MetLife 2013 Annual Report Download - page 110
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MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
2. Segment Information (continued)
‰Amortization of negative VOBA excludes amounts related to Market Value Adjustments;
‰Interest expense on debt excludes certain amounts related to securitization entities that are VIEs consolidated under GAAP; and
‰Other expenses excludes costs related to: (i) noncontrolling interests, (ii) implementation of new insurance regulatory requirements, and
(iii) acquisition and integration costs.
Operating earnings also excludes the recognition of certain contingent assets and liabilities that could not be recognized at acquisition or adjusted
for during the measurement period under GAAP business combination accounting guidance.
Set forth in the tables below is certain financial information with respect to the Company’s segments, as well as Corporate & Other, for the years
ended December 31, 2013, 2012 and 2011 and at December 31, 2013 and 2012. The segment accounting policies are the same as those used to
prepare the Company’s consolidated financial statements, except for operating earnings adjustments as defined above. In addition, segment
accounting policies include the method of capital allocation described below.
Economic capital is an internally developed risk capital model, the purpose of which is to measure the risk in the business and to provide a basis
upon which capital is deployed. The economic capital model accounts for the unique and specific nature of the risks inherent in the Company’s
business.
The Company’s economic capital model aligns segment allocated equity with emerging standards and consistent risk principles. The model applies
statistics-based risk evaluation principles to the material risks to which the Company is exposed. These consistent risk principles include calibrating
required economic capital shock factors to a specific confidence level and time horizon and applying an industry standard method for the inclusion of
diversification benefits among risk types.
For the Company’s domestic segments, net investment income is credited or charged based on the level of allocated equity; however, changes in
allocated equity do not impact the Company’s consolidated net investment income, operating earnings or income (loss) from continuing operations, net
of income tax.
102 MetLife, Inc.