change in spot rates.
When net investments in foreign operations are sold or substantially liquidated, the amounts in accumulated other comprehensive income (loss) are
reclassified to the consolidated statements of operations, while a pro rata portion will be reclassified upon partial sale of the net investments in foreign
operations.
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