MetLife 2011 Annual Report Download - page 190

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
period the policies and contracts in the closed block remain in-force. Management believes that over time the actual cumulative earnings of the closed
block will approximately equal the expected cumulative earnings due to the effect of dividend changes. If, over the period the closed block remains in
existence, the actual cumulative earnings of the closed block are greater than the expected cumulative earnings of the closed block, the Company will
pay the excess of the actual cumulative earnings of the closed block over the expected cumulative earnings to closed block policyholders as additional
policyholder dividends unless offset by future unfavorable experience of the closed block and, accordingly, will recognize only the expected cumulative
earnings in income with the excess recorded as a policyholder dividend obligation. If over such period, the actual cumulative earnings of the closed
block are less than the expected cumulative earnings of the closed block, the Company will recognize only the actual earnings in income. However, the
Company may change policyholder dividend scales in the future, which would be intended to increase future actual earnings until the actual cumulative
earnings equal the expected cumulative earnings.
Experience within the closed block, in particular mortality and investment yields, as well as realized and unrealized gains and losses, directly impact
the policyholder dividend obligation. Amortization of the closed block DAC, which resides outside of the closed block, is based upon cumulative actual
and expected earnings within the closed block. Accordingly, the Company’s net income continues to be sensitive to the actual performance of the
closed block.
Information regarding the closed block liabilities and assets designated to the closed block was as follows:
December 31,
2011 2010
(In millions)
Closed Block Liabilities
Future policy benefits .................................................................... $43,169 $43,456
Other policy-related balances .............................................................. 358 316
Policyholder dividends payable ............................................................ 514 579
Policyholder dividend obligation ............................................................ 2,919 876
Current income tax payable ............................................................... — 178
Other liabilities .......................................................................... 613 627
Total closed block liabilities ............................................................ 47,573 46,032
Assets Designated to the Closed Block
Investments: ...........................................................................
Fixed maturity securities available-for-sale, at estimated fair value ................................ 30,407 28,768
Equity securities available-for-sale, at estimated fair value ...................................... 35 102
Mortgage loans ....................................................................... 6,206 6,253
Policy loans .......................................................................... 4,657 4,629
Real estate and real estate joint ventures held-for-investment ................................... 364 328
Short-term investments ................................................................. — 1
Other invested assets .................................................................. 857 729
Total investments ................................................................... 42,526 40,810
Cash and cash equivalents ............................................................... 249 236
Accrued investment income ............................................................... 509 518
Premiums, reinsurance and other receivables ................................................. 109 95
Current income tax recoverable ............................................................ 53 —
Deferred income tax assets ............................................................... 362 474
Total assets designated to the closed block ............................................... 43,808 42,133
Excess of closed block liabilities over assets designated to the closed block ......................... 3,765 3,899
Amounts included in accumulated other comprehensive income (loss): .............................
Unrealized investment gains (losses), net of income tax .......................................... 2,394 1,101
Unrealized gains (losses) on derivative instruments, net of income tax ............................... 11 10
Allocated to policyholder dividend obligation, net of income tax .................................... (1,897) (569)
Total amounts included in accumulated other comprehensive income (loss) ...................... 508 542
Maximum future earnings to be recognized from closed block assets and liabilities .................... $ 4,273 $ 4,441
186 MetLife, Inc.