MetLife 2011 Annual Report Download - page 189

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
The amounts in the consolidated balance sheets include the impact of reinsurance. Information regarding the effect of reinsurance was as follows at:
December 31, 2011
Direct Assumed Ceded
Total
Balance
Sheet
(In millions)
Assets:
Premiums, reinsurance and other receivables ........................... $ 5,601 $ 641 $16,239 $ 22,481
Deferred policy acquisition costs and value of business acquired ........... 27,979 138 (146) 27,971
Total assets ................................................... $ 33,580 $ 779 $16,093 $ 50,452
Liabilities:
Future policy benefits .............................................. $182,281 $1,972 $ (1) $184,252
Policyholder account balances ...................................... 214,206 3,494 — 217,700
Other policy-related balances ....................................... 14,880 339 380 15,599
Other liabilities ................................................... 25,245 630 5,039 30,914
Total liabilities .................................................. $436,612 $6,435 $ 5,418 $448,465
December 31, 2010
Direct Assumed Ceded
Total
Balance
Sheet
(In millions)
Assets:
Premiums, reinsurance and other receivables ........................... $ 5,517 $ 722 $13,560 $ 19,799
Deferred policy acquisition costs and value of business acquired ........... 27,095 176 (179) 27,092
Total assets ................................................... $ 32,612 $ 898 $13,381 $ 46,891
Liabilities:
Future policy benefits .............................................. $168,903 $2,074 $ (65) $170,912
Policyholder account balances ...................................... 208,520 2,237 — 210,757
Other policy-related balances ....................................... 14,981 265 504 15,750
Other liabilities ................................................... 17,057 608 2,701 20,366
Total liabilities .................................................. $409,461 $5,184 $ 3,140 $417,785
Reinsurance agreements that do not expose the Company to a reasonable possibility of a significant loss from insurance risk are recorded using the
deposit method of accounting. The deposit assets on reinsurance were $2.4 billion and $2.5 billion at December 31, 2011 and 2010, respectively. The
deposit liabilities on reinsurance were $66 million and $47 million at December 31, 2011 and 2010, respectively.
10. Closed Block
On April 7, 2000 (the “Demutualization Date”), Metropolitan Life Insurance Company (“MLIC”) converted from a mutual life insurance company to a
stock life insurance company and became a wholly-owned subsidiary of MetLife, Inc. The conversion was pursuant to an order by the New York
Superintendent of Insurance (the “Superintendent”) approving MLIC’s plan of reorganization, as amended (the “Plan”). On the Demutualization Date,
MLIC established a closed block for the benefit of holders of certain individual life insurance policies of MLIC. Assets have been allocated to the closed
block in an amount that has been determined to produce cash flows which, together with anticipated revenues from the policies included in the closed
block, are reasonably expected to be sufficient to support obligations and liabilities relating to these policies, including, but not limited to, provisions for
the payment of claims and certain expenses and taxes, and to provide for the continuation of policyholder dividend scales in effect for 1999, if the
experience underlying such dividend scales continues, and for appropriate adjustments in such scales if the experience changes. At least annually, the
Company compares actual and projected experience against the experience assumed in the then-current dividend scales. Dividend scales are adjusted
periodically to give effect to changes in experience.
The closed block assets, the cash flows generated by the closed block assets and the anticipated revenues from the policies in the closed block
will benefit only the holders of the policies in the closed block. To the extent that, over time, cash flows from the assets allocated to the closed block
and claims and other experience related to the closed block are, in the aggregate, more or less favorable than what was assumed when the closed
block was established, total dividends paid to closed block policyholders in the future may be greater than or less than the total dividends that would
have been paid to these policyholders if the policyholder dividend scales in effect for 1999 had been continued. Any cash flows in excess of amounts
assumed will be available for distribution over time to closed block policyholders and will not be available to stockholders. If the closed block has
insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside of the closed block. The closed block
will continue in effect as long as any policy in the closed block remains in-force. The expected life of the closed block is over 100 years.
The Company uses the same accounting principles to account for the participating policies included in the closed block as it used prior to the
Demutualization Date. However, the Company establishes a policyholder dividend obligation for earnings that will be paid to policyholders as additional
dividends as described below. The excess of closed block liabilities over closed block assets at the Demutualization Date (adjusted to eliminate the
impact of related amounts in accumulated other comprehensive income) represents the estimated maximum future earnings from the closed block
expected to result from operations attributed to the closed block after income taxes. Earnings of the closed block are recognized in income over the
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