MetLife 2012 Annual Report Download - page 110

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
Guarantees
The Company issues variable annuity products with guaranteed minimum benefits. The non-life contingent portion of GMWB and the portion of
certain GMIB that does not require annuitization are accounted for as embedded derivatives in PABs and are further discussed in Note 9. Guarantees
accounted for as insurance liabilities include:
Guarantee: Measurement Assumptions:
GMDB ŠA return of purchase payment upon death even if the
account value is reduced to zero.
ŠAn enhanced death benefit may be available for an
additional fee.
ŠPresent value of expected death benefits in excess of the projected
account balance recognizing the excess ratably over the
accumulation period based on the present value of total expected
assessments.
ŠAssumptions are consistent with those used for amortizing DAC, and
are thus subject to the same variability and risk.
ŠInvestment performance and volatility assumptions are consistent with
the historical experience of the appropriate underlying equity index,
such as the S&P 500 Index.
ŠBenefit assumptions are based on the average benefits payable over
a range of scenarios.
GMIB ŠAfter a specified period of time determined at the time
of issuance of the variable annuity contract, a minimum
accumulation of purchase payments, even if the
account value is reduced to zero, that can be
annuitized to receive a monthly income stream that is
not less than a specified amount.
ŠCertain contracts also provide for a guaranteed lump
sum return of purchase premium in lieu of the
annuitization benefit.
ŠPresent value of expected income benefits in excess of the projected
account balance at any future date of annuitization and recognizing
the excess ratably over the accumulation period based on present
value of total expected assessments.
ŠAssumptions are consistent with those used for estimating GMDB
liabilities.
ŠCalculation incorporates an assumption for the percentage of the
potential annuitizations that may be elected by the contractholder.
GMWB ŠA return of purchase payment via partial withdrawals,
even if the account value is reduced to zero, provided
that cumulative withdrawals in a contract year do not
exceed a certain limit.
ŠCertain contracts include guaranteed withdrawals that
are life contingent.
ŠExpected value of the life contingent payments and expected
assessments using assumptions consistent with those used for
estimating the GMDB liabilities.
The Company also issues annuity contracts that apply a lower rate of funds deposited if the contractholder elects to surrender the contract for cash
and a higher rate if the contractholder elects to annuitize (“two tier annuities”). These guarantees include benefits that are payable in the event of death,
maturity or at annuitization. Additionally, the Company issues universal and variable life contracts where the Company contractually guarantees to the
contractholder a secondary guarantee or a guaranteed paid-up benefit.
Information regarding the liabilities for guarantees (excluding base policy liabilities and embedded derivatives) relating to annuity and universal and
variable life contracts was as follows:
104 MetLife, Inc.