MetLife 2011 Annual Report Download - page 194

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
Due to the reduction in total capacity of the three-year facility, the Company subsequently expensed $4 million of the remaining deferred financing
costs associated with the October 2010 credit agreement, which are included in other expenses.
(2) All borrowings under the credit agreement must be repaid by October 2013, except that letters of credit outstanding upon termination may remain
outstanding until October 2014.
Committed Facilities. The committed facilities are used for collateral for certain of the Company’s affiliated reinsurance liabilities. Total fees
expensed associated with these committed facilities were $93 million, $92 million and $55 million for the years ended December 31, 2011, 2010 and
2009, respectively. Information on these committed facilities at December 31, 2011 was as follows:
Account Party/Borrower(s) Expiration Capacity
Letter of
Credit
Issuances Drawdowns Unused Commitments Maturity (Years)
(In millions)
MetLife, Inc. ..................... August 2012 $ 300 $ 300 $ — $ — —
Exeter Reassurance Company Ltd.,
MetLife, Inc. & Missouri Reinsurance
(Barbados), Inc. ................ June 2016 500 490 — 10 4
MetLife Reinsurance Company of
Vermont & MetLife, Inc. .......... December 2020(1) 350 350 — — 9
Exeter Reassurance Company Ltd. . . . December 2027(1) 650 205 — 445 16
MetLife Reinsurance Company of South
Carolina & MetLife, Inc. ........... June 2037(2) 3,500 — 2,797 703 25
MetLife Reinsurance Company of
Vermont & MetLife, Inc. .......... December 2037(1) 2,896 1,715 — 1,181 26
MetLife Reinsurance Company of
Vermont & MetLife, Inc. .......... September 2038(1) 4,250 2,402 — 1,848 26
Total .......................... $12,446 $5,462 $2,797 $4,187
(1) MetLife, Inc. is guarantor under this agreement.
(2) The drawdown on this facility is associated with the collateral financing arrangement described more fully in Note 12.
As a result of the offerings of certain senior notes (see “— Senior Notes — Other”) and common stock (see Note 18), the commitment letter for a
$5.0 billion senior credit facility, which MetLife, Inc. signed to partially finance the Acquisition, was terminated. During March 2010, MetLife, Inc. paid
$28 million in fees related to this senior credit facility, all of which were expensed during the year ended December 31, 2010.
12. Collateral Financing Arrangements
Associated with the Closed Block
In December 2007, MLIC reinsured a portion of its closed block liabilities to MRC, a wholly-owned subsidiary of MetLife, Inc. In connection with this
transaction, MRC issued, to investors placed by an unaffiliated financial institution, $2.5 billion in aggregate principal amount of 35-year surplus notes to
provide statutory reserve support for the assumed closed block liabilities. Interest on the surplus notes accrues at an annual rate of three-month LIBOR
plus 0.55%, payable quarterly. The ability of MRC to make interest and principal payments on the surplus notes is contingent upon South Carolina
regulatory approval.
Simultaneous with the issuance of the surplus notes, MetLife, Inc. entered into an agreement with the unaffiliated financial institution, under which
MetLife, Inc. is entitled to the interest paid by MRC on the surplus notes of three-month LIBOR plus 0.55% in exchange for the payment of three-month
LIBOR plus 1.12%, payable quarterly on such amount as adjusted, as described below. MetLife, Inc. may also be required to pledge collateral or make
payments to the unaffiliated financial institution related to any decline in the estimated fair value of the surplus notes. Any such payments would be
accounted for as a receivable and included in other assets on the Company’s consolidated balance sheets and would not reduce the principal amount
outstanding of the surplus notes. Such payments would, however, reduce the amount of interest payments due from MetLife, Inc. under the agreement.
Any payment received from the unaffiliated financial institution would reduce the receivable by an amount equal to such payment and would also
increase the amount of interest payments due from MetLife, Inc. under the agreement. In addition, the unaffiliated financial institution may be required to
pledge collateral to MetLife, Inc. related to any increase in the estimated fair value of the surplus notes. MetLife, Inc. may also be required to make a
payment to the unaffiliated financial institution in connection with any early termination of this agreement.
In December 2011, following regulatory approval, MRC repurchased and canceled $650 million in aggregate principal amount of the surplus notes
(the “Partial Repurchase”). Payments made by the Company in December 2011 associated with the Partial Repurchase, which also included payments
made to the unaffiliated financial institution, totaled $650 million, exclusive of accrued interest on the surplus notes. At December 31, 2011 and 2010,
the amount of the surplus notes outstanding was $1.9 billion and $2.5 billion, respectively.
At December 31, 2011 and 2010, the amount of the receivable from the unaffiliated financial institution was $241 million and $425 million,
respectively. In June 2011, MetLife, Inc. received $100 million from the unaffiliated financial institution related to an increase in the estimated fair value of
the surplus notes. No payments were made or received by MetLife, Inc. during 2010. During 2009, on a net basis, MetLife, Inc. received $375 million
from the unaffiliated financial institution related to changes in the estimated fair value of the surplus notes.
In addition, at December 31, 2011 and 2010, MetLife, Inc. had pledged collateral with an estimated fair value of $125 million and $49 million,
respectively, to the unaffiliated financial institution.
A majority of the proceeds from the offering of the surplus notes was placed in a trust, which is consolidated by the Company, to support MRC’s
statutory obligations associated with the assumed closed block liabilities. At both December 31, 2011 and 2010, the estimated fair value of assets held
in trust by the Company was $2.0 billion. The assets are principally invested in fixed maturity securities and are presented as such within the Company’s
190 MetLife, Inc.