MetLife 2011 Annual Report Download - page 75

Contractual Obligations. The following table summarizes the Company’s major contractual obligations at December 31, 2011:
Total(1) One Year or Less(1)
More than
One Year to
Three Years(1)
More than
Three Years to
Five Years(1) More than Five Years(1)
(In millions)
Future policy benefits ........................... $317,340 $ 6,348 $10,561 $13,444 $286,987
Policyholder account balances ................... 295,341 33,909 48,569 32,605 180,258
Other policyholder liabilities ...................... 12,188 7,997 390 150 3,651
Payables for collateral under securities loaned and
other transactions ........................... 33,716 33,716 — — —
Bank deposits ................................ 10,575 9,309 1,218 48 —
Short-term debt ............................... 686 686 — — —
Long-term debt ............................... 30,054 2,390 4,804 6,126 16,734
Collateral financing arrangements ................. 6,106 67 135 133 5,771
Junior subordinated debt securities ................ 9,933 258 517 516 8,642
Commitments to lend funds ..................... 15,065 13,736 101 93 1,135
Operating leases .............................. 2,052 337 481 317 917
Other ....................................... 25,324 24,850 31 — 443
Total ...................................... $758,380 $133,603 $66,807 $53,432 $504,538
(1) The contractual obligations have not been adjusted for businesses expected to be divested in 2012, which are categorized according to the future
timing of such obligations irrespective of the corresponding divestitures. See “— MetLife, Inc. — Capital” and Note 2 of the Notes to the
Consolidated Financial Statements.
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 $4.6 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 $317.3 billion exceeds the liability amount of $184.3 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 — PABs 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 PABs 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.
MetLife, Inc. 71