MetLife 2012 Annual Report Download - page 140

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
The following table presents earned income on derivatives for the:
Years Ended December 31,
2012 2011 2010
(In millions)
Qualifying hedges:
Net investment income ............................................................................... $111 $ 98 $ 83
Interest credited to policyholder account balances .......................................................... 164 214 233
Other expenses ..................................................................................... (5) (4) (6)
Non-qualifying hedges: .................................................................................
Net investment income ............................................................................... (6) (8) (3)
Other revenues ..................................................................................... 47 75 108
Net derivative gains (losses) ........................................................................... 476 411 65
Policyholder benefits and claims ........................................................................ (120) 17 —
Total ............................................................................................ $667 $803 $480
Non-Qualifying Derivatives and Derivatives for Purposes Other Than Hedging
The following table presents the amount and location of gains (losses) recognized in income for derivatives that were not designated or qualifying as
hedging instruments:
Net
Derivative
Gains (Losses)
Net
Investment
Income (1)
Policyholder
Benefits and
Claims (2) Other Revenues (3) Other Expenses (4)
(In millions)
For the Year Ended December 31, 2012:
Interest rate derivatives ............................................ $ (296) $ — $ — $ 28 $—
Foreign currency exchange rate derivatives ............................. (660) — — — —
Credit derivatives ................................................. (148) (14) — — —
Equity derivatives ................................................. (2,556) (9) (419) — —
Total ......................................................... $(3,660) $(23) $(419) $ 28 $—
For the Year Ended December 31, 2011:
Interest rate derivatives ............................................ $3,940 $ (1) $ — $236 $—
Foreign currency exchange rate derivatives ............................. 343 (9) — — —
Credit derivatives ................................................. 175 5 — — —
Equity derivatives ................................................. 1,178 (35) (87) — —
Total ......................................................... $5,636 $(40) $ (87) $236 $—
For the Year Ended December 31, 2010:
Interest rate derivatives ............................................ $ 691 $— $ 39 $ 89 $—
Foreign currency exchange rate derivatives ............................. 196 54 — — (4)
Credit derivatives ................................................. 34 (2) — — —
Equity derivatives ................................................. (782) (41) (314) — —
Total ......................................................... $ 139 $11 $(275) $ 89 $ (4)
(1) Changes in estimated fair value related to economic hedges of equity method investments in joint ventures; changes in estimated fair value related
to derivatives held in relation to trading portfolios; and changes in estimated fair value related to derivatives held within contractholder-directed unit-
linked investments.
(2) Changes in estimated fair value related to economic hedges of variable annuity guarantees included in future policy benefits.
(3) Changes in estimated fair value related to derivatives held in connection with the Company’s mortgage banking activities.
(4) Changes in estimated fair value related to economic hedges of foreign currency exposure associated with the Company’s international subsidiaries.
Fair Value Hedges
The Company designates and accounts for the following as fair value hedges when they have met the requirements of fair value hedging: (i) interest
rate swaps to convert fixed rate assets and liabilities to floating rate assets and liabilities; (ii) foreign currency swaps to hedge the foreign currency fair
value exposure of foreign currency denominated assets and liabilities; and (iii) foreign currency forwards to hedge the foreign currency fair value
exposure of foreign currency denominated fixed rate investments.
134 MetLife, Inc.