MetLife 2013 Annual Report Download - page 145

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
8. Investments (continued)
(2) Non-investment portfolio gains (losses) for the years ended December 31, 2013 and 2012 includes a gain of $30 million and $33 million, respectively,
related to certain dispositions as more fully described in Note 3. Non-investment portfolio gains (losses) for the year ended December 31, 2011
includes a loss of $106 million related to certain dispositions and a goodwill impairment loss of $65 million. See Notes 3 and 11.
See “— Variable Interest Entities” for discussion of CSEs.
Gains (losses) from foreign currency transactions included within net investment gains (losses) were $171 million, ($112) million and $37 million for
the years ended December 31, 2013, 2012 and 2011, respectively.
Sales or Disposals and Impairments of Fixed Maturity and Equity Securities
Proceeds from sales or disposals of fixed maturity and equity securities and the components of fixed maturity and equity securities net investment
gains (losses) are as shown in the table below. Investment gains and losses on sales of securities are determined on a specific identification basis.
Years Ended December 31,
2013 2012 2011 2013 2012 2011 2013 2012 2011
Fixed Maturity Securities Equity Securities Total
(In millions)
Proceeds ................................. $76,070 $59,219 $67,449 $746 $1,648 $1,241 $76,816 $60,867 $68,690
Gross investment gains ...................... $ 1,326 $ 944 $ 892 $ 56 $ 73 $ 108 $ 1,382 $ 1,017 $ 1,000
Gross investment losses ..................... (765) (691) (867) (25) (35) (71) (790) (726) (938)
Total OTTI losses:
Credit-related ............................ (147) (223) (645) — — — (147) (223) (645)
Other (1) ................................ (19) (94) (310) (26) (34) (60) (45) (128) (370)
Total OTTI losses ....................... (166) (317) (955) (26) (34) (60) (192) (351) (1,015)
Net investment gains (losses) ............ $ 395 $ (64) $ (930) $ 5 $ 4 $ (23) $ 400 $ (60) $ (953)
(1) Other OTTI losses recognized in earnings include impairments on (i) equity securities, (ii) perpetual hybrid securities classified within fixed maturity
securities where the primary reason for the impairment was the severity and/or the duration of an unrealized loss position and (iii) fixed maturity
securities where there is an intent to sell or it is more likely than not that the Company will be required to sell the security before recovery of the
decline in estimated fair value.
Credit Loss Rollforward
The table below presents a rollforward of the cumulative credit loss component of OTTI loss recognized in earnings on fixed maturity securities still
held for which a portion of the OTTI loss was recognized in OCI:
Years Ended December 31,
2013 2012
(In millions)
Balance at January 1, ................................................................................. $392 $ 471
Additions:
Initial impairments — credit loss OTTI recognized on securities not previously impaired ............................. 6 46
Additional impairments — credit loss OTTI recognized on securities previously impaired ............................ 69 70
Reductions:
Sales (maturities, pay downs or prepayments) during the period of securities previously impaired as credit loss OTTI ...... (87) (176)
Securities impaired to net present value of expected future cash flows .......................................... — (17)
Increases in cash flows — accretion of previous credit loss OTTI .............................................. (2) (2)
Balance at December 31, .............................................................................. $378 $ 392
9. Derivatives
Accounting for Derivatives
See Note 1 for a description of the Company’s accounting policies for derivatives and Note 10 for information about the fair value hierarchy for
derivatives.
Derivative Strategies
The Company is exposed to various risks relating to its ongoing business operations, including interest rate, foreign currency exchange rate, credit
and equity market. The Company uses a variety of strategies to manage these risks, including the use of derivatives.
Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, credit spreads and/or other
financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter (“OTC”) market. Certain of the Company’s OTC derivatives are
cleared and settled through central clearing counterparties (“OTC-cleared”), while others are bilateral contracts between two counterparties (“OTC-
bilateral”). The types of derivatives the Company uses include swaps, forwards, futures and option contracts. To a lesser extent, the Company uses credit
default swaps and structured interest rate swaps to synthetically replicate investment risks and returns which are not readily available in the cash market.
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