-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OazOWJbQUxmMbyY4UIi4o47jlW0e5efFj3sDELYkp7FbwZFsD3Albmnj2oWJB2Zv 2WXnNpm/ZOQPe7VwjhUcow== 0001193125-08-086743.txt : 20080422 0001193125-08-086743.hdr.sgml : 20080422 20080422153409 ACCESSION NUMBER: 0001193125-08-086743 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20080422 DATE AS OF CHANGE: 20080422 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE CENTRAL INDEX KEY: 0000815915 IRS NUMBER: 431236042 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-51950 FILM NUMBER: 08769220 BUSINESS ADDRESS: STREET 1: 5 PARK PLAZA, SUITE 1900 CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 949-223-5680 MAIL ADDRESS: STREET 1: 5 PARK PLAZA, SUITE 1900 CITY: IRVINE STATE: CA ZIP: 92614 FORMER COMPANY: FORMER CONFORMED NAME: COVA VARIABLE ANNUITY ACCOUNT ONE DATE OF NAME CHANGE: 19960314 FORMER COMPANY: FORMER CONFORMED NAME: XEROX VARIABLE ANNUITY ACCOUNT ONE DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ACCOUNT FOR PERFORMANCE DATE OF NAME CHANGE: 19880307 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE CENTRAL INDEX KEY: 0000815915 IRS NUMBER: 431236042 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05200 FILM NUMBER: 08769221 BUSINESS ADDRESS: STREET 1: 5 PARK PLAZA, SUITE 1900 CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 949-223-5680 MAIL ADDRESS: STREET 1: 5 PARK PLAZA, SUITE 1900 CITY: IRVINE STATE: CA ZIP: 92614 FORMER COMPANY: FORMER CONFORMED NAME: COVA VARIABLE ANNUITY ACCOUNT ONE DATE OF NAME CHANGE: 19960314 FORMER COMPANY: FORMER CONFORMED NAME: XEROX VARIABLE ANNUITY ACCOUNT ONE DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ACCOUNT FOR PERFORMANCE DATE OF NAME CHANGE: 19880307 0000815915 S000005147 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE C000014092 Class XC 485APOS 1 d485apos.txt MLI MO XC POST-EFFECTIVE AMENDMENT NO. 22 As filed with the Securities and Exchange Commission on April 22, 2008 File Nos. 333-51950 811-05200 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. [] Post-Effective Amendment No. 22 [x] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 179 [x] (Check Appropriate Box or Boxes) MetLife Investors Variable Annuity Account One (Exact Name of Registrant) MetLife Investors Insurance Company 5 Park Plaza, Suite 1900 Irvine, California 92614 (Address of Depositor's Principal Executive Offices) (Zip Code) Depositor's Telephone Number, including Area Code (800) 989-3752 (Name and Address of Guarantor) General American Life Insurance Company 13045 Tesson Ferry Road St. Louis, Missouri 63128 (Name and Address of Agent for Service) Richard C. Pearson Vice President MetLife Investors Insurance Company Irvine, CA 92614 (949) 223-5680 COPIES TO: W. Thomas Conner Sutherland Asbill & Brennan LLP 1275 Pennsylvania Avenue, N.W. Washington, DC 20004-2415 (202) 383-0590 (Approximate Date of Proposed Public Offering) It is proposed that this filing will become effective (check appropriate box): [] immediately upon filing pursuant to paragraph (b) of Rule 485. [] on (date) pursuant to paragraph (b) of Rule 485. [x] 60 days after filing pursuant to paragraph (a)(1) of Rule 485. [] on (date) pursuant to paragraph (a)(1) of Rule 485. If appropriate, check the following box: [] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Registered: (1) Individual Variable Annuity Contracts, and (2) Guarantee related to insurance obligations under variable annuity contracts METLIFE INVESTORS USA INSURANCE COMPANY METLIFE INVESTORS USA SEPARATE ACCOUNT A METLIFE INVESTORS INSURANCE COMPANY METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE FIRST METLIFE INVESTORS INSURANCE COMPANY FIRST METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE SUPPLEMENT DATED APRIL 28, 2008 TO PROSPECTUS DATED APRIL 28, 2008 This supplement describes an increase in certain Purchase Payment Credits applicable to Series/Class XC variable annuity contracts issued by MetLife Investors USA Insurance Company, MetLife Investors Insurance Company and First MetLife Investors Insurance Company ("we," "us," or "our"). This supplement provides information in addition to the prospectus dated April 28, 2008 for the contract. This supplement should be read in its entirety and kept together with your prospectus for future reference. If you would like another copy of the prospectus, write to us at 5 Park Plaza, Suite 1900, Irvine, CA 92614 or call us at (800) 343-8496 to request a free copy. 1. HIGHLIGHTS Add the following after the second paragraph under "HIGHLIGHTS": "For contracts issued on or after April 28, 2008, the amount of the Purchase Payment Credit is 6%. For contracts issued on or after April 28, 2008, there is no additional 1% credit for contracts with purchase payments of $1 million or more. This Purchase Payment Credit increase does not apply retroactively to contracts issued before April 28, 2008. For contracts issued from April 28, 2008 until the date we change or rescind this Purchase Payment Credit increase, the Purchase Payment Credit increase will apply to your initial purchase payment and each subsequent purchase payment received by us prior to the contract anniversary immediately following your 81st birthday. For this Purchase Payment Credit increase to apply to your contract, the MetLife Annuity Service Center must receive your application (with all required documents) in good order before the date when the Purchase Payment Credit increase is no longer in effect. We reserve the right to change or rescind this Purchase Payment Credit increase for contracts issued based on applications received after June 30, 2008." 2. PURCHASE Add the following after the second paragraph under "Purchase Payment Credit": "For contracts issued on or after April 28, 2008, the Purchase Payment Credit is an amount equal to 6% of the purchase payment. For contracts issued on or after April 28, 2008, there is no additional 1% credit for contracts with purchase payments of $1 million or more. This Purchase Payment Credit increase does not apply retroactively to contracts issued before April 28, 2008. For contracts issued from April 28, 2008 until the date we change or rescind this Purchase Payment Credit increase, the Purchase Payment Credit increase will apply to your initial purchase payment and each subsequent purchase payment received by us prior to the contract anniversary immediately following your 81st birthday (if joint owners are named, the age of the oldest owner will apply, and if a non-natural person owns the contract, then the annuitant's age will apply). For this Purchase Payment Credit increase to apply to your contract, the MetLife Annuity Service Center must receive your application (with all required documents) in good order before the date when the Purchase Payment Credit increase is no longer in effect. We reserve the right to change or rescind this Purchase Payment Credit increase for contracts issued based on applications received after June 30, 2008." SUPP-PPC0408 Add the following at the end of the discussion of "Accumulation Units," after the Example: "EXAMPLE FOR CONTRACTS ISSUED ON OR AFTER APRIL 28, 2008 (WHILE THE PURCHASE PAYMENT CREDIT INCREASE IS IN EFFECT): On Monday we receive an additional purchase payment of $5,000 from you before 4:00 p.m. Eastern Time. We add an additional $300 to your contract as a Purchase Payment Credit. You have told us you want this to go to the Lord Abbett Growth and Income Portfolio. When the New York Stock Exchange closes on that Monday, we determine that the value of an accumulation unit for the Lord Abbett Growth and Income Portfolio is $12.50. We divide $5,300 by $12.50 and credit your contract on Monday night with 424 accumulation units for the Lord Abbett Growth and Income Portfolio." THIS SUPPLEMENT SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE 5 Park Plaza, Suite 1900 Telephone: 800-343-8496 Irvine, CA 92614 THE VARIABLE ANNUITY CONTRACT ISSUED BY METLIFE INVESTORS INSURANCE COMPANY AND METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE CLASS XC APRIL 28, 2008 This prospectus describes the flexible premium deferred variable annuity contract offered by MetLife Investors Insurance Company (MetLife Investors or we or us). The contracts are offered for individuals and some tax qualified and non-tax qualified retirement plans. The annuity contract has 41 investment choices - a fixed account that offers an interest rate guaranteed by us, and 40 investment portfolios listed below. You can put your money in the fixed account and/or any of these investment portfolios. The expenses for a contract with a Purchase Payment Credit may be higher than expenses for a contract without a credit. The amount of the Purchase Payment Credit may be more than offset by the fees and charges associated with the credit. MET INVESTORS SERIES TRUST (CLASS B OR, AS NOTED, CLASS C): American Funds Bond Portfolio (Class C) American Funds Growth Portfolio (Class C) American Funds International Portfolio (Class C) BlackRock High Yield Portfolio Clarion Global Real Estate Portfolio (formerly Neuberger Berman Real Estate Portfolio) Harris Oakmark International Portfolio Lazard Mid Cap Portfolio Legg Mason Partners Aggressive Growth Portfolio Legg Mason Value Equity Portfolio Loomis Sayles Global Markets Portfolio Lord Abbett Bond Debenture Portfolio Lord Abbett Growth and Income Portfolio Lord Abbett Mid Cap Value Portfolio Met/AIM Small Cap Growth Portfolio Met/Franklin Mutual Shares Portfolio MFS (Reg. TM) Emerging Markets Equity Portfolio MFS (Reg. TM) Research International Portfolio PIMCO Inflation Protected Bond Portfolio PIMCO Total Return Portfolio Rainier Large Cap Equity Portfolio RCM Technology Portfolio T. Rowe Price Mid Cap Growth Portfolio Third Avenue Small Cap Value Portfolio Turner Mid Cap Growth Portfolio Van Kampen Comstock Portfolio METROPOLITAN SERIES FUND, INC. (CLASS B OR, AS NOTED, CLASS E): BlackRock Money Market Portfolio Davis Venture Value Portfolio (Class E) Harris Oakmark Focused Value Portfolio Jennison Growth Portfolio MetLife Stock Index Portfolio Western Asset Management U.S. Government Portfolio 1 MET INVESTORS SERIES TRUST - METLIFE ASSET ALLOCATION PROGRAM (CLASS B): MetLife Defensive Strategy Portfolio MetLife Moderate Strategy Portfolio MetLife Balanced Strategy Portfolio MetLife Growth Strategy Portfolio MetLife Aggressive Strategy Portfolio MET INVESTORS SERIES TRUST - AMERICAN FUNDS ASSET ALLOCATION PORTFOLIOS (CLASS C): American Funds Moderate Allocation Portfolio American Funds Balanced Allocation Portfolio American Funds Growth Allocation Portfolio MET INVESTORS SERIES TRUST - FRANKLIN TEMPLETON ASSET ALLOCATION PORTFOLIO (CLASS B): Met/Franklin Templeton Founding Strategy Portfolio Please read this prospectus before investing and keep it on file for future reference. It contains important information about the MetLife Investors Variable Annuity Contract. To learn more about the MetLife Investors Variable Annuity Contract, you can obtain a copy of the Statement of Additional Information (SAI) dated April 28, 2008. The SAI has been filed with the Securities and Exchange Commission (SEC) and is legally a part of the prospectus. The SEC maintains a Web site (http://www.sec.gov) that contains the SAI, material incorporated by reference, and other information regarding companies that file electronically with the SEC. The Table of Contents of the SAI is on Page 80 of this prospectus. For a free copy of the SAI, call us at (800) 343-8496, visit our website at WWW.METLIFEINVESTORS.COM, or write to us at: 5 Park Plaza, Suite 1900, Irvine, CA 92614. The contracts: o are not bank deposits o are not FDIC insured o are not insured by any federal government agency o are not guaranteed by any bank or credit union o may be subject to loss of principal THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. April 28, 2008 2 TABLE OF CONTENTS PAGE PAGE INDEX OF SPECIAL TERMS ................. 4 HIGHLIGHTS ............................. 7 FEE TABLES AND EXAMPLES ................ 9 1. THE ANNUITY CONTRACT ................ 18 Market Timing ..................... 18 2. PURCHASE ............................ 19 Purchase Payments ................. 19 Termination for Low Account Value . 19 Allocation of Purchase Payments ... 19 Investment Allocation Restrictions for Certain Riders .......................... 20 Purchase Payment Credit ........... 22 Free Look ......................... 22 Accumulation Units ................ 22 Account Value ..................... 23 Replacement of Contracts .......... 23 3. INVESTMENT OPTIONS .................. 23 Transfers ......................... 25 Dollar Cost Averaging Programs .... 28 Three Month Market Entry Program .. 30 Automatic Rebalancing Program ..... 30 Description of the MetLife Asset Allocation Program ......................... 30 Voting Rights ..................... 31 Substitution of Investment Options 31 4. EXPENSES ............................ 31 Product Charges ................... 31 Account Fee ....................... 32 Guaranteed Minimum Income Benefit - Rider Charge .......... 32 Lifetime Withdrawal Guarantee and Guaranteed Withdrawal Benefit - Rider 33 Charge Guaranteed Minimum Accumulation Benefit - Rider Charge .......... 34 Withdrawal Charge ................. 34 Reduction or Elimination of the Withdrawal Charge .......................... 35 Premium and Other Taxes ........... 36 Transfer Fee ...................... 36 Income Taxes ...................... 36 Investment Portfolio Expenses ..... 36 5. ANNUITY PAYMENTS (THE INCOME PHASE) ................ 36 Annuity Date ...................... 36 Annuity Payments .................. 36 Annuity Options ................... 37 6. ACCESS TO YOUR MONEY ................ 39 Systematic Withdrawal Program ..... 40
Suspension of Payments or 40 Transfers 7. LIVING BENEFITS ..................... 40 Overview of Living Benefit Riders . 40 Guaranteed Income Benefits ........ 41 Description of GMIB Plus II ....... 42 Description of GMIB Plus I ........ 46 Description of GMIB II ............ 47 Description of GMIB I ............. 48 Guaranteed Withdrawal Benefits .... 48 Description of the Lifetime Withdrawal Guarantee II .............................. 50 Description of the Lifetime Withdrawal Guarantee I ............................... 54 Description of the Enhanced Guaranteed Withdrawal Benefit .............. 55 Description of the Guaranteed Withdrawal Benefit I ............................... 59 Guaranteed Minimum Accumulation 59 Benefit 8. PERFORMANCE ......................... 64 9. DEATH BENEFIT ....................... 64 Upon Your Death ................... 64 Standard Death Benefit - Principal 65 Protection Optional Death Benefit - Annual 65 Step-Up Optional Death Benefit - Enhanced 65 Death Benefit Optional Death Benefit - 67 Compounded-Plus Additional Death Benefit - Earnings Preservation Benefit ......................... 68 General Death Benefit Provisions .. 69 Spousal Continuation .............. 69 Death of the Annuitant ............ 70 Controlled Payout ................. 70 10. FEDERAL INCOME TAX STATUS .......... 70 Taxation of Non-Qualified 70 Contracts Taxation of Qualified Contracts ... 72 Tax Benefits Related to the Assets of the Separate Account ......................... 75 Possible Tax Law Changes .......... 75 11. OTHER INFORMATION .................. 75 MetLife Investors ................. 75 The Separate Account .............. 76 Distributor ....................... 76 Selling Firms ..................... 77 Requests and Elections ............ 78 Ownership ......................... 79 Legal Proceedings ................. 80 Financial Statements .............. 80
3 TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ................. 80 APPENDIX A ............................. A-1 Condensed Financial Information ... A-1 APPENDIX B ............................. B-1 Participating Investment B-1 Portfolios APPENDIX C ............................. C-1 EDCA Examples with Multiple C-1 Purchase Payments APPENDIX D ............................. D-1 Guaranteed Minimum Income Benefit D-1 Examples APPENDIX E ............................. E-1 Guaranteed Withdrawal Benefit E-1 Examples APPENDIX F ............................. F-1 Enhanced Death Benefit Examples ... F-1
4 INDEX OF SPECIAL TERMS Because of the complex nature of the contract, we have used certain words or terms in this prospectus which may need an explanation. We have identified the following as some of these words or terms. The page that is indicated here is where we believe you will find the best explanation for the word or term. These words and terms are in italics on the indicated page. PAGE Account Value..............................................................23 Accumulation Phase.........................................................18 Accumulation Unit..........................................................22 Annual Benefit Payment.......................................50 and 56 Annuitant..................................................................79 Annuity Date...............................................................36 Annuity Options............................................................37 Annuity Payments...........................................................36 Annuity Units..............................................................37 Beneficiary................................................................79 Benefit Base...............................................................56 Business Day...............................................................19 Death Benefit Base.........................................................65 Fixed Account..............................................................18 Guaranteed Accumulation Amount.............................................59 Guaranteed Withdrawal Amount...............................................57 GWB Withdrawal Rate........................................................56 Income Base................................................................42 Income Phase...............................................................18 Investment Portfolios......................................................23 Joint Owners...............................................................79 Owner......................................................................79 Purchase Payment Credit....................................................22 Purchase Payment...........................................................19 Remaining Guaranteed Withdrawal Amount.....................................50 Separate Account...........................................................76 Total Guaranteed Withdrawal Amount.........................................50 5 This page intentionally left blank. 6 HIGHLIGHTS The variable annuity contract that we are offering is a contract between you, the owner, and us, the insurance company, where you agree to make at least one purchase payment to us and we agree to make a series of annuity payments at a later date. The contract has a maximum issue age and you should consult with your registered representative. The contract provides a means for investing on a tax-deferred basis in our fixed account and the investment portfolios. The contract is intended for retirement savings or other long-term investment purposes. When you purchase the contract, you can choose an optional death benefit and fixed and variable income options. You can also select a guaranteed minimum income benefit ("GMIB"), a guaranteed withdrawal benefit ("GWB"), or the guaranteed minimum accumulation benefit ("GMAB"). As a result of the purchase payment credit feature of this contract, the contract is available only to prospective owners who are age 80 or younger. We will add a Purchase Payment Credit to your account value with respect to your initial purchase payment and any subsequent purchase payment received by us prior to the contract anniversary immediately following your 81st birthday. The amount of the credit is 5% (an additional 1% credit is added if your total purchase payments equal $1 million or more). A portion of certain charges (the mortality and expense charge and the withdrawal charge) assessed under the contract are used to fund the credit. The contract, like all deferred annuity contracts, has two phases: the accumulation phase and the income phase. During the accumulation phase, earnings accumulate on a tax-deferred basis and are taxed as income when you make a withdrawal. If you make a withdrawal during the accumulation phase, we may assess a withdrawal charge of up to 8%. The income phase occurs when you or a designated payee begin receiving regular annuity payments from your contract. You and the annuitant (the person on whose life we base annuity payments) do not have to be the same, unless you purchase a tax qualified contract or elect a GMIB (see "Living Benefits - Guaranteed Income Benefits"). You can have annuity payments made on a variable basis, a fixed basis, or a combination of both. If you choose variable annuity payments, the amount of the variable annuity payments will depend upon the investment performance of the investment portfolio(s) you select for the income phase. If you choose fixed annuity payments, the amount of each payment will not change during the income phase. TAX DEFERRAL AND QUALIFIED PLANS. The contracts are offered for individuals and some tax qualified and non-tax qualified retirement plans. For any tax qualified account (e.g., an IRA), the tax deferred accrual feature is provided by the tax qualified retirement plan. Therefore, there should be reasons other than tax deferral for acquiring the contract within a qualified plan. (See "Federal Income Tax Status.") STATE VARIATIONS. Contracts issued in your state may provide different features and benefits from, and impose different costs than, those described in this prospectus because of state law variations. These differences include, among other things, free look rights, age issuance limitations, transfer rights and limitations, the right to reject purchase payments, the right to assess transfer fees, and general availability of certain riders. However, please note that the maximum fees and charges for all features and benefits are set forth in the fee table in this prospectus. If you would like to review a copy of the contract and any endorsements, contact our Annuity Service Center. FREE LOOK. You may cancel the contract within 10 days after receiving it (or whatever period is required in your state). If you mail your cancellation request, the request must be postmarked by the appropriate day; if you deliver your cancellation request by hand, it must be received by us by the appropriate day. Unless otherwise required by state law, we will return the account value less the adjusted Purchase Payment Credit. The adjusted Purchase Payment Credit is equal to the lesser of: (1) the portion of the account value that is attributable to the Purchase Payment Credit; or (2) the total of Purchase Payment Credit(s). This means that you receive any investment gain on the Purchase Payment Credit(s) and MetLife Investors bears any loss. We will return your payment if required by law. TAX PENALTY. The earnings in your contract are not taxed until you take money out of your contract. If you take money out of a non-qualified contract during the accumulation phase, for tax purposes any earnings are deemed to come out first. If you are younger than 59 1/2 when you take money out, you may be charged a 10% federal tax penalty on those earnings. Payments during the income phase are considered partly a return of your original investment until your investment is returned. 7 NON-NATURAL PERSONS AS OWNERS. If the owner of a non-qualified annuity contract is not a natural person (e.g., a corporation, partnership or certain trusts), gains under the contract are generally not eligible for tax deferral. The owner of this contract can be a natural person, a trust established for the exclusive benefit of a natural person, a charitable remainder trust or other trust arrangement (if approved by us). The owner of this contract can also be a beneficiary of a deceased person's contract that is an Individual Retirement Account or non-qualified deferred annuity. A contract generally may have two owners (both of whom must be individuals). The contract is not available to corporations or other business organizations, except to the extent an employer is the purchaser of a SEP or SIMPLE IRA contract. Subject to state approval, certain retirement plans qualified under the Internal Revenue Code may purchase the contract. INQUIRIES. If you need more information, please contact our Annuity Service Center at: MetLife Investors Distribution Company P.O. Box 10366 Des Moines, Iowa 50306-0366 (800) 343-8496 ELECTRONIC DELIVERY. As an owner you may elect to receive electronic delivery of current prospectuses related to this contract, prospectuses and annual and semi-annual reports for the investment portfolios and other contract related documents. Contact us at WWW.METLIFEINVESTORS.COM for more information and to enroll. 8 FEE TABLES AND EXAMPLES THE FOLLOWING TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY WHEN BUYING, OWNING, AND SURRENDERING THE CONTRACT. THE FIRST TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU WILL PAY AT THE TIME THAT YOU BUY THE CONTRACT, SURRENDER THE CONTRACT, OR TRANSFER ACCOUNT VALUE BETWEEN INVESTMENT OPTIONS. STATE PREMIUM TAXES OF 0% TO 3.5% MAY ALSO BE DEDUCTED. - -------------------------------------------------------------------------------- OWNER TRANSACTION EXPENSES TABLE WITHDRAWAL CHARGE (Note 1) 8% (as a percentage of purchase payments) TRANSFER FEE (Note 2) $0 (First 12 per year) $25 (Thereafter)
- -------------------------------------------------------------------------------- Note 1. If an amount withdrawn is determined to include the withdrawal of prior purchase payments, a withdrawal charge may be assessed. Withdrawal charges are calculated in accordance with the following. (See "Expenses - Withdrawal Charge.")
Number of Complete Years from Withdrawal Charge Receipt of Purchase Payment (% of Purchase Payment) - ------------------------------ ------------------------ 0 8 1 8 2 8 3 7 4 6 5 5 6 4 7 3 8 2 9 and thereafter 0
Note 2. There is no charge for the first 12 transfers in a contract year; thereafter the fee is $25 per transfer. MetLife Investors is currently waiving the transfer fee, but reserves the right to charge the fee in the future. 9 THE NEXT TABLES DESCRIBE THE FEES AND EXPENSES THAT YOU WILL PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT, NOT INCLUDING INVESTMENT PORTFOLIO FEES AND EXPENSES. - -------------------------------------------------------------------------------- ACCOUNT FEE (Note 1) $30
SEPARATE ACCOUNT ANNUAL EXPENSES* (referred to as Separate Account Product Charges) (as a percentage of average account value in the Separate Account) Mortality and Expense Charge 1.30% Administration Charge 0.25% ---- Total Separate Account Annual Expenses 1.55% Death Benefit Rider Charges (Optional)** (as a percentage of average account value in the Separate Account) Optional Death Benefit - Annual Step-Up 0.20% Optional Death Benefit - Compounded-Plus 0.35% Additional Death Benefit - Earnings 0.25% Preservation Benefit Total Separate Account Annual Expenses Including Highest Charges for Optional 2.15% Death Benefits
- -------------------------------------------------------------------------------- Note 1. An Account Fee of $30 is charged on the last day of each contract year if account value is less than $50,000. Different policies apply during the income phase of the contract. (See "Expenses.") *Certain charges and expenses for contracts issued before May 1, 2003, are different. Certain charges and expenses may not apply during the income phase of the contract. (See "Expenses.") **See below for an additional optional death benefit rider, the Enhanced Death Benefit, for which the charge is assessed on the Death Benefit Base and deducted annually from the account value. 10 ADDITIONAL OPTIONAL RIDER CHARGES* GUARANTEED MINIMUM INCOME BENEFIT RIDER CHARGES GMIB Plus II and I Prior to Optional 0.80% of the Income Base (Note 1) Step-Up/Reset GMIB Plus II and I Upon Optional 1.50% of the Income Base (Note 1) Step-Up/Reset (maximum) GMIB II and GMIB I 0.50% of the Income Base (Note 1) LIFETIME WITHDRAWAL GUARANTEE RIDER CHARGES Lifetime Withdrawal Guarantee II 0.65% of the Total Guaranteed Withdrawal Amount (Single Life Version) Prior to Automatic Annual (Note 2) Step-Up Lifetime Withdrawal Guarantee II 1.25% of the Total Guaranteed Withdrawal Amount (Single Life Version) Upon Automatic Annual Step-Up (Note 2) (maximum) Lifetime Withdrawal Guarantee II 0.85% of the Total Guaranteed Withdrawal Amount (Joint Life Version) Prior to Automatic Annual (Note 2) Step-Up Lifetime Withdrawal Guarantee II 1.50% of the Total Guaranteed Withdrawal Amount (Joint Life Version) Upon Automatic Annual Step-Up (Note 2) (maximum) Lifetime Withdrawal Guarantee I 0.50% of the Total Guaranteed Withdrawal Amount (Single Life Version) Prior to Automatic Annual (Note 2) Step-Up Lifetime Withdrawal Guarantee I 0.95% of the Total Guaranteed Withdrawal Amount (Single Life Version) Upon Automatic Annual Step-Up (Note 2) (maximum) Lifetime Withdrawal Guarantee I 0.70% of the Total Guaranteed Withdrawal Amount (Joint Life Version) Prior to Automatic Annual (Note 2) Step-Up Lifetime Withdrawal Guarantee I 1.40% of the Total Guaranteed Withdrawal Amount (Joint Life Version) Upon Automatic Annual Step-Up (Note 2) (maximum)
*Certain rider charges for contracts issued before July 16, 2007, are different. Certain charges and expenses may not apply during the income phase of the contract. (See "Expenses.") Note 1. On the issue date, the Income Base is equal to your initial purchase payment. The Income Base is adjusted for subsequent purchase payments and withdrawals. See "Living Benefits - Guaranteed Income Benefits" for a definition of the term Income Base. Note 2. The Total Guaranteed Withdrawal Amount is initially set at an amount equal to your initial purchase payment. The Total Guaranteed Withdrawal Amount may increase with additional purchase payments. See "Living Benefits - Guaranteed Withdrawal Benefits" for a definition of the term Total Guaranteed Withdrawal Amount. 11 GUARANTEED WITHDRAWAL BENEFIT RIDER CHARGES Enhanced Guaranteed Withdrawal 0.55% of the Guaranteed Withdrawal Amount Benefit Rider Charge Prior to Optional Reset (Note 3) Enhanced Guaranteed Withdrawal 1.00% of the Guaranteed Withdrawal Amount Benefit Rider Charge Upon Optional Reset (maximum) (Note 3) Guaranteed Withdrawal Benefit Rider 0.50% of the Guaranteed Withdrawal Amount Charge Prior to Optional Reset (Note 3) Guaranteed Withdrawal Benefit Rider 0.95% of the Guaranteed Withdrawal Amount Charge Upon Optional Reset (maximum) (Note 3) GUARANTEED MINIMUM ACCUMULATION BENEFIT 0.75% of the Guaranteed Accumulation Amount RIDER CHARGE (Note 4) ENHANCED DEATH BENEFIT RIDER CHARGES Enhanced Death Benefit Rider Charge 0.65% of the Death Benefit Base (Note 5) Prior to Optional Reset (issue age 69 or younger) Enhanced Death Benefit Rider Charge 0.85% of the Death Benefit Base (Note 5) Prior to Optional Reset (issue age 70-75) Enhanced Death Benefit Rider Charge 1.50% of the Death Benefit Base (Note 5) Upon Optional Reset (maximum)
Note 3. The Guaranteed Withdrawal Amount is initially set at an amount equal to your initial purchase payment plus the GWB Bonus Amount. The Guaranteed Withdrawal Amount may increase with additional purchase payments. See "Living Benefits - Guaranteed Withdrawal Benefits" for definitions of the terms Guaranteed Withdrawal Amount and GWB Bonus Amount. Note 4. The Guaranteed Accumulation Amount is initially set at an amount equal to a percentage of your initial purchase payment. The Guaranteed Accumulation Amount is adjusted for additional purchase payments made during the first 120 days of the contract and for withdrawals. See "Living Benefits - Guaranteed Minimum Accumulation Benefit" for a definition of the term Guaranteed Accumulation Amount. Note 5. The Death Benefit Base is initially set at an amount equal to your initial purchase payment. The Death Benefit Base is adjusted for subsequent purchase payments and withdrawals. See "Death Benefit - Enhanced Death Benefit" for a definition of the term Death Benefit Base. If you elect both the Enhanced Death Benefit rider and the GMIB Plus II rider, the charge for the Enhanced Death Benefit will be reduced to 0.60% of the Death Benefit Base if you are age 69 or younger at issue and 0.80% of the Death Benefit Base if you are age 70-75 at issue. 12 - -------------------------------------------------------------------------------- THE NEXT TABLE SHOWS THE MINIMUM AND MAXIMUM TOTAL OPERATING EXPENSES CHARGED BY THE INVESTMENT PORTFOLIOS THAT YOU MAY PAY PERIODICALLY DURING THE TIME THAT YOU OWN THE CONTRACT. MORE DETAIL CONCERNING EACH INVESTMENT PORTFOLIO'S FEES AND EXPENSES IS CONTAINED IN THE PROSPECTUSES FOR THE INVESTMENT PORTFOLIOS AND IN THE FOLLOWING TABLES. Minimum Maximum ---- ---- Total Annual Portfolio Expenses 0.54% 1.52% (expenses that are deducted from investment portfolio assets, including management fees, 12b-1/service fees, and other expenses)
- -------------------------------------------------------------------------------- FOR INFORMATION CONCERNING COMPENSATION PAID FOR THE SALE OF THE CONTRACTS, SEE "OTHER INFORMATION - DISTRIBUTOR." 13 INVESTMENT PORTFOLIO EXPENSES (as a percentage of the average daily net assets of an investment portfolio) The following table is a summary. For more complete information on investment portfolio fees and expenses, please refer to the prospectus for each investment portfolio.
NET ACQUIRED TOTAL CONTRACTUAL TOTAL FUND ANNUAL EXPENSE ANNUAL MANAGEMENT 12B-1/SERVICE OTHER FEES AND PORTFOLIO SUBSIDY PORTFOLIO FEES FEES EXPENSES EXPENSES EXPENSES OR DEFERRAL EXPENSES ------------ --------------- ---------- ---------- ----------- ------------- ---------- MET INVESTORS SERIES TRUST American Funds Bond Portfolio(1)(2) 0.00% 0.55% 0.44% 0.41% 1.40% 0.34% 1.06% American Funds Growth Portfolio(1)(2) 0.00% 0.55% 0.13% 0.33% 1.01% 0.03% 0.98% American Funds International 0.00% 0.55% 0.36% 0.52% 1.43% 0.26% 1.17% Portfolio(1)(2) BlackRock High Yield Portfolio(3) 0.60% 0.25% 0.13% 0.00% 0.98% 0.00% 0.98% Clarion Global Real Estate Portfolio 0.61% 0.25% 0.04% 0.00% 0.90% 0.00% 0.90% Harris Oakmark International Portfolio 0.77% 0.25% 0.08% 0.00% 1.10% 0.00% 1.10% Lazard Mid Cap Portfolio 0.69% 0.25% 0.06% 0.00% 1.00% 0.00% 1.00% Legg Mason Partners Aggressive Growth 0.62% 0.25% 0.05% 0.00% 0.92% 0.00% 0.92% Portfolio Legg Mason Value Equity Portfolio 0.63% 0.25% 0.04% 0.00% 0.92% 0.00% 0.92% Loomis Sayles Global Markets Portfolio 0.68% 0.25% 0.09% 0.00% 1.02% 0.00% 1.02% Lord Abbett Bond Debenture Portfolio 0.49% 0.25% 0.04% 0.00% 0.78% 0.00% 0.78% Lord Abbett Growth and Income Portfolio 0.49% 0.25% 0.03% 0.00% 0.77% 0.00% 0.77% Lord Abbett Mid Cap Value Portfolio 0.67% 0.25% 0.09% 0.00% 1.01% 0.00% 1.01% Met/AIM Small Cap Growth Portfolio 0.86% 0.25% 0.06% 0.00% 1.17% 0.00% 1.17% Met/Franklin Mutual Shares Portfolio(1) 0.80% 0.25% 0.29% 0.00% 1.34% 0.19% 1.15% MFS (Reg. TM) Emerging Markets Equity 1.00% 0.25% 0.27% 0.00% 1.52% 0.00% 1.52% Portfolio MFS (Reg. TM) Research International 0.70% 0.25% 0.09% 0.00% 1.04% 0.00% 1.04% Portfolio PIMCO Inflation Protected Bond 0.50% 0.25% 0.05% 0.00% 0.80% 0.00% 0.80% Portfolio PIMCO Total Return Portfolio(4) 0.48% 0.25% 0.04% 0.00% 0.77% 0.00% 0.77% Rainier Large Cap Equity Portfolio 0.65% 0.25% 0.12% 0.00% 1.02% 0.00% 1.02% RCM Technology Portfolio 0.88% 0.25% 0.14% 0.00% 1.27% 0.00% 1.27% T. Rowe Price Mid Cap Growth Portfolio 0.75% 0.25% 0.05% 0.00% 1.05% 0.00% 1.05% Third Avenue Small Cap Value Portfolio 0.73% 0.25% 0.03% 0.00% 1.01% 0.00% 1.01% Turner Mid Cap Growth Portfolio 0.77% 0.25% 0.06% 0.00% 1.08% 0.00% 1.08% Van Kampen Comstock Portfolio 0.58% 0.25% 0.03% 0.00% 0.86% 0.00% 0.86% METROPOLITAN SERIES FUND, INC. BlackRock Money Market Portfolio 0.33% 0.25% 0.07% 0.00% 0.65% 0.01% 0.64% Davis Venture Value Portfolio 0.69% 0.15% 0.04% 0.00% 0.88% 0.00% 0.88% Harris Oakmark Focused Value Portfolio 0.72% 0.25% 0.04% 0.00% 1.01% 0.00% 1.01% Jennison Growth Portfolio 0.63% 0.25% 0.04% 0.00% 0.92% 0.00% 0.92% MetLife Stock Index Portfolio 0.25% 0.25% 0.04% 0.00% 0.54% 0.01% 0.53% Western Asset Management U.S. 0.49% 0.25% 0.05% 0.00% 0.79% 0.00% 0.79% Government Portfolio
14
NET TOTAL ANNUAL PORTFOLIO EXPENSES ACQUIRED TOTAL CONTRACTUAL INCLUDING FUND ANNUAL EXPENSE EXPENSES OF MANAGEMENT 12B-1/SERVICE OTHER FEES AND PORTFOLIO SUBSIDY UNDERLYING FEES FEES EXPENSES EXPENSES EXPENSES OR DEFERRAL PORTFOLIOS ------------ --------------- ---------- ---------- ----------- ------------- ------------ MET INVESTORS SERIES TRUST - METLIFE ASSET ALLOCATION PROGRAM MetLife Defensive Strategy Portfolio(5) 0.09% 0.25% 0.02% 0.62% 0.98% 0.01% 0.97% MetLife Moderate Strategy Portfolio(5) 0.07% 0.25% 0.00% 0.65% 0.97% 0.00% 0.97% MetLife Balanced Strategy Portfolio(5) 0.06% 0.25% 0.00% 0.69% 1.00% 0.00% 1.00% MetLife Growth Strategy Portfolio(5) 0.06% 0.25% 0.00% 0.72% 1.03% 0.00% 1.03% MetLife Aggressive Strategy 0.09% 0.25% 0.01% 0.72% 1.07% 0.00% 1.07% Portfolio(5) MET INVESTORS SERIES TRUST - AMERICAN FUNDS ASSET ALLOCATION PORTFOLIOS American Funds Moderate Allocation 0.10% 0.55% 0.26% 0.41% 1.32% 0.26% 1.06% Portfolio(1)(6) American Funds Balanced Allocation 0.10% 0.55% 0.15% 0.39% 1.19% 0.15% 1.04% Portfolio(1)(6) American Funds Growth Allocation 0.10% 0.55% 0.19% 0.36% 1.20% 0.19% 1.01% Portfolio(1)(6) MET INVESTORS SERIES TRUST - FRANKLIN TEMPLETON ASSET ALLOCATION PORTFOLIO Met/Franklin Templeton Founding 0.05% 0.25% 0.15% 0.87% 1.32% 0.15% 1.17% Strategy Portfolio(1)(7)
The Net Total Annual Portfolio Expenses have been restated to reflect contractual arrangements in effect as of April 28, 2008, under which investment advisers or managers of investment portfolios have agreed to waive and/or pay expenses of the portfolios. Each of these arrangements is in effect until at least April 30, 2009 (excluding optional extensions). Net Total Annual Portfolio Expenses have not been restated to reflect expense reductions that certain investment portfolios achieved as a result of directed brokerage arrangements. The investment portfolios provided the information on their expenses, and we have not independently verified the information. Unless otherwise indicated, the information provided is for the year ended December 31, 2007. (1) The fees and expenses of the Portfolio are estimated for the year ending December 31, 2008. (2) The Portfolio is a "feeder fund" that invests all of its assets in an underlying "master fund." As an investor in an underlying master fund, the Portfolio will bear its pro rata portion of the operating expenses of the underlying master fund, including the management fee. (3) This is a new share class for this Portfolio. Operating expenses are estimated based on the expenses of the Class A shares of the Portfolio. (4) The Management Fee has been restated to reflect an amended management fee agreement, as if the agreement had been in effect during the preceding fiscal year. (5) The Portfolio is a "fund of funds" that invests substantially all of its assets in other portfolios of the Met Investors Series Trust and the Metropolitan Series Fund, Inc. Because the Portfolio invests in other underlying portfolios, the Portfolio will bear its pro rata portion of the operating expenses of the underlying portfolios in which it invests, including the management fee. (6) The Portfolio is a "fund of funds" that invests substantially all of its assets in portfolios of the American Funds Insurance Series (Reg. TM). Because the Portfolio invests in other underlying portfolios, the Portfolio will bear its pro rata portion of the operating expenses of the underlying portfolios in which it invests, including the management fee. The estimated expenses of the underlying portfolios are based upon the weighted average of the total operating expenses of the underlying portfolios before expense waivers allocated to the portfolios at December 31, 2007. (7) The Portfolio is a "fund of funds" that invests equally in three other portfolios of the Met Investors Series Trust: the Met/Franklin Income Portfolio, the Met/Franklin Mutual Shares Portfolio and the Met/Templeton Growth Portfolio. Because the Portfolio invests in other underlying portfolios, the Portfolio will bear its pro rata portion of the operating expenses of the underlying portfolios in which it invests, including the management fee. The expenses of the underlying portfolios are based upon the weighted average of the estimated total operating expenses of the underlying portfolios after expense waivers allocated to the underlying portfolios for the year ending December 31, 2008. 15 EXAMPLES THESE EXAMPLES ARE INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE CONTRACT WITH THE COST OF INVESTING IN OTHER VARIABLE ANNUITY CONTRACTS. THESE COSTS INCLUDE CONTRACT OWNER TRANSACTION EXPENSES, CONTRACT FEES, SEPARATE ACCOUNT ANNUAL EXPENSES, AND INVESTMENT PORTFOLIO FEES AND EXPENSES. THE EXAMPLES ASSUME THAT YOU INVEST $10,000 IN THE CONTRACT FOR THE TIME PERIODS INDICATED. THE EXAMPLES ALSO ASSUME THAT YOUR INVESTMENT HAS A 5% RETURN EACH YEAR AND ASSUME: (A) MAXIMUM AND (B) MINIMUM FEES AND EXPENSES OF ANY OF THE INVESTMENT PORTFOLIOS (BEFORE SUBSIDY AND/OR DEFERRAL). ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS, YOUR COSTS WOULD BE: CHART 1. Chart 1 assumes you select the Enhanced Death Benefit (assuming the maximum 1.50% charge applies in all contract years), the Additional Death Benefit - Earnings Preservation Benefit and the Guaranteed Minimum Income Benefit Plus II rider (assuming the maximum 1.50% charge applies in all contract years), which is the most expensive way to purchase the contract. (1) IF YOU SURRENDER YOUR CONTRACT AT THE END OF THE APPLICABLE TIME PERIOD:
Time Periods 1 year 3 years 5 years 10 years - ------------------ ------------ ------------ ------------ (a)$1,449 (a)$2,709 (a)$3,926 (a)$7,153 (b)$1,352 (b)$2,428 (b)$3,480 (b)$6,384
(2) IF YOU DO NOT SURRENDER YOUR CONTRACT OR IF YOU ANNUITIZE AT THE END OF THE APPLICABLE TIME PERIOD:
Time Periods 1 year 3 years 5 years 10 years - ------------ ------------ ------------ ------------ (a)$649 (a)$1,989 (a)$3,386 (a)$7,153 (b)$552 (b)$1,708 (b)$2,940 (b)$6,384
CHART 2. Chart 2 assumes you do not select optional death benefit riders, a Guaranteed Minimum Income Benefit rider, a Guaranteed Withdrawal Benefit rider, or the Guaranteed Minimum Accumulation Benefit rider, which is the least expensive way to purchase the contract. (1) IF YOU SURRENDER YOUR CONTRACT AT THE END OF THE APPLICABLE TIME PERIOD:
Time Periods 1 year 3 years 5 years 10 years - ------------------ ------------ ------------ ------------ (a)$1,112 (a)$1,673 (a)$2,157 (a)$3,385 (b)$1,014 (b)$1,381 (b)$1,672 (b)$2,433
(2) IF YOU DO NOT SURRENDER YOUR CONTRACT OR IF YOU ANNUITIZE AT THE END OF THE APPLICABLE TIME PERIOD:
Time Periods 1 year 3 years 5 years 10 years - ------------ --------- ------------ ------------ (a)$312 (a)$953 (a)$1,617 (a)$3,385 (b)$214 (b)$661 (b)$1,132 (b)$2,433
The Examples should not be considered a representation of past or future expenses or annual rates of return of any investment portfolio. Actual expenses and annual rates of return may be more or less than those assumed for the purpose of 16 the Examples. Condensed financial information containing the accumulation unit value history appears in Appendix A of this prospectus as well as in the SAI. 17 1. THE ANNUITY CONTRACT This prospectus describes the Variable Annuity Contract offered by us. The variable annuity contract is a contract between you as the owner, and us, the insurance company, where we promise to pay an income to you, in the form of annuity payments, beginning on a designated date that you select. Until you decide to begin receiving annuity payments, your annuity is in the ACCUMULATION PHASE. Once you begin receiving annuity payments, your contract switches to the INCOME PHASE. The contract benefits from tax deferral. Tax deferral means that you are not taxed on earnings or appreciation on the assets in your contract until you take money out of your contract. For any tax qualified account (e.g., an IRA, 401 plan or 403(b) plan), the tax deferred accrual feature is provided by the tax qualified retirement plan. Therefore, there should be reasons other than tax deferral for acquiring the contract within a qualified plan. (See "Federal Income Tax Status.") The contract is called a variable annuity because you can choose among the investment portfolios and, depending upon market conditions, you can make or lose money in any of these portfolios. If you select the variable annuity portion of the contract, the amount of money you are able to accumulate in your contract during the accumulation phase depends upon the investment performance of the investment portfolio(s) you select. The amount of the annuity payments you receive during the income phase from the variable annuity portion of the contract also depends, in part, upon the investment performance of the investment portfolio(s) you select for the income phase. We do not guarantee the investment performance of the variable annuity portion. You bear the full investment risk for all amounts allocated to the variable annuity portion. However, there are certain optional features that provide guarantees that can reduce your investment risk (see "Living Benefits"). In most states, the contract also contains a FIXED ACCOUNT (contact your registered representative regarding your state). The fixed account is not offered by this prospectus. The fixed account offers an interest rate that is guaranteed by us. The minimum interest rate depends on the year your contract is issued but will not be less than 1%. Your registered representative can tell you the current and minimum interest rates that apply. If you select the fixed account, your money will be placed with our other general account assets, and the amount of money you are able to accumulate in your contract during the accumulation phase depends upon the total interest credited to your contract. The fixed account is part of our general account. Our general account consists of all assets owned by us other than those in the Separate Account and our other separate accounts. We have sole discretion over the investment of assets in the general account. If you select a fixed annuity payment option during the income phase, payments are made from our general account assets. The amount of the annuity payments you receive during the income phase from a fixed annuity payment option of the contract will remain level for the entire income phase, provided that the payment may increase in the event you make a transfer from a variable annuity payment option to the fixed annuity payment. Please see the terms of your actual contract for more detailed information. As owner of the contract, you exercise all interests and rights under the contract. You can change the owner at any time, subject to our underwriting rules (a change of ownership may terminate certain optional riders). The contract may be owned generally by joint owners (limited to two natural persons). We provide more information on this under "Other Information - Ownership." Because the contract proceeds must be distributed within the time periods required by the federal Internal Revenue Code, the right of a spouse to continue the contract, and all contract provisions relating to spousal continuation (see "Death Benefit - Spousal Continuation"), are available only to a person who is defined as a "spouse" under the federal Defense of Marriage Act, or any other applicable federal law. Accordingly, a purchaser who has or is contemplating a civil union should note that a civil union partner would not be able to receive continued payments after the death of the contract owner under the Joint Life version of the Lifetime Withdrawal Guarantee (see "Living Benefits - Guaranteed Withdrawal Benefits"). MARKET TIMING We have policies and procedures that attempt to detect transfer activity that may adversely affect other owners or investment portfolio shareholders in situations where there is potential for pricing inefficiencies or that involve certain other types of disruptive trading activity (I.E., market timing). We employ various means to try to detect such transfer activity, such as periodically examining the frequency and size of transfers into and out of particular 18 investment portfolios made by owners within given periods of time and/or investigating transfer activity identified by the investment portfolios on a case-by-case basis. We may revise these policies and procedures in our sole discretion at any time without prior notice. Our market timing policies and procedures are discussed in more detail in "Investment Options - Transfers - Market Timing." 2. PURCHASE As a result of the purchase payment credit feature of this contract, the contract is available only to prospective owners who are age 80 or younger. (See "Purchase Payment Credit" below.) The maximum issue age for the contract and certain of its riders may be reduced in connection with the offer of the contract through certain broker dealers ("selling firms"). In addition, certain riders may not be available through certain selling firms. You should discuss this with your registered representative. PURCHASE PAYMENTS A PURCHASE PAYMENT is the money you give us to invest in the contract. The initial purchase payment is due on the date the contract is issued. Subject to the minimum and maximum payment requirements (see below), you may make additional purchase payments. o The minimum initial purchase payment we will accept is $10,000. o If you want to make an initial purchase payment of $1 million or more, or an additional purchase payment that would cause your total purchase payments to exceed $1 million, you will need our prior approval. o You can make additional purchase payments of $500 or more to either type of contract (qualified and non-qualified) unless you have elected an electronic funds transfer program approved by us, in which case the minimum additional purchase payment is $100 per month. o We will accept a different amount if required by federal tax law. o We reserve the right to refuse purchase payments made via a personal check in excess of $100,000. Purchase payments over $100,000 may be accepted in other forms, including, but not limited to, EFT/wire transfers, certified checks, corporate checks, and checks written on financial institutions. The form in which we receive a purchase payment may determine how soon subsequent disbursement requests may be fulfilled. (See "Access to Your Money.") o We will not accept purchase payments made with cash, money orders, or travelers checks. We reserve the right to reject any application or purchase payment and to limit future purchase payments. TERMINATION FOR LOW ACCOUNT VALUE We may terminate your contract by paying you the account value in one sum if, prior to the annuity date, you do not make purchase payments for two consecutive contract years, the total amount of purchase payments made, less any partial withdrawals, is less than $2,000 or any lower amount required by federal tax laws, and the account value on or after the end of such two year period is less than $2,000. Accordingly, no contract will be terminated due solely to negative investment performance. Federal tax law may impose additional restrictions on our right to cancel your Traditional IRA, Roth IRA, SEP, SIMPLE IRA or other Qualified Contract. ALLOCATION OF PURCHASE PAYMENTS When you purchase a contract, we will allocate your purchase payment to the fixed account and/or any of the investment portfolios you have selected. You may not choose more than 18 investment portfolios (including the fixed account) at the time your initial purchase payment is allocated. Each allocation must be at least $500 and must be in whole numbers. We have reserved the right to restrict payments to the fixed account if any of the following conditions exist: o the credited interest rate on the fixed account is equal to the guaranteed minimum rate; or o your account value in the fixed account equals or exceeds our published maximum for fixed account allocation (currently, there is no limit); or o a transfer was made out of the fixed account within the previous 180 days. Once we receive your purchase payment and the necessary information, we will issue your contract and allocate your first purchase payment within 2 business days. A BUSINESS DAY is each day that the New York Stock Exchange is open for business. A business day closes at the close of normal trading on the New York Stock Exchange, usually 4:00 p.m. Eastern Time. If you do not give us all of the 19 information we need, we will contact you to get it before we make any allocation. If for some reason we are unable to complete this process within 5 business days, we will either send back your money or get your permission to keep it until we get all of the necessary information. (See "Other Information - - Requests and Elections.") However, if you allocate purchase payments to a discontinued investment portfolio (see Appendix A), we will request reallocation instructions or if unable to obtain such instructions, we will return your purchase payment to you. If you choose the Guaranteed Minimum Income Benefit Plus II, Lifetime Withdrawal Guarantee II, or Enhanced Death Benefit riders, until the rider terminates, we will require you to allocate your purchase payments and account value as described below under "Investment Allocation Restrictions for Certain Riders." If you choose the GMIB Plus I rider or the Lifetime Withdrawal Guarantee I rider, until the rider terminates, we will require you to allocate your purchase payments and account value solely among the fixed account, the BlackRock Money Market Portfolio, the American Funds Asset Allocation portfolios, the Met/Franklin Templeton Founding Strategy Portfolio, and/or the MetLife Asset Allocation Program portfolios, excluding the MetLife Aggressive Strategy Portfolio (you may participate in the Enhanced Dollar Cost Averaging (EDCA) program, subject to restrictions). If you choose the Guaranteed Minimum Accumulation Benefit rider, until the rider terminates, we will require you to allocate your purchase payments and account value solely to one of the MetLife Asset Allocation Program portfolios, excluding the MetLife Growth Strategy Portfolio and the MetLife Aggressive Strategy Portfolio (you may participate in the EDCA program, subject to restrictions). If you make additional purchase payments, we will allocate them in the same way as your first purchase payment unless you tell us otherwise. However, if you make an additional purchase payment and you have an EDCA or Dollar Cost Averaging (DCA) program in effect, we will allocate your additional payments to the investment portfolios selected under the EDCA or DCA program unless you tell us otherwise. (See "Investment Options - Dollar Cost Averaging Programs.") You may change your allocation instructions at any time by notifying us in writing, by calling us or by Internet. You may not choose more than 18 investment portfolios (including the fixed account) at the time you submit a subsequent purchase payment. If you wish to allocate the payment to more than 18 investment portfolios (including the fixed account), we must have your request to allocate future purchase payments to more than 18 investment portfolios on record before we can apply your subsequent purchase payment to your chosen allocation. If there are joint owners, unless we are instructed to the contrary, we will accept allocation instructions from either joint owner. INVESTMENT ALLOCATION RESTRICTIONS FOR CERTAIN RIDERS ALLOCATION. If you elect the GMIB Plus II, the Lifetime Withdrawal Guarantee II, or the Enhanced Death Benefit, you must comply with certain investment allocation restrictions. SPECIFICALLY, YOU MUST ALLOCATE ACCORDING TO EITHER ------ (A) OR (B) BELOW: (A) You must allocate: o 100% of your purchase payments or account value among the MetLife Defensive Strategy Portfolio, MetLife Moderate Strategy Portfolio, MetLife Balanced Strategy Portfolio, MetLife Growth Strategy Portfolio, American Funds Moderate Allocation Portfolio, American Funds Balanced Allocation Portfolio, American Funds Growth Allocation Portfolio, Met/ Franklin Templeton Founding Strategy Portfolio, BlackRock Money Market Portfolio and/or the fixed account OR (B) You must allocate: o AT LEAST 15% of purchase payments or account value to Platform 1 portfolios and/or to the fixed account; o UP TO 85% of purchase payments or account value to Platform 2 portfolios; o UP TO 15% of purchase payments or account value to Platform 3 portfolios; and o UP TO 15% of purchase payments or account value to Platform 4 portfolios. The investment options in each Platform are: Platform 1 - ---------- Fixed Account American Funds Bond Portfolio BlackRock Money Market Portfolio PIMCO Inflation Protected Bond Portfolio 20 PIMCO Total Return Portfolio Western Asset Management U.S. Government Portfolio Platform 2 - ---------- American Funds Balanced Allocation Portfolio American Funds Growth Allocation Portfolio American Funds Growth Portfolio American Funds International Portfolio American Funds Moderate Allocation Portfolio BlackRock High Yield Portfolio Davis Venture Value Portfolio Harris Oakmark International Portfolio Jennison Growth Portfolio Legg Mason Partners Aggressive Growth Portfolio Legg Mason Value Equity Portfolio Loomis Sayles Global Markets Portfolio Lord Abbett Bond Debenture Portfolio Lord Abbett Growth and Income Portfolio Met/Franklin Mutual Shares Portfolio Met/Franklin Templeton Founding Strategy Portfolio MetLife Aggressive Strategy Portfolio MetLife Balanced Strategy Portfolio MetLife Defensive Strategy Portfolio MetLife Growth Strategy Portfolio MetLife Moderate Strategy Portfolio Metlife Stock Index Portfolio MFS (Reg. TM) Research International Portfolio Rainier Large Cap Equity Portfolio Van Kampen Comstock Portfolio Platform 3 - ---------- Harris Oakmark Focused Value Portfolio Lazard Mid Cap Portfolio Lord Abbett Mid Cap Value Portfolio T. Rowe Price Mid Cap Growth Portfolio Turner Mid Cap Growth Portfolio Platform 4 - ---------- Clarion Global Real Estate Portfolio Met/AIM Small Cap Growth Portfolio MFS (Reg. TM) Emerging Markets Equity Portfolio RCM Technology Portfolio Third Avenue Small Cap Value Portfolio YOUR PURCHASE PAYMENTS AND TRANSFER REQUESTS MUST BE ALLOCATED IN ACCORDANCE WITH THE ABOVE LIMITATIONS. WE WILL REJECT ANY PURCHASE PAYMENTS OR TRANSFER REQUESTS THAT DO NOT COMPLY WITH THE ABOVE LIMITATIONS. Certain selling firms do not offer option (B) at the time your initial purchase payment is allocated. Please contact our Annuity Service Center if you wish to change your allocation selection to option (B). We determine whether an investment option is classified as Platform 1, Platform 2, Platform 3 or Platform 4. We may determine or change the classification of an investment option in the event that an investment option is added, deleted, substituted, merged or otherwise reorganized. In that case, any change in classification will only take effect as to your contract in the event you make a new purchase payment or request a transfer among investment options. We will provide you with prior written notice of any changes in classification of investment options. REBALANCING. If you choose to allocate according to (B) above, we will rebalance your account value on a quarterly basis based on your most recent allocation of purchase payments that complies with the allocation limitations described above. We will also rebalance your account value when we receive a subsequent purchase payment that is accompanied by new allocation instructions (in addition to the quarterly rebalancing). We will first rebalance your account value on the date that is three months from the rider issue date; provided however, if a quarterly rebalancing date occurs on the 29th, 30th or 31st of a month, we will instead rebalance on the 1st day of the following month. We will subsequently rebalance your account value on each quarter thereafter on the same day. In addition, if a quarterly rebalancing date is not a business day the reallocation will occur on the next business day. Withdrawals from the contract will not result in rebalancing on the date of withdrawal. The rebalancing requirement described above does not apply if you choose to allocate according to (A) above. EDCA. If you choose to allocate according to (B) above and you choose to allocate a purchase payment to the EDCA account, that entire purchase payment must be allocated only to the EDCA account. Any transfer from an EDCA account must be allocated in accordance with the limitations described under (B) above. In addition, if you made previous purchase payments before allocating a purchase payment to the EDCA account, all transfers from an EDCA account must be allocated to the same investment options as your most recent allocations for purchase payments. CHANGING PURCHASE PAYMENT ALLOCATION INSTRUCTIONS. You may change your purchase payment 21 allocation instructions under (B) above at any time by providing notice to us, at our Annuity Service Center, or by any other method acceptable to us, provided that such instructions comply with the allocation limits described above. If you provide new allocation instructions for purchase payments and if these instructions conform to the allocation limits described under (B) above, then we will rebalance in accordance with the revised allocation instructions. Any future purchase payment, EDCA account transfer and quarterly rebalancing allocations will be automatically updated in accordance with these new instructions. TRANSFERS. Please note that any transfer request must result in an account value that meets the allocation limits described above. Any transfer request will not cause your allocation instructions to change unless you provide us with a separate instruction at the time of transfer. PURCHASE PAYMENT CREDIT Your account value will be credited with an additional amount (PURCHASE PAYMENT CREDIT) with respect to your initial purchase payment and each subsequent purchase payment received by us prior to the contract anniversary immediately following your 81st birthday (if joint owners are named, the age of the oldest owner will apply and if a non-natural person owns the contract, then the annuitant's age will apply.) The Purchase Payment Credit is an amount equal to 5% of the purchase payment. For contracts with purchase payments of $1,000,000 or more, the amount of the credit increases to 6%. The additional 1% credit will not be applied retroactively (which means that the additional 1% credit will only be applied to the payment that brings your total purchase payments to the $1 million level and all subsequent payments). From time to time, we may offer promotional programs with higher Purchase Payment Credit rates that apply to contracts issued between specified dates. If your contract is issued during such a program, the amount of the Purchase Payment Credit you receive is determined by the terms of the program that was in effect when your contract was issued. You should know that over time and under certain circumstances (such as withdrawal when a withdrawal charge applies, or after an extended period of poor market performance) the costs associated with this product may exceed the Purchase Payment Credit amount and any related earnings. If you exercise the free-look provision, MetLife Investors will take back the Purchase Payment Credit(s) as described below. Each Purchase Payment Credit will be allocated to the contract in the same proportion as the applicable purchase payment. All Purchase Payment Credits are treated as earnings under the contract. FREE LOOK If you change your mind about owning this contract, you can cancel it within 10 days after receiving it (or the period required in your state). We ask that you submit your request to cancel in writing, signed by you, to our Annuity Service Center. When you cancel the contract within this "free look" period, we will not assess a withdrawal charge. Unless otherwise required by state law, we will return the account value less the adjusted Purchase Payment Credits. The adjusted Purchase Payment Credits are equal to the lesser of: (1) the portion of the account value that is attributable to the Purchase Payment Credits, or (2) the total of Purchase Payment Credit(s). This means that you receive any investment gain on the Purchase Payment Credit(s) and MetLife Investors bears any loss. In certain states, we are required to give you back your purchase payment if you decide to cancel your contract during the free look period. ACCUMULATION UNITS The portion of your account value allocated to the Separate Account will go up or down depending upon the investment performance of the investment portfolio(s) you choose. In order to keep track of this portion of your account value, we use a unit of measure we call an ACCUMULATION UNIT. (An accumulation unit works like a share of a mutual fund.) Every business day we determine the value of an accumulation unit for each of the investment portfolios by multiplying the accumulation unit value for the immediately preceding business day by a factor for the current business day. The factor is determined by: 1) dividing the net asset value per share of the investment portfolio at the end of the current business day, plus any dividend or capital gains per share declared on behalf of the investment portfolio as of that day, by the net asset value per share of the investment portfolio for the previous business day, and 22 2) multiplying it by one minus the Separate Account product charges (including any rider charge for the Annual Step-Up Death Benefit, the Compounded-Plus Death Benefit, and/or the Additional Death Benefit-Earnings Preservation Benefit) for each day since the last business day and any charges for taxes. The value of an accumulation unit may go up or down from day to day. When you make a purchase payment, we credit your contract with accumulation units. The number of accumulation units credited is determined by dividing the amount of the purchase payment allocated to an investment portfolio by the value of the accumulation unit for that investment portfolio. We calculate the value of an accumulation unit for each investment portfolio after the New York Stock Exchange closes each day (generally 4:00 p.m. Eastern Time) and then credit your contract. EXAMPLE: On Monday we receive an additional purchase payment of $5,000 from you before 4:00 p.m. Eastern Time. We add an additional $250 to your contract as a Purchase Payment Credit. You have told us you want this to go to the Lord Abbett Growth and Income Portfolio. When the New York Stock Exchange closes on that Monday, we determine that the value of an accumulation unit for the Lord Abbett Growth and Income Portfolio is $12.50. We then divide $5,250 by $12.50 and credit your contract on Monday night with 420 accumulation units for the Lord Abbett Growth and Income Portfolio. ACCOUNT VALUE ACCOUNT VALUE is equal to the sum of your interests in the investment portfolios, the fixed account, and the EDCA account. Your interest in each investment portfolio is determined by multiplying the number of accumulation units for that portfolio by the value of the accumulation unit. REPLACEMENT OF CONTRACTS Generally you can exchange one variable annuity contract for another in a tax-free exchange under Section 1035 of the Internal Revenue Code. Before making an exchange, you should compare both annuities carefully. If you exchange another annuity for the one described in this prospectus, you might have to pay a surrender charge on your old annuity, and there will be a new surrender charge period for this contract. Other charges may be higher (or lower) and the benefits may be different. Also, because we will not issue the contract until we have received the initial premium from your existing insurance company, the issuance of the contract may be delayed. Generally, it is not advisable to purchase a contract as a replacement for an existing variable annuity contract. Before you exchange another annuity for our contract, ask your registered representative whether the exchange would be advantageous, given the contract features, benefits and charges. Class XC is not available to purchase payments that consist of money exchanged or transferred from other annuities issued by us or our affiliates. 3. INVESTMENT OPTIONS The contract offers 40 INVESTMENT PORTFOLIOS, which are listed below. Additional investment portfolios may be available in the future. YOU SHOULD READ THE PROSPECTUSES FOR THESE FUNDS CAREFULLY. COPIES OF THESE PROSPECTUSES WILL ACCOMPANY OR PRECEDE THE DELIVERY OF YOUR CONTRACT. YOU CAN OBTAIN COPIES OF THE FUND PROSPECTUSES BY CALLING OR WRITING TO US AT: METLIFE INVESTORS INSURANCE COMPANY, ANNUITY SERVICE CENTER, P.O. BOX 10366, DES MOINES, IOWA 50306-0366, (800) 343-8496. YOU CAN ALSO OBTAIN INFORMATION ABOUT THE FUNDS (INCLUDING A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION) BY ACCESSING THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT HTTP:// WWW.SEC.GOV. CERTAIN INVESTMENT PORTFOLIOS DESCRIBED IN THE FUND PROSPECTUSES MAY NOT BE AVAILABLE WITH YOUR CONTRACT. (SEE APPENDIX A.) APPENDIX B CONTAINS A SUMMARY OF ADVISERS, SUBADVISERS, AND INVESTMENT OBJECTIVES FOR EACH INVESTMENT PORTFOLIO. The investment objectives and policies of certain of the investment portfolios may be similar to the investment objectives and policies of other mutual funds that certain of the portfolios' investment advisers manage. Although the objectives and policies may be similar, the investment results of the investment portfolios may be higher or lower than the results of such other mutual funds. The investment advisers cannot guarantee, and make no representation, that the investment results of similar funds will be 23 comparable even though the funds may have the same investment advisers. Shares of the investment portfolios may be offered to insurance company separate accounts of both variable annuity and variable life insurance contracts and to qualified plans. Due to differences in tax treatment and other considerations, the interests of various owners participating in, and the interests of qualified plans investing in the investment portfolios may conflict. The investment portfolios will monitor events in order to identify the existence of any material irreconcilable conflicts and determine what action, if any, should be taken in response to any such conflict. CERTAIN PAYMENTS WE RECEIVE WITH REGARD TO THE INVESTMENT PORTFOLIOS. We do not receive compensation from any of the advisers or subadvisers of any of the investment portfolios of the Met Investors Series Trust or the Metropolitan Series Fund, Inc. (or their affiliates) for administrative or other services relating to the portfolios, excluding 12b-1 fees (see below). However, we and/or certain of our affiliated insurance companies have joint ownership interests in our affiliated investment advisers, MetLife Advisers, LLC and Met Investors Advisory, LLC, which are formed as "limited liability companies." Our ownership interests in MetLife Advisers, LLC and Met Investors Advisory, LLC entitle us to profit distributions if the adviser makes a profit with respect to the advisory fees it receives from the investment portfolios. We will benefit accordingly from assets allocated to the investment portfolios to the extent they result in profits to the advisers. (See "Fee Tables and Examples - Investment Portfolio Expenses" for information on the management fees paid by the investment portfolios and the Statement of Additional Information for the investment portfolios for information on the management fees paid by the advisers to the subadvisers.) Additionally, an investment adviser or subadviser of an investment portfolio or its affiliates may provide us with wholesaling services that assist in the distribution of the contracts and may pay us and/or certain of our affiliates amounts to participate in sales meetings. These amounts may be significant and may provide the adviser or subadviser (or its affiliate) with increased access to persons involved in the distribution of the contracts. Each of the Met Investors Series Trust and the Metropolitan Series Fund, Inc. has adopted a Distribution Plan under Rule 12b-1 of the Investment Company Act of 1940. Each investment portfolio's 12b-1 Plan is described in more detail in the investment portfolio's prospectus. (See "Fee Tables and Examples - Investment Portfolio Expenses" and "Other Information - Distributor.") Any payments we receive pursuant to those 12b-1 Plans are paid to us or our distributor. Payments under an investment portfolio's 12b-1 Plan decrease the investment portfolio's investment return. We select the investment portfolios offered through this contract based on a number of criteria, including asset class coverage, the strength of the adviser's or subadviser's reputation and tenure, brand recognition, performance, and the capability and qualification of each investment firm. Another factor we consider during the selection process is whether the investment portfolio's adviser or subadviser is one of our affiliates or whether the investment portfolio, its adviser, its subadviser(s), or an affiliate will make payments to us or our affiliates. In this regard, the profit distributions we receive from our affiliated investment advisers are a component of the total revenue that we consider in configuring the features and investment choices available in the variable insurance products that we and our affiliated insurance companies issue. Since we and our affiliated insurance companies may benefit more from the allocation of assets to portfolios advised by our affiliates than to those that are not, we may be more inclined to offer portfolios advised by our affiliates in the variable insurance products we issue. We review the investment portfolios periodically and may remove an investment portfolio or limit its availability to new purchase payments and/or transfers of account value if we determine that the investment portfolio no longer meets one or more of the selection criteria, and/or if the investment portfolio has not attracted significant allocations from owners. In some cases, we have included investment portfolios based on recommendations made by selling firms. These selling firms may receive payments from the investment portfolios they recommend and may benefit accordingly from the allocation of account value to such investment portfolios. WE DO NOT PROVIDE ANY INVESTMENT ADVICE AND DO NOT RECOMMEND OR ENDORSE ANY PARTICULAR INVESTMENT PORTFOLIO. YOU BEAR THE RISK OF ANY DECLINE IN THE ACCOUNT VALUE OF YOUR CONTRACT 24 RESULTING FROM THE PERFORMANCE OF THE INVESTMENT PORTFOLIOS YOU HAVE CHOSEN. MET INVESTORS SERIES TRUST (CLASS B OR, AS NOTED, CLASS C) Met Investors Series Trust is a mutual fund with multiple portfolios. Met Investors Advisory, LLC (Met Investors Advisory), an affiliate of MetLife Investors, is the investment manager of Met Investors Series Trust. Met Investors Advisory has engaged subadvisers to provide investment advice for the individual investment portfolios. (See Appendix B for the names of the subadvisers.) The following Class B or, as noted, Class C portfolios are available under the contract: American Funds Bond Portfolio (Class C) American Funds Growth Portfolio (Class C) American Funds International Portfolio (Class C) BlackRock High Yield Portfolio Clarion Global Real Estate Portfolio (formerly Neuberger Berman Real Estate Portfolio) Harris Oakmark International Portfolio Lazard Mid Cap Portfolio Legg Mason Partners Aggressive Growth Portfolio Legg Mason Value Equity Portfolio Loomis Sayles Global Markets Portfolio Lord Abbett Bond Debenture Portfolio Lord Abbett Growth and Income Portfolio Lord Abbett Mid Cap Value Portfolio Met/AIM Small Cap Growth Portfolio Met/Franklin Mutual Shares Portfolio MFS (Reg. TM) Emerging Markets Equity Portfolio MFS (Reg. TM) Research International Portfolio PIMCO Inflation Protected Bond Portfolio PIMCO Total Return Portfolio Rainier Large Cap Equity Portfolio RCM Technology Portfolio T. Rowe Price Mid Cap Growth Portfolio Third Avenue Small Cap Value Portfolio Turner Mid Cap Growth Portfolio Van Kampen Comstock Portfolio METROPOLITAN SERIES FUND, INC. (CLASS B OR, AS NOTED, CLASS E) Metropolitan Series Fund, Inc. is a mutual fund with multiple portfolios. MetLife Advisers, LLC (MetLife Advisers), an affiliate of MetLife Investors, is the investment adviser to the portfolios. MetLife Advisers has engaged subadvisers to provide investment advice for the individual investment portfolios. (See Appendix B for the names of the subadvisers.) The following Class B or, as noted, Class E portfolios are available under the contract: BlackRock Money Market Portfolio Davis Venture Value Portfolio (Class E) Harris Oakmark Focused Value Portfolio Jennison Growth Portfolio MetLife Stock Index Portfolio Western Asset Management U.S. Government Portfolio MET INVESTORS SERIES TRUST - METLIFE ASSET ALLOCATION PROGRAM (CLASS B) In addition to the portfolios listed above under Met Investors Series Trust, the following Class B portfolios are available under the contract: MetLife Defensive Strategy Portfolio MetLife Moderate Strategy Portfolio MetLife Balanced Strategy Portfolio MetLife Growth Strategy Portfolio MetLife Aggressive Strategy Portfolio MET INVESTORS SERIES TRUST - AMERICAN FUNDS ASSET ALLOCATION PORTFOLIOS (CLASS C) In addition to the portfolios listed above under Met Investors Series Trust, the following Class C portfolios are also available under the contract: American Funds Moderate Allocation Portfolio American Funds Balanced Allocation Portfolio American Funds Growth Allocation Portfolio MET INVESTORS SERIES TRUST - FRANKLIN TEMPLETON ASSET ALLOCATION PORTFOLIOS (CLASS B) In addition to the portfolios listed above under Met Investors Series Trust, the following Class B portfolio is also available under the contract: Met/Franklin Templeton Founding Strategy Portfolio TRANSFERS GENERAL. You can transfer a portion of your account value among the fixed account and the investment portfolios. The contract provides that you can make a maximum of 12 transfers every year and that each transfer is made without charge. We measure a year from the anniversary of the day we issued your contract. We currently allow unlimited transfers but reserve the right to limit this in the future. We may also limit transfers in circumstances of market timing or other transfers we determine are or would be to the disadvantage of other contract owners. (See "Investment Options - Transfers - Market Timing.") We are not currently charging a transfer fee, but we reserve the right to charge such a fee in the future. If such a charge were to be imposed, it would be 25 $25 for each transfer over 12 in a year. The transfer fee will be deducted from the investment portfolio or fixed account from which the transfer is made. However, if the entire interest in an account is being transferred, the transfer fee will be deducted from the amount which is transferred. You can make a transfer to or from the fixed account and to or from any investment portfolio, subject to the limitations below. All transfers made on the same business day will be treated as one transfer. Transfers received before the close of trading on the New York Stock Exchange will take effect as of the end of the business day. The following apply to any transfer: o Your request for transfer must clearly state which investment portfolio(s) or the fixed account are involved in the transfer. o Your request for transfer must clearly state how much the transfer is for. o The minimum amount you can transfer is $500 from an investment portfolio, or your entire interest in the investment portfolio, if less (this does not apply to pre-scheduled transfer programs). o The minimum amount that may be transferred from the fixed account is $500, or your entire interest in the fixed account. Transfers out of the fixed account during the accumulation phase are limited to the greater of: (a) 25% of the fixed account value at the beginning of the contract year, or (b) the amount transferred out of the fixed account in the prior contract year. Currently we are not imposing these restrictions on transfers out of the fixed account, but we have the right to reimpose them at any time. o You may not make a transfer to more than 18 investment portfolios (including the fixed account) at any time if the request is made by telephone to our voice response system or by Internet. A request to transfer to more than 18 investment portfolios (including the fixed account) may be made by calling or writing our Annuity Service Center. o If you have elected to add the Enhanced Death Benefit, GMIB Plus I, GMIB Plus II, Lifetime Withdrawal Guarantee I or Lifetime Withdrawal Guarantee II rider to your contract, you may only make transfers between certain investment portfolios. Please refer to the sections "Purchase-Allocation of Purchase Payments" and "Purchase-Investment Allocation Restrictions for Certain Riders." o If you have elected to add the Guaranteed Minimum Accumulation Benefit rider to your contract, you may not transfer out of the MetLife Asset Allocation Program portfolio you chose at issue until the rider terminates. Please refer to the section "Living Benefits-Guaranteed Minimum Accumulation Benefit." During the accumulation phase, to the extent permitted by applicable law, during times of drastic economic or market conditions, we may suspend the transfer privilege temporarily without notice and treat transfer requests based on their separate components (a redemption order with simultaneous request for purchase of another investment portfolio). In such a case, the redemption order would be processed at the source investment portfolio's next determined accumulation unit value. However, the purchase of the new investment portfolio would be effective at the next determined accumulation unit value for the new investment portfolio only after we receive the proceeds from the source investment portfolio, or we otherwise receive cash on behalf of the source investment portfolio. For transfers during the accumulation phase, we have reserved the right to restrict transfers to the fixed account if any one of the following conditions exist: o The credited interest rate is equal to the guaranteed minimum rate; o Your account value in the fixed account equals or exceeds our published maximum for fixed account contract values (currently, there is no limit); or o A transfer was made out of the fixed account within the previous 180 days. During the income phase, you cannot make transfers from a fixed annuity payment option to the investment portfolios. You can, however, make transfers during the income phase from the investment portfolios to a fixed annuity payment option and among the investment portfolios. TRANSFERS BY TELEPHONE OR OTHER MEANS. You may elect to make transfers by telephone, Internet or other means acceptable to us. To elect this option, you must first provide us with a notice or agreement in a form that we may require. If you own the contract with a joint owner, unless we are instructed otherwise, we will accept instructions from either you or the other owner. (See "Other Information - Requests and Elections.") 26 All transfers made on the same day will be treated as one transfer. A transfer will be made as of the end of the business day when we receive a notice containing all the required information necessary to process the request. We will consider telephone and Internet requests received after 4:00 p.m. Eastern Time to be received the following business day. PRE-SCHEDULED TRANSFER PROGRAM. There are certain programs that involve transfers that are pre-scheduled. When a transfer is made as a result of such a program, we do not count the transfer in determining the applicability of any transfer fee and certain minimums do not apply. The current pre-scheduled transfers are made in conjunction with the following: Dollar Cost Averaging, Three Month Market Entry and Automatic Rebalancing Programs. MARKET TIMING. Frequent requests from contract owners to transfer account value may dilute the value of an investment portfolio's shares if the frequent trading involves an attempt to take advantage of pricing inefficiencies created by a lag between a change in the value of the securities held by the portfolio and the reflection of that change in the portfolio's share price ("arbitrage trading"). Regardless of the existence of pricing inefficiencies, frequent transfers may also increase brokerage and administrative costs of the underlying investment portfolios and may disrupt portfolio management strategy, requiring a portfolio to maintain a high cash position and possibly resulting in lost investment opportunities and forced liquidations ("disruptive trading"). Accordingly, arbitrage trading and disruptive trading activities (referred to collectively as "market timing") may adversely affect the long-term performance of the investment portfolios, which may in turn adversely affect contract owners and other persons who may have an interest in the contracts (E.G., annuitants and beneficiaries). We have policies and procedures that attempt to detect and deter frequent transfers in situations where we determine there is a potential for arbitrage trading. Currently, we believe that such situations may be presented in the international, small-cap, and high-yield investment portfolios (i.e., the American Funds International, BlackRock High Yield, Clarion Global Real Estate, Harris Oakmark International, Loomis Sayles Global Markets, Lord Abbett Bond Debenture, Met/AIM Small Cap Growth, MFS (Reg. TM) Emerging Markets Equity, MFS (Reg. TM) Research International, and Third Avenue Small Cap Value Portfolios), and we monitor transfer activity in those portfolios (the "Monitored Portfolios"). We employ various means to monitor transfer activity, such as examining the frequency and size of transfers into and out of the Monitored Portfolios within given periods of time. For example, we currently monitor transfer activity to determine if, for each category of international, small-cap, and high-yield portfolios, in a 12-month period there were: (1) six or more transfers involving the given category; (2) cumulative gross transfers involving the given category that exceed the current account value; and (3) two or more "round-trips" involving the given category. A round-trip generally is defined as a transfer in followed by a transfer out within the next seven calendar days or a transfer out followed by a transfer in within the next seven calendar days, in either case subject to certain other criteria. We do not believe that other investment portfolios present a significant opportunity to engage in arbitrage trading and therefore do not monitor transfer activity in those portfolios. We may change the Monitored Portfolios at any time without notice in our sole discretion. In addition to monitoring transfer activity in certain investment portfolios, we rely on the underlying investment portfolios to bring any potential disruptive trading activity they identify to our attention for investigation on a case-by-case basis. We will also investigate any other harmful transfer activity that we identify from time to time. We may revise these policies and procedures in our sole discretion at any time without prior notice. Our policies and procedures may result in transfer restrictions being applied to deter market timing. Currently, when we detect transfer activity in the Monitored Portfolios that exceeds our current transfer limits, or other transfer activity that we believe may be harmful to other owners or other persons who have an interest in the contracts, we require all future transfer requests to or from any Monitored Portfolios or other identified investment portfolios under that contract to be submitted with an original signature. Transfers made under a Dollar Cost Averaging Program, a rebalancing program or, if applicable, any asset allocation program described in this prospectus are not treated as transfers when we evaluate trading patterns for market timing. The detection and deterrence of harmful transfer activity involves judgments that are inherently subjective, such as the decision to monitor only those investment portfolios that we believe are susceptible to arbitrage trading, or the determination of the transfer limits. Our ability to detect 27 and/or restrict such transfer activity may be limited by operational and technological systems, as well as our ability to predict strategies employed by owners to avoid such detection. Our ability to restrict such transfer activity also may be limited by provisions of the contract. Accordingly, there is no assurance that we will prevent all transfer activity that may adversely affect owners and other persons with interests in the contracts. We do not accommodate market timing in any investment portfolios and there are no arrangements in place to permit any contract owner to engage in market timing; we apply our policies and procedures without exception, waiver, or special arrangement. The investment portfolios may have adopted their own policies and procedures with respect to frequent purchases and redemptions of their respective shares, and we reserve the right to enforce these policies and procedures. For example, investment portfolios may assess a redemption fee (which we reserve the right to collect) on shares held for a relatively short period. The prospectuses for the investment portfolios describe any such policies and procedures, which may be more or less restrictive than the policies and procedures we have adopted. Although we may not have the contractual authority or the operational capacity to apply the frequent trading policies and procedures of the investment portfolios, we have entered into a written agreement, as required by SEC regulation, with each investment portfolio or its principal underwriter that obligates us to provide to the investment portfolio promptly upon request certain information about the trading activity of individual contract owners, and to execute instructions from the investment portfolio to restrict or prohibit further purchases or transfers by specific contract owners who violate the frequent trading policies established by the investment portfolio. In addition, contract owners and other persons with interests in the contracts should be aware that the purchase and redemption orders received by the investment portfolios generally are "omnibus" orders from intermediaries, such as retirement plans or separate accounts funding variable insurance contracts. The omnibus orders reflect the aggregation and netting of multiple orders from individual owners of variable insurance contracts and/or individual retirement plan participants. The omnibus nature of these orders may limit the investment portfolios in their ability to apply their frequent trading policies and procedures. In addition, the other insurance companies and/or retirement plans may have different policies and procedures or may not have any such policies and procedures because of contractual limitations. For these reasons, we cannot guarantee that the investment portfolios (and thus contract owners) will not be harmed by transfer activity relating to other insurance companies and/or retirement plans that may invest in the investment portfolios. If an investment portfolio believes that an omnibus order reflects one or more transfer requests from contract owners engaged in disruptive trading activity, the investment portfolio may reject the entire omnibus order. In accordance with applicable law, we reserve the right to modify or terminate the transfer privilege at any time. We also reserve the right to defer or restrict the transfer privilege at any time that we are unable to purchase or redeem shares of any of the investment portfolios, including any refusal or restriction on purchases or redemptions of their shares as a result of their own policies and procedures on market timing activities (even if an entire omnibus order is rejected due to the market timing activity of a single contract owner). You should read the investment portfolio prospectuses for more details. DOLLAR COST AVERAGING PROGRAMS We offer two dollar cost averaging programs as described below. By allocating amounts on a regular schedule as opposed to allocating the total amount at one particular time, you may be less susceptible to the impact of market fluctuations. You can elect only one dollar cost averaging program at a time. The dollar cost averaging programs are available only during the accumulation phase. We reserve the right to modify, terminate or suspend any of the dollar cost averaging programs. There is no additional charge for participating in any of the dollar cost averaging programs. If you participate in any of the dollar cost averaging programs, the transfers made under the program are not taken into account in determining any transfer fee. We may, from time to time, offer other dollar cost averaging programs which have terms different from those described in this prospectus. 28 The two dollar cost averaging programs are: 1. STANDARD DOLLAR COST AVERAGING (DCA) This program allows you to systematically transfer a set amount each month from the fixed account or from a money market investment portfolio to any of the other available investment portfolio(s) you select. We provide certain exceptions from our normal fixed account restrictions to accommodate dollar cost averaging programs. These transfers are made on a date you select or, if you do not select a date, on the date that a purchase payment (including Purchase Payment Credits applied to your contract) or account value is allocated to the dollar cost averaging program. You can make subsequent purchase payments while you have an active DCA program in effect, provided, however, that no amount will be allocated to the DCA program without your express direction. (See "Purchase - Allocation of Purchase Payments.") If you make such an addition to your existing DCA program, the DCA transfer amount will not be increased; however, the number of months over which transfers are made is increased, unless otherwise elected in writing. You can terminate the program at any time, at which point transfers under the program will stop. This program is not available if you have selected the GMIB Plus I rider, the GMIB Plus II rider, the Lifetime Withdrawal Guarantee II rider, the GMAB rider, or the Enhanced Death Benefit rider. 2. ENHANCED DOLLAR COST AVERAGING PROGRAM (EDCA) The Enhanced Dollar Cost Averaging (EDCA) Program allows you to systematically transfer amounts from the EDCA account in the general account to any available investment portfolio(s) you select. Except as discussed below, only new purchase payments or portions thereof can be allocated to an EDCA account. The transfer amount will be equal to the amount allocated to the EDCA account divided by a specified number of months (currently 6 or 12 months). For example, a $12,000 allocation to a 6-month program will consist of six $2,000 transfers, and a final transfer of the interest processed separately as a seventh transfer. You can make subsequent purchase payments while you have an active EDCA account in effect, provided, however, that no amount will be allocated to the EDCA account without your express direction. (See "Purchase - Allocation of Purchase Payments.") When a subsequent purchase payment is allocated by you to your existing EDCA account we create "buckets" within your EDCA account. o The EDCA transfer amount will be increased by the subsequent purchase payment divided by the number of EDCA months (6 or 12 months as you selected) and thereby accelerates the time period over which transfers are made. o Each allocation (bucket) resulting from a subsequent purchase payment will earn interest at the then current interest rate applied to new allocations to an EDCA account of the same monthly term. o Allocations (buckets) resulting from each purchase payment, along with the interest credited, will be transferred on a first-in, first-out basis. Using the example above, a subsequent $6,000 allocation to a 6 month EDCA will increase the EDCA transfer amount from $2,000 to $3,000 ($2,000 plus $6,000/6). This increase will have the effect of accelerating the rate at which the 1st payment bucket is exhausted. (See Appendix C for further examples of EDCA with multiple purchase payments.) The interest rate earned in an EDCA account will be the minimum guaranteed rate, plus any additional interest which we may declare from time to time. The interest rate earned in an EDCA account is paid over time on declining amounts in the EDCA account. Therefore, the amount of interest payments you receive will decrease as amounts are systematically transferred from the EDCA account to any investment portfolio, and the effective interest rate earned will therefore be less than the declared interest rate. The first transfer we make under the EDCA program is the date your purchase payment is allocated to your EDCA account. Subsequent transfers will be made each month thereafter on the same day. However, transfers will be made on the 1st day of the following month for purchase payments allocated on the 29th, 30th, or 31st day of a month. If the selected day is not a business day, the transfer will be deducted from the EDCA account on the selected day but will be applied to the investment portfolios on the next business day. EDCA interest will not be credited on the transfer amount between the selected day and the next business day. Transfers will continue on a monthly basis 29 until all amounts are transferred from your EDCA account. Your EDCA account will be terminated as of the last transfer. If you decide you no longer want to participate in the EDCA program, and your contract was issued prior to May 1, 2005, all money remaining in your EDCA account will be transferred to the BlackRock Money Market Portfolio, unless you specify otherwise. If your contract was issued on or after May 1, 2005, all money remaining in your EDCA account will be transferred to the investment portfolio(s) in accordance with the percentages you have chosen for the EDCA program, unless you specify otherwise. THREE MONTH MARKET ENTRY PROGRAM Alternatively, you can participate in the Three Month Market Entry Program which operates in the same manner as the Enhanced Dollar Cost Averaging Program, except it is of 3 months duration. AUTOMATIC REBALANCING PROGRAM Once your money has been allocated to the investment portfolios, the performance of each portfolio may cause your allocation to shift. You can direct us to automatically rebalance your contract to return to your original percentage allocations by selecting our Automatic Rebalancing Program. You can tell us whether to rebalance monthly, quarterly, semi-annually or annually. An automatic rebalancing program is intended to transfer account value from those portfolios that have increased in value to those that have declined or not increased as much in value. Over time, this method of investing may help you "buy low and sell high," although there can be no assurance that this objective will be achieved. Automatic rebalancing does not guarantee profits, nor does it assure that you will not have losses. We will measure the rebalancing periods from the anniversary of the date we issued your contract. If a dollar cost averaging (either DCA or EDCA) program is in effect, rebalancing allocations will be based on your current DCA or EDCA allocations. If you are not participating in a dollar cost averaging program, we will make allocations based upon your current purchase payment allocations, unless you tell us otherwise. The Automatic Rebalancing Program is available only during the accumulation phase. There is no additional charge for participating in the Automatic Rebalancing Program. If you participate in the Automatic Rebalancing Program, the transfers made under the program are not taken into account in determining any transfer fee. If you have selected the GMIB Plus II rider, the Lifetime Withdrawal Guarantee II rider, or the Enhanced Death Benefit rider, the fixed account is available for automatic rebalancing. The Automatic Rebalancing Program is not available if you have selected the GMAB rider. EXAMPLE: Assume that you want your initial purchase payment split between 2 investment portfolios. You want 40% to be in the Lord Abbett Bond Debenture Portfolio and 60% to be in the Legg Mason Partners Aggressive Growth Portfolio. Over the next 2 1/2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the Lord Abbett Bond Debenture Portfolio now represents 50% of your holdings because of its increase in value. If you have chosen to have your holdings rebalanced quarterly, on the first day of the next quarter, we will sell some of your units in the Lord Abbett Bond Debenture Portfolio to bring its value back to 40% and use the money to buy more units in the Legg Mason Partners Aggressive Growth Portfolio to increase those holdings to 60%. DESCRIPTION OF THE METLIFE ASSET ALLOCATION PROGRAM The MetLife Asset Allocation Program consists of the following five MetLife asset allocation portfolios (Class B), each of which is a portfolio of the Met Investors Series Trust. Met Investors Advisory, LLC ("Met Investors Advisory"), an affiliate of ours, is the investment manager of the MetLife asset allocation portfolios. METLIFE ASSET ALLOCATION PROGRAM PORTFOLIOS - ------------------------------------------- MetLife Defensive Strategy Portfolio MetLife Moderate Strategy Portfolio MetLife Balanced Strategy Portfolio MetLife Growth Strategy Portfolio MetLife Aggressive Strategy Portfolio Each portfolio is well diversified and was designed on established principles of asset allocation and risk tolerance. Each portfolio will invest substantially all of its assets in the Class A shares of other investment portfolios of the Met Investors Series Trust or of the Metropolitan Series Fund, Inc., which invest either in equity securities, fixed income securities or cash equivalent money market securities, as applicable. Each portfolio has a target allocation among the three types of asset classes (equity, 30 fixed income and cash/money market). Met Investors Advisory establishes specific target investment percentages for the asset classes and the various components of each asset category and then selects the underlying investment portfolios in which a portfolio invests based on, among other things, the underlying investment portfolios' investment objectives and policies, Met Investors Advisory's investment process, its outlook for the economy, interest rates, financial markets and historical performance of each underlying investment portfolio and/or asset class. At least annually, Met Investors Advisory will evaluate each portfolio's target allocation between equity and fixed income securities, including the allocation among sub-classes of these asset classes, based on the portfolio's risk profile. At the same time, Met Investors Advisory will also consider whether to make changes to each portfolio's underlying investment portfolio target. (See the fund prospectus for a description of each portfolio's target allocation.) Met Investors Advisory has hired an independent consultant to provide research and consulting services with respect to the periodic asset allocation targets for each of the portfolios and to investment in the underlying investment portfolios, which may assist Met Investors Advisory in determining the underlying investment portfolios that may be available for investment and with the selection of and allocation of each portfolio's investments among the underlying investment portfolios. Met Investors Advisory is responsible for paying the consulting fees. VOTING RIGHTS We are the legal owner of the investment portfolio shares. However, we believe that when an investment portfolio solicits proxies in conjunction with a vote of shareholders, we are required to obtain from you and other affected owners instructions as to how to vote those shares. When we receive those instructions, we will vote all of the shares we own in proportion to those instructions. This will also include any shares that we own on our own behalf. The effect of this proportional voting is that a small number of contract owners may control the outcome of a vote. Should we determine that we are no longer required to comply with the above, we will vote the shares in our own right. SUBSTITUTION OF INVESTMENT OPTIONS If investment in the investment portfolios or a particular investment portfolio is no longer possible, in our judgment becomes inappropriate for purposes of the contract, or for any other reason in our sole discretion, we may substitute another investment portfolio or investment portfolios without your consent. The substituted investment portfolio may have different fees and expenses. Substitution may be made with respect to existing investments or the investment of future purchase payments, or both. However, we will not make such substitution without any necessary approval of the Securities and Exchange Commission and applicable state insurance departments. Furthermore, we may close investment portfolios to allocation of purchase payments or account value, or both, at any time in our sole discretion. 4. EXPENSES There are charges and other expenses associated with the contract that reduce the return on your investment in the contract. These charges and expenses are: PRODUCT CHARGES SEPARATE ACCOUNT PRODUCT CHARGES. Each day, we make a deduction for our Separate Account product charges (which consist of the mortality and expense charge, the administration charge and the charges related to certain death benefit riders). We do this as part of our calculation of the value of the accumulation units and the annuity units (I.E., during the accumulation phase and the income phase - although death benefit charges no longer continue in the income phase). MORTALITY AND EXPENSE CHARGE. We assess a daily mortality and expense charge which is equal, on an annual basis, to 1.30% of the average daily net asset value of each investment portfolio. For contracts issued prior to May 1, 2003, the mortality and expense charge on an annual basis is 1.40% of the average daily net asset value of each investment portfolio. This charge compensates us for mortality risks we assume for the annuity payment and death benefit guarantees made under the contract. These guarantees include making annuity payments that will not change based on our actual mortality experience, and providing a guaranteed minimum death benefit under the contract. The charge also compensates us for expense risks we assume to cover contract maintenance expenses. These expenses may include issuing contracts, maintaining records, making and maintaining subaccounts available under the contract and performing accounting, regulatory compliance, and reporting functions. This charge also compensates us for costs associated with the establishment and administration 31 of the contract, including programs like transfers and dollar cost averaging. If the mortality and expense charge is inadequate to cover the actual expenses of mortality, maintenance, and administration, we will bear the loss. If the charge exceeds the actual expenses, we will add the excess to our profit and it may be used to finance distribution expenses or for any other purpose. ADMINISTRATION CHARGE. This charge is equal, on an annual basis, to 0.25% of the average daily net asset value of each investment portfolio. This charge, together with the account fee (see below), is for the expenses associated with the administration of the contract. Some of these expenses are: issuing contracts, maintaining records, providing accounting, valuation, regulatory and reporting services, as well as expenses associated with marketing, sale and distribution of the contracts. DEATH BENEFIT RIDER CHARGES. If you select one of the following death benefit riders, we assess a daily charge during the accumulation phase equal, on an annual basis, to the percentages below of the average daily net asset value of each investment portfolio: Annual Step-Up Death Benefit 0.20 % Additional Death Benefit - Earnings Preservation Benefit 0.25 % Compounded-Plus Death Benefit 0.35%*
*For contracts issued prior to May 1, 2003, the percentage charge for the Compounded-Plus Death Benefit is 0.15% of the average daily net asset value of each investment portfolio. Please check with your registered representative regarding which death benefits are available in your state. If you select the Enhanced Death Benefit, and you are age 69 or younger at issue, we will assess a charge during the accumulation phase equal to 0.65% of the Death Benefit Base. If you are age 70-75 at issue, we will assess a charge during the accumulation phase equal to 0.85% of the Death Benefit Base (see "Death Benefit - Optional Death Benefit - Enhanced Death Benefit" for a discussion of how the Death Benefit Base is determined). If your Death Benefit Base is increased due to an Optional Step-Up, we may reset the rider charge to a rate we shall determine that does not exceed the Maximum Optional Step-Up Charge (1.50%), provided that this rate will not exceed the rate currently applicable to the same rider available for new contract purchases at the time of the Optional Step-Up. Starting with the first contract anniversary, the charge is assessed for the prior contract year at each contract anniversary before any Optional Step-Up. If you make a full withdrawal (surrender) or if you begin to receive annuity payments at the annuity date, a pro rata portion of the charge will be assessed based on the number of months from the last contract anniversary to the date of withdrawal or application to an annuity option. The charge is deducted from your account value pro rata from each investment portfolio, the fixed account and the EDCA account in the ratio each portfolio/account bears to your total account value. We take amounts from the investment options that are part of the Separate Account by canceling accumulation units from the Separate Account. If you elect both the Enhanced Death Benefit rider and the GMIB Plus II rider (described below), the percentage charge for the Enhanced Death Benefit will be reduced to 0.60% of the death benefit base if you are age 69 or younger at issue and 0.80% of the death benefit base if you are age 70-75 at issue. ACCOUNT FEE During the accumulation phase, every contract year on your contract anniversary (the anniversary of the date when your contract was issued), we will deduct $30 from your contract as an account fee for the prior contract year if your account value is less than $50,000. If you make a complete withdrawal from your contract, the full account fee will be deducted from the account value regardless of the amount of your account value. During the accumulation phase, the account fee is deducted pro rata from the investment portfolios. This charge is for administrative expenses (see above). This charge cannot be increased. A pro rata portion of the charge will be deducted from the account value on the annuity date if this date is other than a contract anniversary. If your account value on the annuity date is at least $50,000, then we will not deduct the account fee. After the annuity date, the charge will be collected monthly out of the annuity payment, regardless of the size of your contract. GUARANTEED MINIMUM INCOME BENEFIT - RIDER CHARGE We offer a Guaranteed Minimum Income Benefit ("GMIB") that you can select when you purchase the contract. There are four different versions of the GMIB 32 under this contract (a maximum of two of which are available in your state): GMIB Plus II, GMIB Plus I, GMIB II, and GMIB I. If you select the GMIB Plus II rider, we will assess a charge during the accumulation phase equal to 0.80% of the income base (see "Living Benefits - Guaranteed Income Benefits" for a discussion of how the income base is determined) at the time the rider charge is assessed prior to any Optional Step-Up. If your income base is increased due to an Optional Step-Up under the GMIB Plus II rider, we may reset the rider charge to a rate we shall determine that does not exceed the Maximum Optional Step-Up Charge (1.50%), provided that this rate will not exceed the rate currently applicable to the same rider available for new contract purchases at the time of the Optional Step-Up. If you select the GMIB Plus I rider, we will assess a charge during the accumulation phase equal to 0.80% of the income base at the time the rider charge is assessed. If your income base is increased due to an Optional Reset under the GMIB Plus I rider, we may increase the rider charge to the charge applicable to contract purchases of the same rider at the time of the increase, but to no more than a maximum of 1.50%. For contracts issued prior to February 26, 2007 for which the GMIB Plus I was elected, the rider charge equals 0.75% of the income base. If you select the GMIB II or GMIB I rider, the charge is 0.50% of the income base at the time the charge is assessed. For contracts issued from May 1, 2003 and prior to May 1, 2005 for which the GMIB II or GMIB I was elected, the rider charge is reduced to 0.45% of the income base if you elected either the optional Annual Step-Up Death Benefit or the Compounded-Plus Death Benefit. (See "Death Benefit".) For contracts issued on and after May 1, 2005, the rider charge will not be reduced if you elect either the optional Annual Step-Up Death Benefit or the Compounded-Plus Death Benefit. For contracts issued prior to February 15, 2003, the GMIB I rider charge equals 0.35% of the income base. The rider charge is assessed at the first contract anniversary, and then at each subsequent contract anniversary, up to and including the anniversary on or immediately preceding the date the rider is exercised. If you make a full withdrawal (surrender) or if you begin to receive annuity payments at the annuity date, a pro rata portion of the rider charge will be assessed based on the number of months from the last contract anniversary to the date of withdrawal or application to an annuity option. The GMIB rider charge is deducted from your account value pro rata from each investment portfolio, the fixed account and the EDCA account in the ratio each portfolio/ account bears to your total account value. We take amounts from the investment options that are part of the Separate Account by canceling accumulation units from the Separate Account. LIFETIME WITHDRAWAL GUARANTEE AND GUARANTEED WITHDRAWAL BENEFIT - RIDER CHARGE There are two versions of the optional Lifetime Withdrawal Guarantee rider: the Lifetime Withdrawal Guarantee II rider and the Lifetime Withdrawal Guarantee I rider (collectively referred to as the Lifetime Withdrawal Guarantee riders). There are also two versions of the optional Guaranteed Withdrawal Benefit ("GWB") rider: the Enhanced GWB rider and the GWB I rider (collectively referred to as the Guaranteed Withdrawal Benefit riders). Please check with your registered representative regarding which versions are available in your state. If you elect one of the Lifetime Withdrawal Guarantee riders or one of the Guaranteed Withdrawal Benefit riders, a charge is deducted from your account value during the accumulation phase on each contract anniversary. The charge for the Lifetime Withdrawal Guarantee II rider is equal to 0.65% (Single Life version) or 0.85% (Joint Life version) of the Total Guaranteed Withdrawal Amount (see "Living Benefits - Guaranteed Withdrawal Benefits - Description of the Lifetime Withdrawal Guarantee II") on the applicable contract anniversary, after applying any 7.25% Compounding Income Amount and prior to taking into account any Automatic Annual Step-Up occurring on such contract anniversary. The charge for the Lifetime Withdrawal Guarantee I rider is equal to 0.50% (Single Life version) or 0.70% (Joint Life version) of the Total Guaranteed Withdrawal Amount on the applicable contract anniversary, after applying any 5% Compounding Income Amount and prior to taking into account any Automatic Annual Step-Up occurring on such contract anniversary. The charge for the Enhanced GWB rider is equal to 0.55% of the Guaranteed Withdrawal Amount (see "Living Benefits - Guaranteed Withdrawal Benefit - Description of the Enhanced Guaranteed Withdrawal Benefit") on the applicable contract anniversary, prior to taking into account any Optional Reset occurring on such contract anniversary. (For contracts issued prior to July 16, 2007, the charge for the Enhanced GWB rider is equal to 0.50% of the Guaranteed Withdrawal Amount on the applicable contract anniversary, prior to taking into account any Optional Reset occurring on such contract 33 anniversary.) The charge for the GWB I rider is equal to 0.50% of the Guaranteed Withdrawal Amount on the applicable contract anniversary, prior to taking into account any Optional Reset occurring on such contract anniversary. The rider charge for the Lifetime Withdrawal Guarantee riders and the Guaranteed Withdrawal Benefit riders is deducted from your account value pro rata from each investment portfolio, the fixed account and the EDCA account in the ratio each portfolio/account bears to your total account value. We take amounts from the investment options that are part of the Separate Account by canceling accumulation units from the Separate Account. If you make a full withdrawal (surrender) of your account value, you apply your account value to an annuity option, there is a change in owners, joint owners or annuitants (if the owner is a non-natural person), or the contract terminates (except for a termination due to death), a pro rata portion of the rider charge will be assessed based on the number of full months from the last contract anniversary to the date of the change. If the Enhanced GWB rider or a Lifetime Withdrawal Guarantee rider is cancelled pursuant to the cancellation provisions of each rider, a pro rata portion of the rider charge will not be assessed based on the period from the most recent contract anniversary to the date the cancellation takes effect. If an Automatic Annual Step-Up occurs under the Lifetime Withdrawal Guarantee II rider, we may reset the Lifetime Withdrawal Guarantee II rider charge to a rate we shall determine that does not exceed the Maximum Optional Step-Up Charge of 1.25% (Single Life version) or 1.50% (Joint Life version), provided that this rate will not exceed the rate currently applicable to the same rider available for new contract purchases at the time of the step-up. If an Automatic Annual Step-Up occurs under the Lifetime Withdrawal Guarantee I rider, we may increase the Lifetime Withdrawal Guarantee I rider charge to the charge applicable to current contract purchases of the same rider at the time of the step-up, but to no more than a maximum of 0.95% (Single Life version) or 1.40% (Joint Life version) of the Total Guaranteed Withdrawal Amount. If you elect an Optional Reset as permitted under the Enhanced GWB rider or the GWB I rider, we may increase the rider charge to the Enhanced GWB/GWB I rider charge applicable to current contract purchases of the same rider at the time of the reset, but to no more than a maximum of 1.00% (for Enhanced GWB) or 0.95% (for GWB I) of the Guaranteed Withdrawal Amount. (For contracts issued prior to July 16, 2007, the maximum charge for the Enhanced GWB rider upon an Optional Reset is equal to 0.95% of the Guaranteed Withdrawal Amount.) If one of the Lifetime Withdrawal Guarantee riders is in effect, the rider charge will continue if your Remaining Guaranteed Withdrawal Amount (see "Living Benefits - Guaranteed Withdrawal Benefit - Description of the Lifetime Withdrawal Guarantee II") equals zero. If the Enhanced GWB or GWB I rider is in effect, the rider charge will not continue if your Benefit Base (see "Living Benefits - Guaranteed Withdrawal Benefit - Description of the Enhanced Guaranteed Withdrawal Benefit") equals zero. GUARANTEED MINIMUM ACCUMULATION BENEFIT - RIDER CHARGE We offer a Guaranteed Minimum Accumulation Benefit ("GMAB") rider that you can select when you purchase the contract. If you elect the GMAB, a charge is deducted from your account value during the accumulation phase on each contract anniversary. The charge is equal to 0.75% of the GMAB Guaranteed Accumulation Amount (see "Living Benefits-Guaranteed Minimum Accumulation Benefit") at the end of the prior contract year. The GMAB rider charge is deducted from your account value pro rata from your contract's MetLife Asset Allocation Program portfolio and the EDCA account in the ratio each portfolio/account bears to your total account value. We take amounts from the investment options that are part of the Separate Account by cancelling accumulation units from the Separate Account. If you make a full withdrawal (surrender) of your account value or you apply your account value to an annuity option, we will assess a pro rata portion of the GMAB rider charge based on the number of whole months since the last contract anniversary. WITHDRAWAL CHARGE During the accumulation phase, you can make a withdrawal from your contract (either a partial or a complete withdrawal). If the amount you withdraw is determined to include the withdrawal of any of your prior purchase payments, a withdrawal charge is assessed against the purchase payment withdrawn. To determine if your withdrawal includes prior purchase payments, amounts are withdrawn from your contract in the following order: 1. Earnings in your contract (earnings are equal to your 34 account value, less purchase payments not previously withdrawn); then 2. The free withdrawal amount described below; then 3. Purchase payments not previously withdrawn, in the order such purchase payments were made: the oldest purchase payment first, the next purchase payment second, etc. until all purchase payments have been withdrawn. A withdrawal charge will be assessed if prior purchase payments are withdrawn pursuant to a request to divide the assets of a contract due to divorce. FREE WITHDRAWAL AMOUNT. The free withdrawal amount for each contract year after the first (there is no free withdrawal amount in the first contract year) is equal to 10% of your total purchase payments, less the total free withdrawal amount previously withdrawn in the same contract year. Also, we currently will not assess the withdrawal charge on amounts withdrawn during the first contract year under the Systematic Withdrawal Program. Any unused free withdrawal amount in one contract year does not carry over to the next contract year. The withdrawal charge is calculated at the time of each withdrawal in accordance with the following:
Number of Complete Years from Withdrawal Charge Receipt of Purchase Payment (% of Purchase Payment) - ------------------------------ ------------------------ 0 8 1 8 2 8 3 7 4 6 5 5 6 4 7 3 8 2 9 and thereafter 0
For a partial withdrawal, the withdrawal charge is deducted from the remaining account value, if sufficient. If the remaining account value is not sufficient, the withdrawal charge is deducted from the amount withdrawn. If the account value is smaller than the total of all purchase payments, the withdrawal charge only applies up to the account value. We do not assess the withdrawal charge on any payments paid out as annuity payments or as death benefits, although we do assess the withdrawal charge in calculating GMIB payments, if applicable. In addition, we will not assess the withdrawal charge on required minimum distributions from qualified contracts but only as to amounts required to be distributed from this contract. We do not assess the withdrawal charge on earnings in your contract. NOTE: For tax purposes, earnings from non-qualified contracts are considered to come out first. REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE NURSING HOME OR HOSPITAL CONFINEMENT RIDER. We will not impose a withdrawal charge if, after you have owned the contract for one year, you or your joint owner becomes confined to a nursing home and/or hospital for at least 90 consecutive days or confined for a total of at least 90 days if there is no more than a 6 month break in confinement and the confinements are for related causes. The confinement must begin after the first contract anniversary and you must have been the owner continuously since the contract was issued (or have become the owner as the spousal beneficiary who continues the contract). The confinement must be prescribed by a physician and be medically necessary. This waiver terminates on the annuity date. We will not accept additional payments once this waiver is used. This rider may not be available in your state. (Check with your registered representative regarding availability.) TERMINAL ILLNESS RIDER. After the first contract anniversary, we will waive the withdrawal charge if you or your joint owner are terminally ill and not expected to live more than 12 months; a physician certifies to your illness and life expectancy; you were not diagnosed with the terminal illness as of the date we issued your contract; and you have been the owner continuously since the contract was issued (or have become the owner as the spousal beneficiary who continues the contract). This waiver terminates on the annuity date. We will not accept additional payments once this waiver is used. This rider may not be available in your state. (Check with your registered representative regarding availability.) For contracts issued on and after May 1, 2005, the Nursing Home or Hospital Confinement rider and the Terminal Illness rider are not available for owners who are age 81 or older (on the contract issue date). Additional conditions and requirements apply to the Nursing Home or Hospital 35 Confinement rider and the Terminal Illness rider. They are specified in the rider(s) that are part of your contract. PREMIUM AND OTHER TAXES We reserve the right to deduct from purchase payments, account balances, withdrawals, death benefits or income payments any taxes relating to the contracts (including, but not limited to, premium taxes) paid by us to any government entity. Examples of these taxes include, but are not limited to, premium tax, generation-skipping transfer tax or a similar excise tax under federal or state tax law which is imposed on payments we make to certain persons and income tax withholdings on withdrawals and income payments to the extent required by law. Premium taxes generally range from 0 to 3.5%, depending on the state. We will, at our sole discretion, determine when taxes relate to the contracts. We may, at our sole discretion, pay taxes when due and deduct that amount from the account balance at a later date. Payment at an earlier date does not waive any right we may have to deduct amounts at a later date. It is our current practice not to charge premium taxes until annuity payments begin. TRANSFER FEE We currently allow unlimited transfers without charge during the accumulation phase. However, we have reserved the right to limit the number of transfers to a maximum of 12 per year without charge and to charge a transfer fee of $25 for each transfer greater than 12 in any year. We are currently waiving the transfer fee, but reserve the right to charge it in the future. The transfer fee is deducted from the investment portfolio or fixed account from which the transfer is made. However, if the entire interest in an account is being transferred, the transfer fee will be deducted from the amount which is transferred. If the transfer is part of a pre-scheduled transfer program, it will not count in determining the transfer fee. INCOME TAXES We will deduct from the contract for any income taxes which we incur because of the contract. At the present time, we are not making any such deductions. INVESTMENT PORTFOLIO EXPENSES There are deductions from and expenses paid out of the assets of each investment portfolio, which are described in the fee table in this prospectus and the investment portfolio prospectuses. These deductions and expenses are not charges under the terms of the contract, but are represented in the share values of each investment portfolio. 5. ANNUITY PAYMENTS (THE INCOME PHASE) ANNUITY DATE Under the contract you can receive regular income payments (referred to as ANNUITY PAYMENTS). You can choose the month and year in which those payments begin. We call that date the ANNUITY DATE. Your annuity date must be the first day of a calendar month and must be at least 30 days after we issue the contract. Annuity payments must begin by the first day of the calendar month following the annuitant's 90th birthday (this requirement may be changed by us). When you purchase the contract, the annuity date will be the first day of the calendar month after the annuitant's 90th birthday. You can change the annuity date at any time before the annuity date with 30 days prior notice to us. Please be aware that once your contract is annuitized, you are ineligible to receive the death benefit you have selected. Additionally, if you have selected a living benefit rider such as a Guaranteed Minimum Income Benefit, a Guaranteed Withdrawal Benefit, or the Guaranteed Minimum Accumulation Benefit, annuitizing your contract terminates the rider, including any death benefit provided by the rider and any Guaranteed Principal Adjustment (for the Guaranteed Minimum Income Benefit Plus or Lifetime Withdrawal Guarantee riders) or Guaranteed Accumulation Payment (for the Guaranteed Minimum Accumulation Benefit rider) that may also be provided by the rider. ANNUITY PAYMENTS You (unless another payee is named) will receive the annuity payments during the income phase. The annuitant is the natural person(s) whose life we look to in the determination of annuity payments. During the income phase, you have the same investment choices you had just before the start of the income phase. At the annuity date, you can choose whether payments will be: o fixed annuity payments, or 36 o variable annuity payments, or o a combination of both. If you don't tell us otherwise, your annuity payments will be based on the investment allocations that were in place just before the start of the income phase. If you choose to have any portion of your annuity payments based on the investment portfolio(s), the dollar amount of your initial payment will vary and will depend upon three things: 1) the value of your contract in the investment portfolio(s) just before the start of the income phase, 2) the assumed investment return (AIR) (you select) used in the annuity table for the contract, and 3) the annuity option elected. Subsequent variable annuity payments will vary with the performance of the investment portfolios you selected. (For more information, see "Variable Annuity Payments" below.) At the time you choose an annuity option, you select the AIR, which must be acceptable to us. Currently, you can select an AIR of 3% or 4%. You can change the AIR with 30 days notice to us prior to the annuity date. If you do not select an AIR, we will use 3%. If the actual performance exceeds the AIR, your variable annuity payments will increase. Similarly, if the actual investment performance is less than the AIR, your variable annuity payments will decrease. Your variable annuity payment is based on ANNUITY UNITS. An annuity unit is an accounting device used to calculate the dollar amount of annuity payments. (For more information, see "Variable Annuity Payments" below.) When selecting an AIR, you should keep in mind that a lower AIR will result in a lower initial variable annuity payment, but subsequent variable annuity payments will increase more rapidly or decline more slowly as changes occur in the investment experience of the investment portfolios. On the other hand, a higher AIR will result in a higher initial variable annuity payment than a lower AIR, but later variable annuity payments will rise more slowly or fall more rapidly. In the event of a transfer during the income phase from a variable annuity payment option to a fixed annuity payment option, this may result in a reduction in the amount of annuity payments. If you choose to have any portion of your annuity payments be a fixed annuity payment, the dollar amount of each fixed annuity payment will not change. Annuity payments are made monthly (or at any frequency permitted under the contract) unless you have less than $5,000 to apply toward an annuity option. In that case, we may provide your annuity payment in a single lump sum instead of annuity payments. Likewise, if your annuity payments would be or become less than $100 a month, we have the right to change the frequency of payments so that your annuity payments are at least $100. ANNUITY OPTIONS You can choose among income plans. We call those ANNUITY OPTIONS. We ask you to choose an annuity option when you purchase the contract. You can change it at any time before the annuity date with 30 days notice to us. If you do not choose an annuity option at the time you purchase the contract, Option 2, which provides a life annuity with 10 years of guaranteed annuity payments, will automatically be applied. You can choose one of the following annuity options or any other annuity option acceptable to us. After annuity payments begin, you cannot change the annuity option. OPTION 1. LIFE ANNUITY. Under this option, we will make annuity payments so long as the annuitant is alive. We stop making annuity payments after the annuitant's death. It is possible under this option to receive only one annuity payment if the annuitant dies before the due date of the second payment or to receive only two annuity payments if the annuitant dies before the due date of the third payment, and so on. OPTION 2. LIFE ANNUITY WITH 10 YEARS OF ANNUITY PAYMENTS GUARANTEED. Under this option, we will make annuity payments so long as the annuitant is alive. If, when the annuitant dies, we have made annuity payments for less than ten years, we will then continue to make annuity payments for the rest of the 10 year period. OPTION 3. JOINT AND LAST SURVIVOR ANNUITY. Under this option, we will make annuity payments so long as the annuitant and a second person (joint annuitant) are both alive. When either annuitant dies, we will continue to make annuity payments, so long as the survivor continues to live. We will stop making annuity payments after the last survivor's death. 37 OPTION 4. JOINT AND LAST SURVIVOR ANNUITY WITH 10 YEARS OF ANNUITY PAYMENTS GUARANTEED. Under this option, we will make annuity payments so long as the annuitant and a second person (joint annuitant) are both alive. When either annuitant dies, we will continue to make annuity payments, so long as the survivor continues to live. If, at the last death of the annuitant and the joint annuitant, we have made annuity payments for less than ten years, we will then continue to make annuity payments for the rest of the 10 year period. OPTION 5. PAYMENTS FOR A DESIGNATED PERIOD. We currently offer an annuity option under which fixed or variable monthly annuity payments are made for a selected number of years as approved by us, currently not less than 10 years. This annuity option may be limited or withdrawn by us in our discretion. We may require proof of age or sex of an annuitant before making any annuity payments under the contract that are measured by the annuitant's life. If the age or sex of the annuitant has been misstated, the amount payable will be the amount that the account value would have provided at the correct age or sex. Once annuity payments have begun, any underpayments will be made up in one sum with the next annuity payment. Any overpayments will be deducted from future annuity payments until the total is repaid. You may withdraw the commuted value of the payments remaining under the variable Payments for a Designated Period annuity option (Option 5). You may not commute the fixed Payments for a Designated Period annuity option or any option involving a life contingency, whether fixed or variable, prior to the death of the last surviving annuitant. Upon the death of the last surviving annuitant, the beneficiary may choose to continue receiving income payments or to receive the commuted value of the remaining guaranteed payments. For variable annuity options, the calculation of the commuted value will be done using the AIR applicable to the contract. (See "Annuity Payments" above.) For fixed annuity options, the calculation of the commuted value will be done using the then current annuity option rates. There may be tax consequences resulting from the election of an annuity payment option containing a commutation feature (I.E., an annuity payment option that permits the withdrawal of a commuted value). (See "Federal Income Tax Status.") Due to underwriting or Internal Revenue Code considerations, there may be limitations on payments to the survivor under Options 3 and 4 and/or the duration of the guarantee period under Options 2, 4, and 5. In addition to the annuity options described above, we may offer an additional payment option that would allow your beneficiary to take distribution of the account value over a period not extending beyond his or her life expectancy. Under this option, annual distributions would not be made in the form of an annuity, but would be calculated in a manner similar to the calculation of required minimum distributions from IRAs. (See "Federal Income Tax Status.") We intend to make this payment option available to both tax qualified and non-tax qualified contracts. In the event that you purchased the contract as a tax qualified contract, you must take distribution of the account value in accordance with the minimum required distribution rules set forth in applicable tax law. (See "Federal Income Tax Status.") Under certain circumstances, you may satisfy those requirements by electing an annuity option. You may choose any death benefit available under the contract, but certain other contract provisions and programs will not be available. Upon your death, if annuity payments have already begun, the death benefit would be required to be distributed to your beneficiary at least as rapidly as under the method of distribution in effect at the time of your death. VARIABLE ANNUITY PAYMENTS The Adjusted Contract Value (the account value, less any applicable premium taxes, account fee, and any prorated rider charge) is determined on the annuity calculation date, which is a business day no more than five (5) business days before the annuity date. The first variable annuity payment will be based upon the Adjusted Contract Value, the annuity option elected, the annuitant's age and sex, and the appropriate variable annuity option table. If, as of the annuity calculation date, the then current variable annuity option rates applicable to this class of contracts provide a first annuity payment greater than that which is guaranteed under the same annuity option under this contract, the greater payment will be made. The dollar amount of variable annuity payments after the first payment is determined as follows: o The dollar amount of the first variable annuity payment is divided by the value of an annuity unit for each applicable investment portfolio as of the annuity calculation date. This establishes the number of annuity units for each payment. The number of annuity units 38 for each applicable investment portfolio remains fixed during the annuity period, provided that transfers among the subaccounts will be made by converting the number of annuity units being transferred to the number of annuity units of the subaccount to which the transfer is made, and the number of annuity units will be adjusted for transfers to a fixed annuity option. Please see the Statement of Additional Information for details about making transfers during the Annuity Phase. o The fixed number of annuity units per payment in each investment portfolio is multiplied by the annuity unit value for that investment portfolio for the business day for which the annuity payment is being calculated. This result is the dollar amount of the payment for each applicable investment portfolio, less any account fee. The account fee will be deducted pro rata out of each annuity payment. o The total dollar amount of each variable annuity payment is the sum of all investment portfolio variable annuity payments. ANNUITY UNIT. The initial annuity unit value for each investment portfolio of the Separate Account was set by us. The subsequent annuity unit value for each investment portfolio is determined by multiplying the annuity unit value for the immediately preceding business day by the net investment factor (see the Statement of Additional Information for a definition) for the investment portfolio for the current business day and multiplying the result by a factor for each day since the last business day which represents the daily equivalent of the AIR you elected. FIXED ANNUITY PAYMENTS The Adjusted Contract Value (defined above under "Variable Annuity Payments") on the day immediately preceding the annuity date will be used to determine a fixed annuity payment. The annuity payment will be based upon the annuity option elected and the appropriate annuity option table. If, as of the annuity calculation date, the then current annuity option rates applicable to this class of contracts provide an annuity payment greater than that which is guaranteed under the same annuity option under this contract, the greater payment will be made. You may not make a transfer from the fixed annuity option to the variable annuity option. Current annuity option rates for this class of contract may be lower than rates for other contracts without a Purchase Payment Credit. 6. ACCESS TO YOUR MONEY You (or in the case of a death benefit, your beneficiary) can have access to the money in your contract: (1) by making a withdrawal (either a partial or a complete withdrawal); (2) by electing to receive annuity payments; or (3) when a death benefit is paid to your beneficiary. Under most circumstances, withdrawals can only be made during the accumulation phase. You may establish a withdrawal plan under which you can receive substantially equal periodic payments in order to comply with the requirements of Sections 72(q) or (t) of the Code. Premature modification or termination of such payments may result in substantial penalty taxes. (See "Federal Income Tax Status.") When you make a complete withdrawal, you will receive the withdrawal value of the contract. The withdrawal value of the contract is the account value of the contract at the end of the business day when we receive a written request for a withdrawal: o less any applicable withdrawal charge; o less any premium or other tax; o less any account fee; and o less any applicable pro rata GMIB, GWB, GMAB or Enhanced Death Benefit rider charge. Unless you instruct us otherwise, any partial withdrawal will be made pro rata from the fixed account, the EDCA account and the investment portfolio(s) you selected. Under most circumstances the amount of any partial withdrawal must be for at least $500, or your entire interest in the investment portfolio, fixed account or EDCA account. We require that after a partial withdrawal is made you keep at least $2,000 in the contract. If the withdrawal would result in the account value being less than $2,000 after a partial withdrawal, we will treat the withdrawal request as a request for a full withdrawal. We will pay the amount of any withdrawal from the Separate Account within seven days of when we receive the request in good order unless the suspension of payments or transfers provision is in effect. We may withhold payment of withdrawal proceeds if any portion of those proceeds would be derived from a contract owner's check that has 39 not yet cleared (I.E., that could still be dishonored by the contract owner's banking institution). We may use telephone, fax, Internet or other means of communication to verify that payment from the contract owner's check has been or will be collected. We will not delay payment longer than necessary for us to verify that payment has been or will be collected. Contract owners may avoid the possibility of delay in the disbursement of proceeds coming from a check that has not yet cleared by providing us with a certified check. How to withdraw all or part of your account value: o You must submit a request to our Annuity Service Center. (See "Other Information - Requests and Elections.") o You must provide satisfactory evidence of terminal illness or confinement to a nursing home if you would like to have the withdrawal charge waived. (See "Expenses - Reduction or Elimination of the Withdrawal Charge.") o You must state in your request whether you would like to apply the proceeds to a payment option (otherwise you will receive the proceeds in a lump sum and may be taxed on them). o We have to receive your withdrawal request in our Annuity Service Center prior to the annuity date or owner's death. There are limits to the amount you can withdraw from certain qualified plans including Qualified and TSA plans. (See "Federal Income Tax Status.") INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO ANY WITHDRAWAL YOU MAKE. SYSTEMATIC WITHDRAWAL PROGRAM You may elect the Systematic Withdrawal Program at any time. We do not assess a charge for this program. This program provides an automatic payment to you of up to 10% of your total purchase payments each year. You can receive payments monthly or quarterly, provided that each payment must amount to at least $100 (unless we consent otherwise). We reserve the right to change the required minimum systematic withdrawal amount. If the New York Stock Exchange is closed on a day when the withdrawal is to be made, we will process the withdrawal on the next business day. While the Systematic Withdrawal Program is in effect you can make additional withdrawals. However, such withdrawals plus the systematic withdrawals will be considered when determining the applicability of any withdrawal charge. (For a discussion of the withdrawal charge, see "Expenses" above.) INCOME TAXES, TAX PENALTIES AND CERTAIN RESTRICTIONS MAY APPLY TO SYSTEMATIC WITHDRAWALS. SUSPENSION OF PAYMENTS OR TRANSFERS We may be required to suspend or postpone payments for withdrawals or transfers for any period when: o the New York Stock Exchange is closed (other than customary weekend and holiday closings); o trading on the New York Stock Exchange is restricted; o an emergency exists, as determined by the Securities and Exchange Commission, as a result of which disposal of shares of the investment portfolios is not reasonably practicable or we cannot reasonably value the shares of the investment portfolios; or o during any other period when the Securities and Exchange Commission, by order, so permits for the protection of owners. We have reserved the right to defer payment for a withdrawal or transfer from the fixed account for the period permitted by law but not for more than six months. Federal laws designed to counter terrorism and prevent money laundering might, in certain circumstances, require us to block an owner's ability to make certain transactions and thereby refuse to accept any requests for transfers, withdrawals, surrenders, or death benefits until instructions are received from the appropriate regulator. We may also be required to provide additional information about you and your contract to government regulators. 7. LIVING BENEFITS OVERVIEW OF LIVING BENEFIT RIDERS We offer a suite of optional living benefit riders that, for certain additional charges, offer protection against market risk (the risk that your investments may decline in value or underperform your expectations). Only one of these riders may be elected, and the rider must be elected at contract issue. These optional riders are described briefly below. Please see the more detailed description that follows for important information on the costs, restrictions and 40 availability of each optional rider. We offer three types of Living Benefit riders: Guaranteed Income Benefits - -------------------------- o Guaranteed Minimum Income Benefit Plus (GMIB Plus I and GMIB Plus II) o Guaranteed Minimum Income Benefit (GMIB I and GMIB II) Our guaranteed income benefit riders are designed to allow you to invest your account value in the market while at the same time assuring a specified guaranteed level of minimum fixed annuity payments if you elect the income phase. The fixed annuity payment amount is guaranteed regardless of investment performance or the actual account value at the time you annuitize. Prior to exercising the rider and annuitizing your contract, you may make withdrawals up to a maximum level specified in the rider and still maintain the benefit amount. Guaranteed Withdrawal Benefits - ------------------------------ o Lifetime Withdrawal Guarantee (LWG I and LWG II) o Enhanced Guaranteed Withdrawal Benefit (Enhanced GWB) o Guaranteed Withdrawal Benefit (GWB I) The GWB riders are designed to guarantee that at least the entire amount of purchase payments you make will be returned to you through a series of withdrawals without annuitizing, regardless of investment performance, as long as withdrawals in any contract year do not exceed the maximum amount allowed under the rider. With the LWG riders, you get the same benefits, but in addition, if you make your first withdrawal on or after the date you reach age 59 1/2, you are guaranteed income without annuitizing for your life (and the life of your spouse, if the Joint Life version of the rider was elected), even after the entire amount of purchase payments has been returned. Guaranteed Asset Accumulation Benefit - ------------------------------------- o Guaranteed Minimum Accumulation Benefit (GMAB) The GMAB is designed to guarantee that your account value will not be less than a minimum amount at the end of the 10-year waiting period. The amount of the guarantee depends on which of three permitted investment portfolios you select. GUARANTEED INCOME BENEFITS At the time you buy the contract, you may elect a guaranteed income benefit rider, called a Guaranteed Minimum Income Benefit (GMIB), for an additional charge. Each version of these riders is designed to guarantee a predictable, minimum level of fixed annuity payments, regardless of investment performance during the accumulation phase. HOWEVER, IF APPLYING YOUR ACTUAL ACCOUNT VALUE AT THE TIME YOU ANNUITIZE THE CONTRACT TO THEN CURRENT ANNUITY PURCHASE RATES (OUTSIDE OF THE RIDER) PRODUCES HIGHER INCOME PAYMENTS, YOU WILL RECEIVE THE HIGHER PAYMENTS, AND THUS YOU WILL HAVE PAID FOR THE RIDER EVEN THOUGH IT WAS NOT USED. Also, prior to exercising the rider, you may make specified withdrawals that reduce your income base (as explained below) during the accumulation phase and still leave the rider guarantees intact, provided the conditions of the rider are met. Your registered representative can provide you an illustration of the amounts you would receive, with or without withdrawals, if you exercised the rider. There are four versions of the GMIB available with this contract, A MAXIMUM OF TWO OF WHICH ARE OFFERED IN ANY PARTICULAR STATE: o GMIB Plus II o GMIB Plus I o GMIB II o GMIB I Additionally, there may be versions of each rider that vary by issue date and state availability. Please check with your registered representative regarding which versions are available in your state. You may not have this benefit and a GWB or GMAB rider in effect at the same time. Once elected, the rider cannot be terminated except as discussed below. FACTS ABOUT GUARANTEED INCOME BENEFIT RIDERS INCOME BASE AND GMIB ANNUITY PAYMENTS. Under all versions of the GMIB, we calculate an "income base" (as described below) that determines, in part, the minimum amount you receive as an income payment upon exercising the GMIB rider and annuitizing the contract. IT IS IMPORTANT TO RECOGNIZE THAT THIS INCOME BASE IS NOT AVAILABLE FOR CASH WITHDRAWALS AND DOES NOT 41 ESTABLISH OR GUARANTEE YOUR ACCOUNT VALUE OR A MINIMUM RETURN FOR ANY INVESTMENT PORTFOLIO. After a minimum 10-year waiting period, and then only within 30 days following a contract anniversary, you may exercise the rider. We then will apply the income base calculated at the time of exercise to the conservative GMIB Annuity Table (as described below) specified in the rider in order to determine your minimum guaranteed lifetime fixed monthly annuity payments (your actual payment may be higher than this minimum if, as discussed above, the base contract under its terms would provide a higher payment). THE GMIB ANNUITY TABLE. The GMIB Annuity Table is specified in the rider. This table is calculated based on the Annuity 2000 Mortality Table with a 7-year age set back with interest of 2.5% per annum. As with other pay-out types, the amount you receive as an income payment also depends on your age, your sex, and the annuity option you select. For GMIB Plus II, the annuity rates for attained ages 86 to 90 are the same as those for attained age 85. The annuity rates in the GMIB Annuity Table are conservative and a withdrawal charge may be applicable, so the amount of guaranteed minimum lifetime income that the GMIB produces may be less than the amount of annuity income that would be provided by applying your account value on your annuity date to then-current annuity purchase rates. If you exercise a GMIB rider, your annuity payments will be the greater of: o the annuity payment determined by applying the amount of the income base to the GMIB Annuity Table, or o the annuity payment determined for the same annuity option in accordance with the base contract. (See "Annuity Payments (The Income Phase).") If you choose not to receive annuity payments as guaranteed under the GMIB, you may elect any of the annuity options available under the contract. OWNERSHIP. If the owner is a natural person, the owner must be the annuitant. If a non-natural person owns the contract, then annuitant will be considered the owner in determining the income base and GMIB annuity payments. If joint owners are named, the age of the older will be used to determine the income base and GMIB annuity payments. GMIB, QUALIFIED CONTRACTS AND DECEDENT CONTRACTS. The GMIB may have limited usefulness in connection with a Qualified Contract, such as an IRA (see "Federal Income Tax Status - Taxation of Qualified Contracts"), in circumstances where, due to the ten-year waiting period after purchase (and, for the GMIB Plus II and GMIB Plus I, after an Optional Step-Up/Optional Reset) the owner is unable to exercise the rider until after the required beginning date of required minimum distributions under the contract. In such event, required minimum distributions received from the contract during the 10-year waiting period will have the effect of reducing the income base either on a proportionate or dollar for dollar basis, as the case may be. This may have the effect of reducing or eliminating the value of annuity payments under the GMIB. You should consult your tax adviser prior to electing a GMIB rider. Additionally, the GMIB is not available for purchase by a beneficiary under a decedent's Non-Qualified Contract (see "Federal Income Tax Status - Taxation of Non-Qualified Contracts") or IRA (or where otherwise offered, under any other contract which is being "stretched" by a beneficiary after the death of the owner or after the death of the annuitant in certain cases). The GMIB benefit may not be exercised until 10 years after purchase (and, for the GMIB Plus II and GMIB Plus I, after an Optional Step-Up/ Optional Reset), and the benefit provides guaranteed monthly fixed income payments for life (or joint lives, if applicable), with payments guaranteed for 10 years. However, the tax rules require distributions prior to the end of the 10-year waiting period, commencing generally in the year after the owner's death, and also prohibit payments for as long as the beneficiary's life in certain circumstances. (See Appendix D for examples of the GMIB.) DESCRIPTION OF GMIB PLUS II In states where approved, the GMIB Plus II rider is available only for owners up through age 78, and you can only elect the GMIB Plus II at the time you purchase the contract. The GMIB Plus II may be exercised after a 10-year waiting period and then only within 30 days following a contract anniversary, provided that the exercise must occur no later than the 30-day period following the contract anniversary on or following the owner's 90th birthday. INCOME BASE. The INCOME BASE is the greater of (a) or (b) below. (a) Highest Anniversary Value: On the issue date, the "Highest Anniversary Value" is equal to your initial purchase payment. Thereafter, the Highest Anniversary 42 Value will be increased by subsequent purchase payments and reduced proportionately by the percentage reduction in account value attributable to each subsequent withdrawal (including any applicable withdrawal charge). On each contract anniversary prior to the owner's 81st birthday, the Highest Anniversary Value will be recalculated and set equal to the greater of the Highest Anniversary Value before the recalculation or the account value on the date of the recalculation. The Highest Anniversary Value does not change after the contract anniversary immediately preceding the owner's 81st birthday, except that it is increased for each subsequent purchase payment and reduced proportionally by the percentage reduction in account value attributable to each subsequent withdrawal (including any applicable withdrawal charge). (b) Annual Increase Amount: On the issue date, the "Annual Increase Amount" is equal to your initial purchase payment. (For these purposes, all purchase payments credited within 120 days of the date we issued the contract will be treated as if they were received on the date we issue the contract.) Thereafter, the Annual Increase Amount is equal to (i) less (ii), where: (i) is purchase payments accumulated at the annual increase rate. The annual increase rate is 6% per year through the contract anniversary on or following the owner's 90th birthday and 0% thereafter; and (ii) is withdrawal adjustments accumulated at the annual increase rate. Withdrawal adjustments in a contract year are determined according to (1) or (2) as defined below: (1) The withdrawal adjustment for each withdrawal in a contract year is the value of the Annual Increase Amount immediately prior to the withdrawal multiplied by the percentage reduction in account value attributed to that withdrawal (including any applicable withdrawal charge); or (2) If total withdrawals in a contract year are 6% or less of the Annual Increase Amount on the issue date or on the prior contract anniversary after the first contract year, and if these withdrawals are paid to you (or the annuitant if the contract is owned by a non-natural person) or to another payee we agree to, the total withdrawal adjustments for that contract year will be set equal to the dollar amount of total withdrawals (including any applicable withdrawal charge) in that contract year. These withdrawal adjustments will replace the withdrawal adjustments defined in (1) above and be treated as though the corresponding withdrawals occurred at the end of that contract year. (See section (1) of Appendix D for examples of the calculation of the withdrawal adjustment.) In determining the GMIB Plus II annuity income, an amount equal to the withdrawal charge that would be assessed upon a complete withdrawal and the amount of any premium and other taxes that may apply will be deducted from the income base. For purposes of calculating the income base, Purchase Payment Credits are not included. OPTIONAL STEP-UP. On each contract anniversary as permitted, you may elect to reset the Annual Increase Amount to the account value. An Optional Step-Up may be beneficial if your account value has grown at a rate above the 6% accumulation rate on the Annual Increase Amount. HOWEVER, RESETTING THE ANNUAL INCREASE AMOUNT WILL INCREASE YOUR WAITING PERIOD FOR EXERCISING THE GMIB PLUS II BY RESTARTING THE 10-YEAR WAITING PERIOD, AND WE MAY RESET THE GMIB PLUS II RIDER CHARGE TO A RATE WE SHALL DETERMINE THAT DOES NOT EXCEED THE MAXIMUM OPTIONAL STEP-UP CHARGE (1.50%), PROVIDED THAT THIS RATE WILL NOT EXCEED THE RATE CURRENTLY APPLICABLE TO THE SAME RIDER AVAILABLE FOR NEW CONTRACT PURCHASES AT THE TIME OF THE OPTIONAL STEP-UP. An Optional Step-Up is permitted only if: (1) the account value exceeds the Annual Increase Amount immediately before the reset; and (2) the owner (or oldest joint owner or annuitant if the contract is owned by a non-natural person) is not older than age 80 on the date of the Optional Step-Up. You may elect either: 1) a one-time Optional Step-Up at any contract anniversary provided the above requirements are met, or 2) Optional Step-Ups to occur under the Automatic Annual Step-Up. If you elect Automatic Annual Step-Ups, on any contract anniversary while this election is in effect, the Annual Increase Amount will reset to the account value automatically, provided the above requirements are met. The same conditions described above 43 will apply to each Automatic Step-Up. You may discontinue this election at any time by notifying us in writing, at our Annuity Service Center (or by any other method acceptable to us), at least 30 days prior to the contract anniversary on which a reset may otherwise occur. Otherwise, it will remain in effect through the seventh contract anniversary following the date you make this election, at which point you must make a new election if you want Automatic Annual Step-Ups to continue. If you discontinue or do not re-elect the Automatic Annual Step-Ups, no Optional Step-Up will occur automatically on any subsequent contract anniversary unless you make a new election under the terms described above. (If you discontinue Automatic Annual Step-Ups, the GMIB Plus II rider (and the rider charge) will continue, and you may choose to elect a one time Optional Step-Up or reinstate Automatic Annual Step-Ups as described above.) We must receive your request to exercise the Optional Step-Up in writing, at our Annuity Service Center, or any other method acceptable to us. We must receive your request prior to the contract anniversary for an Optional Step-Up to occur on that contract anniversary. The Optional Step-Up will: (1) reset the Annual Increase Amount to the account value on the contract anniversary following the receipt of an Optional Step-Up election; (2) reset the GMIB Plus II waiting period to the tenth contract anniversary following the date the Optional Step-Up took effect; and (3) we may reset the GMIB Plus II rider charge to a rate we shall determine that does not exceed the Maximum Optional Step-Up Charge (1.50%), provided that this rate will not exceed the rate currently applicable to the same rider available for new contract purchases at the time of the Optional Step-Up. On the date of the Optional Step-Up, the account value on that day will be treated as a single purchase payment received on the date of the step-up for purposes of determining the Annual Increase Amount after the reset. All purchase payments and withdrawal adjustments previously used to calculate the Annual Increase Amount will be set equal to zero on the date of the step-up. INVESTMENT ALLOCATION RESTRICTIONS. If you elect the GMIB Plus II, there are certain investment allocation restrictions. (See "Purchase - Investment Allocation Restrictions for Certain Riders.") If you elect the GMIB Plus II, you may not particpate in the Dollar Cost Averaging (DCA) program. However, you may elect to participate in the Enhanced Dollar Cost Averaging (EDCA) program, provided that your destination investment portfolios are selected in accordance with the investment allocation restrictions. GUARANTEED PRINCIPAL OPTION. On each contract anniversary starting with the tenth contract anniversary and through the contract anniversary prior to the owner's 91st birthday, you may exercise the Guaranteed Principal Option. If the owner is a non-natural person, the annuitant's age is the basis for determining the birthday. If there are joint owners, the age of the oldest owner is used for determining the birthday. We must receive your request to exercise the Guaranteed Principal Option in writing, or any other method that we agree to, within 30 days following the applicable contract anniversary. The Guaranteed Principal Option will take effect at the end of this 30-day period following that contract anniversary. By exercising the Guaranteed Principal Option, you elect to receive an additional amount to be added to your account value intended to restore your initial investment in the contract, in lieu of receiving GMIB payments. The additional amount is called the Guaranteed Principal Adjustment and is equal to (a) minus (b) where: (a) is purchase payments credited within 120 days of the date we issued the contract (reduced proportionately by the percentage reduction in account value attributable to each partial withdrawal (including applicable withdrawal charges) prior to the exercise of the Guaranteed Principal Option) and (b) the account value on the contract anniversary immediately preceding exercise of the Guaranteed Principal Option. For purposes of calculating the Guaranteed Principal Adjustment, Purchase Payment Credits are not included. The Guaranteed Principal Option can only be exercised if (a) exceeds (b), as defined above. The Guaranteed Principal Adjustment will be added to each applicable investment portfolio in the ratio the portion of the account value in such investment portfolio bears to the total account value in all investment portfolios. IT IS IMPORTANT TO NOTE THAT ONLY PURCHASE PAYMENTS MADE DURING THE FIRST 120 DAYS THAT YOU HOLD THE CONTRACT ARE TAKEN INTO CONSIDERATION IN DETERMINING THE GUARANTEED PRINCIPAL ADJUSTMENT. IF YOU 44 ANTICIPATE MAKING PURCHASE PAYMENTS AFTER 120 DAYS, YOU SHOULD UNDERSTAND THAT SUCH PAYMENTS WILL NOT INCREASE THE GUARANTEED PRINCIPAL ADJUSTMENT. However, because purchase payments made after 120 days will increase your account value, such payments may have a significant impact on whether or not a Guaranteed Principal Adjustment is due. Therefore, GMIB Plus II may not be appropriate for you if you intend to make additional purchase payments after the 120-day period and are purchasing the GMIB Plus II for this feature. The Guaranteed Principal Adjustment will never be less than zero. IF THE GUARANTEED PRINCIPAL OPTION IS EXERCISED, THE GMIB PLUS II RIDER WILL TERMINATE AS OF THE DATE THE OPTION TAKES EFFECT AND NO ADDITIONAL GMIB CHARGES WILL APPLY THEREAFTER. The variable annuity contract, however, will continue, and the GMIB Plus II investment allocation restrictions, described above, will no longer apply. EXERCISING THE GMIB PLUS II RIDER. If you exercise the GMIB Plus II, you must elect to receive annuity payments under one of the following fixed annuity options: (1) Life annuity with 10 years of annuity payments guaranteed. For annuitization ages over 79, the guaranteed component of the life annuity is reduced as follows:
Age at Annuitization Guarantee Period - --------------------- ----------------- 80 9 81 8 82 7 83 6 84 - 90 5
(2) Joint and last survivor annuity with 10 years of annuity payments guaranteed. Based on federal tax rules, this option is not available for Qualified Contracts where the difference in ages of the joint annuitants is greater than 10 years. (See "Annuity Payments (The Income Phase).") These options are described in the contract and the GMIB Plus II rider. The GMIB Annuity Table is specified in the rider. This table is calculated based on the Annuity 2000 Mortality Table with a 7-year age set back with interest of 2.5% per annum. As with other payout types, the amount you receive as an income payment also depends on your age, your sex, and the annuity option you select. For GMIB Plus II, the annuity rates for attained ages 86 to 90 are the same as those for attained age 85. THE ANNUITY RATES IN THE GMIB ANNUITY TABLE ARE CONSERVATIVE AND A WITHDRAWAL CHARGE MAY BE APPLICABLE, SO THE AMOUNT OF GUARANTEED MINIMUM LIFETIME INCOME THAT THE GMIB PRODUCES MAY BE LESS THAN THE AMOUNT OF ANNUITY INCOME THAT WOULD BE PROVIDED BY APPLYING YOUR ACCOUNT VALUE ON YOUR ANNUITY DATE TO THEN-CURRENT ANNUITY PURCHASE RATES. If you exercise the GMIB Plus II, your annuity payments will be the greater of: o the annuity payment determined by applying the amount of the income base to the GMIB Annuity Table, or o the annuity payment determined for the same annuity option in accordance with the base contract. (See "Annuity Payments (The Income Phase).") If the amount of the guaranteed minimum lifetime income that the GMIB Plus II produces is less than the amount of annuity income that would be provided by applying contract value on the annuity date to the then-current annuity purchase rates, then you would have paid for a benefit that you did not use. If you take a full withdrawal of your account value, your contract is terminated by us due to its small account value and inactivity (see "Purchase - Purchase Payments"), or your contract lapses and there remains any income base, we will commence making income payments within 30 days of the date of the full withdrawal, termination or lapse. In such cases, your income payments under this benefit, if any, will be determined using the income base and any applicable withdrawal adjustment that was taken on account of the withdrawal, termination or lapse. The GMIB purchase payout rates are enhanced under the following circumstances. If: o you take no withdrawals before your 60th birthday; o your account value is fully withdrawn at or after your 60th birthday and there is an income base remaining; and o the annuity option you select is the single life annuity with 10 years of annuity payments guaranteed; 45 then the annual annuity payments under the GMIB Plus II rider will equal or exceed 6% of the Annual Increase Amount (calculated on the date the payments are determined). If you choose not to receive annuity payments as guaranteed under the GMIB Plus II, you may elect any of the annuity options available under the contract. TERMINATING THE GMIB PLUS II RIDER. Except as otherwise provided in the GMIB Plus II rider, the GMIB Plus II will terminate upon the earliest of: a) The 30th day following the contract anniversary on or following your 90th birthday; b) The date you make a complete withdrawal of your account value; c) The date you elect to receive annuity payments under the contract and you do not elect to receive payments under the GMIB; d) Death of the owner or joint owner (unless the spouse (age 89 or younger) is the beneficiary and elects to continue the contract), or death of the annuitant if a non-natural person owns the contract; e) A change for any reason of the owner or joint owner or the annuitant, if a non-natural person owns the contract, unless we agree otherwise; f) The effective date of the Guaranteed Principal Option; or g) The date you assign your contract, subject to our administrative procedures. When the GMIB Plus II rider terminates, the corresponding GMIB Plus II rider charge terminates and the GMIB Plus II investment allocation restrictions no longer apply. (See Appendix D for examples illustrating the operation of the GMIB Plus II.) DESCRIPTION OF GMIB PLUS I In states where the GMIB Plus I has been approved and the GMIB Plus II has not been approved, the GMIB Plus I is available only for owners up through age 75, and you can only elect GMIB Plus I at the time you purchase the contract. GMIB Plus I may be exercised after a 10-year waiting period and then only within 30 days following a contract anniversary, provided that the exercise must occur no later than the 30-day period following the contract anniversary on or following the owner's 85th birthday. GMIB Plus I is otherwise identical to GMIB Plus II, with the following exceptions: (1) The GMIB Plus I Income Base is calculated as described above, except that the annual increase rate is 6% per year through the contract anniversary on or following the owner's 85th birthday and 0% thereafter. (2) An "Optional Step-Up" under the GMIB Plus II rider is referred to as an "Optional Reset" under the GMIB Plus I rider. An Optional Reset is permitted only if: (a) the account value exceeds the Annual Increase Amount immediately before the reset; and (b) the owner (or oldest joint owner or annuitant if the contract is owned by a non-natural person) is not older than age 75 on the date of the Optional Reset. (3) If your income base is increased due to an Optional Reset under the GMIB Plus I rider, we may increase the rider charge to the charge applicable to contract purchases of the same rider at the time of the increase, but to no more than a maximum of 1.50%. (4) The Guaranteed Principal Option may be exercised on each contract anniversary starting with the tenth contract anniversary and through the contract anniversary prior to the owner's 86th birthday. (5) We reserve the right to prohibit an Optional Reset if we no longer offer this benefit for this class of contract. We are waiving this right with respect to purchasers of the contract offered by this prospectus who elect or have elected the GMIB Plus I rider and will allow Optional Resets by those purchasers even if this benefit is no longer offered for this class of contract. (6) If you exercise the GMIB Plus I rider under the life annuity with 10 years of annuity payments guaranteed option, the Guarantee Period is five years for ages 84 - 85. (7) Termination provision g) above does not apply, and the following replaces termination provision a), above: The 30th day following the contract anniversary on or following your 85th birthday. and the following replaces termination provision d), above: Death of the owner or joint owner (unless the spouse (age 84 or younger) is the beneficiary and elects to continue the contract), or death of the annuitant if a non-natural person owns the contract. 46 (8) If you elect the GMIB Plus I, you are limited to allocating your purchase payments and account value among the fixed account and the following investment portfolios: (a) the MetLife Defensive Strategy Portfolio, (b) the MetLife Moderate Strategy Portfolio, (c) the MetLife Balanced Strategy Portfolio, (d) the MetLife Growth Strategy Portfolio, (e) the American Funds Moderate Allocation Portfolio, (f) the American Funds Balanced Allocation Portfolio, (g) the American Funds Growth Allocation Portfolio, (h) the Met/Franklin Templeton Founding Strategy Portfolio, or (i) the BlackRock Money Market Portfolio. You may also elect to participate in the EDCA program, provided that your destination investment portfolios are one or more of the above-listed investment portfolios. For contracts issued before July 16, 2007, the enhanced GMIB purchase payout - ----------------------------------------- rates described under "Exercising the GMIB Plus II Rider" will not be applied. For contracts issued before February 26, 2007, we offered a version of the GMIB - --------------------------------------------- Plus I that is no longer available. Under this prior version, when we calculate the Annual Increase Amount: (1) the annual increase rate is 5% per year through the contract anniversary on or following the owner's 85th birthday; and (2) the amount of total withdrawal adjustments for a contract year will be set equal to the dollar amount of total withdrawals in such contract year, provided that such total withdrawals do not exceed 5% of the Annual Increase Amount on the issue date or on the prior contract anniversary after the first contract year. The rider charge for this prior version of the GMIB Plus I is 0.75% of the income base (with a maximum charge of 1.50% of the income base applicable upon the exercise of the Optional Reset feature). (See Appendix D for examples of the GMIB.) For contracts issued before February 27, 2006, you may elect an Optional Reset - --------------------------------------------- under the GMIB Plus I as described above, except that: 1) you may elect an Optional Reset on any contract anniversary only on or after the third contract anniversary, and you may then elect an Optional Reset at any subsequent contract anniversary only if it has been at least three years since the last Optional Reset; and 2) you are required to affirmatively elect an Optional Reset in accordance with the procedures described above; the Automatic Annual Step-Up feature is not available. By endorsement, we have enhanced your contract to change the frequency of the Optional Resets from every third contract anniversary to every contract anniversary. You will also be able to elect Automatic Annual Step-Ups, as described above. DESCRIPTION OF GMIB II In states where approved, GMIB II is available only for owners up through age 75, and you can only elect GMIB II at the time you purchase the contract. GMIB II may be exercised after a 10-year waiting period and then only within 30 days following a contract anniversary, provided that the exercise must occur no later than the 30-day period following the contract anniversary on or following the owner's 85th birthday. GMIB II is otherwise identical to the GMIB Plus II, with the following exceptions: (1) The additional charge for GMIB II is lower (see "Expenses-Guaranteed Minimum Income Benefit-Rider Charge"). (2) The GMIB II Income Base is calculated as described above, except that, for purposes of calculating the Annual Increase Amount: a. the annual increase rate is 5% per year through the contract anniversary on or following the owner's 85th birthday and 0% thereafter, and b. the amount of total withdrawal adjustments for a contract year as calculated in paragraph (b)(ii)(2) of the "Income Base" section of "Description of GMIB Plus II" above will be set equal to the dollar amount of total withdrawals (including any applicable withdrawal charge) in such contract year provided that such total withdrawals do not exceed 5% of the Annual Increase Amount on the issue date or on the prior contract anniversary after the first contract year. (3) There is no Guaranteed Principal Option. 47 (4) There is no Optional Reset feature. (5) If you exercise the GMIB II rider under the life annuity with 10 years of annuity payments guaranteed option, the Guarantee Period is five years for ages 84 - 85. (6) The following replaces termination provision a), above: The 30th day following the contract anniversary on or following your 85th birthday. (7) The following replaces termination provision d), above: Death of the owner or joint owner (unless the spouse (age 84 or younger) is the beneficiary and elects to continue the contract), or death of the annuitant if a non-natural person owns the contract. (8) The following replaces termination provision e), above: A change for any reason of the owner or joint owner or the annuitant if a non-natural person owns the contract. (9) Termination provisions f) and g), above, do not apply. (10) There are no limitations to how you may allocate your purchase payments and account value among the investment portfolios, and you may participate in the Dollar Cost Averaging (DCA) program. (See Appendix D for examples illustrating the operation of GMIB II.) DESCRIPTION OF GMIB I In states where GMIB I has been approved and GMIB II has not been approved, you can only elect GMIB I at the time you purchase the contract and if you are age 75 or less. Once elected, the rider cannot be terminated except as described below. GMIB I may be exercised after a 10-year waiting period, up through age 85, within 30 days following a contract anniversary. GMIB I is identical to GMIB II, with the following exceptions: (1) The GMIB I Income Base is calculated as described above in "Description of GMIB Plus II-Income Base", except that: a) Withdrawals may be payable as you direct without affecting the withdrawal adjustments; and b) The annual increase rate is 6% per year through the contract anniversary immediately prior to the owner's 81st birthday and 0% thereafter. (2) The following replaces termination provision d), above: Death of the owner or death of the annuitant if a non-natural person owns the contract. (3) If you take a full withdrawal of your account value, your contract is terminated by us due to its small account value and inactivity (see "Purchase - Purchase Payments"), or your contract lapses, the GMIB I rider terminates (even if there remains any income base) and no payments will be made under the rider. We currently waive the contractual requirement that terminates the GMIB I rider in the event of the death of the owner in circumstances where the spouse of the owner elects to continue the contract. (See "Death Benefit - General Death Benefit Provisions.") In such event, the GMIB I rider will automatically continue unless the spouse elects to terminate the rider. We are permanently waiving this requirement with respect to purchasers of the contract offered by this prospectus who have elected GMIB I. GUARANTEED WITHDRAWAL BENEFITS We offer optional guaranteed withdrawal benefit riders for an additional charge. There are four guaranteed withdrawal benefit riders (two versions of the LWG, the Enhanced GWB, and GWB I) available under this contract: o Lifetime Withdrawal Guarantee II (LWG II) o Lifetime Withdrawal Guarantee I (LWG I) o Enhanced Guaranteed Withdrawal Benefit (Enhanced GWB) o Guaranteed Withdrawal Benefit (GWB I) Each of the guaranteed withdrawal benefit riders guarantees that the entire amount of purchase payments you make will be returned to you through a series of withdrawals that you may begin taking immediately or at a later time, provided withdrawals in any contract year do not exceed the maximum amount allowed. This means that, regardless of negative investment performance, you can take specified annual withdrawals until the entire amount of the purchase payments you made during the time period specified in your rider has been returned to you. Moreover, if you make your first withdrawal on or after the date you reach age 59 1/2, the Lifetime Withdrawal Guarantee riders guarantee income, without annuitizing the contract, for your life (and the life of your spouse, if the Joint Life version of the rider was elected, and your spouse elects to continue the contract and is at least age 59 1/2 at continuation), even after the entire amount of purchase 48 payments has been returned. (See "Description of the Lifetime Withdrawal Guarantee II" below.) If you purchase a guaranteed withdrawal benefit rider, you must elect one version at the time you purchase the contract, prior to age 81. A maximum of two guaranteed withdrawal benefit riders are offered in any particular state. Please check with your registered representative regarding which version(s) are available in your state. You may not have this benefit and another living benefit (GMIB or GMAB) or the Enhanced Death Benefit rider in effect at the same time. Once elected, these riders may not be terminated except as stated below. FACTS ABOUT GUARANTEED WITHDRAWAL BENEFIT RIDERS MANAGING WITHDRAWALS. The GWB guarantee may be reduced if your annual withdrawals are greater than the maximum amount allowed, called the Annual Benefit Payment, which is described in more detail below. The GWB does not establish or guarantee an account value or minimum return for any investment portfolio. The Benefit Base (as described below) under the Enhanced GWB and GWB I, and the Remaining Guaranteed Withdrawal Amount (as described below) under the Lifetime Withdrawal Guarantee, cannot be taken as a lump sum. (However, if you cancel the Lifetime Withdrawal Guarantee riders after a waiting period of at least fifteen years, the Guaranteed Principal Adjustment will increase your account value to the purchase payments credited within the first 120 days of the date that we issue the contract, reduced proportionately for any withdrawals. See "Description of the Lifetime Withdrawal Guarantee II- Cancellation and Guaranteed Principal Adjustment" below.) Income taxes and penalties may apply to your withdrawals, and withdrawal charges may apply to withdrawals during the first contract year unless you take the necessary steps to elect to take such withdrawals under a Systematic Withdrawal Program. Withdrawal charges will also apply to withdrawals of purchase payments that exceed the free withdrawal amount. (See "Expenses-Withdrawal Charge.") IF IN ANY CONTRACT YEAR YOU TAKE CUMULATIVE WITHDRAWALS THAT EXCEED THE ANNUAL BENEFIT PAYMENT, THE TOTAL PAYMENTS THAT THE GWB GUARANTEES THAT YOU OR YOUR BENEFICIARY WILL RECEIVE FROM THE CONTRACT OVER TIME MAY BE LESS THAN THE INITIAL GUARANTEED WITHDRAWAL AMOUNT (TOTAL GUARANTEED WITHDRAWAL AMOUNT FOR THE LIFETIME WITHDRAWAL GUARANTEE RIDERS). THIS REDUCTION MAY BE SIGNIFICANT AND MEANS THAT RETURN OF YOUR PURCHASE PAYMENTS MAY BE LOST. THE GWB RIDER CHARGE WILL CONTINUE TO BE DEDUCTED AND CALCULATED BASED ON THE GUARANTEED WITHDRAWAL AMOUNT (TOTAL GUARANTEED WITHDRAWAL AMOUNT FOR THE LIFETIME WITHDRAWAL GUARANTEE RIDERS) UNTIL TERMINATION OF THE RIDER. For purposes of calculating the Guaranteed Withdrawal Amount or the Total Guaranteed Withdrawal Amount (for the Lifetime Withdrawal Guarantee), Purchase Payment Credits are not included. RIDER CHARGES. If a Lifetime Withdrawal Guarantee rider is in effect, we will continue to assess the GWB rider charge even in the case where your Remaining Guaranteed Withdrawal Amount, as described below, equals zero. However, if the Enhanced GWB or GWB I rider is in effect, we will not continue to assess the GWB rider charge if your Benefit Base, as described below, equals zero. WITHDRAWAL CHARGE. We will apply a withdrawal charge to withdrawals from purchase payments of up to 8% of purchase payments taken in the first nine years following receipt of the applicable purchase payment. (See "Expenses - Withdrawal Charge - Free Withdrawal Amount" and "Access to Your Money - Systematic Withdrawal Program.") TAXES. Withdrawals of taxable amounts will be subject to ordinary income tax and, if made prior to age 59 1/2, a 10% federal tax penalty may apply. TAX TREATMENT. THE TAX TREATMENT OF WITHDRAWALS UNDER THE GWB RIDERS IS UNCERTAIN. IT IS CONCEIVABLE THAT THE AMOUNT OF POTENTIAL GAIN COULD BE DETERMINED BASED ON THE BENEFIT BASE (REMAINING GUARANTEED WITHDRAWAL AMOUNT UNDER THE LIFETIME WITHDRAWAL GUARANTEE RIDERS) AT THE TIME OF THE WITHDRAWAL, IF THE BENEFIT BASE (OR REMAINING GUARANTEED WITHDRAWAL AMOUNT) IS GREATER THAN THE ACCOUNT VALUE (PRIOR TO WITHDRAWAL CHARGES, IF APPLICABLE). THIS COULD RESULT IN A GREATER AMOUNT OF TAXABLE INCOME REPORTED UNDER A WITHDRAWAL AND CONCEIVABLY A 49 LIMITED ABILITY TO RECOVER ANY REMAINING BASIS IF THERE IS A LOSS ON SURRENDER OF THE CONTRACT. CONSULT YOUR TAX ADVISOR PRIOR TO PURCHASE. GWB, LIFETIME WITHDRAWAL GUARANTEE AND DECEDENT CONTRACTS. The Lifetime Withdrawal Guarantee is not available for purchase under a decedent's Non-Qualified Contract (see "Federal Income Tax Status - Taxation of Non-Qualified Contracts") or IRA (or where otherwise offered, under any other contract which is being "stretched" by a beneficiary after the death of the owner or after the death of the annuitant in certain cases). Under the tax rules, such contracts generally require distributions to commence in accordance with tax regulations by the end of the calendar year following the year of the owner's death. However, these required distributions can in certain circumstances exceed the Annual Benefit Payment, and any such excess will have the effect of reducing the lifetime payments under the Lifetime Withdrawal Guarantee. Note that the Enhanced GWB and GWB I riders are not available for purchase by a beneficiary under a decedent's Non-Qualified Contract. (See Appendix E for examples of the GWB.) DESCRIPTION OF THE LIFETIME WITHDRAWAL GUARANTEE II TOTAL GUARANTEED WITHDRAWAL AMOUNT. While the Lifetime Withdrawal Guarantee II rider is in effect, we guarantee that you will receive a minimum amount over time. We refer to this minimum amount as the TOTAL GUARANTEED WITHDRAWAL AMOUNT. The initial Total Guaranteed Withdrawal Amount is equal to your initial purchase payment. We increase the Total Guaranteed Withdrawal Amount (up to a maximum of $10,000,000) by each additional purchase payment. If you take a withdrawal that does not exceed the Annual Benefit Payment (see "Annual Benefit Payment" below), then we will not reduce the Total Guaranteed Withdrawal Amount. We refer to this type of withdrawal as a Non-Excess Withdrawal. If, however, you take a withdrawal that results in cumulative withdrawals for the current contract year that exceed the Annual Benefit Payment, then we will reduce the Total Guaranteed Withdrawal Amount in the same proportion that the withdrawal (including any applicable withdrawal charges) reduced the account value. We refer to this type of withdrawal as an Excess Withdrawal. REMAINING GUARANTEED WITHDRAWAL AMOUNT. The REMAINING GUARANTEED WITHDRAWAL AMOUNT is the remaining amount you are guaranteed to receive over time. We increase the Remaining Guaranteed Withdrawal Amount (up to a maximum of $10,000,000) by additional purchase payments. If you take a Non-Excess Withdrawal, we will decrease the Remaining Guaranteed Withdrawal Amount by the amount of the Non-Excess Withdrawal (including any applicable withdrawal charges). If, however, you take an Excess Withdrawal, then we will reduce the Remaining Guaranteed Withdrawal Amount in the same proportion that the withdrawal (including any applicable withdrawal charges) reduces the account value. 7.25% COMPOUNDING INCOME AMOUNT. On each contract anniversary until the earlier of: (a) the date of the second withdrawal from the contract or (b) the tenth contract anniversary, we increase the Total Guaranteed Withdrawal Amount and the Remaining Guaranteed Withdrawal Amount by an amount equal to 7.25% multiplied by the Total Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount before such increase (up to a maximum of $10,000,000). We may also increase the Total Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount by the Automatic Annual Step-Up (discussed below), if that would result in a higher Total Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount. ANNUAL BENEFIT PAYMENT. The initial ANNUAL BENEFIT PAYMENT is equal to the initial Total Guaranteed Withdrawal Amount multiplied by the 5% Withdrawal Rate (6% Withdrawal Rate if you make your first withdrawal on or after the date you reach age 76). If the Total Guaranteed Withdrawal Amount is later recalculated (for example, because of additional purchase payments, the 7.25% Compounding Income Amount, the Automatic Annual Step-Up, or Excess Withdrawals), the Annual Benefit Payment is reset equal to the new Total Guaranteed Withdrawal Amount multiplied by the 5% Withdrawal 50 Rate (6% Withdrawal Rate if you make your first withdrawal on or after the date you reach age 76). IT IS IMPORTANT TO NOTE: o If you take your first withdrawal before the date you reach age 59 1/2, we will continue to pay the Annual Benefit Payment each year until the Remaining Guaranteed Withdrawal Amount is depleted, even if your account value declines to zero. This means if your account value is depleted due to a Non-Excess Withdrawal or the deduction of the rider charge, and your Remaining Guaranteed Withdrawal Amount is greater than zero, we will pay you the remaining Annual Benefit Payment, if any, not yet withdrawn during the contract year that the account value was depleted, and beginning in the following contract year, we will continue paying the Annual Benefit Payment to you each year until your Remaining Guaranteed Withdrawal Amount is depleted. This guarantees that you will receive your purchase payments regardless of market performance so long as you do not take Excess Withdrawals; however, you will not be guaranteed income for the rest of your life. o If you take your first withdrawal on or after the date you reach age 59 1/2, we will continue to pay the Annual Benefit Payment each year for the rest of your life (and the life of your spouse, if the Joint Life version of the rider was elected, and your spouse elects to continue the contract and is at least age 59 1/2 at continuation), even if your Remaining Guaranteed Withdrawal Amount and/or account value declines to zero. This means if your Remaining Guaranteed Withdrawal Amount and/or your account value is depleted due to a Non-Excess Withdrawal or the deduction of the rider charge, we will pay to you the remaining Annual Benefit Payment, if any, not yet withdrawn during that contract year that the account value was depleted, and beginning in the following contract year, we will continue paying the Annual Benefit Payment to you each year for the rest of your life (and your spouse's life, if the Joint Life version of the rider was elected, and your spouse elects to continue the contract and is at least age 59 1/2 at continuation). Therefore, you will be guaranteed income for life. o If you take your first withdrawal on or after the date you reach age 76, your Annual Benefit payment will be set equal to a 6% Withdrawal Rate multiplied by the Total Guaranteed Withdrawal Amount. o IF YOU HAVE ELECTED THE LWG II, YOU SHOULD CAREFULLY CONSIDER WHEN TO BEGIN TAKING WITHDRAWALS. IF YOU BEGIN TAKING WITHDRAWALS TOO SOON, YOU MAY LIMIT THE VALUE OF THE LWG II. FOR EXAMPLE, WE NO LONGER INCREASE YOUR TOTAL GUARANTEED WITHDRAWAL AMOUNT BY THE 7.25% COMPOUNDING INCOME AMOUNT ONCE YOU MAKE YOUR SECOND WITHDRAWAL. HOWEVER, IF YOU DELAY TAKING WITHDRAWALS FOR TOO LONG, YOU MAY LIMIT THE NUMBER OF YEARS AVAILABLE FOR YOU TO TAKE WITHDRAWALS IN THE FUTURE (DUE TO LIFE EXPECTANCY) AND YOU MAY BE PAYING FOR A BENEFIT YOU ARE NOT USING. o At any time during the accumulation phase, you can elect to annuitize under current annuity rates in lieu of continuing the LWG II rider. This may provide higher income amounts and/or different tax treatment than the payments received under the LWG II rider. MANAGING YOUR WITHDRAWALS. It is important that you carefully manage your annual withdrawals. To retain the full guarantees of this rider, your annual withdrawals cannot exceed the Annual Benefit Payment each contract year. In other words, you should not take Excess Withdrawals. We do not include withdrawal charges for the purpose of calculating whether you have made an Excess Withdrawal. If you do take an Excess Withdrawal, we will recalculate the Total Guaranteed Withdrawal Amount and reduce the Annual Benefit Payment to the new Total Guaranteed Withdrawal Amount multiplied by the 5% Withdrawal Rate (6% Withdrawal Rate if you make your first withdrawal on or after the date you reach age 76). In addition, as noted above, if you take an Excess Withdrawal, we will reduce the Remaining Total Guaranteed Withdrawal Amount in the same proportion that the withdrawal reduces the account value. These reductions in the Total Guaranteed Withdrawal Amount, Annual Benefit Payment, and Remaining Guaranteed Withdrawal Amount may be significant. You are still eligible to receive either lifetime payments or the remainder of the Remaining Guaranteed Withdrawal Amount so long as the withdrawal that exceeded the Annual Benefit Payment did not cause your account value to decline to zero. You can always take Non-Excess Withdrawals. However, if you choose to receive only a part of your Annual Benefit 51 Payment in any given contract year, your Annual Benefit Payment is not cumulative and your Remaining Guaranteed Withdrawal Amount and Annual Benefit Payment will not increase. For example, since your Annual Benefit Payment is 5% of your Total Guaranteed Withdrawal Amount (or 6% if you make your first withdrawal on or after the date you reach age 76), you cannot withdraw 3% of the Total Guaranteed Withdrawal Amount in one year and then withdraw 7% of the Total Guaranteed Withdrawal Amount the next year without making an Excess Withdrawal in the second year. AUTOMATIC ANNUAL STEP-UP. On each contract anniversary prior to the owner's 91st birthday, an Automatic Annual Step-Up will occur, provided that the account value exceeds the Total Guaranteed Withdrawal Amount (after compounding) immediately before the step-up (and provided that you have not chosen to decline the step-up as described below). The Automatic Annual Step-Up will: o reset the Total Guaranteed Withdrawal Amount and the Remaining Guaranteed Withdrawal Amount to the account value on the date of the step-up, up to a maximum of $10,000,000, regardless of whether or not you have taken any withdrawals. o reset the Annual Benefit Payment equal to 5% of the Total Guaranteed Withdrawal Amount after the step-up (or 6% if you make your first withdrawal on or after the date you reach age 76); and o reset the LWG II rider charge to a rate we shall determine that does not exceed the maximum charge of 1.25% (Single Life version) or 1.50% (Joint Life version), provided that this rate will not exceed the rate currently applicable to the same rider available for new contract purchases at the time of the step-up. In the event that the charge applicable to contract purchases at the time of the step-up is higher than your current LWG II rider charge, we will notify you in writing a minimum of 30 days in advance of the applicable contract anniversary and inform you that you may choose to decline the Automatic Annual Step-Up. If you choose to decline the Automatic Annual Step-Up, you must notify us in accordance with our Administrative Procedures (currently we require you to submit your request in writing to our Annuity Service Center no less than seven calendar days prior to the applicable contract anniversary). Once you notify us of your decision to decline the Automatic Annual Step-Up, you will no longer be eligible for future Automatic Annual Step-Ups until you notify us in writing to our Annuity Service Center that you wish to reinstate the step-ups. This reinstatement will take effect at the next contract anniversary after we receive your request for reinstatement. Please note that the Automatic Annual Step-Up may be of limited benefit if you intend to make purchase payments that would cause your account value to approach $10,000,000, because the Total Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount cannot exceed $10,000,000. REQUIRED MINIMUM DISTRIBUTIONS. For IRAs and other contracts subject to Section 401(a)(9) of the Internal Revenue Code, you may be required to take withdrawals to fulfill minimum distribution requirements generally beginning at age 70 1/2. These required distributions may be larger than your Annual Benefit Payment. If you enroll in the Automated Required Minimum Distribution program and elect annual withdrawals, after the first contract year, we will increase your Annual Benefit Payment to equal your most recently calculated required minimum distribution amount, if such amount is greater than your Annual Benefit Payment. Otherwise, any cumulative withdrawals you make to satisfy your required minimum distribution amount will be treated as Excess Withdrawals if they exceed your Annual Benefit Payment. YOU MUST BE ENROLLED IN THE AUTOMATED REQUIRED MINIMUM DISTRIBUTION PROGRAM TO QUALIFY FOR THIS INCREASE IN THE ANNUAL BENEFIT PAYMENT. THE FREQUENCY OF YOUR WITHDRAWALS MUST BE ANNUAL. THE AUTOMATED REQUIRED MINIMUM DISTRIBUTION PROGRAM IS BASED ON INFORMATION RELATING TO THIS CONTRACT ONLY. To enroll in the Automated Required Minimum Distribution program, please contact our Annuity Service Center. INVESTMENT ALLOCATION RESTRICTIONS. If you elect the LWG II rider, there are certain investment allocation restrictions. Please see "Purchase - Investment Allocation Restrictions for Certain Riders" above. JOINT LIFE VERSION. A Joint Life version of the LWG II rider is available for a charge of 0.85% (which may increase upon an Automatic Annual Step-Up to a maximum of 1.50%). Like the Single Life version of the LWG II rider, the Joint Life version must be elected at the time you purchase the contract, and the owner (or oldest joint owner) must be age 85 or younger. Under the Joint Life version, when the owner of the contract dies (or when the first joint owner dies), the LWG II rider will automatically remain in effect only if the spouse is the 52 primary beneficiary and elects to continue the contract under the spousal continuation provisions. (See "Death Benefit-Spousal Continuation.") This means that if you purchase the Joint Life version and subsequently get divorced, or your spouse is no longer the primary beneficiary at the time of your death, he or she will not be eligible to receive payments under the LWG II rider. If the spouse is younger than age 59 1/2 when he or she elects to continue the contract, the spouse will receive the Annual Benefit Payment each year until the Remaining Guaranteed Withdrawal Amount is depleted. If the spouse is age 59 1/2 or older when he or she elects to continue the contract, the spouse will receive the Annual Benefit Payment each year for the remainder of his or her life. In situations in which a trust is both the owner and beneficiary of the contract, the Joint Life version of the LWG II would not apply. In addition, because of the definition of "spouse" under federal law, a purchaser who has or is contemplating a civil union should note that a civil union partner would not be able to receive continued payments after the death of the contract owner under the Joint Life version of the LWG II. CANCELLATION AND GUARANTEED PRINCIPAL ADJUSTMENT. You may elect to cancel the LWG II rider on the contract anniversary every five contract years for the first 15 contract years and annually thereafter. We must receive your cancellation request within 30 days following the applicable contract anniversary in accordance with our Administrative Procedures (currently we require you to submit your request in writing to our Annuity Service Center). The cancellation will take effect upon our receipt of your request. If cancelled, the LWG II rider will terminate, we will no longer deduct the LWG II rider charge, and the investment allocation restrictions described in "Purchase - - Investment Allocation Restrictions for Certain Riders" will no longer apply. The variable annuity contract, however, will continue. If you cancel the LWG II rider on the fifteenth contract anniversary or any contract anniversary thereafter, we will add a Guaranteed Principal Adjustment to your account value. The Guaranteed Principal Adjustment is intended to restore your initial investment in the contract in the case of poor investment performance. The Guaranteed Principal Adjustment is equal to (a) - (b) where: (a) is purchase payments credited within 120 days of the date that we issued the contract, reduced proportionately by the percentage reduction in account value attributable to any partial withdrawals taken (including any applicable withdrawal charges) and (b) is the account value on the date of cancellation. The Guaranteed Principal Adjustment will be added to each applicable investment portfolio in the ratio the portion of the account value in such investment portfolio bears to the total account value in all investment portfolios. The Guaranteed Principal Adjustment will never be less than zero. Only purchase payments made during the first 120 days that you hold the contract are taken into consideration in determining the Guaranteed Principal Adjustment. Contract owners who anticipate making purchase payments after 120 days should understand that such payments will not increase the Guaranteed Principal Adjustment. Purchase payments made after 120 days are added to your account value and impact whether or not a benefit is due. Therefore, the LWG II may not be appropriate for you if you intend to make additional purchase payments after the 120-day period and are purchasing the LWG II for its Guaranteed Principal Adjustment feature. TERMINATION OF THE LIFETIME WITHDRAWAL GUARANTEE II RIDER. The Lifetime Withdrawal Guarantee II rider will terminate upon the earliest of: (1) the date of a full withdrawal of the account value (a pro rata portion of the rider charge will be assessed; you are still eligible to receive either the Remaining Guaranteed Withdrawal Amount or lifetime payments, provided the withdrawal did not exceed the Annual Benefit Payment and the provisions and conditions of the rider have been met); (2) the date all of the account value is applied to an annuity option (a pro rata portion of the rider charge will be assessed); (3) the date there are insufficient funds to deduct the Lifetime Withdrawal Guarantee rider charge from the account value (you are still eligible to receive either the Remaining Guaranteed Withdrawal Amount or lifetime payments, provided the provisions and conditions of the rider have been met); (4) death of the owner or joint owner (or the annuitant if the owner is a non-natural person), except where the contract is issued under the Joint Life version of the Lifetime Withdrawal Guarantee, the primary beneficiary is the spouse, and the spouse elects to continue the contract under the spousal continuation provisions of the contract; 53 (5) change of the owner or joint owner for any reason (a pro rata portion of the rider charge will be assessed), subject to our administrative procedures; (6) the effective date of the cancellation of the rider; (7) termination of the contract to which the rider is attached (a pro rata portion of the rider charge will be assessed, except for a termination due to death); or (8) the date you assign your contract, subject to our administrative procedures. Once the rider is terminated, the LWG II rider charge will no longer be deducted and the LWG II investment allocation restrictions will no longer apply. ADDITIONAL INFORMATION. The LWG II rider may affect the death benefit available under your contract. If the owner or joint owner should die while the LWG II rider is in effect, an alternate death benefit amount will be calculated under the LWG II rider that can be taken in a lump sum. The LWG II death benefit amount that may be taken as a lump sum will be equal to total purchase payments less any partial withdrawals (deducted on a dollar-for-dollar basis). If this death benefit amount is greater than the death benefit provided by your contract, and if you made no Excess Withdrawals, then this death benefit amount will be paid instead of the death benefit provided by the contract. All other provisions of your contract's death benefit will apply. Alternatively, the beneficiary may elect to receive the Remaining Guaranteed Withdrawal Amount as a death benefit, in which case we will pay the Remaining Guaranteed Withdrawal Amount on a monthly basis (or any mutually agreed upon frequency, but no less frequently than annually) until the Remaining Guaranteed Withdrawal Amount is exhausted. The surviving spouse's withdrawal rights then come to an end. Currently, there is no minimum dollar amount for the payments; however, we reserve the right to accelerate any payment, in a lump sum, that is less than $500 (see below). This death benefit will be paid instead of the applicable contractual death benefit or the additional death benefit amount calculated under the LWG II as described above. Otherwise, the provisions of those contractual death benefits will determine the amount of the death benefit. Except as may be required by the Internal Revenue Code, an annual payment will not exceed the Annual Benefit Payment. If your beneficiary dies while such payments are made, we will continue making the payments to the beneficiary's estate unless we have agreed to another payee in writing. If the contract is a Non-Qualified Contract, any death benefit must be paid out over a time period and in a manner that satisfies Section 72(s) of the Internal Revenue Code. If the owner (or the annuitant, if the owner is not a natural person) dies prior to the "annuity starting date" (as defined under the Internal Revenue Code and regulations thereunder), the period over which the Remaining Guaranteed Withdrawal Amount is paid as a death benefit cannot exceed the remaining life expectancy of the payee under the appropriate IRS tables. For purposes of the preceding sentence, if the payee is a non-natural person, the Remaining Guaranteed Withdrawal Amount must be paid out within 5 years from the date of death. Payments under this death benefit must begin within 12 months following the date of death. We reserve the right to accelerate any payment, in a lump sum, that is less than $500 or to comply with requirements under the Internal Revenue Code (including minimum distribution requirements for IRAs and other contracts subject to Section 401(a)(9) of the Internal Revenue Code and Non-Qualified Contracts subject to Section 72(s)). If you terminate the LWG II rider because (1) you make a total withdrawal of your account value; (2) your account value is insufficient to pay the LWG II rider charge; or (3) the contract owner dies, except where the beneficiary or joint owner is the spouse of the owner and the spouse elects to continue the contract, you may not make additional purchase payments under the contract. DESCRIPTION OF THE LIFETIME WITHDRAWAL GUARANTEE I In states where the Lifetime Withdrawal Guarantee II is not yet approved, we offer (in states where approved) the Lifetime Withdrawal Guarantee I rider. The Lifetime Withdrawal Guarantee I rider is identical to the Lifetime Withdrawal Guarantee II, with the exceptions described below. TOTAL GUARANTEED WITHDRAWAL AMOUNT. The maximum Total Guaranteed Withdrawal Amount for the Lifetime Withdrawal Guarantee I rider is $5,000,000. If you elect the Lifetime Withdrawal Guarantee I rider and take an Excess Withdrawal, we will reduce the Total Guaranteed Withdrawal Amount by an amount equal to the difference between the Total Guaranteed Withdrawal Amount after the withdrawal and the Account Value after the withdrawal (if lower). On the other hand, if you elect 54 the LWG II rider and take an Excess Withdrawal, we will reduce the Total Guaranteed Withdrawal Amount in the same proportion that the withdrawal reduces the Account Value. REMAINING GUARANTEED WITHDRAWAL AMOUNT. The maximum Remaining Guaranteed Withdrawal Amount for the Lifetime Withdrawal Guarantee I rider is $5,000,000. If you elect the Lifetime Withdrawal Guarantee I rider and take a withdrawal, we will reduce the Remaining Guaranteed Withdrawal Amount by the amount of each withdrawal regardless of whether it is an Excess or Non-Excess withdrawal. However, if the withdrawal is an Excess Withdrawal, then we will additionally reduce the Remaining Guaranteed Withdrawal Amount to equal the difference between the Remaining Guaranteed Withdrawal Amount after the withdrawal and the Account Value after the withdrawal (if lower). On the other hand, if you elect the LWG II rider and take a withdrawal, we will reduce the Remaining Guaranteed Withdrawal Amount by the amount of each withdrawal for withdrawals that are Non-Excess Withdrawals and for Excess Withdrawals, we will reduce the Remaining Guaranteed Withdrawal Amount in the same proportion that the withdrawal reduces the Account Value. COMPOUNDING INCOME AMOUNT. If you elect the Lifetime Withdrawal Guarantee I rider, on each contract anniversary until the earlier of: (a) the date of the first withdrawal from the contract or (b) the tenth contract anniversary, we - ----- increase the Total Guaranteed Withdrawal Amount and the Remaining Guaranteed Withdrawal Amount by an amount equal to 5% multiplied by the Total Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount before such increase. On the other hand, if you elect the LWG II rider, on each contract anniversary until the earlier of: (a) the date of the second withdrawal from ------ the contract or (b) the tenth contract anniversary, we increase the Total Guaranteed Withdrawal Amount and the Remaining Guaranteed Withdrawal Amount by an amount equal to 7.25% multiplied by the Total Guaranteed Withdrawal Amount and Remaining Guaranteed Withdrawal Amount before such increase. ANNUAL BENEFIT PAYMENT. Under the Lifetime Withdrawal Guarantee I, the Annual Benefit Payment is set equal to the Total Guaranteed Withdrawal Amount multiplied by the 5% Withdrawal Rate (there is no 6% Withdrawal Rate for taking later withdrawals). AUTOMATIC ANNUAL STEP-UP. If an Automatic Annual Step-Up occurs under the Lifetime Withdrawal Guarantee I rider, we may increase the Lifetime Withdrawal Guarantee I rider charge to the charge applicable to current contract purchases of the same rider at the time of the step-up, but to no more than a maximum of 0.95% (Single Life version) or 1.40% (Joint Life version) of the Total Guaranteed Withdrawal Amount. RIDER CHARGE. The charge for the Lifetime Withdrawal Guarantee I rider is 0.50% (Single Life version) or 0.70% (Joint Life version) of the Total Guaranteed Withdrawal Amount (see "Expenses - Guaranteed Withdrawal Benefit - Rider Charge"). INVESTMENT ALLOCATION RESTRICTIONS. If you elect the Lifetime Withdrawal Guarantee I rider, you are limited to allocating your purchase payments and account value among the fixed account and the following investment portfolios: (a) the MetLife Defensive Strategy Portfolio (b) the MetLife Moderate Strategy Portfolio (c) the MetLife Balanced Strategy Portfolio (d) the MetLife Growth Strategy Portfolio (e) the American Funds Moderate Allocation Portfolio, (f) the American Funds Balanced Allocation Portfolio, (g) the American Funds Growth Allocation Portfolio, (h) the Met/Franklin Templeton Founding Strategy Portfolio, or (i) the BlackRock Money Market Portfolio. You may also elect to participate in the EDCA program, provided that your destination investment portfolios are one or more of the above listed investment portfolios. On the other hand, if you elect the LWG II rider, you must comply with the restrictions listed in "Purchase - Investment Allocation Restrictions for Certain Riders." DESCRIPTION OF THE ENHANCED GUARANTEED WITHDRAWAL BENEFIT BENEFIT BASE. The Guaranteed Withdrawal Amount is the maximum TOTAL amount of money that you are guaranteed to receive over time under the Enhanced GWB rider. At issue, the Guaranteed Withdrawal Amount and the Benefit Base are both equal to your initial purchase payment plus 55 the GWB Bonus Amount. At any subsequent point in time, the BENEFIT BASE is the remaining amount of money that you are guaranteed to receive through withdrawals under the Enhanced GWB rider. Your Benefit Base will change with each purchase payment, or as the result of an Optional Reset. Also, each withdrawal will reduce your Benefit Base. If negative investment performance reduces your account value below the Benefit Base, you are still guaranteed to be able to withdraw the entire amount of your Benefit Base. The Benefit Base is equal to: o Your initial purchase payment, increased by the 5% GWB Bonus Amount; o Increased by each subsequent purchase payment, and by the 5% GWB Bonus Amount; o Reduced dollar for dollar by Benefits Paid, which are withdrawals and amounts applied to an annuity option (currently, you may not apply amounts less than your entire account value to an annuity option); and o If a Benefit Paid from your contract is not payable to the contract owner or the contract owner's bank account (or to the annuitant or the annuitant's bank account, if the owner is a non-natural person), or results in cumulative Benefits Paid for the current contract year exceeding the Annual Benefit Payment, and the resulting Benefit Base exceeds the account value, an additional reduction in the Benefit Base will be made. This additional reduction will be equal to the difference between the Benefit Base and your account value after the decrease for the Benefits Paid. The Benefit Base will also be reset as a result of an Optional Reset as described below. (See section A of Appendix E for examples of how withdrawals affect the Benefit Base.) ANNUAL BENEFIT PAYMENT. The ANNUAL BENEFIT PAYMENT is the maximum amount of your Benefit Base you may withdraw each contract year without adversely impacting the amount guaranteed to be available to you through withdrawals over time. The initial Annual Benefit Payment is equal to the initial Benefit Base multiplied by the GWB WITHDRAWAL RATE (7%). The Annual Benefit Payment is reset after each subsequent purchase payment to the greater of: (1) the Annual Benefit Payment before the subsequent purchase payment, and (2) the GWB Withdrawal Rate multiplied by the Benefit Base after the subsequent purchase payment. The Annual Benefit Payment will also be reset as a result of an Optional Reset as described below. You can continue to receive annual withdrawals in an amount equal to or less than your Annual Benefit Payment until your Benefit Base is depleted. MANAGING YOUR WITHDRAWALS. It is important that you carefully manage your annual withdrawals. To retain the guarantees of this rider, your annual withdrawals cannot exceed the Annual Benefit Payment each contract year. If a withdrawal from your contract does result in annual withdrawals during a contract year exceeding the Annual Benefit Payment, or if the withdrawal is not payable to the contract owner or the contract owner's bank account (or to the annuitant or the annuitant's bank account, if the owner is a non-natural person), the Annual Benefit Payment will be recalculated and may be reduced. The new Annual Benefit Payment will equal the lower of (1) the Annual Benefit Payment before the withdrawal and (2) your account value after the decrease for the withdrawal (including any applicable withdrawal charge) multiplied by the GWB Withdrawal Rate. This reduction may be significant. Furthermore, because the GWB rider charge is assessed as a percentage of the Guaranteed Withdrawal Amount, any decrease of the Annual Benefit Payment caused by an excess withdrawal results in an increase in the cost of the rider relative to the benefits you will receive. (See sections B and C of Appendix E for examples of how withdrawals and subsequent purchase payments affect the Annual Benefit Payment.) You can always take annual withdrawals less than the Annual Benefit Payment. However, if you choose to receive only a part of, or none of, your Annual Benefit Payment in any given contract year, your Annual Benefit Payment is not cumulative and your Benefit Base and Annual Benefit Payment will not increase. For example, if your Annual Benefit Payment is 7% of your Benefit Base and you withdraw only 4% one year, you cannot then withdraw 10% the next year without exceeding your Annual Benefit Payment. REQUIRED MINIMUM DISTRIBUTIONS. For IRAs and other contracts subject to Section 401(a)(9) of the Internal Revenue Code, you may be required to take withdrawals to fulfill minimum distribution requirements generally beginning at age 70 1/2. These required distributions may be larger than your Annual Benefit Payment. If you enroll in the Automated Required Minimum Distribution program and elect annual withdrawals, after the first contract year, 56 we will increase your Annual Benefit Payment to equal your most recently calculated required minimum distribution amount, if such amount is greater than your Annual Benefit Payment. Otherwise, any cumulative withdrawals you make to satisfy your required minimum distribution amount will be treated as Excess Withdrawals if they exceed your Annual Benefit Payment. YOU MUST BE ENROLLED IN THE AUTOMATED REQUIRED MINIMUM DISTRIBUTION PROGRAM TO QUALIFY FOR THIS INCREASE IN THE ANNUAL BENEFIT PAYMENT. THE FREQUENCY OF YOUR WITHDRAWALS MUST BE ANNUAL. THE AUTOMATED REQUIRED MINIMUM DISTRIBUTION PROGRAM IS BASED ON INFORMATION RELATING TO THIS CONTRACT ONLY. To enroll in the Automated Required Minimum Distribution program, please contact our Annuity Service Center. GUARANTEED WITHDRAWAL AMOUNT. We assess the GWB rider charge as a percentage of the GUARANTEED WITHDRAWAL AMOUNT, which is initially set at an amount equal to your initial purchase payment plus the GWB Bonus Amount. The Guaranteed Withdrawal Amount may increase with subsequent purchase payments. In this case, the Guaranteed Withdrawal Amount will be reset equal to the greater of: (1) the Guaranteed Withdrawal Amount before the purchase payment and (2) the Benefit Base after the purchase payment. Withdrawals do not decrease the Guaranteed Withdrawal Amount. The Guaranteed Withdrawal Amount will also be reset as a result of an Optional Reset as described below. If your Guaranteed Withdrawal Amount increases, the amount of the Enhanced GWB rider charge we deduct will increase because the rider charge is a percentage of your Guaranteed Withdrawal Amount. OPTIONAL RESET. The purpose of an Optional Reset is to "lock-in" a higher Benefit Base, which may increase the amount of the Annual Benefit Payment and lengthen the period of time over which these withdrawals can be taken. At any contract anniversary prior to the owner's 86th birthday, you may elect an Optional Reset. The Optional Reset will reset the Annual Benefit Payment, Benefit Base and Guaranteed Withdrawal Amount, provided that your account value is larger than the Benefit Base immediately before the reset. We reserve the right to prohibit an Optional Reset election if we no longer offer this benefit. The reset will: o Reset your Guaranteed Withdrawal Amount and Benefit Base equal to the account value on the date of the reset; o Reset your Annual Benefit Payment equal to the account value on the date of the reset multiplied by the GWB Withdrawal Rate (7%); and o Reset the Enhanced GWB rider charge equal to the then current level we charge for the same rider at the time of the reset, up to the maximum charge of 1.00%. An Optional Reset can also result in an increase of the Guaranteed Withdrawal Amount and the Enhanced GWB rider charge. However, locking in a higher Benefit Base by electing an Optional Reset can result in a decrease of the Annual Benefit Payment and the Guaranteed Withdrawal Amount if the account value before the reset was less than the Guaranteed Withdrawal Amount. Therefore, generally it may be beneficial to reset your Benefit Base only if your account value exceeds your Guaranteed Withdrawal Amount. However, any benefit of an Optional Reset also depends on the current Enhanced GWB rider charge. If the current charge in effect is higher than the charge you are paying, it may not be beneficial to reset your Benefit Base since we will begin applying the higher current charge at the time of the reset (even if the reset results in a decrease of your Annual Benefit Payment and/or your Guaranteed Withdrawal Amount). We must receive your request for an Optional Reset in accordance with our administrative procedures (currently we require you to submit your request in writing to our Annuity Service Center) within the 30-day period ending on the day before the applicable contract anniversary. If the owner is a non-natural person, the annuitant's age is the basis for determining the birthday. If there are joint owners, the age of the oldest joint owner is used to determine the birthday. The Optional Reset will take effect on the next contract anniversary following our receipt of your written request. For contracts issued prior to July 16, 2007, you may elect an Optional Reset - ------------------------------------------- beginning with the third contract annivesary (as long as it is prior to the owner's 86th birthday) and at any subsequent contract anniversary prior to the owner's 86th birthday as long as it has been at least three years since the last Optional Reset. CANCELLATION OF THE ENHANCED GWB RIDER. You may elect to cancel the Enhanced GWB rider in accordance with our Administrative Procedures (currently we require you to submit your cancellation request in writing to our Annuity Service Center) during the 90-day period following your fifth contract anniversary. Such cancellation will take effect upon our receipt of your request. If cancelled, the 57 Enhanced GWB rider will terminate and we will no longer deduct the Enhanced GWB rider charge. The variable annuity contract, however, will continue. If you cancel the Enhanced GWB rider, you may not re-elect it. TERMINATION OF THE ENHANCED GWB RIDER. The Enhanced GWB rider will terminate upon the earliest of: (1) the date you make a full withdrawal of your account value; (2) the date you apply all of your account value to an annuity option; (3) the date there are insufficient funds to deduct the Enhanced GWB rider charge from your account value (whatever account value is available will be applied to pay the annual Enhanced GWB rider charge); (4) the date we receive due proof of the owner's death and a beneficiary claim form, except where the beneficiary or joint owner is the spouse of the owner and the spouse elects to continue the contract and the spouse is less than 85 years old, or the annuitant dies if the owner is a non-natural person; note: (a) if the spouse elects to continue the contract (so long as the spouse is less than 85 years old and the Enhanced GWB rider is in effect at the time of continuation), all terms and conditions of the Enhanced GWB rider will apply to the surviving spouse; and (b) we will not terminate the rider until we receive both due proof of the owner's death and a beneficiary claim form (from certain beneficiaries, such as a trust, we may require additional information, such as the trust document), which means we will continue to deduct the Enhanced GWB rider charge until we receive this information; (5) a change of the owner or joint owner (or the annuitant if the owner is a non-natural person) for any reason; (6) the effective date of cancellation of the rider; or (7) the termination of your contract. ADDITIONAL INFORMATION. If you take a full withdrawal of your account value and the withdrawal does not exceed the Annual Benefit Payment, or your account value is reduced to zero because you do not have a sufficient account value to pay the Enhanced GWB rider charge and your Benefit Base after the withdrawal is greater than zero, we will commence making payments to the owner or joint owner (or to the annuitant if the owner is a non-natural person) on a monthly basis (or any mutually agreed upon frequency, but not less frequently than annually) until the Benefit Base is exhausted. Your withdrawal rights then come to an end. Currently, there is no minimum dollar amount for the payments; however, we reserve the right to accelerate any payment, in a lump sum, that is less than $500 (see below). The total annual payments cannot exceed the Annual Benefit Payment, except to the extent required under the Internal Revenue Code. If you or the joint owner (or the annuitant if the owner is a non-natural person) should die while these payments are being made, your beneficiary will receive these payments. No other death benefit will be paid. If the owner or joint owner (or the annuitant if the owner is a non-natural person) should die while the Enhanced GWB rider is in effect, your beneficiary may elect to receive the Benefit Base as a death benefit in lieu of any other contractual death benefits. Otherwise, the provisions of those death benefits will determine the amount of the death benefit and no benefit will be payable under the Enhanced GWB rider. If the beneficiary elects the Benefit Base as a death benefit, we will pay the remaining Benefit Base on a monthly basis (or any mutually agreed upon frequency, but no less frequently than annually) until the Benefit Base is exhausted. Except as may be required by the Internal Revenue Code, an annual payment will not exceed the Annual Benefit Payment. If your beneficiary dies while such payments are made, we will continue making the payments to the beneficiary's estate unless we have agreed to another payee in writing. If the contract is a Non-Qualified Contract, any death benefit must be paid out over a time period and in a manner that satisfies Section 72(s) of the Internal Revenue Code. If the owner (or the annuitant, if the owner is not a natural person) dies prior to the "annuity starting date" (as defined under the Internal Revenue Code and regulations thereunder), the period over which the Benefit Base is paid as a death benefit cannot exceed the remaining life expectancy of the payee under the appropriate IRS tables. For purposes of the preceding sentence, if the payee is a non-natural person, the Benefit Base must be paid out within 5 years from the date of death. Payments under this death benefit must begin within 12 months following the date of death. We reserve the right to accelerate any payment, in a lump sum, that is less than $500 or to comply with requirements under the Internal Revenue Code (including minimum distribution requirements for IRAs and other contracts subject to Section 401(a)(9) of the Internal Revenue Code 58 and Non-Qualified Contracts subject to Section 72(s)). If you terminate the Enhanced GWB rider because (1) you make a total withdrawal of your account value; (2) your account value is insufficient to pay the Enhanced GWB rider charge; or (3) the contract owner or joint owner (or the annuitant, if the owner is a non-natural person) dies, except where the beneficiary or joint owner is the spouse of the owner and the spouse elects to continue the contract and the spouse is less than 85 years old, you may not make additional purchase payments under the contract. DESCRIPTION OF THE GUARANTEED WITHDRAWAL BENEFIT I The GWB I rider is the same as the Enhanced GWB rider described above with the following differences: (1) there is no favorable treatment of required minimum distributions; (2) the GWB I rider charge continues even if your Benefit Base equals zero; (3) you may only elect the Optional Reset once every five contract years instead of every contract year; (4) the GWB I rider charge is 0.50% and the maximum GWB I rider charge upon an Optional Reset is 0.95%; (5) you do not have the ability to cancel the rider following your fifth contract anniversary; and (6) we include withdrawal charges for purposes of determining whether your withdrawals have exceeded your Annual Benefit Payment. By endorsement, the GWB I rider has been enhanced so that items (1) and (2) above no longer apply and the interval between Optional Resets in item (3) has been decreased to every three contract years. You may now elect an Optional Reset under the GWB I starting with the third contract anniversary (as long as it is prior to the owner's 86th birthday), and you may elect an Optional Reset at any subsequent contract anniversary prior to the owner's 86th birthday, as long as it has been at least three years since the last Optional Reset. GUARANTEED MINIMUM ACCUMULATION BENEFIT In states where approved, you may elect the Guaranteed Minimum Accumulation Benefit ("GMAB") as an optional rider to your contract. The GMAB guarantees that your account value will not be less than a minimum amount at the end of a specified number of years (the "Rider Maturity Date"). If your account value is less than the minimum guaranteed amount at the Rider Maturity Date, we will apply an additional amount to increase your account value so that it is equal to the guaranteed amount. If you elect the GMAB rider, we require you to allocate your purchase payments and all of your account value to one of the MetLife Asset Allocation Program --- portfolios available in your contract (the MetLife Aggressive Strategy and the MetLife Growth Strategy Portfolios are not available for this purpose). You may also allocate purchase payments to the EDCA program, provided that your destination portfolio is the available MetLife Asset Allocation Program portfolio that you have chosen. No transfers are permitted while this rider is in effect. The MetLife Asset Allocation Program portfolio you choose will determine the percentage of purchase payments that equals the guaranteed amount. The MetLife Asset Allocation Program portfolios available if you choose the GMAB rider, the percentage of purchase payments that determines the guaranteed amount, and the number of years to the Rider Maturity Date for each, are:
Guaranteed Amount Years to (% of Purchase Rider Portfolio Payments) Maturity Date - ------------------- ---------------- -------------- MetLife Defensive Strategy Portfolio 130% 10 years MetLife Moderate Strategy Portfolio 120% 10 years MetLife Balanced Strategy Portfolio 110% 10 years
For more information about the MetLife Asset Allocation Program portfolios, please see "Investment Options - Description of the MetLife Asset Allocation Program" and the prospectus for the MetLife Asset Allocation Program portfolios. You may elect the GMAB rider when you purchase the contract, up through age 80. This benefit is intended to protect you against poor investment performance during the accumulation phase of your contract. You may not have this benefit and a GMIB or GWB rider in effect at the same time. BENEFIT DESCRIPTION. The GMAB rider guarantees that at the Rider Maturity Date, your account value will at least be equal to a percentage of the purchase payments you made during the first 120 days that you held the contract (the "GMAB Eligibility Period"), less reductions for any withdrawals (and related withdrawal charges) that you made at any time before the Rider Maturity Date. The percentage of purchase payments made that determines the guaranteed amount range from 110% to 130%, depending on the MetLife Asset Allocation Program portfolio you selected. This guaranteed amount is the "GUARANTEED ACCUMULATION AMOUNT." The Guaranteed Accumulation 59 Amount is used only to determine the amount of any benefit payable under the GMAB feature and the amount of the annual charge for the GMAB. There is a maximum Guaranteed Accumulation Amount for your contract that is shown on your contract schedule page (currently $5 million). Purchase payments made after this maximum Guaranteed Accumulation Amount is reached will not increase the Guaranteed Accumulation Amount above the maximum. However, if you make a withdrawal of account value during the GMAB Eligibility Period that reduces the Guaranteed Accumulation Amount below the maximum, then purchase payments you make AFTER the withdrawal, and during the GMAB Eligibility Period, will increase the Guaranteed Accumulation Amount until it reaches the maximum. Only purchase payments made during the first 120 days that you hold the contract are taken into consideration in determining the Guaranteed Accumulation Amount. If you anticipate making purchase payments after 120 days, you should understand that such payments will not increase the Guaranteed Accumulation Amount. Purchase payments made after 120 days are added to your account value and impact whether or not a benefit is due under the GMAB feature at the Rider Maturity Date. On your contract's issue date, the Guaranteed Accumulation Amount is equal to a percentage of your initial purchase payment. Subsequent purchase payments made during the GMAB Eligibility Period increase the Guaranteed Accumulation Amount by the percentage amount of the purchase payment (subject to the limit described above) depending on which MetLife Asset Allocation Program portfolio you have selected. When you make a withdrawal from the contract, the Guaranteed Accumulation Amount is reduced in the same proportion that the amount of the withdrawal (including any related withdrawal charge) bears to the total account value. EXAMPLE: Assume your account value is $100,000 and your Guaranteed Accumulation Amount is $120,000, prior to making a $10,000 withdrawal from the contract. The withdrawal amount is 10% of the account value. Therefore, after the withdrawal, your account value would be $90,000 and your Guaranteed Accumulation Amount would be $108,000 (90% of $120,000). Purchase Payment Credits are not considered to be purchase payments under the GMAB rider and are not part of the Guaranteed Accumulation Amount. The Guaranteed Accumulation Amount does not represent an amount of money available for withdrawal and is not used to calculate any benefits under the contract prior to the Rider Maturity Date. At the Rider Maturity Date, after deduction of the annual charge for the GMAB rider, we will compare your contract's account value to its Guaranteed Accumulation Amount. If the account value is less than the Guaranteed Accumulation Amount, we will contribute to your account value the amount needed to make it equal the Guaranteed Accumulation Amount. (This added amount is the "Guaranteed Accumulation Payment.") The Guaranteed Accumulation Payment is allocated entirely to the MetLife Asset Allocation Program portfolio you have selected (no portion of the Guaranteed Accumulation Payment is allocated to the EDCA account). If your account value is greater than or equal to the Guaranteed Accumulation Amount at the Rider Maturity Date, then no Guaranteed Accumulation Payment will be paid into your account value. The GMAB rider terminates at the Rider Maturity Date. We will not deduct the GMAB rider charge after that date, and the related investment requirements and restrictions will no longer apply. If your account value is reduced to zero for any reason other than a full withdrawal of the account value or application of the entire account value to an annuity option, but your contract has a positive Guaranteed Accumulation Amount remaining, the contract and the GMAB rider will remain in force. No charge for the GMAB rider will be deducted or accrue while there is insufficient account value to cover the deductions for the charge. At the Rider Maturity Date, the Guaranteed Accumulation Payment will be paid into the account value. Purchase payments made after the 120 day GMAB Eligibility Period may have a significant impact on whether or not a Guaranteed Accumulation Payment is due at the Rider Maturity Date. Even if purchase payments made during the 120 day GMAB Eligibility Period lose significant value, if the account value, which includes all purchase payments, is equal to or greater than the Guaranteed --- Accumulation Amount, which is a percentage of your purchase payments made during the 120 day period, then no Guaranteed Accumulation Payment is made. Therefore, the GMAB rider may not be appropriate for you if you intend to make additional purchase payments after the GMAB Eligibility Period. 60 EXAMPLE: Assume that you make one $10,000 purchase payment during the 120 day GMAB Eligibility Period and you select the MetLife Balanced Strategy Porfolio. Therefore, the Guaranteed Accumulation Amount is $11,000 (110% of your $10,000 purchase payment). Assume that at the Rider Maturity Date, your account value is $0. The Guaranteed Accumulation Payment is $11,000 ($11,000 - $0 = $11,000). In contrast, assume that you make one $10,000 purchase payment during the 120 day GMAB Eligibility Period and you select the MetLife Balanced Strategy Porfolio. Therefore, the Guaranteed Accumulation Amount is $11,000. Also assume that on the day before the Rider Maturity Date your account value is $0. Assume that you decide to make one purchase payment on the day before the Rider Maturity Date of $11,000. At the Rider Maturity Date, assume there has not been any positive or negative investment experience for the one day between your purchase payment and the Rider Maturity Date. Consequently, your account value is $11,000. We would not pay a Guaranteed Accumulation Payment because the account value of $11,000 is equal to the Guaranteed Accumulation Amount of $11,000 ($11,000 - $11,000 = $0). RIDER TERMINATION. The GMAB rider will terminate at the earliest of: (1) the Rider Maturity Date; (2) the date you surrender the contract; (3) the date you cancel the GMAB rider, as described below; (4) the date you apply all of your account value to an annuity option; and (5) the date of death of the owner or joint owner (or annuitant if the owner is a non-natural person), unless the beneficiary is the spouse of the owner and elects to continue the contract under the spousal continuation provisions of the contract. Once the rider is terminated, the GMAB rider charge will no longer be deducted and the related investment requirements and limitations will no longer apply. If the rider is terminated before the Rider Maturity Date, the Guaranteed Accumulation Payment will not be paid. CANCELLATION. You have a one-time right to cancel this optional benefit to take effect on your fifth contract anniversary. We must receive your request in writing within the 90-day period after your fifth contract anniversary. Such cancellation will take effect upon our receipt of your request. Once you have cancelled the GMAB rider, you will no longer be eligible to receive the Guaranteed Accumulation Payment or be bound by the investment requirements and restrictions, and we will no longer deduct the charge for this rider. GMAB AND DECEDENT CONTRACTS. The GMAB is not available for purchase by a beneficiary under a decedent's Non-Qualified Contract (see "Federal Income Tax Status - Taxation of Non-Qualified Contracts") or IRA contract (or where otherwise offered, under any other contract which is being "stretched" by a beneficiary after the death of the owner or after the death of the annuitant in certain cases) because, under tax rules, such contracts generally require distributions to commence by the end of the calendar year following the year of the owner's death and such distributions will have the effect of reducing the usefulness of the GMAB. 61 SUMMARY OF LIVING BENEFIT RIDERS The chart below highlights certain differences among the living benefit riders. Please refer to the detailed descriptions above for specific information about the features, costs and restrictions associated with the riders.
INCOME GUARANTEES GMIB PLUS GMIB I & II I & II LIFETIME INCOME Yes (after waiting Yes (after waiting period) period) BENEFIT RIDER Yes Yes INVOLVES ANNUITIZATION WITHDRAWALS Prior to Prior to PERMITTED/1/ annuitization annuitization WAITING PERIOD Must wait 10 years Must wait 10 years to annuitize under to annuitize under rider; Optional rider; withdrawals Step-Up/2/ restarts available waiting period; immediately withdrawals available immediately RESET/STEP-UP Yes No MAY INVEST IN Prior to Prior to VARIABLE annuitization annuitization INVESTMENT OPTIONS INVESTMENT Yes No ALLOCATION REQUIREMENTS ABILITY TO CANCEL Yes, after 10 years, No RIDER can take lump-sum option under the GPO provisions DEATH BENEFIT Prior to Prior to annuitization, annuitization, contract death contract death benefit available/3/ benefit available/3/ ACCOUNT WITHDRAWAL VALUE GUARANTEES GUARANTEE LIFETIME WITHDRAWAL ENHANCED GWB GUARANTEE I & II & GWB I GMAB LIFETIME INCOME Yes (if first No No withdrawal on or after age 59 1/2) BENEFIT RIDER No No No INVOLVES ANNUITIZATION WITHDRAWALS Yes Yes Yes PERMITTED/1/ WAITING PERIOD None (age 59 1/2 for None 10 years lifetime withdrawals) RESET/STEP-UP Yes Yes No MAY INVEST IN Yes Yes Yes VARIABLE INVESTMENT OPTIONS INVESTMENT Yes No Yes ALLOCATION REQUIREMENTS ABILITY TO CANCEL Yes, at 5th, 10th & Enhanced GWB Yes, within 90 days ---------------------- RIDER 15th contract only: Yes, within 90 after 5th contract anniversary, days after 5th anniversary annually thereafter; contract or, lump-sum anniversary option under the GPA provisions after 15 years DEATH BENEFIT Contract death Ability to receive Prior to benefit or alternate Benefit Base in annuitization, rider death benefit series of payments contract death available; ability to instead of contract benefit available/3/ receive Remaining death benefit Guaranteed Withdrawal Amount in series of payments instead of contract death benefit
62
ACCOUNT INCOME WITHDRAWAL VALUE GUARANTEES GUARANTEES GUARANTEE LIFETIME GMIB PLUS GMIB WITHDRAWAL ENHANCED GWB I & II I & II GUARANTEE I & II & GWB I GMAB CURRENT RIDER 0.80% 0.50% LWG II: 0.65% Enhanced GWB: 0.75% CHARGES/4/ (Single Life version) 0.55%; GWB I: or 0.85% (Joint 0.50% Life version); LWG I: 0.50% (Single Life version) or 0.70% (Joint Life version)
- -------- (1) Withdrawals will reduce the living and death benefits and account value. (2) For GMIB Plus I, the Optional Step-Up is called the "Optional Reset." (3) If the contract is annuitized, annuity payments may be guaranteed for a certain period of time (depending on the annuity option selected) and therefore payable upon death of the annuitant. See "Annuity Payments (The Income Phase)" and the rider descriptions for more information. (4) Certain rider charges may increase upon a Reset or Step-Up. Generally, rider charges are assessed as a percentage of the guaranteed benefit rather than account value. For example, the charge for GMIB II is 0.50% of the Income Base. See the Expenses section and the individual rider descriptions for more information. 63 8. PERFORMANCE We periodically advertise subaccount performance relating to the investment portfolios. We will calculate performance by determining the percentage change in the value of an accumulation unit by dividing the increase (decrease) for that unit by the value of the accumulation unit at the beginning of the period. This performance number reflects the deduction of the Separate Account product charges (including certain death benefit rider charges) and the investment portfolio expenses. It does not reflect the deduction of any applicable account fee, withdrawal charge, Enhanced Death Benefit charge, and GMIB, GWB, or GMAB rider charge. The deduction of these charges would reduce the percentage increase or make greater any percentage decrease. Any advertisement will also include total return figures which reflect the deduction of the Separate Account product charges (including certain death benefit rider charges), account fee, withdrawal charges, Enhanced Death Benefit charge, GMIB, GWB or GMAB rider charge, and the investment portfolio expenses. For periods starting prior to the date the contract was first offered, the performance will be based on the historical performance of the corresponding investment portfolios for the periods commencing from the date on which the particular investment portfolio was made available through the Separate Account. In addition, the performance for the investment portfolios may be shown for the period commencing from the inception date of the investment portfolios. These figures should not be interpreted to reflect actual historical performance of the Separate Account. We may, from time to time, include in our advertising and sales materials performance information for funds or investment accounts related to the investment portfolios and/or their investment advisers or subadvisers. Such related performance information also may reflect the deduction of certain contract charges. We may also include in our advertising and sales materials tax deferred compounding charts and other hypothetical illustrations, which may include comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets. We may advertise the GMIB, GWB, or GMAB riders using illustrations showing how the benefit works with historical performance of specific investment portfolios or with a hypothetical rate of return (which rate will not exceed 12%) or a combination of historical and hypothetical returns. These illustrations will reflect the deduction of all applicable charges including the portfolio expenses of the underlying investment portfolios. You should know that for any performance we illustrate, future performance will vary and results shown are not necessarily representative of future results. 9. DEATH BENEFIT UPON YOUR DEATH If you die during the accumulation phase, we will pay a death benefit to your beneficiary(ies). The Principal Protection is the standard death benefit for your contract. At the time you purchase the contract, depending on availability in your state, you can select the optional Annual Step-Up Death Benefit rider, the Enhanced Death Benefit rider or the Compounded-Plus Death Benefit rider and you can also select the Additional Death Benefit-Earnings Preservation Benefit. If you are 80 years old or older at the effective date of your contract, you are not eligible to select the Annual Step-Up Death Benefit rider, the Compounded-Plus Death Benefit rider or the Earnings Preservation Benefit. If you are 76 years old or older at the effective date of your contract, you are not eligible to select the Enhanced Death Benefit rider. For contracts issued before May 1, 2003, the Annual Step-Up is the standard death benefit for your contract. The death benefits are described below. Check your contract and riders for the specific provisions applicable. One or more optional death benefits may not be available in your state (check with your registered representative regarding availability). The death benefit is determined as of the end of the business day on which we receive both due proof of death and an election for the payment method. Where there are multiple beneficiaries, the death benefit will only be determined as of the time the first beneficiary submits the necessary documentation in good order. If you have a joint owner, the death benefit will be paid when the first owner dies. Upon the death of either owner, the surviving joint owner will be the primary beneficiary. Any other beneficiary designation will be treated as a contingent beneficiary, unless instructed otherwise. If a non-natural person owns the contract, the annuitant will be deemed to be the owner in determining the death 64 benefit. If there are joint owners, the age of the oldest owner will be used to determine the death benefit amount. For purposes of calculating the death benefits, purchase payments do not include Purchase Payment Credits. STANDARD DEATH BENEFIT - PRINCIPAL PROTECTION The death benefit will be the greater of: (1) the account value; or (2) total purchase payments, reduced proportionately by the percentage reduction in account value attributable to each partial withdrawal. If the owner is a natural person and the owner is changed to someone other than a spouse, the death benefit amount will be determined as defined above; however, subsection (2) will be changed to provide as follows: "the account value as of the effective date of the change of owner, increased by purchase payments received after the date of the change of owner, reduced proportionately by the percentage reduction in account value attributable to each partial withdrawal made after such date." In the event that a beneficiary who is the spouse of the owner elects to continue the contract in his or her name after the owner dies, the death benefit amount will be determined in accordance with (1) or (2) above. OPTIONAL DEATH BENEFIT - ANNUAL STEP-UP If you select the Annual Step-Up death benefit rider, the death benefit will be the greatest of: (1) the account value; or (2) total purchase payments, reduced proportionately by the percentage reduction in account value attributable to each partial withdrawal; or (3) the highest anniversary value, as defined below. On the date we issue your contract, the highest anniversary value is equal to your initial purchase payment. Thereafter, the highest anniversary value (as recalculated) will be increased by subsequent purchase payments and reduced proportionately by the percentage reduction in account value attributable to each subsequent partial withdrawal. On each contract anniversary prior to your 81st birthday, the highest anniversary value will be recalculated and set equal to the greater of the highest anniversary value before the recalculation or the account value on the date of the recalculation. If the owner is a natural person and the owner is changed to someone other than a spouse, the death benefit is equal to the greatest of (1), (2) or (3); however, for purposes of calculating (2) and (3) above: o Subsection (2) is changed to provide: "The account value as of the effective date of the change of owner, increased by purchase payments received after the date of change of owner, and reduced proportionately by the percentage reduction in account value attributable to each partial withdrawal made after such date"; and o for subsection (3), the highest anniversary value will be recalculated to equal your account value as of the effective date of the change of owner. In the event that a beneficiary who is the spouse of the owner elects to continue the contract in his or her name after the owner dies, the death benefit is equal to the greatest of (1), (2) or (3). OPTIONAL DEATH BENEFIT - ENHANCED DEATH BENEFIT In states where approved, you may select the Enhanced Death Benefit rider if you are age 75 or younger at the effective date of your contract and you either (a) have not elected any living benefit rider or (b) have elected the GMIB Plus II rider. If you select the Enhanced Death Benefit rider, the amount of the death benefit will be the greater of: (1) the account value; or (2) the death benefit base. The DEATH BENEFIT BASE provides protection against adverse investment experience. It guarantees that the death benefit will not be less than the greater of: (1) the highest account value on any anniversary (adjusted for withdrawals), or (2) the amount of your initial investment (adjusted for withdrawals), accumulated at 6% per year. The death benefit base is the greater of (a) or (b) below: (a) Highest Anniversary Value: On the date we issue your contract, the Highest Anniversary Value is equal to your initial purchase payment. Thereafter, the Highest Anniversary Value will be increased by subsequent purchase payments and reduced proportionately by the percentage reduction in account value attributable to each partial withdrawal. The percentage reduction in account 65 value is the dollar amount of the withdrawal (including any applicable withdrawal charge) divided by the account value immediately preceding such withdrawal. On each contract anniversary prior to your 81st birthday, the Highest Anniversary Value will be recalculated to equal the greater of the Highest Anniversary Value before the recalculation or the account value on the date of the recalculation. (b) Annual Increase Amount: On the date we issue your contract, the Annual Increase Amount is equal to your initial purchase payment. All purchase payments received within 120 days of the date we issue your contract will be treated as part of the initial purchase payment for this purpose. Thereafter, the Annual Increase Amount is equal to (i) less (ii), where: (i) is purchase payments accumulated at the annual increase rate. The annual increase rate is 6% per year through the contract anniversary immediately prior to your 91st birthday, and 0% per year thereafter; and (ii) is withdrawal adjustments accumulated at the annual increase rate. The annual increase rate is 6% per year through the contract anniversary immediately prior to your 91st birthday, and 0% per year thereafter. The withdrawal adjustment for any partial withdrawal in a contract year is equal to the Annual Increase Amount immediately prior to the withdrawal multiplied by the percentage reduction in account value attributable to that partial withdrawal (including any applicable withdrawal charge). However, (1) if the partial withdrawal occurs before the the contract anniversary immediately prior to your 91st birthday; (2) if all partial withdrawals in a contract year are payable to the owner (or the annuitant if the owner is a non-natural person) or other payees that we agree to; and (3) if total partial withdrawals in a contract year are not greater than 6% of the Annual Increase Amount on the previous contract anniversary, the total withdrawal adjustments for that contract year will be set equal to the dollar amount of total partial withdrawals in that contract year and will be treated as a single withdrawal at the end of that contract year. The Highest Anniversary Value does not change after the contract anniversary immediately preceding the owner's 81st birthday, except that it is increased for each subsequent purchase payment and reduced proportionately by the percentage reduction in account value attributable to each subsequent withdrawal (including any applicable withdrawal charge). The Annual Increase Amount does not change after the contract anniversary immediately preceding the owner's 91st birthday, except that it is increased for each subsequent purchase payment and reduced by the withdrawal adjustments described in (b)(ii) above. OPTIONAL STEP-UP. On each contract anniversary on or after the first anniversary following the effective date of the rider, you may elect an Optional Step-Up provided that (1) the account value exceeds the Annual Increase Amount immediately before the Optional Step-Up; and (2) the owner (or oldest joint owner or annuitant if the contract is owned by a non-natural person) is not older than age 80 on the date of the Optional Step-Up. We must receive your request to exercise the Optional Step-Up in writing, at our Annuity Service Center, or any other method acceptable to us. We must receive your request prior to the contract anniversary for an Optional Step-Up to occur on that contract anniversary. The Optional Step-Up will: (a) Reset the Annual Increase Amount to the account value on the contract anniversary following the receipt of an Optional Step-Up election; and (b) Reset the Enhanced Death Benefit rider charge to a rate we shall determine that does not exceed the maximum Optional Step-Up charge (1.50%), provided that this rate will not exceed the rate currently applicable to the same rider available for new contract purchases at the time of the step-up. On the date of the Optional Step-Up, the account value on that day will be treated as a single purchase payment received on the date of the step-up for purposes of determining the Annual Increase Amount after the step-up. All purchase payments and withdrawal adjustments previously used to calculate the Annual Increase Amount will be set equal to zero on the date of the Optional Step-Up. When you elect the Optional Step-Up, provided the above requirements are met, you may elect either: 66 1) a one time Optional Step-Up at any contract anniversary; or 2) Optional Step-Ups to occur under the Automatic Annual Step-Up (on any contract anniversary while this election is in effect, the Annual Increase Amount will reset to the account value automatically). In the event that the charge applicable to contract purchases at the time of the step-up is higher than your current Enhanced Death Benefit rider charge, you will be notified in writing a minimum of 30 days in advance of the applicable contract anniversary and be informed that you may choose to decline the Automatic Annual Step-Up. If you decline the Automatic Annual Step-Up, you must notify us in accordance with our Administrative Procedures (currently we require you to submit your request in writing to our Annuity Service Center no less than seven calendar days prior to the applicable contract anniversary). Once you notify us of your decision to decline the Automatic Annual Step-Up, you will no longer be eligible for future Automatic Annual Step-Ups until you notify us in writing to our Annuity Service Center that you wish to reinstate the Automatic Annual Step-Ups. This reinstatement will take effect at the next contract anniversary after we receive your request for reinstatement. If you have also elected the GMIB Plus II rider and you elect Optional Step-Ups to occur under the Automatic Annual Step-up, it will remain in effect through the seventh contract anniversary following the date you make the election. You may make a new election if you want Automatic Annual Step-Ups to continue after the seventh contract anniversary. You may discontinue Automatic Annual Step-Ups at any time by notifying us in writing, at our Annuity Service Center (or by any other method acceptable to us), at least 30 days prior to the contract anniversary following the date you make this election. If you discontinue Automatic Annual Step-Ups, the Enhanced Death Benefit rider (and the rider charge) will continue, and you may choose to elect a one time Optional Step-Up or reinstate Automatic Annual Step-Ups as described above. INVESTMENT ALLOCATION RESTRICTIONS. If you select the Enhanced Death Benefit rider, there are certain investment allocation restrictions. (See "Purchase - Investment Allocation Restrictions for Certain Riders.") TERMINATION OF THE ENHANCED DEATH BENEFIT. The Enhanced Death Benefit will terminate upon the earliest of: a) The date you make a total withdrawal of your account value (a pro rata portion of the rider charge will be assessed); b) The date there are insufficient funds to deduct the Enhanced Death Benefit rider charge from your account value; c) The date you annuitize your contract (a pro rata portion of the rider charge will be assessed); d) A change of the owner or joint owner (or annuitant if the owner is a non-natural person), subject to our administrative procedures; e) The date you assign your contract, subject to our administrative procedures; f) The date the death benefit amount is determined (excluding the determination of the death benefit amount under the spousal continuation option); or g) Termination of the contract to which this rider is attached. (See Appendix F for examples of the Enhanced Death Benefit.) OPTIONAL DEATH BENEFIT - COMPOUNDED-PLUS In states where the Compounded-Plus death benefit rider has been approved and the Enhanced Death Benefit has not been approved, you may select the Compounded-Plus death benefit rider if you are age 79 or younger at the effective date of your contract. If you select the Compounded-Plus death benefit rider, the death benefit will be the greater of: (1) the account value; or (2) the enhanced death benefit. The enhanced death benefit is the greater of (a) or (b) below: (a) Highest Anniversary Value: On the date we issue your contract, the highest anniversary value is equal to your initial purchase payment. Thereafter, the highest anniversary value (as recalculated) will be increased by subsequent purchase payments and reduced proportionately by the percentage reduction in account value attributable to each subsequent partial withdrawal. On each contract anniversary prior to your 81st birthday, the highest anniversary value will be recalculated and set equal to the greater of the highest anniversary value 67 before the recalculation or the account value on the date of the recalculation. (b) Annual Increase Amount: On the date we issue your contract, the annual increase amount is equal to your initial purchase payment. Thereafter, the annual increase amount is equal to (i) less (ii), where: (i) is purchase payments accumulated at the annual increase rate. The annual increase rate is 5% per year through the contract anniversary immediately prior to your 81st birthday, and 0% per year thereafter; and (ii) is withdrawal adjustments accumulated at the annual increase rate. A withdrawal adjustment is equal to the value of the annual increase amount immediately prior to a withdrawal multiplied by the percentage reduction in account value attributable to that partial withdrawal. If the owner is a natural person and the owner is changed to someone other than a spouse, the death benefit is equal to the greatest of (1) or (2); however, for purposes of calculating the enhanced death benefit under (2) above: (a) for the highest anniversary value, the highest anniversary value will be recalculated to equal your account value as of the effective date of the owner change; and (b) for the annual increase amount, the current annual increase amount will be reset to equal your account value as of the effective date of the owner change. For purposes of the calculation of the annual increase amount thereafter, the account value on the effective date of the owner change will be treated as the initial purchase payment and purchase payments received and partial withdrawals taken prior to the change of owner will not be taken into account. In the event that a beneficiary who is the spouse of the owner elects to continue the contract in his or her name after the owner dies, the death benefit amount is equal to the greater of (1) or (2). ADDITIONAL DEATH BENEFIT - EARNINGS PRESERVATION BENEFIT The Additional Death Benefit - Earnings Preservation Benefit pays an additional death benefit that is intended to help pay part of the income taxes due at the time of death of the owner or joint owner. The benefit is only available up through age 79 (on the contract issue date). In certain situations, this benefit may not be available for qualified plans (check with your registered representative for details). Before the contract anniversary immediately prior to your 81st birthday, the additional death benefit is equal to the "benefit percentage" (determined in accordance with the table below) times the result of (a) - (b), where: (a) is the death benefit under your contract; and (b) is total purchase payments not withdrawn. For purposes of calculating this value, partial withdrawals are first applied against earnings in the contract, and then against purchase payments not withdrawn. On or after the contract anniversary immediately prior to your 81st birthday, the additional death benefit is equal to the "benefit percentage" (determined in accordance with the table below) times the result of (a) - (b), where: (a) is the death benefit on the contract anniversary immediately prior to your 81st birthday, increased by subsequent purchase payments and reduced proportionately by the percentage reduction in account value attributable to each subsequent partial withdrawal; and (b) is total purchase payments not withdrawn. For purposes of calculating this value, partial withdrawals are first applied against earnings in the contract, and then against purchase payments not withdrawn. Benefit Percentage Issue Age Percentage - ---------------------- Ages 69 or younger 40% Ages 70-79 25% Ages 80 and above 0%
If the owner is a natural person and the owner is changed to someone other than a spouse, the additional death benefit is as defined above; however, for the purposes of calculating subsection (b) above "total purchase payments not withdrawn" will be reset to equal the account value as of the effective date of the owner change, and purchase payments received and partial withdrawals taken prior to the change of owner will not be taken into account. In the event that a beneficiary who is the spouse of the owner elects to continue the contract in his or her name after the owner dies, the additional death benefit will be 68 determined and payable upon receipt of due proof of death of the first spousal beneficiary. Alternatively, the spousal beneficiary may elect to have the additional death benefit determined and added to the account value upon the election, in which case the additional death benefit rider will terminate (and the corresponding death benefit rider charge will also terminate). GENERAL DEATH BENEFIT PROVISIONS The death benefit amount remains in the Separate Account until distribution begins. From the time the death benefit is determined until complete distribution is made, any amount in the Separate Account will continue to be subject to investment risk. This risk is borne by the beneficiary. Please check with your registered representative regarding the availability of the following in your state. If the beneficiary under a tax qualified contract is the annuitant's spouse, the tax law generally allows distributions to begin by the year in which the annuitant would have reached 70 1/2 (which may be more or less than five years after the annuitant's death). A beneficiary must elect the death benefit to be paid under one of the payment options (unless the owner has previously made the election). The entire death benefit must be paid within five years of the date of death unless the beneficiary elects to have the death benefit payable under an annuity option. The death benefit payable under an annuity option must be paid over the beneficiary's lifetime or for a period not extending beyond the beneficiary's life expectancy. For non-qualified contracts, payment must begin within one year of the date of death. For tax qualified contracts, payment must begin no later than the end of the calendar year immediately following the year of death. We may also offer a payment option, for both non-tax qualified contracts and certain tax qualified contracts, under which your beneficiary may receive payments, over a period not extending beyond his or her life expectancy, under a method of distribution similar to the distribution of required minimum distributions from Individual Retirement Accounts. If this option is elected, we will issue a new contract to your beneficiary in order to facilitate the distribution of payments. Your beneficiary may choose any optional death benefit available under the new contract. Upon the death of your beneficiary, the death benefit would be required to be distributed to your beneficiary's beneficiary at least as rapidly as under the method of distribution in effect at the time of your beneficiary's death. (See "Federal Income Tax Status.") To the extent permitted under the tax law, and in accordance with our procedures, your designated beneficiary is permitted under our procedures to make additional purchase payments consisting of monies which are direct transfers (as permitted under tax law) from other tax qualified or non-tax qualified contracts, depending on which type of contract you own, held in the name of the decedent. Any such additional purchase payments would be subject to applicable withdrawal charges. Your beneficiary is also permitted to choose some of the optional benefits available under the contract, but certain contract provisions or programs may not be available. If a lump sum payment is elected and all the necessary requirements are met, the payment will be made within 7 days. Payment to the beneficiary under an annuity option may only be elected during the 60 day period beginning with the date we receive due proof of death. If we do not receive an election during such time, we will make a single lump sum payment to the beneficiary at the end of the 60 day period. If the owner or a joint owner, who is not the annuitant, dies during the income phase, any remaining payments under the annuity option elected will continue at least as rapidly as under the method of distribution in effect at the time of the owner's death. Upon the death of the owner or a joint owner during the income phase, the beneficiary becomes the owner. SPOUSAL CONTINUATION If the primary beneficiary is the spouse of the owner, upon the owner's death, the beneficiary may elect to continue the contract in his or her own name. Upon such election, the account value will be adjusted upward (but not downward) to an amount equal to the death benefit amount determined upon such election and receipt of due proof of death of the owner. Any excess of the death benefit amount over the account value will be allocated to each applicable investment portfolio and/or the fixed account in the ratio that the account value in the investment portfolio and/or the fixed account bears to the total account value. The terms and conditions of the contract that applied prior to the owner's death will continue to apply, with certain exceptions described in the contract. For purposes of the death benefit on the continued contract, the death benefit is calculated in the same manner as it was prior to continuation except that all values used to calculate the death benefit, which may include a highest 69 anniversary value and/or an annual increase amount (depending on whether you elected an optional death benefit), are reset on the date the spouse continues the contract. Spousal continuation will not satisfy minimum required distribution rules for Qualified Contracts other than IRAs (see "Federal Income Tax Status"). DEATH OF THE ANNUITANT If the annuitant, not an owner or joint owner, dies during the accumulation phase, you automatically become the annuitant. You can select a new annuitant if you do not want to be the annuitant (subject to our then current underwriting standards). However, if the owner is a non- natural person (for example, a trust), then the death of the primary annuitant will be treated as the death of the owner, and a new annuitant may not be named. Upon the death of the annuitant after annuity payments begin, the death benefit, if any, will be as provided for in the annuity option selected. Death benefits will be paid at least as rapidly as under the method of distribution in effect at the annuitant's death. CONTROLLED PAYOUT You may elect to have the death benefit proceeds paid to your beneficiary in the form of annuity payments for life or over a period of time that does not exceed your beneficiary's life expectancy. This election must be in writing in a form acceptable to us. You may revoke the election only in writing and only in a form acceptable to us. Upon your death, the beneficiary cannot revoke or modify your election. The Controlled Payout is only available to Non-Qualified Contracts (see "Federal Income Tax Status"). 10. FEDERAL INCOME TAX STATUS The following discussion is general in nature and is not intended as tax advice. Each person concerned should consult a competent tax adviser. No attempt is made to consider any applicable state tax or other tax laws, or to address any state and local estate, inheritance and other tax consequences of ownership or receipt of distributions under a contract. When you invest in an annuity contract, you usually do not pay taxes on your investment gains until you withdraw the money, generally for retirement purposes. If you invest in an annuity contract as part of an individual retirement plan, pension plan or employer-sponsored retirement program, your contract is called a "Qualified Contract." The tax rules applicable to Qualified Contracts vary according to the type of retirement plan and the terms and conditions of the plan. You should note that for any Qualified Contract, the tax deferred accrual feature is provided by the tax qualified retirement plan, and as a result there should be reasons other than tax deferral for acquiring the contract within a qualified plan. If your annuity is independent of any formal retirement or pension plan, it is termed a "Non-Qualified Contract." Under current federal income tax law, the taxable portion of distributions under variable annuity contracts and qualified plans (including IRAs) is not eligible for the reduced tax rate applicable to long-term capital gains and qualifying dividends. TAXATION OF NON-QUALIFIED CONTRACTS NON-NATURAL PERSON. If a non-natural person (e.g., a trust) owns a Non-Qualified Contract, the taxpayer generally must include in income any increase in the excess of the account value over the investment in the contract (generally, the premiums or other consideration paid for the contract) during the taxable year. There are some exceptions to this rule and a prospective owner that is not a natural person should discuss these with a tax adviser. The following discussion generally applies to Non-Qualified Contracts owned by natural persons. WITHDRAWALS. When a withdrawal from a Non-Qualified Contract occurs, the amount received will be treated as ordinary income subject to tax up to an amount equal to the excess (if any) of the account value immediately before the distribution over the owner's investment in the contract (generally, the premiums or other consideration paid for the contract, reduced by any amount previously distributed from the contract that was not subject to tax) at that time. In the case of a surrender under a Non-Qualified Contract, the amount received generally will be taxable only to the extent it exceeds the owner's investment in the contract. In the case of a withdrawal under a Qualified Contract, a ratable portion of the amount received is taxable, generally based on the ratio of the "investment in the contract" to the individual's total account balance or accrued benefit under the retirement plan. The "investment in the 70 contract" generally equals the amount of any non-deductible purchase payments paid by or on behalf of any individual. In many cases, the "investment in the contract" under a Qualified Contract can be zero. It is conceivable that certain benefits or the charges for certain benefits such as any of the guaranteed death benefits (including, but not limited to, the Earnings Preservation Benefit) and certain living benefits (E.G., the GWB riders or GMAB rider), could be considered to be taxable each year as deemed distributions from the contract to pay for non-annuity benefits. We currently treat these charges and benefits as an intrinsic part of the annuity contract and do not tax report these as taxable income until distributions are actually made. However, it is possible that this may change in the future if we determine that this is required by the IRS. If so, the charges or benefits could also be subject to a 10% penalty tax if the taxpayer is under age 59 1/2. The tax treatment of withdrawals under a Guaranteed Withdrawal Benefit is also uncertain. It is conceivable that the amount of potential gain could be determined based on the Benefit Base at the time of the withdrawal, if greater than the account value. This could result in a greater amount of taxable income in certain cases. In general, at the present time, we intend to tax report such withdrawals using the gross account value rather than the Benefit Base at the time of the withdrawal to determine gain. However, in cases where the maximum permitted withdrawal in any year under the GWB exceeds the gross account value, the portion of the withdrawal treated as taxable gain (not to exceed the amount of the withdrawal) should be measured as the difference between the maximum permitted withdrawal amount under the benefit and the remaining after-tax basis immediately preceding the withdrawal. Consult your tax adviser. We reserve the right to change our tax reporting practices if we determine that they are not in accordance with IRS guidance (whether formal or informal). ADDITIONAL PENALTY TAX ON CERTAIN WITHDRAWALS. In the case of a distribution (or a deemed distribution) from a Non-Qualified Contract, there may be imposed a federal tax penalty equal to 10% of the amount treated as income. In general, however, there is no penalty on distributions: o made on or after the taxpayer reaches age 59 1/2; o made on or after the death of an owner; o attributable to the taxpayer's becoming disabled; o made as part of a series of substantially equal periodic payment (at least annually) for the life (or life expectancy) of the taxpayer or the joint lives (or joint life expectancies) of the taxpayer and his or her designated beneficiary; or o under certain immediate income annuities providing for substantially equal payments made at least annually. Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. Also, additional exceptions apply to distributions from a Qualified Contract. You should consult a tax adviser with regard to exceptions from the penalty tax. ANNUITY PAYMENTS. Although tax consequences may vary depending on the payout option elected under an annuity contract, a portion of each annuity payment is generally not taxed and the remainder is taxed as ordinary income. The non-taxable portion of any annuity payment is generally determined in a manner that is designed to allow you to recover your investment in the contract ratably on a tax-free basis over the expected stream of annuity payments, as determined when annuity payments start. Once your investment in the contract has been fully recovered, however, the full amount of each annuity payment is subject to tax as ordinary income. In general, the amount of each payment under a variable annuity payment option that can be excluded from federal income tax is the remaining after-tax cost in the amount annuitized at the time such payments commence, divided by the number of expected payments, subject to certain adjustments. No deduction is permitted for any excess of such excludable amount for a year over the annuity payments actually received in that year. However, you may elect to increase the excludable amount attributable to future years by a ratable portion of such excess. Consult your tax adviser as to how to make such election and also as to how to treat the loss due to any unrecovered investment in the contract when the income stream is terminated. Once the investment in the contract has been recovered through the use of the excludable amount, the entire amount of all future payments are includable in taxable income. The IRS has not furnished explicit guidance as to how the excludable amount is to be determined each year under variable income annuities that permit transfers between the fixed account and variable investment portfolios, as well as 71 transfers between investment portfolios after the annuity starting date. Consult your tax adviser. TAXATION OF DEATH BENEFIT PROCEEDS. Amounts may be distributed from a Non-Qualified Contract because of your death or the death of the annuitant. Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a surrender of the contract, or (ii) if distributed under a payout option, they are taxed in the same way as annuity payments. See the Statement of Additional Information as well as "Death Benefit - General Death Benefit Provisions" in this prospectus for a general discussion on the federal income tax rules applicable to how death benefits must be distributed. TRANSFERS, ASSIGNMENTS OR EXCHANGES OF A CONTRACT. Where otherwise permitted under the terms of the contract, a transfer or assignment of ownership of a Non-Qualified Contract, the designation or change of an annuitant, the selection of certain maturity dates, or the exchange of a contract may result in certain adverse tax consequences to you that are not discussed herein. An owner contemplating any such transfer, assignment, exchange or event should consult a tax adviser as to the tax consequences. WITHHOLDING. Annuity distributions are generally subject to withholding for the recipient's federal income tax liability. Recipients can generally elect, however, not to have tax withheld from distributions. MULTIPLE CONTRACTS. The tax law provides that deferred annuities issued after October 21, 1988 by the same insurance company or an affiliate in the same calendar year to the same owner are combined for tax purposes. As a result, a greater portion of your withdrawals may be considered taxable income than you would otherwise expect. Please consult your own tax adviser. OWNERSHIP OF THE INVESTMENTS. In certain circumstances, owners of variable annuity contracts have been considered to be the owners of the assets of the underlying Separate Account for Federal income tax purposes due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains attributable to the variable account assets. There is little guidance in this area, and some features of the contract, such as the number of funds available and the flexibility of the contract owner to allocate premium payments and transfer amounts among the funding options, have not been addressed in public rulings. While we believe that the contract does not give the contract owner investment control over Separate Account assets, we reserve the right to modify the contract as necessary to prevent a contract owner from being treated as the owner of the Separate Account assets supporting the contract. FURTHER INFORMATION. We believe that the contracts will qualify as annuity contracts for federal income tax purposes and the above discussion is based on that assumption. Further details can be found in the Statement of Additional Information under the heading "Tax Status of the Contracts." TAXATION OF QUALIFIED CONTRACTS The tax rules applicable to Qualified Contracts vary according to the type of retirement plan and the terms and conditions of the plan. Your rights under a Qualified Contract may be subject to the terms of the retirement plan itself, regardless of the terms of the Qualified Contract. Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions with respect to the contract comply with the law. INDIVIDUAL RETIREMENT ACCOUNTS (IRAS). IRAs, as defined in Section 408 of the Internal Revenue Code (Code), permit individuals to make annual contributions of up to the lesser of the applicable dollar amount for the year (for 2008, $5,000 plus, for an owner age 50 or older, $1,000) or the amount of compensation includible in the individual's gross income for the year. The contributions may be deductible in whole or in part, depending on the individual's income. Distributions from certain retirement plans may be "rolled over" into an IRA on a tax-deferred basis without regard to these limits. Amounts in the IRA (other than non-deductible contributions) are taxed when distributed from the IRA. A 10% penalty tax generally applies to distributions made before age 59 1/2, unless an exception applies. The Internal Revenue Service (IRS) has approved the forms of the IRA and SIMPLE IRA endorsements, when used with the contract and certain of its riders (including enhanced death benefits), but your contract may differ from the approved version because of differences in riders or state insurance law requirements. Traditional IRAs/SEPs, SIMPLE IRAs and Roth IRAs may not invest in life insurance. The contract may provide death benefits that could exceed the greater of premiums paid or the account balance. The final required minimum distribution income tax regulations generally treat such 72 benefits as part of the annuity contract and not as life insurance and require the value of such benefits to be included in the participant's interest that is subject to the required minimum distribution rules. SIMPLE IRA. A SIMPLE IRA permits certain small employers to establish SIMPLE plans as provided by Section 408(p) of the Code, under which employees may elect to defer to a SIMPLE IRA a percentage of compensation up to $10,500 for 2008. The sponsoring employer is generally required to make matching or non-elective contributions on behalf of employees. Distributions from SIMPLE IRA's are subject to the same restrictions that apply to IRA distributions and are taxed as ordinary income. Subject to certain exceptions, premature distributions prior to age 59 1/2 are subject to a 10% penalty tax, which is increased to 25% if the distribution occurs within the first two years after the commencement of the employee's participation in the plan. ROTH IRA. A Roth IRA, as described in Code section 408A, permits certain eligible individuals to make non-deductible contributions to a Roth IRA in cash or as a rollover or transfer from another Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA is generally subject to tax, and other special rules apply. The owner may wish to consult a tax adviser before combining any converted amounts with any other Roth IRA contributions, including any other conversion amounts from other tax years. Distributions from a Roth IRA generally are not taxed, except that, once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made (1) before age 59 1/2 (subject to certain exceptions) or (2) during the five taxable years starting with the year in which the first contribution is made to any Roth IRA. A 10% penalty tax may apply to amounts attributable to a conversion from an IRA if they are distributed during the five taxable years beginning with the year in which the conversion was made. PENSION PLANS. Corporate pension and profit-sharing plans under Section 401(a) of the Code allow corporate employers to establish various types of retirement plans for employees, and self-employed individuals to establish qualified plans for themselves and their employees. Adverse tax consequences to the retirement plan, the participant or both may result if the contract is transferred to any individual as a means to provide benefit payments, unless the plan complies with all the requirements applicable to such benefits prior to transferring the contract. The contract includes optional death benefits that in some cases may exceed the greater of the premium payments or the account value. TAX SHELTERED ANNUITIES. Tax Sheltered Annuities (TSA) that qualify under section 403(b) of the Code allow employees of certain Section 501(c)(3) organizations and public schools to exclude from their gross income the premium payments made, within certain limits, on a contract that will provide an annuity for the employee's retirement. These premium payments may be subject to FICA (social security) tax. Distributions of (1) salary reduction contributions made in years beginning after December 31, 1988; (2) earnings on those contributions; and (3) earnings on amounts held as of the close of the last year beginning before January 1, 1989, are not allowed prior to age 59 1/2, severance from employment, death or disability. Salary reduction contributions may also be distributed upon hardship, but would generally be subject to penalties. Income tax regulations issued in July 2007 will require certain fundamental changes to these arrangements including (a) a requirement that there be a written plan document in addition to the annuity contract (or section 403(b)(7) custodial account), (b) significant restrictions on the ability of participants to direct proceeds between 403(b) annuity contracts and (c) new restrictions on withdrawals of amounts attributable to contributions other than elective deferrals. The regulations are generally effective for taxable years beginning after December 31, 2008. However, certain aspects, including a proposed prohibition on use of new life insurance under section 403(b) arrangements and rules affecting payroll taxes on certain types of contributions are currently effective. Please note that, in light of the regulations, this contract is not available for purchase via a "90-24" transfer. If your contract was issued previously in a 90-24 transfer completed on or before September 24, 2007, we urge you to consult with your tax adviser prior to making additional purchase payments. SECTION 457(B) PLANS. An eligible 457(b) plan, while not actually a qualified plan as that term is normally used, provides for certain eligible deferred compensation plans with respect to service for state governments, local governments, political subdivisions, agencies, instrumentalities and certain affiliates of such entities, and tax exempt organizations. Under such plans a participant may specify the form of investment in which his or her 73 participation will be made. Under a non-governmental plan, which must be a tax-exempt entity under section 501(c) of the Code, all such investments, however, are owned by and are subject to, the claims of the general creditors of the sponsoring employer. In general, all amounts received under a non-governmental section 457(b) plan are taxable and are subject to federal income tax withholding as wages. SEPARATE ACCOUNT CHARGES FOR DEATH BENEFITS. For contracts purchased under section 401(a) plans or 403(b) plans, certain death benefits could conceivably be characterized as an incidental benefit, the amount of which is limited in any pension or profit-sharing plan. Because the death benefits, in certain cases, may exceed this limitation employers using the contract in connection with such plans should consult their tax adviser. Additionally, it is conceivable that the explicit charges for, or the amount of the mortality and expense charges allocable to, such benefits may be considered taxable distributions. OTHER TAX ISSUES. Qualified Contracts (including contracts under section 457(b) plans) have minimum distribution rules that govern the timing and amount of distributions. You should refer to your retirement plan, adoption agreement, or consult a tax adviser for more information about these distribution rules. Failure to meet such rules generally results in the imposition of a 50% excise tax on the amount that should have been, but was not, distributed. Final income tax regulations regarding minimum distribution requirements were released in June 2004. These regulations affect both deferred and income annuities. Under these new rules, effective with respect to minimum distributions required for the 2006 distribution year, in general, the value of all benefits under a deferred annuity (including death benefits in excess of account value, as well as all living benefits) must be added to the account value in computing the amount required to be distributed over the applicable period. The final required minimum distribution regulations permit income payments to increase due to "actuarial gain" which includes the investment performance of the underlying assets, as well as changes in actuarial factors and assumptions under certain conditions. Additionally, withdrawals may also be permitted under certain conditions. The new rules are not entirely clear, and you should consult with your own tax adviser to determine whether your variable income annuity will satisfy these rules for your own situation. Distributions from Qualified Contracts generally are subject to withholding for the owner's federal income tax liability. The withholding rate varies according to the type of distribution and the owner's tax status. The owner will be provided the opportunity to elect not to have tax withheld from distributions. "Eligible rollover distributions" from section 401(a), 403(a), 403(b) and governmental section 457(b) plans are subject to a mandatory federal income tax withholding of 20%. An eligible rollover distribution is any distribution to an employee (or employee's spouse or former spouse as beneficiary or alternate payee) from such a plan, except certain distributions such as distributions required by the Code, distributions in a specified annuity form or hardship distributions. The 20% withholding does not apply, however, if the employee chooses a "direct rollover" from the plan to a tax-qualified plan, IRA or tax sheltered annuity or to a governmental 457(b) plan that agrees to separately account for rollover contributions. Effective March 28, 2005, certain mandatory distributions made to participants in an amount in excess of $1,000 must be rolled over to an IRA designated by the Plan, unless the participant elects to receive it in cash or roll it over to a different IRA or eligible retirement plan of his or her own choosing. General transitional rules apply as to when plans have to be amended. Special effective date rules apply for governmental plans and church plans. COMMUTATION FEATURES UNDER ANNUITY PAYMENT OPTIONS. Please be advised that the tax consequences resulting from the election of an annuity payment option containing a commutation feature are uncertain and the IRS may determine that the taxable amount of annuity payments and withdrawals received for any year could be greater than or less than the taxable amount reported by us. The exercise of the commutation feature also may result in adverse tax consequences including: o The imposition of a 10% penalty tax on the taxable amount of the commuted value, if the taxpayer has not attained age 59 1/2 at the time the withdrawal is made. This 10% penalty tax is in addition to the ordinary income tax on the taxable amount of the commuted value. 74 o The retroactive imposition of the 10% penalty tax on annuity payments received prior to the taxpayer attaining age 59 1/2. o The possibility that the exercise of the commutation feature could adversely affect the amount excluded from federal income tax under any annuity payments made after such commutation. A payee should consult with his or her own tax adviser prior to electing to annuitize the contract and prior to exercising any commutation feature under an annuity payment option. FEDERAL ESTATE TAXES. While no attempt is being made to discuss the federal estate tax implications of the contract, you should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent's gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning adviser for more information. GENERATION-SKIPPING TRANSFER TAX. Under certain circumstances, the Code may impose a "generation-skipping transfer tax" when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the contract owner. Regulations issued under the Code may require us to deduct the tax from your contract, or from any applicable payment, and pay it directly to the IRS. ANNUITY PURCHASE PAYMENTS BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS. The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to the U.S. federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser's country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax adviser regarding U.S., state, and foreign taxation with respect to an annuity contract purchase. TAX BENEFITS RELATED TO THE ASSETS OF THE SEPARATE ACCOUNT We may be entitled to certain tax benefits related to the assets of the Separate Account. These tax benefits, which may include foreign tax credits and corporate dividends received deductions, are not passed back to the Separate Account or to contract owners because we are the owner of the assets from which the tax benefits are derived. POSSIBLE TAX LAW CHANGES Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the contract could change by legislation or otherwise. Consult a tax adviser with respect to legislative developments and their effect on the contract. We have the right to modify the contract in response to legislative changes that could otherwise diminish the favorable tax treatment that annuity contract owners currently receive. We make no guarantee regarding the tax status of the contract and do not intend the above discussion as tax advice. 11. OTHER INFORMATION METLIFE INVESTORS MetLife Investors Insurance Company (MetLife Investors) is a stock life insurance company incorporated on August 17, 1981, as Assurance Life Company, a Missouri corporation. It changed its name to Xerox Financial Services Life Insurance Company in 1985. On June 1, 1995, a wholly-owned subsidiary of General American Life Insurance Company (General American Life) purchased Xerox Financial Services Life Insurance Company, which on that date changed its name to Cova Financial Services Life Insurance Company. On January 6, 2000, Metropolitan Life Insurance Company acquired GenAmerica Financial Corporation, the ultimate parent company of General American Life. Cova Financial Services Life Insurance Company changed its name to MetLife Investors Insurance Company on February 12, 2001. On December 31, 2002, MetLife Investors became an indirect subsidiary of MetLife, Inc., the holding company of Metropolitan Life Insurance Company and a listed company on the New York Stock Exchange. On October 1, 2004, MetLife Investors became a direct 75 subsidary of MetLife, Inc. MetLife, Inc., through its subsidiaries and affiliates, is a leading provider of insurance and other financial services to individual and institutional customers. For contracts issued on or before December 31, 2002, General American Life agreed to ensure that MetLife Investors will have sufficient funds to meet obligations under the contracts. In the event an owner of such a contract presents a legitimate claim for payment, General American Life will pay such claim directly to the contract owner if MetLife Investors is unable to make such payment. This guarantee is enforceable by such contract owners against General American Life directly without any requirement that contract owners first file a claim against MetLife Investors. The guarantee agreement is binding on General American Life, its successors or assignees and shall terminate only if the guarantee is assigned to an organization having a financial rating from certain specified rating agencies equal to or better than General American Life's rating. We are licensed to do business in the District of Columbia and all states except New Hampshire and New York. We are a member of the Insurance Marketplace Standards Association (IMSA). Companies that belong to IMSA subscribe to a set of ethical standards covering the various aspects of sales and service for individually sold life insurance and annuities. THE SEPARATE ACCOUNT We have established a SEPARATE ACCOUNT, MetLife Investors Variable Annuity Account One (Separate Account), to hold the assets that underlie the contracts. Our Board of Directors adopted a resolution to establish the Separate Account under Missouri insurance law on February 24, 1987. We have registered the Separate Account with the Securities and Exchange Commission as a unit investment trust under the Investment Company Act of 1940. The Separate Account is divided into subaccounts. The assets of the Separate Account are held in our name on behalf of the Separate Account and legally belong to us. However, those assets that underlie the contracts, are not chargeable with liabilities arising out of any other business we may conduct. All the income, gains and losses (realized or unrealized) resulting from these assets are credited to or charged against the contracts and not against any other contracts we may issue. We reserve the right to transfer assets of the Separate Account to another account, and to modify the structure or operation of the Separate Account, subject to necessary regulatory approvals. If we do so, we guarantee that the modification will not affect your account value. The amount of the guaranteed death benefit that exceeds the account value is paid from our general account. In addition, portions of the contract's guaranteed living benefits payable may exceed the amount of the account value and be paid from our general account. Benefit amounts paid from the general account are subject to the claims-paying ability of MetLife Investors. DISTRIBUTOR We have entered into a distribution agreement with our affiliate, MetLife Investors Distribution Company (Distributor), 5 Park Plaza, Suite 1900, Irvine, CA 92614, for the distribution of the contracts. Distributor is a member of the Financial Industry Regulatory Authority (FINRA). FINRA maintains a Public Disclosure Program for investors. A brochure that includes information describing the Program is available by calling FINRA's Public Disclosure Program hotline at 1-800-289-9999, or by visiting FINRA's website at www.finra.org. Distributor, and in certain cases, we, have entered into selling agreements with other affiliated and unaffiliated selling firms for the sale of the contracts. We pay compensation to Distributor for sales of the contracts by selling firms. We also pay amounts to Distributor that may be used for its operating and other expenses, including the following sales expenses: compensation and bonuses for the Distributor's management team, advertising expenses, and other expenses of distributing the contracts. Distributor's management team also may be eligible for non-cash compensation items that we may provide jointly with Distributor. Non-cash items include conferences, seminars and trips (including travel, lodging and meals in connection therewith), entertainment, merchandise and other similar items. All of the investment portfolios make payments to Distributor under their distribution plans in consideration of services provided and expenses incurred by Distributor in distributing shares of the investment portfolios. (See "Fee Tables and Examples - Investment Portfolio Expenses" and the fund prospectuses.) These payments 76 range from 0.15% to 0.55% of Separate Account assets invested in the particular investment portfolio. SELLING FIRMS As noted above, Distributor, and in certain cases, we, have entered into selling agreements with affiliated and unaffiliated selling firms for the sale of the contracts. Affiliated selling firms include Metropolitan Life Insurance Company (MLIC); New England Securities Corporation; Tower Square Securities, Inc.; and Walnut Street Securities, Inc. All selling firms receive commissions, and they may also receive some form of non-cash compensation. Certain selected selling firms receive additional compensation (described below under "Additional Compensation for Selected Selling Firms"). These commissions and other incentives or payments are not charged directly to contract owners or the Separate Account. We intend to recoup commissions and other sales expenses through fees and charges deducted under the contract or from our general account. A portion of the payments made to selling firms may be passed on to their sales representatives in accordance with the selling firms' internal compensation programs. Those programs may also include other types of cash and non-cash compensation and other benefits. COMPENSATION PAID TO SELLING FIRMS. We and Distributor pay compensation to all affiliated and unaffiliated selling firms in the form of commissions and may also provide certain types of non-cash compensation. The maximum commission payable for contract sales and additional purchase payments by selling firms is 8% of purchase payments. Some selling firms may elect to receive a lower commission when a purchase payment is made, along with annual trail commissions up to 1.20% of account value (less purchase payments received within the previous 12 months) for so long as the contract remains in effect or as agreed in the selling agreement. We also pay commissions when a contract owner elects to begin receiving regular income payments (referred to as "annuity payments"). (See "Annuity Payments - The Income Phase.") Distributor may also provide non-cash compensation items that we may provide jointly with Distributor. Non-cash items include expenses for conference or seminar trips and certain gifts. With respect to the contracts, the compensation paid to affiliated selling firms is generally not expected to exceed, on a present value basis, the aggregate amount of commission that is paid by Distributor to all other selling firms as noted above. SALES BY OUR AFFILIATES. As previously noted, we and Distributor may offer the contracts through retail selling firms that are affiliates of ours. The amount of compensation the affiliated selling firms pass on to their sales representatives is determined in accordance with their own internal compensation programs. These programs may also include other types of cash compensation, such as bonuses, equity awards (such as stock options), training allowances, supplementary salary, financing arrangements, marketing support, medical and other insurance benefits, retirement benefits, non-qualified deferred compensation plans and other benefits. For sales representatives of certain affiliates, the amount of this additional compensation is based primarily on the amount of proprietary products sold and serviced by the representative. Proprietary products are those issued by us or our affiliates. The managers who supervise these sales representatives may also be entitled to additional cash compensation based on the sale of proprietary products sold by their representatives. Because the additional cash compensation paid to these sales representatives and their managers is primarily based on sales of proprietary products, these sales representatives and their managers have an incentive to favor the sale of proprietary products over other products issued by non-affiliates. Sales representatives of our affiliate, MLIC, receive cash payments for the products they sell and service based upon a "gross dealer concession" model. The cash payment received by the sales representative is equal to a percentage of the gross dealer concession. For MLIC sales represenatives other than those in its MetLife Resources (MLR) division, the percentage is determined by a formula that takes into consideration the amount of proprietary products that the sales representative sells and services. The percentage could be as high as 100%. (MLR sales representatives receive compensation based on premiums and purchase payments applied to all products sold and serviced by the representative.) In addition, MetLife sales representatives may be entitled to the additional compensation described above based on sales of proprietary products. Because sales of proprietary products are a factor determining the percentage of gross dealer concession and/or the amount of additional compensation to which MLIC sales representatives are entitled, the sales representatives have an incentive to favor the sale of the contracts over other similar products issued by non-affiliates. In addition, because the MLIC sales managers' 77 compensation is based upon the sales made by the sales representatives they supervise, the MLIC sales managers also have an incentive to favor the sale of proprietary products. We may also make certain payments to the business unit responsible for the operation of the distribution systems through which the contracts are sold. These amounts are part of the total compensation paid for the sale of the contracts. Ask your registered representative for further information about what payments your registered representative and the selling firm for which he or she works may receive in connection with your purchase of a contract. ADDITIONAL COMPENSATION FOR SELECTED SELLING FIRMS. We and Distributor have entered into distribution arrangements with certain selected selling firms. Under these arrangements we and Distributor may pay additional compensation to selected selling firms, including marketing allowances, introduction fees, persistency payments, preferred status fees and industry conference fees. Marketing allowances are periodic payments to certain selling firms based on cumulative periodic (usually quarterly) sales of our variable insurance contracts (including the contracts). Introduction fees are payments to selling firms in connection with the addition of our products to the selling firm's line of investment products, including expenses relating to establishing the data communications systems necessary for the selling firm to offer, sell and administer our products. Persistency payments are periodic payments based on account values of our variable insurance contracts (including account values of the contracts) or other persistency standards. Preferred status fees are paid to obtain preferred treatment of the contracts in selling firms' marketing programs, which may include marketing services, participation in marketing meetings, listings in data resources and increased access to their sales representatives. Industry conference fees are amounts paid to cover in part the costs associated with sales conferences and educational seminars for selling firms' sales representatives. We and Distributor have entered into such distribution agreements with our affiliates, Tower Square Securities, Inc. and Walnut Street Securities, Inc., as well as unaffiliated selling firms identified in the Statement of Additional Information. We and Distributor may enter into similar arrangements with other affiliates, such as MLIC and New England Securities Corporation. The additional types of compensation discussed above are not offered to all selling firms. The terms of any particular agreement governing compensation may vary among selling firms and the amounts may be significant. The prospect of receiving, or the receipt of, additional compensation as described above may provide selling firms and/or their sales representatives with an incentive to favor sales of the contracts over other variable annuity contracts (or other investments) with respect to which selling firm does not receive additional compensation, or lower levels of additional compensation. You may wish to take such payment arrangements into account when considering and evaluating any recommendation relating to the contracts. For more information about any such additional compensation arrangements, ask your registered representative. (See the Statement of Additional Information - "Distribution" for a list of selling firms that received compensation during 2007, as well as the range of additional compensation paid.) REQUESTS AND ELECTIONS We will treat your request for a contract transaction, or your submission of a purchase payment, as received by us if we receive a request conforming to our administrative procedures or a payment at our Annuity Service Center before the close of regular trading on the New York Stock Exchange on that day. We will treat your submission of a purchase payment as received by us if we receive a payment at our Annuity Service Center (or a designee receives a payment in accordance with the designee's administrative procedures) before the close of regular trading on the New York Stock Exchange on that day. If we receive the request, or if we (or our designee) receive the payment, after the close of trading on the New York Stock Exchange on that day, or if the New York Stock Exchange is not open that day, then the request or payment will be treated as received on the next day when the New York Stock Exchange is open. Our Annuity Service Center is located at P.O. Box 10366, Des Moines, IA 50306-0366. If you send your purchase payments or transaction requests to an address other than the one we have designated for receipt of such purchase payments or requests, we may return the purchase payment to you, or there may be a delay in applying the purchase payment or transaction to your contract. 78 Requests for service may be made: o Through your registered representative o By telephone at (800) 343-8496, between the hours of 7:30AM and 5:30PM Central Time Monday through Thursday and 7:30AM and 5:00PM Central Time on Friday o In writing to our Annuity Service Center o By fax at (515) 457-4400 or o By Internet at www.metlifeinvestors.com All other requests must be in written form, satisfactory to us. We will use reasonable procedures such as requiring certain identifying information, tape recording the telephone instructions, and providing written confirmation of the transaction, in order to confirm that instructions communicated by telephone, fax, Internet or other means are genuine. Any telephone, fax or Internet instructions reasonably believed by us to be genuine will be your responsibility, including losses arising from any errors in the communication of instructions. As a result of this policy, you will bear the risk of loss. If we do not employ reasonable procedures to confirm that instructions communicated by telephone, fax or Internet are genuine, we may be liable for any losses due to unauthorized or fraudulent transactions. All other requests and elections under your contract must be in writing signed by the proper party, must include any necessary documentation and must be received at our Annuity Service Center to be effective. If acceptable to us, requests or elections relating to beneficiaries and ownership will take effect as of the date signed unless we have already acted in reliance on the prior status. We are not responsible for the validity of any written request or action. Telephone and computer systems may not always be available. Any telephone or computer system, whether it is yours, your service provider's, your agent's, or ours, can experience outages or slowdowns for a variety of reasons. These outages or slowdowns may delay or prevent our processing of your request. Although we have taken precautions to help our systems handle heavy use, we cannot promise complete reliability under all circumstances. If you experience technical difficulties or problems, you should make your transaction request in writing to our Annuity Service Center. CONFIRMING TRANSACTIONS. We will send out written statements confirming that a transaction was recently completed. Unless you inform us of any errors within 60 days of receipt, we will consider these communications to be accurate and complete. OWNERSHIP OWNER. You, as the OWNER of the contract, have all the interest and rights under the contract. These rights include the right to: o change the beneficiary. o change the annuitant before the annuity date (subject to our underwriting and administrative rules). o assign the contract (subject to limitation). o change the payment option. o exercise all other rights, benefits, options and privileges allowed by the contract or us. The owner is as designated at the time the contract is issued, unless changed. Any change of owner is subject to our underwriting rules in effect at the time of the request. JOINT OWNER. The contract can be owned by JOINT OWNERS, limited to two natural persons. Upon the death of either owner, the surviving owner will be the primary beneficiary. Any other beneficiary designation will be treated as a contingent beneficiary unless otherwise indicated. BENEFICIARY. The BENEFICIARY is the person(s) or entity you name to receive any death benefit. The beneficiary is named at the time the contract is issued unless changed at a later date. Unless an irrevocable beneficiary has been named, you can change the beneficiary at any time before you die. If joint owners are named, unless you tell us otherwise, the surviving joint owner will be the primary beneficiary. Any other beneficiary designation will be treated as a contingent beneficiary (unless you tell us otherwise). ANNUITANT. The ANNUITANT is the natural person(s) on whose life we base annuity payments. You can change the annuitant at any time prior to the annuity date, unless an owner is not a natural person. Any reference to annuitant includes any joint annuitant under an annuity option. The owner and the annuitant do not have to be the same person except as required under certain sections of the Internal 79 Revenue Code or under a GMIB rider (see "Living Benefits - Guaranteed Income Benefits"). ASSIGNMENT. You can assign a Non-Qualified Contract at any time during your lifetime. We will not be bound by the assignment until the written notice of the assignment is recorded by us. We will not be liable for any payment or other action we take in accordance with the contract before we record the assignment. AN ASSIGNMENT MAY BE A TAXABLE EVENT. If the contract is issued pursuant to a qualified plan, there may be limitations on your ability to assign the contract. LEGAL PROCEEDINGS In the ordinary course of business, MetLife Investors, similar to other life insurance companies, is involved in lawsuits (including class action lawsuits), arbitrations and other legal proceedings. Also, from time to time, state and federal regulators or other officials conduct formal and informal examinations or undertake other actions dealing with various aspects of the financial services and insurance industries. In some legal proceedings involving insurers, substantial damages have been sought and/or material settlement payments have been made. It is not possible to predict with certainty the ultimate outcome of any pending legal proceeding or regulatory action. However, MetLife Investors does not believe any such action or proceeding will have a material adverse effect upon the Separate Account or upon the ability of MetLife Investors Distribution Company to perform its contract with the Separate Account or of MetLife Investors to meet its obligations under the contracts. FINANCIAL STATEMENTS Our financial statements and the financial statements of the Separate Account have been included in the SAI. The consolidated financial statements of General American Life have also been included in the SAI. TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION Company Experts Custodian Distribution Calculation of Performance Information Annuity Provisions Tax Status of the Contracts Condensed Financial Information Financial Statements 80 APPENDIX A CONDENSED FINANCIAL INFORMATION The following charts list the Condensed Financial Information (the accumulation unit value information for the accumulation units outstanding) for contracts issued as of December 31, 2007. See "Purchase - Accumulation Units" in the prospectus for information on how accumulation unit values are calculated. Chart 1 presents accumulation unit values for the lowest possible combination of separate account product charges and death benefit rider charges, and Chart 2 presents accumulation unit values for the highest possible combination of such charges. The SAI contains the accumulation unit values for all other possible combinations of separate account product charges and death benefit rider charges. (See "Cover Page" for how to obtain a copy of the SAI.) CHART 1
1.55% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998726 11.959762 144,699.6155 01/01/2005 to 12/31/2005 11.959762 13.252669 356,825.1071 01/01/2006 to 12/31/2006 13.252669 15.097059 434,701.8559 01/01/2007 to 12/31/2007 15.097059 15.323863 344,335.6135 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.731522 11.716282 396,562.3124 01/01/2004 to 12/31/2004 11.716282 13.903248 470,431.2235 01/01/2005 to 12/31/2005 13.903248 15.639015 633,028.4390 01/01/2006 to 12/31/2006 15.639015 19.841608 708,090.9103 01/01/2007 to 12/31/2007 19.841608 19.316263 612,651.8756 ============ ==== ========== ========= ========= ============== LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 9.706254 11.986389 218,443.2789 01/01/2004 to 12/31/2004 11.986389 13.501246 161,115.3461 01/01/2005 to 12/31/2005 13.501246 14.365513 137,230.5751 01/01/2006 to 12/31/2006 14.365513 16.220973 134,582.3983 01/01/2007 to 12/31/2007 16.220973 15.537282 137,261.7284 ============ ==== ========== ========= ========= ============== LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 5.488500 6.684840 539,599.5008 01/01/2004 to 12/31/2004 6.684840 7.137295 1,635,992.3400 01/01/2005 to 12/31/2005 7.137295 7.981937 1,384,841.4148 01/01/2006 to 12/31/2006 7.981937 7.722873 1,309,016.5352 01/01/2007 to 12/31/2007 7.722873 7.775812 1,132,131.2474 ============ ==== ========== ========= ========= ==============
A-1 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.55% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.246967 10.622902 1,563.1764 01/01/2006 to 12/31/2006 10.622902 11.148484 505,894.7644 01/01/2007 to 12/31/2007 11.148484 10.327747 357,208.5561 ============ ==== ========== ========= ========= ============ LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988726 10.329074 4,845.5033 01/01/2007 to 12/31/2007 10.329074 13.001983 108,711.2677 ============ ==== ========== ========= ========= ============ LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 14.650777 16.036858 631,295.6467 01/01/2004 to 12/31/2004 16.036858 17.079057 619,202.3849 01/01/2005 to 12/31/2005 17.079057 17.068231 823,466.2222 01/01/2006 to 12/31/2006 17.068231 18.343828 755,035.3702 01/01/2007 to 12/31/2007 18.343828 19.243149 648,345.7027 ============ ==== ========== ========= ========= ============ LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 34.446031 42.905952 529,074.4655 01/01/2004 to 12/31/2004 42.905952 47.587002 641,545.3822 01/01/2005 to 12/31/2005 47.587002 48.446417 598,261.6716 01/01/2006 to 12/31/2006 48.446417 56.187289 551,658.2545 01/01/2007 to 12/31/2007 56.187289 57.377185 486,247.6436 ============ ==== ========== ========= ========= ============ MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.687314 11.563798 248,139.8511 01/01/2004 to 12/31/2004 11.563798 12.117839 309,357.5264 01/01/2005 to 12/31/2005 12.117839 12.918267 611,055.3073 01/01/2006 to 12/31/2006 12.918267 14.524142 553,414.3540 01/01/2007 to 12/31/2007 14.524142 15.882719 454,153.4011 ============ ==== ========== ========= ========= ============ MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.405390 7.690349 95,392.7350 01/01/2004 to 11/19/2004 7.690349 7.889764 121,982.2592 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988726 10.467975 291,585.4002 01/01/2007 to 12/31/2007 10.467975 14.080259 77,966.6976 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 7.311169 9.451731 189,888.3063 01/01/2004 to 12/31/2004 9.451731 11.126240 651,974.0853 01/01/2005 to 12/31/2005 11.126240 12.759052 854,981.1071 01/01/2006 to 12/31/2006 12.759052 15.908560 785,254.8395 01/01/2007 to 12/31/2007 15.908560 17.753236 652,235.7138 ============ ==== ========== ========= ========= ============
A-2 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.55% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- MONEY MARKET SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.064681 9.983712 273,169.5878 01/01/2004 to 12/31/2004 9.983712 9.892782 95,883.7591 01/01/2005 to 04/30/2005 9.892782 9.900879 0.0000 ============ ==== ========== ========= ========= ============== NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998726 12.820747 119,020.1155 01/01/2005 to 12/31/2005 12.820747 14.301354 452,914.3448 01/01/2006 to 12/31/2006 14.301354 19.374246 378,227.5818 01/01/2007 to 12/31/2007 19.374246 16.212180 296,865.2128 ============ ==== ========== ========= ========= ============== OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.524949 7.931148 963,327.7346 01/01/2004 to 12/31/2004 7.931148 8.308913 1,025,211.7400 01/01/2005 to 12/31/2005 8.308913 8.567167 815,998.7769 01/01/2006 to 12/31/2006 8.567167 9.078212 844,510.6626 01/01/2007 to 12/31/2007 9.078212 10.214981 762,423.8995 ============ ==== ========== ========= ========= ============== PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.425465 504,998.3737 01/01/2004 to 12/31/2004 10.425465 11.189656 579,707.9113 01/01/2005 to 12/31/2005 11.189656 11.170860 470,076.5019 01/01/2006 to 12/31/2006 11.170860 11.042066 447,191.6871 01/01/2007 to 12/31/2007 11.042066 12.045226 432,594.9317 ============ ==== ========== ========= ========= ============== PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 11.576403 11.631034 1,273,435.6985 01/01/2004 to 12/31/2004 11.631034 12.022053 1,973,805.5060 01/01/2005 to 12/31/2005 12.022053 12.103714 1,800,783.2773 01/01/2006 to 12/31/2006 12.103714 12.456484 1,588,910.0943 01/01/2007 to 12/31/2007 12.456484 13.191600 1,271,672.9875 ============ ==== ========== ========= ========= ============== RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.565084 9.981362 50,306.4617 ============ ==== ========== ========= ========= ============== RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 3.294819 4.580635 75,570.8187 01/01/2004 to 12/31/2004 4.580635 4.315511 223,112.6920 01/01/2005 to 12/31/2005 4.315511 4.717416 188,547.0776 01/01/2006 to 12/31/2006 4.717416 4.893393 180,050.3606 01/01/2007 to 12/31/2007 4.893393 6.336505 282,587.0288 ============ ==== ========== ========= ========= ==============
A-3 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.55% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 4.743147 6.098811 776,150.9781 01/01/2004 to 12/31/2004 6.098811 7.075043 1,045,624.8790 01/01/2005 to 12/31/2005 7.075043 7.985522 911,323.6080 01/01/2006 to 12/31/2006 7.985522 8.347710 906,011.6400 01/01/2007 to 12/31/2007 8.347710 9.668240 663,347.2356 ============ ==== ========== ========= ========= ============== THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.458795 11.452136 399,465.3662 01/01/2004 to 12/31/2004 11.452136 14.264232 484,902.9181 01/01/2005 to 12/31/2005 14.264232 16.219476 566,572.8777 01/01/2006 to 12/31/2006 16.219476 18.067717 591,268.6125 01/01/2007 to 12/31/2007 18.067717 17.250907 491,801.0641 ============ ==== ========== ========= ========= ============== TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998726 11.103863 119,838.9659 01/01/2005 to 12/31/2005 11.103863 12.175337 112,476.1212 01/01/2006 to 12/31/2006 12.175337 12.716515 120,339.3706 01/01/2007 to 12/31/2007 12.716515 15.543311 134,321.4342 ============ ==== ========== ========= ========= ============== VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998726 10.465357 163,450.0515 01/01/2006 to 12/31/2006 10.465357 11.959052 261,367.9349 01/01/2007 to 12/31/2007 11.959052 11.480694 250,040.9111 ============ ==== ========== ========= ========= ============== METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.900743 9.995128 664,675.9490 01/01/2006 to 12/31/2006 9.995128 10.289723 870,039.9434 01/01/2007 to 12/31/2007 10.289723 10.618348 1,169,493.5887 ============ ==== ========== ========= ========= ============== DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 05/01/2003 to 12/31/2003 8.529282 10.729806 999,530.5962 01/01/2004 to 12/31/2004 10.729806 11.847038 1,768,557.1590 01/01/2005 to 12/31/2005 11.847038 12.847742 1,870,220.8107 01/01/2006 to 12/31/2006 12.847742 14.473087 1,782,337.8118 01/01/2007 to 12/31/2007 14.473087 14.880819 1,495,654.1766 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.904957 13.921813 479,429.6843 01/01/2004 to 12/31/2004 13.921813 15.030239 577,898.4740 01/01/2005 to 12/31/2005 15.030239 16.236413 400,291.0627 01/01/2006 to 12/31/2006 16.236413 17.933554 397,406.9629 01/01/2007 to 12/31/2007 17.933554 16.407030 360,709.1911 ============ ==== ========== ========= ========= ==============
A-4 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.55% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------- JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.057126 9.731099 383,417.5333 01/01/2004 to 12/31/2004 9.731099 10.437354 495,225.7035 01/01/2005 to 12/31/2005 10.437354 11.668521 447,702.0184 01/01/2006 to 12/31/2006 11.668521 11.779506 502,942.2258 01/01/2007 to 12/31/2007 11.779506 12.918182 451,175.1090 ============ ==== ========== ========= ========= =============== METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.607628 10.418203 151,306.7151 01/01/2004 to 12/31/2004 10.418203 11.311929 240,637.9726 01/01/2005 to 12/31/2005 11.311929 11.627388 229,626.4664 01/01/2006 to 12/31/2006 11.627388 13.190324 213,766.2941 01/01/2007 to 12/31/2007 13.190324 13.635141 221,264.4210 ============ ==== ========== ========= ========= =============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 15.555699 15.524317 590.2826 01/01/2006 to 12/31/2006 15.524317 15.884610 956.2114 01/01/2007 to 12/31/2007 15.884610 16.269782 1,574.9014 ============ ==== ========== ========= ========= =============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.301699 10.689009 716,752.1926 01/01/2005 to 12/31/2005 10.689009 11.617570 750,229.0859 01/01/2006 to 12/31/2006 11.617570 13.000581 825,320.3725 01/01/2007 to 12/31/2007 13.000581 13.169061 841,388.5477 ============ ==== ========== ========= ========= =============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.101854 10.392980 2,816,675.1410 01/01/2005 to 12/31/2005 10.392980 10.962390 5,274,938.1462 01/01/2006 to 12/31/2006 10.962390 12.087152 7,552,375.9678 01/01/2007 to 12/31/2007 12.087152 12.481300 9,324,716.7248 ============ ==== ========== ========= ========= =============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.941977 10.109092 156,250.0675 01/01/2005 to 12/31/2005 10.109092 10.399957 513,441.3181 01/01/2006 to 12/31/2006 10.399957 11.123726 823,532.3698 01/01/2007 to 12/31/2007 11.123726 11.600009 1,586,151.4732 ============ ==== ========== ========= ========= =============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.241746 10.603907 2,640,646.2190 01/01/2005 to 12/31/2005 10.603907 11.393996 5,439,760.9416 01/01/2006 to 12/31/2006 11.393996 12.744446 8,566,094.0713 01/01/2007 to 12/31/2007 12.744446 13.137431 11,512,392.7137 ============ ==== ========== ========= ========= ===============
A-5 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.55% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.011923 10.229313 885,476.6904 01/01/2005 to 12/31/2005 10.229313 10.657886 1,548,912.2565 01/01/2006 to 12/31/2006 10.657886 11.568201 2,333,121.2151 01/01/2007 to 12/31/2007 11.568201 12.096278 3,288,268.4774 ============ ==== ========== ========= ========= ==============
A-6 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED) CHART 2
2.15% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998233 11.911720 25,778.8133 01/01/2005 to 12/31/2005 11.911720 13.120742 31,100.7319 01/01/2006 to 12/31/2006 13.120742 14.857622 30,114.6166 01/01/2007 to 12/31/2007 14.857622 14.990114 30,895.7203 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.751972 11.696787 506,856.3701 01/01/2004 to 12/31/2004 11.696787 13.796898 553,532.0249 01/01/2005 to 12/31/2005 13.796898 15.426843 543,145.3389 01/01/2006 to 12/31/2006 15.426843 19.455725 141,355.6272 01/01/2007 to 12/31/2007 19.455725 18.826620 122,635.2951 ============ ==== ========== ========= ========= ============ LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 9.728989 11.966439 54,341.9312 01/01/2004 to 12/31/2004 11.966439 13.397939 61,980.1484 01/01/2005 to 12/31/2005 13.397939 14.170585 59,073.6653 01/01/2006 to 12/31/2006 14.170585 15.905432 51,517.8911 01/01/2007 to 12/31/2007 15.905432 15.143385 47,587.1091 ============ ==== ========== ========= ========= ============ LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 5.505944 6.679283 79,878.7400 01/01/2004 to 12/31/2004 6.679283 7.088585 133,548.1532 01/01/2005 to 12/31/2005 7.088585 7.880192 120,601.0062 01/01/2006 to 12/31/2006 7.880192 7.578917 114,696.6013 01/01/2007 to 12/31/2007 7.578917 7.584961 105,753.0867 ============ ==== ========== ========= ========= ============ LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.245793 10.612431 0.0000 01/01/2006 to 12/31/2006 10.612431 11.071037 7,451.1917 01/01/2007 to 12/31/2007 11.071037 10.194281 9,367.9050 ============ ==== ========== ========= ========= ============ LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988233 10.287545 4,868.5499 01/01/2007 to 12/31/2007 10.287545 12.871882 615,180.8200 ============ ==== ========== ========= ========= ============
A-7 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.15% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 14.697264 16.023387 70,847.6596 01/01/2004 to 12/31/2004 16.023387 16.962368 94,381.8524 01/01/2005 to 12/31/2005 16.962368 16.850487 82,897.2614 01/01/2006 to 12/31/2006 16.850487 18.001792 60,664.9746 01/01/2007 to 12/31/2007 18.001792 18.770781 48,773.9156 ============ ==== ========== ========= ========= ============ LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 34.555426 42.870218 53,594.2163 01/01/2004 to 12/31/2004 42.870218 47.262240 76,378.2130 01/01/2005 to 12/31/2005 47.262240 47.828763 78,043.2452 01/01/2006 to 12/31/2006 47.828763 55.140128 53,101.9364 01/01/2007 to 12/31/2007 55.140128 55.969125 50,867.2956 ============ ==== ========== ========= ========= ============ MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.707674 11.544610 38,669.9169 01/01/2004 to 12/31/2004 11.544610 12.025150 90,752.8772 01/01/2005 to 12/31/2005 12.025150 12.743013 85,299.6740 01/01/2006 to 12/31/2006 12.743013 14.241609 75,288.9697 01/01/2007 to 12/31/2007 14.241609 15.480075 69,201.5686 ============ ==== ========== ========= ========= ============ MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.425734 7.683938 25,141.5150 01/01/2004 to 11/19/2004 7.683938 7.841442 35,304.0861 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988233 10.425858 753,820.0465 01/01/2007 to 12/31/2007 10.425858 13.939329 12,101.9918 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 7.334391 9.443844 49,077.1694 01/01/2004 to 12/31/2004 9.443844 11.050305 103,508.3799 01/01/2005 to 12/31/2005 11.050305 12.592178 114,335.3502 01/01/2006 to 12/31/2006 12.592178 15.599096 124,181.5040 01/01/2007 to 12/31/2007 15.599096 17.294487 112,131.8053 ============ ==== ========== ========= ========= ============ MONEY MARKET SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.096666 9.975351 3,729.0869 01/01/2004 to 12/31/2004 9.975351 9.825200 115,294.5512 01/01/2005 to 04/30/2005 9.825200 9.814024 0.0000 ============ ==== ========== ========= ========= ============
A-8 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.15% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998233 12.769274 22,447.5243 01/01/2005 to 12/31/2005 12.769274 14.158993 19,184.8238 01/01/2006 to 12/31/2006 14.158993 19.067100 34,145.2406 01/01/2007 to 12/31/2007 19.067100 15.859122 33,032.5020 ============ ==== ========== ========= ========= ============ OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.545686 7.924557 167,998.8691 01/01/2004 to 12/31/2004 7.924557 8.252214 207,315.2932 01/01/2005 to 12/31/2005 8.252214 8.457958 198,468.0646 01/01/2006 to 12/31/2006 8.457958 8.909009 151,247.1443 01/01/2007 to 12/31/2007 8.909009 9.964302 135,456.1133 ============ ==== ========== ========= ========= ============ PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.383711 67,629.1594 01/01/2004 to 12/31/2004 10.383711 11.078005 118,194.4400 01/01/2005 to 12/31/2005 11.078005 10.993406 102,294.9784 01/01/2006 to 12/31/2006 10.993406 10.801814 90,783.3516 01/01/2007 to 12/31/2007 10.801814 11.712300 79,057.4441 ============ ==== ========== ========= ========= ============ PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 11.613154 11.621236 98,043.6502 01/01/2004 to 12/31/2004 11.621236 11.939873 116,235.2471 01/01/2005 to 12/31/2005 11.939873 11.949254 115,792.6820 01/01/2006 to 12/31/2006 11.949254 12.224156 99,569.6096 01/01/2007 to 12/31/2007 12.224156 12.867717 108,465.8012 ============ ==== ========== ========= ========= ============ RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.563182 9.971336 0.0000 ============ ==== ========== ========= ========= ============ RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 3.305316 4.576888 8,073.4456 01/01/2004 to 12/31/2004 4.576888 4.286100 86,237.8160 01/01/2005 to 12/31/2005 4.286100 4.657329 74,695.9361 01/01/2006 to 12/31/2006 4.657329 4.802236 59,868.9506 01/01/2007 to 12/31/2007 4.802236 6.181095 58,328.7885 ============ ==== ========== ========= ========= ============ T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 4.758231 6.093768 97,565.2403 01/01/2004 to 12/31/2004 6.093768 7.026802 102,787.2762 01/01/2005 to 12/31/2005 7.026802 7.883783 124,522.1411 01/01/2006 to 12/31/2006 7.883783 8.192170 130,870.0561 01/01/2007 to 12/31/2007 8.192170 9.431038 99,988.5744 ============ ==== ========== ========= ========= ============
A-9 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.15% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.471513 11.423552 57,950.9673 01/01/2004 to 12/31/2004 11.423552 14.143335 131,602.8982 01/01/2005 to 12/31/2005 14.143335 15.986141 123,576.1256 01/01/2006 to 12/31/2006 15.986141 17.701553 109,231.5826 01/01/2007 to 12/31/2007 17.701553 16.799572 96,389.9328 ============ ==== ========== ========= ========= ============ TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998233 11.059226 27,883.7977 01/01/2005 to 12/31/2005 11.059226 12.054083 25,960.0392 01/01/2006 to 12/31/2006 12.054083 12.514719 25,632.0798 01/01/2007 to 12/31/2007 12.514719 15.204687 26,340.0641 ============ ==== ========== ========= ========= ============ VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998233 10.423314 71.6321 01/01/2006 to 12/31/2006 10.423314 11.839967 6,930.2497 01/01/2007 to 12/31/2007 11.839967 11.297995 7,457.9274 ============ ==== ========== ========= ========= ============ METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.813406 9.867629 8,189.4934 01/01/2006 to 12/31/2006 9.867629 10.097874 276,084.9819 01/01/2007 to 12/31/2007 10.097874 10.357706 107,889.6771 ============ ==== ========== ========= ========= ============ DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 05/01/2003 to 12/31/2003 8.556367 10.720865 123,305.0583 01/01/2004 to 12/31/2004 10.720865 11.766181 220,479.9066 01/01/2005 to 12/31/2005 11.766181 12.683972 226,324.3938 01/01/2006 to 12/31/2006 12.683972 14.203378 216,238.0055 01/01/2007 to 12/31/2007 14.203378 14.515661 205,193.4900 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.939577 13.910207 58,582.1653 01/01/2004 to 12/31/2004 13.910207 14.927620 69,799.8645 01/01/2005 to 12/31/2005 14.927620 16.029400 68,236.6774 01/01/2006 to 12/31/2006 16.029400 17.599301 56,377.1887 01/01/2007 to 12/31/2007 17.599301 16.004327 46,428.0054 ============ ==== ========== ========= ========= ============ JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.069248 9.706811 58,601.4852 01/01/2004 to 12/31/2004 9.706811 10.348857 106,230.6217 01/01/2005 to 12/31/2005 10.348857 11.500611 95,818.8608 01/01/2006 to 12/31/2006 11.500611 11.540713 107,420.7671 01/01/2007 to 12/31/2007 11.540713 12.580182 112,757.2923 ============ ==== ========== ========= ========= ============
A-10 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.15% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.627802 10.400893 7,839.8126 01/01/2004 to 12/31/2004 10.400893 11.225412 42,520.7149 01/01/2005 to 12/31/2005 11.225412 11.468098 63,283.2120 01/01/2006 to 12/31/2006 11.468098 12.929453 55,743.0876 01/01/2007 to 12/31/2007 12.929453 13.282412 54,896.2502 ============ ==== ========== ========= ========= ============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 14.605215 14.517878 103.6772 01/01/2006 to 12/31/2006 14.517878 14.766198 6,672.5894 01/01/2007 to 12/31/2007 14.766198 15.033298 7,610.3114 ============ ==== ========== ========= ========= ============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.298488 10.678836 126,194.2408 01/01/2005 to 12/31/2005 10.678836 11.537305 204,428.2211 01/01/2006 to 12/31/2006 11.537305 12.833744 213,487.9092 01/01/2007 to 12/31/2007 12.833744 12.921851 267,955.4271 ============ ==== ========== ========= ========= ============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.098702 10.383084 221,035.4304 01/01/2005 to 12/31/2005 10.383084 10.886632 824,330.7893 01/01/2006 to 12/31/2006 10.886632 11.932019 852,884.4112 01/01/2007 to 12/31/2007 11.932019 12.246994 1,101,086.6199 ============ ==== ========== ========= ========= ============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.938873 10.099461 0.0000 01/01/2005 to 12/31/2005 10.099461 10.328069 23,385.1990 01/01/2006 to 12/31/2006 10.328069 10.980934 122,310.6631 01/01/2007 to 12/31/2007 10.980934 11.382233 149,384.0281 ============ ==== ========== ========= ========= ============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.238552 10.593813 519,322.8433 01/01/2005 to 12/31/2005 10.593813 11.315268 1,045,248.5657 01/01/2006 to 12/31/2006 11.315268 12.580887 1,227,264.7078 01/01/2007 to 12/31/2007 12.580887 12.890813 1,378,763.0312 ============ ==== ========== ========= ========= ============== METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.008797 10.219569 57,383.5137 01/01/2005 to 12/31/2005 10.219569 10.584224 266,262.7790 01/01/2006 to 12/31/2006 10.584224 11.419715 297,434.6508 01/01/2007 to 12/31/2007 11.419715 11.869193 322,514.3453 ============ ==== ========== ========= ========= ==============
A-11 APPENDIX A CONDENSED FINANCIAL INFORMATION (CONTINUED) DISCONTINUED INVESTMENT PORTFOLIOS. The following investment portfolios are no longer available for allocations of new purchase payments or transfers of account value (excluding rebalancing and dollar cost averaging programs in existence at the time of closing): (a) Met Investors Series Trust: Oppenheimer Capital Appreciation Portfolio (Class B) (closed effective November 12, 2007); and (b) Met Investors Series Trust: Goldman Sachs Mid Cap Value Portfolio (Class B) (closed effective April 28, 2008). A-12 APPENDIX B PARTICIPATING INVESTMENT PORTFOLIOS Below are the advisers and subadvisers and investment objectives of each investment portfolio available under the contract. The fund prospectuses contain more complete information, including a description of the investment objectives, policies, restrictions and risks. THERE CAN BE NO ASSURANCE THAT THE INVESTMENT OBJECTIVES WILL BE ACHIEVED. MET INVESTORS SERIES TRUST (CLASS B OR, AS NOTED, CLASS C) Met Investors Series Trust is managed by Met Investors Advisory, LLC, which is an affiliate of MetLife Investors. Met Investors Series Trust is a mutual fund with multiple portfolios. The following Class B or, as noted, Class C portfolios are available under the contract: AMERICAN FUNDS BOND PORTFOLIO (CLASS C) SUBADVISER: Capital Research and Management Company INVESTMENT OBJECTIVE: The American Funds Bond Portfolio seeks to maximize current income and preserve capital. AMERICAN FUNDS GROWTH PORTFOLIO (CLASS C) SUBADVISER: Capital Research and Management Company INVESTMENT OBJECTIVE: The American Funds Growth Portfolio seeks to achieve growth of capital. AMERICAN FUNDS INTERNATIONAL PORTFOLIO (CLASS C) SUBADVISER: Capital Research and Management Company INVESTMENT OBJECTIVE: The American Funds International Portfolio seeks to achieve growth of capital. BLACKROCK HIGH YIELD PORTFOLIO SUBADVISER: BlackRock Financial Management, Inc. INVESTMENT OBJECTIVE: The BlackRock High Yield Portfolio seeks to maximize total return, consistent with income generation and prudent investment management. CLARION GLOBAL REAL ESTATE PORTFOLIO (formerly Neuberger Berman Real Estate Portfolio) SUBADVISER: ING Clarion Real Estate Securities L.P. (formerly Neuberger Berman Management, Inc.) INVESTMENT OBJECTIVE: The Clarion Global Real Estate Portfolio seeks to provide total return through investment in real estate securities, emphasizing both capital appreciation and current income. HARRIS OAKMARK INTERNATIONAL PORTFOLIO SUBADVISER: Harris Associates L.P. INVESTMENT OBJECTIVE: The Harris Oakmark International Portfolio seeks long-term capital appreciation. LAZARD MID CAP PORTFOLIO SUBADVISER: Lazard Asset Management LLC INVESTMENT OBJECTIVE: The Lazard Mid-Cap Portfolio seeks long-term growth of capital. B-1 LEGG MASON PARTNERS AGGRESSIVE GROWTH PORTFOLIO SUBADVISER: ClearBridge Advisors, LLC INVESTMENT OBJECTIVE: The Legg Mason Partners Aggressive Growth Portfolio seeks capital appreciation. LEGG MASON VALUE EQUITY PORTFOLIO SUBADVISER: Legg Mason Capital Management, Inc. INVESTMENT OBJECTIVE: The Legg Mason Value Equity Portfolio seeks long-term growth of capital. LOOMIS SAYLES GLOBAL MARKETS PORTFOLIO SUBADVISER: Loomis, Sayles & Company, L.P. INVESTMENT OBJECTIVE: The Loomis Sayles Global Markets Portfolio seeks high total investment return through a combination of capital appreciation and income. LORD ABBETT BOND DEBENTURE PORTFOLIO SUBADVISER: Lord, Abbett & Co. LLC INVESTMENT OBJECTIVE: The Lord Abbett Bond Debenture Portfolio seeks high current income and the opportunity for capital appreciation to produce a high total return. LORD ABBETT GROWTH AND INCOME PORTFOLIO SUBADVISER: Lord, Abbett & Co. LLC INVESTMENT OBJECTIVE: The Lord Abbett Growth and Income Portfolio seeks long-term growth of capital and income without excessive fluctuations in market value. LORD ABBETT MID CAP VALUE PORTFOLIO SUBADVISER: Lord, Abbett & Co. LLC INVESTMENT OBJECTIVE: The Lord Abbett Mid Cap Value Portfolio seeks capital appreciation through investments primarily in equity securities which are believed to be undervalued in the marketplace. MET/AIM SMALL CAP GROWTH PORTFOLIO SUBADVISER: Invesco Aim Capital Management, Inc. INVESTMENT OBJECTIVE: The Met/AIM Small Cap Growth Portfolio seeks long-term growth of capital. MET/FRANKLIN MUTUAL SHARES PORTFOLIO SUBADVISER: Franklin Mutual Advisers, LLC INVESTMENT OBJECTIVE: The Met/Franklin Mutual Shares Portfolio seeks capital appreciation, which may occasionally be short-term. The portfolio's secondary investment objective is income. MFS (Reg. TM) EMERGING MARKETS EQUITY PORTFOLIO SUBADVISER: Massachusetts Financial Services Company INVESTMENT OBJECTIVE: The MFS (Reg. TM) Emerging Markets Equity Portfolio seeks capital appreciation. MFS (Reg. TM) RESEARCH INTERNATIONAL PORTFOLIO SUBADVISER: Massachusetts Financial Services Company INVESTMENT OBJECTIVE: The MFS (Reg. TM) Research International Portfolio seeks capital appreciation. PIMCO INFLATION PROTECTED BOND PORTFOLIO SUBADVISER: Pacific Investment Management Company LLC INVESTMENT OBJECTIVE: The PIMCO Inflation Protected Bond Portfolio seeks to provide maximum real return, consistent with preservation of capital and prudent investment management. PIMCO TOTAL RETURN PORTFOLIO SUBADVISER: Pacific Investment Management Company LLC INVESTMENT OBJECTIVE: The PIMCO Total Return Portfolio seeks maximum total return, consistent with the preservation of capital and prudent investment management. RAINIER LARGE CAP EQUITY PORTFOLIO SUBADVISER: Rainier Investment Management, Inc. INVESTMENT OBJECTIVE: The Rainier Large Cap Equity Portfolio seeks to maximize long-term capital appreciation. B-2 RCM TECHNOLOGY PORTFOLIO SUBADVISER: RCM Capital Management LLC INVESTMENT OBJECTIVE: The RCM Technology Portfolio seeks capital appreciation; no consideration is given to income. T. ROWE PRICE MID CAP GROWTH PORTFOLIO SUBADVISER: T. Rowe Price Associates, Inc. INVESTMENT OBJECTIVE: The T. Rowe Price Mid-Cap Growth Portfolio seeks long-term growth of capital. THIRD AVENUE SMALL CAP VALUE PORTFOLIO SUBADVISER: Third Avenue Management LLC INVESTMENT OBJECTIVE: The Third Avenue Small Cap Value Portfolio seeks long-term capital appreciation. TURNER MID CAP GROWTH PORTFOLIO SUBADVISER: Turner Investment Partners, Inc. INVESTMENT OBJECTIVE: The Turner Mid-Cap Growth Portfolio seeks capital appreciation. VAN KAMPEN COMSTOCK PORTFOLIO SUBADVISER: Morgan Stanley Investment Management, Inc., doing business as Van Kampen INVESTMENT OBJECTIVE: The Van Kampen Comstock Portfolio seeks capital growth and income. METROPOLITAN SERIES FUND, INC. (CLASS B OR, AS NOTED, CLASS E) Metropolitan Series Fund, Inc. is a mutual fund with multiple portfolios. MetLife Advisers, LLC, an affiliate of MetLife Investors, is the investment adviser to the portfolios. The following Class B or, as noted, Class E portfolios are available under the contract: BLACKROCK MONEY MARKET PORTFOLIO SUBADVISER: BlackRock Advisors, LLC INVESTMENT OBJECTIVE: The BlackRock Money Market Portfolio seeks a high level of current income consistent with preservation of capital. An investment in the BlackRock Money Market Portfolio is not insured or guaranteed by the Federal Deposit Insurance Company or any other government agency. Although the BlackRock Money Market Portfolio seeks to preserve the value of your investment at $100 per share, it is possible to lose money by investing in the BlackRock Money Market Portfolio. During extended periods of low interest rates, the yields of the BlackRock Money Market Portfolio may become extremely low and possibly negative. DAVIS VENTURE VALUE PORTFOLIO (CLASS E) SUBADVISER: Davis Selected Advisers, L.P. Davis Selected Advisers, Inc., L.P. may delegate any of its responsibilities to Davis Selected Advisers - NY, Inc., a wholly-owned subsidiary. INVESTMENT OBJECTIVE: The Davis Venture Value Portfolio seeks growth of capital. HARRIS OAKMARK FOCUSED VALUE PORTFOLIO SUBADVISER: Harris Associates L.P. INVESTMENT OBJECTIVE: The Harris Oakmark Focused Value Portfolio seeks long-term capital appreciation. JENNISON GROWTH PORTFOLIO SUBADVISER: Jennison Associates LLC INVESTMENT OBJECTIVE: The Jennison Growth Portfolio seeks long-term growth of capital. B-3 METLIFE STOCK INDEX PORTFOLIO SUBADVISER: MetLife Investment Advisors Company, LLC INVESTMENT OBJECTIVE: The MetLife Stock Index Portfolio seeks to equal the performance of the Standard & Poor's 500 (Reg. TM) Composite Stock Price Index. WESTERN ASSET MANAGEMENT U.S. GOVERNMENT PORTFOLIO SUBADVISER: Western Asset Management Company INVESTMENT OBJECTIVE: The Western Asset Management U.S. Government Portfolio seeks to maximize total return consistent with preservation of capital and maintenance of liquidity. MET INVESTORS SERIES TRUST - METLIFE ASSET ALLOCATION PROGRAM (CLASS B) In addition to the Met Investors Series Trust Portfolios listed above, the following Class B portfolios managed by Met Investors Advisory, LLC are available under the contract: METLIFE DEFENSIVE STRATEGY PORTFOLIO INVESTMENT OBJECTIVE: The MetLife Defensive Strategy Portfolio seeks to provide a high level of current income with growth of capital, a secondary objective. METLIFE MODERATE STRATEGY PORTFOLIO INVESTMENT OBJECTIVE: The MetLife Moderate Strategy Portfolio seeks to provide a high total return in the form of income and growth of capital, with a greater emphasis on income. METLIFE BALANCED STRATEGY PORTFOLIO INVESTMENT OBJECTIVE: The MetLife Balanced Strategy Portfolio seeks to provide a balance between a high level of current income and growth of capital with a greater emphasis on growth of capital. METLIFE GROWTH STRATEGY PORTFOLIO INVESTMENT OBJECTIVE: The MetLife Growth Strategy Portfolio seeks to provide growth of capital. METLIFE AGGRESSIVE STRATEGY PORTFOLIO INVESTMENT OBJECTIVE: The MetLife Aggressive Strategy Portfolio seeks to provide growth of capital. MET INVESTORS SERIES TRUST - AMERICAN FUNDS ASSET ALLOCATION PORTFOLIOS (CLASS C) In addition to the Met Investors Series Trust portfolios listed above, the following Class C portfolios managed by Met Investors Advisory, LLC are also available under the contract: AMERICAN FUNDS MODERATE ALLOCATION PORTFOLIO INVESTMENT OBJECTIVE: The American Funds Moderate Allocation Portfolio seeks a high total return in the form of income and growth of capital, with a greater emphasis on income. AMERICAN FUNDS BALANCED ALLOCATION PORTFOLIO INVESTMENT OBJECTIVE: The American Funds Balanced Allocation Portfolio seeks a balance between a high level of current income and growth of capital with a greater emphasis on growth of capital. AMERICAN FUNDS GROWTH ALLOCATION PORTFOLIO INVESTMENT OBJECTIVE: The American Funds Growth Allocation Portfolio seeks growth of capital. MET INVESTORS SERIES TRUST - FRANKLIN TEMPLETON ASSET ALLOCATION PORTFOLIO (CLASS B) In addition to the Met Investors Series Trust portfolios listed above, the following Class B portfolio managed by Met Investors Advisory, LLC is also available under the contract: MET/FRANKLIN TEMPLETON FOUNDING STRATEGY PORTFOLIO INVESTMENT OBJECTIVE: The Met/Franklin Templeton Founding Strategy Portfolio primarily seeks capital appreciation and secondarily seeks income. B-4 APPENDIX C EDCA EXAMPLES WITH MULTIPLE PURCHASE PAYMENTS In order to show how the EDCA program works, we have created some examples. The examples are purely hypothetical and are for illustrative purposes only. The interest rate earned in an EDCA account will be the guaranteed minimum interest rate, plus any additional interest which we may declare from time to time. In addition, each bucket attributable to a subsequent purchase payment will earn interest at the then-current interest rate applied to new allocations to an EDCA account of the same monthly term. 6-MONTH EDCA The following example demonstrates how the 6-month Enhanced Dollar Cost Averaging (EDCA) program operates when multiple purchase payments are allocated to the program. The example assumes that you are eligible to receive a purchase payment credit of 5% and that a $12,000 purchase payment plus the 5% purchase payment credit of $600 is allocated to the EDCA program at the beginning of the first month and the first transfer of $2,000 also occurs on that date. The $10,600 remaining after the EDCA transfer is allocated to the 1st Payment Bucket, where it is credited with a 5% effective annual interest rate. The EDCA transfer amount of $2,000 is determined by dividing the $12,000 purchase payment amount by 6 (the number of months in the EDCA program). Thereafter, a $2,000 transfer is made from the EDCA at the beginning of each month. Amounts remaining in the EDCA Account Value are accumulated at the EDCA interest rate using the following formula: Account Value 1st Payment Bucket (month 2) = Account Value 1st Payment Bucket (month 1) x (1+EDCA Rate)(1/12) - EDCA Transfer Amount At the beginning of the 4th month, assume that you are eligible to receive a purchase payment credit of 5% and a second purchase payment of $6,000 plus the 5% purchase payment credit of $300 is allocated to the 2nd Payment Bucket, where it is credited with a 4% effective annual interest rate. This second purchase payment triggers an increase in the EDCA transfer amount to $3,000. The increased EDCA transfer amount is determined by adding $1,000 (the $6,000 purchase payment amount divided by 6) to the current EDCA transfer amount. The $3,000 monthly EDCA transfers will first be applied against the account value in the 1st Payment Bucket until exhausted and then against the account value in the 2nd Payment Bucket until it is exhausted.
---- Account Values---- Beg of Amount Allocated Actual EDCA 1st Payment 2nd Payment Month to EDCA EDCA Transfer Account Value Bucket Bucket - -------- ------------------ --------------- --------------- ------------- ------------ 1 12600 2000 10600 10600 2 2000 8643 8643 3 2000 6678 6678 4 6300 3000 10006 3706 6300 5 3000 7041 721 6321 6 3000 4065 0 4065 7 3000 1078 0 1078 8 1082 0 0 0
C-1 12-MONTH EDCA The following example demonstrates how the 12-month Enhanced Dollar Cost Averaging (EDCA) program operates when multiple purchase payments are allocated to the program. The example assumes that you are eligible to receive a purchase payment credit of 5% and that a $24,000 purchase payment plus the 5% purchase payment credit of $1,200 is allocated to the EDCA program at the beginning of the first month and the first transfer of $2,000 also occurs on that date. The $23,200 remaining after the EDCA transfer is allocated to the 1st Payment Bucket, where it is credited with a 5% effective annual interest rate. The EDCA transfer amount of $2,000 is determined by dividing the $24,000 purchase payment amount by 12 (the number of months in the EDCA program). Thereafter, a $2,000 transfer is made from the EDCA at the beginning of each month. Amounts remaining in the EDCA account value are accumulated at the EDCA interest rate using the following formula: Account Value 1st Payment Bucket (month 2) = Account Value 1st Payment Bucket (month 1) x (1+EDCA Rate)(1/12) - EDCA Transfer Amount At the beginning of the 6th month, assume you are eligible to receive a purchase payment credit of 5% and a second purchase payment of $12,000 plus the 5% purchase payment credit of $600 is allocated to the 2nd Payment Bucket, where it is credited with a 4% effective annual interest rate. This second purchase payment triggers an increase in the EDCA transfer amount to $3,000. The increased EDCA transfer amount is determined by adding $1,000 (the $12,000 purchase payment amount divided by 12) to the current EDCA transfer amount. The $3,000 monthly EDCA transfers will first be applied against the account value in the 1st Payment Bucket until exhausted and then against the account value in the 2nd Payment Bucket until it is exhausted.
---- Account Values---- Beg of Amount Allocated Actual EDCA 1st Payment 2nd Payment Month to EDCA EDCA Transfer Account Value Bucket Bucket - -------- ------------------ --------------- --------------- ------------- ------------ 1 25200 2000 23200 23200 2 2000 21295 21295 3 2000 19381 19381 4 2000 17460 17460 5 2000 15531 15531 6 12600 3000 25195 12595 12600 7 3000 22287 9646 12641 8 3000 19368 6685 12683 9 3000 16437 3712 12724 10 3000 13493 728 12766 11 3000 10538 0 10538 12 3000 7573 0 7573 13 3000 4597 0 4597 14 3000 1613 0 1613 15 1618 0 0 0
C-2 APPENDIX D GUARANTEED MINIMUM INCOME BENEFIT EXAMPLES The purpose of these examples is to illustrate the operation of the Guaranteed Minimum Income Benefit. (Unless otherwise noted, these examples are for the GMIB Plus II rider.) The investment results shown are hypothetical and are not representative of past or future performance. Actual investment results may be more or less than those shown and will depend upon a number of factors, including investment allocations and the investment experience of the investment portfolios chosen. THE EXAMPLES DO NOT REFLECT THE DEDUCTION OF FEES AND CHARGES, WITHDRAWAL CHARGES OR INCOME TAXES AND TAX PENALITIES. (1) WITHDRAWAL ADJUSTMENTS TO ANNUAL INCREASE AMOUNT Dollar-for-dollar adjustment when withdrawal is less than or equal to 6% of --------------------------------------------------------------------------- the Annual Increase Amount from the prior contract anniversary -------------------------------------------------------------- Assume the initial purchase payment is $100,000 and the GMIB Plus II is selected. Assume that during the first contract year, $6,000 is withdrawn. Because the withdrawal is less than or equal to 6% of the Annual Increase Amount from the prior contract anniversary, the Annual Increase Amount is reduced by the withdrawal on a dollar-for-dollar basis to $100,000 ($100,000 increased by 6% per year, compounded annually, less $6,000 = $100,000). Assuming no other purchase payments or withdrawals are made before the second contract anniversary, the Annual Increase Amount at the second contract anniversary will be $106,000 ($100,000 increased by 6% per year, compounded annually). Proportionate adjustment when withdrawal is greater than 6% of the Annual ------------------------------------------------------------------------- Increase Amount from the prior contract anniversary --------------------------------------------------- Assume the initial purchase payment is $100,000 and the GMIB Plus II is selected. Assume the account value at the first contract anniversary is $100,000. The Annual Increase Amount at the first contract anniversary will be $106,000 ($100,000 increased by 6% per year, compounded annually). Assume that on the first contract anniversary, $10,000 is withdrawn (leaving an account balance of $90,000). Because the withdrawal is greater than 6% of the Annual Increase Amount from the prior contract anniversary, the Annual Increase Amount is reduced by the value of the Annual Increase Amount immediately prior to the withdrawal ($106,000) multiplied by the percentage reduction in the account value attributed to that withdrawal (10%). Therefore, the new Annual Increase Amount is $95,400 ($106,000 x 10% = $10,600; $106,000 - $10,600 = $95,400). Assuming no other purchase payments or withdrawals are made before the second contract anniversary, the Annual Increase Amount at the second contract anniversary will be $101,124 ($95,400 increased by 6% per year, compounded annually). (In contrast to the GMIB Plus II rider, for the GMIB II rider, the annual increase rate for purposes of calculating the Annual Increase Amount is 5% per year.) (2) THE 6% ANNUAL INCREASE AMOUNT Example ------- Assume the owner of the contract is a male, age 55 at issue, and he elects the GMIB Plus II rider. He makes an initial purchase payment of $100,000, and makes no additional purchase payments or partial withdrawals. On the contract issue date, the 6% Annual Increase Amount is equal to $100,000 (the initial purchase payment). The 6% Annual Increase Amount is calculated at each contract anniversary (through the contract anniversary on or following the owner's 90th birthday). At the tenth contract anniversary, when the owner is age 65, the 6% Annual Increase Amount is $179,085 ($100,000 increased by 6% per year, compounded annually). See section (3) below for an example of the calculation of the Highest Anniversary Value. Graphic Example: Determining a value upon which future income payments can -------------------------------------------------------------------------- be based -------- Assume that you make an initial purchase payment of $100,000. Prior to annuitization, your account value fluctuates above and below your initial purchase payment depending on the investment performance of the investment options you selected. Your purchase payments accumulate at the annual increase rate of 6%, until the contract anniversary on or immediately after the contract owner's 90th birthday. Your purchase payments are also adjusted for any withdrawals (including any applicable withdrawal charge) made during this period. The line (your D-1 purchase payments accumulated at 6% a year adjusted for withdrawals and charges "the 6% Annual Increase Amount") is the value upon which future income payments can be based. [GRAPHIC APPEARS HERE] Graphic Example: Determining your guaranteed lifetime income stream ------------------------------------------------------------------- Assume that you decide to annuitize your contract and begin taking annuity payments after 20 years. In this example, your 6% Annual Increase Amount is higher than the Highest Anniversary Value and will produce a higher income benefit. Accordingly, the 6% Annual Increase Amount will be applied to the annuity pay-out rates in the Guaranteed Minimum Income Benefit Annuity Table to determine your lifetime annuity payments. THE INCOME BASE IS NOT AVAILABLE FOR CASH WITHDRAWALS AND IS ONLY USED FOR PURPOSES OF CALCULATING THE GUARANTEED MINIMUM INCOME BENEFIT PAYMENT AND THE CHARGE FOR THE BENEFIT. [GRAPHIC APPEARS HERE] (In contrast to the GMIB Plus II rider, for the GMIB II rider, purchase payments accumulate at the annual increase rate of 5% until the contract anniversary on or immediately after the contract owner's 85th birthday.) (3) THE "HIGHEST ANNIVERSARY VALUE" ("HAV") Example ------- Assume, as in the example in section (2) above, the owner of the contract is a male, age 55 at issue, and he elects the GMIB Plus II rider. He makes an initial purchase payment of $100,000, and makes no additional purchase payments or partial withdrawals. On the contract issue date, the Highest Anniversary Value is equal to $100,000 (the initial purchase payment). Assume the account value on the first contract anniversary is $108,000 due to good market performance. Because the account value is greater than the Highest Anniversary Value ($100,000), the Highest Anniversary Value is set equal to the account value ($108,000). Assume the account value on the second contract anniversary is $102,000 due to poor market performance. Because the account value is less than the Highest Anniversary Value ($108,000), the Highest Anniversary Value remains $108,000. Assume this process is repeated on each contract anniversary until the tenth contract anniversary, when the account value is $155,000 and the Highest Anniversary Value is $150,000. The Highest Anniversary Value is set equal to the account value ($155,000). See section (4) below for an example of the exercise of the GMIB Plus II rider. Graphic Example: Determining a value upon which future income payments can -------------------------------------------------------------------------- be based -------- Prior to annuitization, the Highest Anniversary Value begins to lock in growth. The Highest Anniversary Value is adjusted upward each contract anniversary if the account value at that time is greater than the amount of the current Highest Anniversary Value. Upward adjustments will continue until the contract anniversary immediately prior to the contract owner's 81st birthday. The Highest Anniversary Value also is adjusted for any withdrawals taken (including any applicable withdrawal charge) or any additional payments made. The Highest Anniversary Value line is D-2 the value upon which future income payments can be based. [GRAPHIC APPEARS HERE] Graphic Example: Determining your guaranteed lifetime income stream ------------------------------------------------------------------- Assume that you decide to annuitize your contract and begin taking annuity payments after 20 years. In this example, the Highest Anniversary Value is higher than the account value. Accordingly, the Highest Anniversary Value will be applied to the annuity payout rates in the Guaranteed Minimum Income Benefit Annuity Table to determine your lifetime annuity payments. THE INCOME BASE IS NOT AVAILABLE FOR CASH WITHDRAWALS AND IS ONLY USED FOR PURPOSES OF CALCULATING THE GUARANTEED MINIMUM INCOME BENEFIT PAYMENT AND THE CHARGE FOR THE BENEFIT. [GRAPHIC APPEARS HERE] (4) PUTTING IT ALL TOGETHER Example ------- Continuing the examples in sections (2) and (3) above, assume the owner chooses to exercise the GMIB Plus II rider at the tenth contract anniversary and elects a life annuity with 10 years of annuity payments guaranteed. Because the 6% Annual Increase Amount ($179,085) is greater than the Highest Anniversary Value ($155,000), the 6% Annual Increase Amount ($179,085) is used as the income base. The income base of $179,085 is applied to the GMIB Annuity Table. This yields annuity payments of $788 per month for life, with a minimum of 10 years guaranteed. (If the same owner were instead age 70, the income base of $179,085 would yield monthly payments of $886; if the owner were age 75, the income base of $179,085 would yield monthly payments of $1,012.) The above example does not take into account the impact of premium and other taxes. As with other pay-out types, the amount you receive as an income payment depends on your age, sex, and the income type you select. THE INCOME BASE IS NOT AVAILABLE FOR CASH WITHDRAWALS AND IS ONLY USED FOR PURPOSES OF CALCULATING THE GUARANTEED MINIMUM INCOME BENEFIT PAYMENT AND THE CHARGE FOR THE BENEFIT. Graphic Example --------------- Prior to annuitization, the two calculations (the 6% Annual Increase Amount and the Highest Anniversary Value) work together to protect your future income. Upon annuitization of the contract, you will receive income payments for life and the income bases and the account value will cease to exist. Also, the GMIB Plus II may only be exercised no later than the contract anniversary on or following the contract owner's 90th birthday, after a 10 year waiting period, and then only within a 30 day period following the contract anniversary. (The GMIB II may only be exercised no later than the contract anniversary on or following the contract owner's 85th birthday, after a 10 year waiting period, and then only within a 30 day period following the contract anniversary.) [GRAPHIC APPEARS HERE] D-3 With the Guaranteed Minimum Income Benefit, the Income Base is applied to special, conservative Guaranteed Minimum Income Benefit annuity purchase factors, which are guaranteed at the time the contract is issued. However, if then-current annuity purchase factors applied to the account value would produce a greater amount of income, then you will receive the greater amount. In other words, when you annuitize your contract you will receive whatever amount produces the greatest income payment. Therefore, if your account value would provide greater income than would the amount provided under the Guaranteed Minimum Income Benefit, you will have paid for the Guaranteed Minimum Income Benefit although it was never used. [GRAPHIC APPEARS HERE] (5) THE GUARANTEED PRINCIPAL OPTION - GMIB PLUS II Assume your initial purchase payment is $100,000 and no withdrawals are taken. Assume that the account value at the 10th contract anniversary is $50,000 due to poor market performance, and you exercise the Guaranteed Principal Option at this time. The effects of exercising the Guaranteed Principal Option are: 1) A Guaranteed Principal Adjustment of $100,000 - $50,000 = $50,000 is added to the account value 30 days after the 10th contract anniversary bringing the account value back up to $100,000. 2) The GMIB Plus rider and rider fee terminates as of the date that the adjustment is made to the account value; the variable annuity contract continues. 3) GMIB Plus allocation and transfer restrictions terminate as of the date that the adjustment is made to the account value. [GRAPHIC APPEARS HERE] *Withdrawals reduce the original purchase payment (I.E. those payments credited within 120 days of contract issue date) proportionately and therefore, may have a significant impact on the amount of the Guaranteed Principal Adjustment. (6) THE OPTIONAL RESET: AUTOMATIC ANNUAL STEP-UP - GMIB PLUS II Assume your initial investment is $100,000 and no withdrawals are taken. The 6% Annual Increase Amount increases to $106,000 on the first anniversary ($100,000 increased by 6% per year, compounded annually). Assume your account value at the first contract anniversary is $110,000 due to good market performance, and you elected Optional Resets to occur under the Automatic Annual Step-Up feature prior to the first contract anniversary. Because your account value is higher than your 6% Annual Increase Amount, an Optional Reset will automatically occur. The effect of the Optional Reset is: (1) The 6% Annual Increase Amount automatically resets from $106,000 to $110,000; (2) The 10-year waiting period to annuitize the contract under the Guaranteed Minimum Income Benefit is reset to 10 years from the first contract anniversary; (3) The GMIB Plus rider charge is reset to the fee we charge new contract owners for the same GMIB Plus rider at that time; and (4) The Guaranteed Principal Option can still be elected on the 10th contract anniversary. The 6% Annual Increase Amount increases to $116,600 on the second anniversary ($110,000 increased by 6% per year, compounded annually). Assume your account value at the second contract anniversary is $120,000 due to good market performance, and you have not discontinued the Automatic Annual Step-Up feature. Because your account value is higher than your 6% Annual Increase Amount, an Optional Reset will automatically occur. D-4 The effect of the Optional Reset is: (1) The 6% Annual Increase Amount automatically resets from $116,600 to $120,000; (2) The 10-year waiting period to annuitize the contract under the Guaranteed Minimum Income Benefit is reset to 10 years from the second contract anniversary; (3) The GMIB Plus rider charge is reset to the fee we charge new contract owners for the same GMIB Plus rider at that time; and (4) The Guaranteed Principal Option can still be elected on the 10th contract anniversary. Assume your account value increases by $10,000 at each contract anniversary in years three through seven. At each contract anniversary, your account value would exceed the 6% Annual Increase Amount and an Optional Reset would automatically occur (provided you had not discontinued the Automatic Annual Step-Up feature, and other requirements were met). The effect of each Optional Reset is: (1) The 6% Annual Increase Amount automatically resets to the higher account value; (2) The 10-year waiting period to annuitize the contract under the Guaranteed Minimum Income Benefit is reset to 10 years from the date of the Optional Reset; (3) The GMIB Plus rider charge is reset to the fee we charge new contract owners for the same GMIB Plus rider at that time; and (4) The Guaranteed Principal Option can still be elected on the 10th contract anniversary. After the seventh contract anniversary, the initial Automatic Annual Step-Up election expires. Assume you do not make a new election of the Automatic Annual Step-Up. The 6% Annual Increase Amount increases to $180,200 on the eighth anniversary ($170,000 increased by 6% per year, compounded annually). Assume your account value at the eighth contract anniversary is $160,000 due to poor market performance. An Optional Reset is NOT permitted because your account value is lower than your 6% Annual Increase Amount. However, because the Optional Reset has locked-in previous gains, the 6% Annual Increase Amount remains at $180,200 despite poor market performance, and, provided the rider continues in effect, will continue to grow at 6% annually (subject to adjustments for additional purchase payments and/or withdrawals) through the contract anniversary on or after your 90th birthday. Also, please note: (1) The 10-year waiting period to annuitize the contract under the Guaranteed Minimum Income Benefit remains at the 17th contract anniversary (10 years from the date of the last Optional Reset); (2) The GMIB Plus rider charge remains at its current level; and (3) The Guaranteed Principal Option can still be elected on the 10th contract anniversary. [GRAPHIC APPEARS HERE] D-5 APPENDIX E GUARANTEED WITHDRAWAL BENEFIT EXAMPLES The purpose of these examples is to illustrate the operation of the Guaranteed Withdrawal Benefit. (Examples A, B and C are for the Lifetime Withdrawal Guarantee I and Lifetime Withdrawal Guarantee II riders. Examples D through K are for Enhanced GWB and GWB I.) The investment results shown are hypothetical and are not representative of past or future performance. Actual investment results may be more or less than those shown and will depend upon a number of factors, including investment allocations and the investment experience of the investment portfolios chosen. THE EXAMPLES DO NOT REFLECT THE DEDUCTION OF FEES AND CHARGES, WITHDRAWAL CHARGES OR INCOME TAXES AND TAX PENALTIES. The Guaranteed Withdrawal Benefit does not establish or guarantee an account value or minimum return for any investment portfolio. The Total Guaranteed Withdrawal Amount and the Remaining Guaranteed Withdrawal Amount (under the Lifetime Withdrawal Guarantee) and the Guaranteed Withdrawal Amount and the Benefit Base (under the Enhanced GWB and GWB I) cannot be taken as a lump sum. A. Lifetime Withdrawal Guarantee 1. When Withdrawals Do Not Exceed the Annual Benefit Payment Assume that a contract had an initial purchase payment of $100,000. The initial account value would be $100,000, the Total Guaranteed Withdrawal Amount would be $100,000, the initial Remaining Guaranteed Withdrawal Amount would be $100,000 and the initial Annual Benefit Payment would be $5,000 ($100,000 x 5%). Assume that $5,000 is withdrawn each year, beginning before the contract owner attains age 59 1/2. The Remaining Guaranteed Withdrawal Amount is reduced by $5,000 each year as withdrawals are taken (the Total Guaranteed Withdrawal Amount is not reduced by these withdrawals). The Annual Benefit Payment of $5,000 is guaranteed to be received until the Remaining Guaranteed Withdrawal Amount is depleted, even if the account value is reduced to zero. If the first withdrawal is taken after age 59 1/2, then the Annual Benefit Payment of $5,000 is guaranteed to be received for the owner's lifetime, even if the Remaining Guaranteed Withdrawal Amount and the account value are reduced to zero. (Under the Lifetime Withdrawal Guarantee II rider, if the contract owner makes the first withdrawal at or after age 76, the Withdrawal Rate is 6% instead of 5% and the Annual Benefit Payment is $6,000.) [GRAPHIC APPEARS HERE]
Remaining Annual Guaranteed Guaranteed Benefit Cumulative Account Withdrawal Withdrawal Payment Withdrawals Value Amount Amount $5,000 $5,000 $100,000 $100,000 $100,000 5,000 10,000 90,250 95,000 100,000 5,000 15,000 80,987.5 90,000 100,000 5,000 20,000 72,188.13 85,000 100,000 5,000 25,000 63,828.72 80,000 100,000 5,000 30,000 55,887.28 75,000 100,000 5,000 35,000 48,342.92 70,000 100,000 5,000 40,000 41,175.77 65,000 100,000 5,000 45,000 34,366.98 60,000 100,000 5,000 50,000 27,898.63 55,000 100,000 5,000 55,000 21,753.7 50,000 100,000 5,000 60,000 15,916.02 45,000 100,000 5,000 65,000 10,370.22 40,000 100,000 5,000 70,000 5,101.706 35,000 100,000 5,000 75,000 96.62093 30,000 100,000 5,000 80,000 0 0 100,000 5,000 85,000 0 0 100,000 5,000 90,000 0 0 100,000 5,000 95,000 0 0 100,000 5,000 100,000 0 0 100,000
2. When Withdrawals Do Exceed the Annual Benefit Payment a. Lifetime Withdrawal Guarantee II - Proportionate Reduction Assume that a contract with the Lifetime Withdrawal Guarantee II rider had an initial purchase payment of $100,000. The initial account value would be $100,000, the Total Guaranteed Withdrawal Amount would be $100,000, the initial Remaining Guaranteed Withdrawal Amount would be $100,000 and the initial Annual Benefit Payment would be $5,000 ($100,000 x 5%). (If the contract owner makes the first withdrawal on or after the date he or she reaches age 76, the E-1 Withdrawal Rate is 6% instead of 5% and the initial Annual Benefit Payment would be $6,000. For the purposes of this example, assume the contract owner makes the first withdrawal before he or she reaches age 76 and the Withdrawal Rate is therefore 5%.) Assume that the Remaining Guaranteed Withdrawal Amount is reduced to $95,000 due to a withdrawal of $5,000 in the first year. Assume the account value was further reduced to $80,000 at year two due to poor market performance. If you withdrew $10,000 at this time, your account value would be reduced to $80,000 - $10,000 = $70,000. Since the withdrawal of $10,000 exceeded the Annual Benefit Payment of $5,000, there would be a proportional reduction to the Remaining Guaranteed Withdrawal Amount and the Total Guaranteed Withdrawal Amount. The proportional reduction is equal to the withdrawal ($10,000) divided by the account value before the withdrawal ($80,000), or 12.5%. The Remaining Guaranteed Withdrawal Amount after the withdrawal would be $83,125 ($95,000 reduced by 12.5%). This new Remaining Guaranteed Withdrawal Amount of $83,125 would now be the amount guaranteed to be available to be withdrawn over time. The Total Guaranteed Withdrawal Amount would be reduced to $87,500 ($100,000 reduced by 12.5%). The Annual Benefit Payment would be set equal to 5% x $87,500 = $4,375. b. Lifetime Withdrawal Guarantee I - Reduction to Account Value Assume that a contract with the Lifetime Withdrawal Guarantee I rider had an initial purchase payment of $100,000. The initial account value would be $100,000, the Total Guaranteed Withdrawal Amount would be $100,000, the initial Remaining Guaranteed Withdrawal Amount would be $100,000 and the initial Annual Benefit Payment would be $5,000 ($100,000 x 5%). Assume that the Remaining Guaranteed Withdrawal Amount is reduced to $95,000 due to a withdrawal of $5,000 in the first year. Assume the account value was further reduced to $75,000 at year two due to poor market performance. If you withdrew $10,000 at this time, your account value would be reduced to $75,000 - $10,000 = $65,000. Your Remaining Guaranteed Withdrawal Amount would be reduced to $95,000 - $10,000 = $85,000. Since the withdrawal of $10,000 exceeded the Annual Benefit Payment of $5,000 and the resulting Remaining Guaranteed Withdrawal Amount would be greater than the resulting account value, there would be an additional reduction to the Remaining Guaranteed Withdrawal Amount. The Remaining Guaranteed Withdrawal Amount after the withdrawal would be set equal to the account value after the withdrawal ($65,000). This new Remaining Guaranteed Withdrawal Amount of $65,000 would now be the amount guaranteed to be available to be withdrawn over time. The Total Guaranteed Withdrawal Amount would also be reduced to $65,000. The Annual Benefit Payment would be set equal to 5% x $65,000 = $3,250. B. Lifetime Withdrawal Guarantee - Compounding Income Amount Assume that a contract with the Lifetime Withdrawal Guarantee II rider had an initial purchase payment of $100,000. The initial Remaining Guaranteed Withdrawal Amount would be $100,000, the Total Guaranteed Withdrawal Amount would be $100,000, and the Annual Benefit Payment would be $5,000 ($100,000 x 5%). (If the contract owner makes the first withdrawal at or after age 76, the Withdrawal Rate is 6% instead of 5% and the Annual Benefit Payment would be $6,000. For the purposes of this example, assume the contract owner makes the first withdrawal before he or she reaches age 76 and the Withdrawal Rate is therefore 5%.) The Total Guaranteed Withdrawal Amount will increase by 7.25% of the previous year's Total Guaranteed Withdrawal Amount until the earlier of the second withdrawal or the 10th contract anniversary. The Annual Benefit Payment will be recalculated as 5% of the new Total Guaranteed Withdrawal Amount. If the second withdrawal is taken in the first contract year, then there would be no increase: the Total Guaranteed Withdrawal Amount would remain at $100,000 and the Annual Benefit Payment will remain at $5,000 ($100,000 x 5%). If the second withdrawal is taken in the second contract year, then the Total Guaranteed Withdrawal Amount would increase to $107,250 ($100,000 x 107.25%), and the Annual Benefit Payment would increase to $5,362 ($107,250 x 5%). If the second withdrawal is taken in the third contract year, then the Total Guaranteed Withdrawal Amount would increase to $115,025 ($107,250 x 107.25%), and the Annual Benefit Payment would increase to $5,751 ($115,025 x 5%). E-2 If the second withdrawal is taken after the 10th contract year, then the Total Guaranteed Withdrawal Amount would increase to $201,360 (the initial $100,000, increased by 7.25% per year, compounded annually for 10 years), and the Annual Benefit Payment would increase to $10,068 ($201,360 x 5%). (In contrast to the Lifetime Withdrawal Guarantee II rider, the Lifetime Withdrawal Guarantee I rider has a 5% Compounding Income Amount and the Total -- Guaranteed Withdrawal Amount is increased by 5% on each contract anniversary until the earlier of the date of the first withdrawal or the tenth contract ----- anniversary.) [GRAPHIC APPEARS HERE]
Year Annual of Second Benefit Withdrawal Payment 1 $5,000 2 5,363 3 5,751 4 6,168 5 6,615 6 7,095 7 7,609 8 8,161 9 8,753 10 9,387 11 10,068
C. Lifetime Withdrawal Guarantee - Automatic Annual Step-Ups and 7.25% Compounding Income Amount (No Withdrawals) Assume that a contract with the Lifetime Withdrawal Guarantee II rider had an initial purchase payment of $100,000. Assume that no withdrawals are taken. At the first contract anniversary, assuming that no withdrawals are taken, the Total Guaranteed Withdrawal Amount is increased to $107,250 ($100,000 increased by 7.25%, compounded annually). Assume the account value has increased to $110,000 at the first contract anniversary due to good market performance. The Automatic Annual Step-Up will increase the Total Guaranteed Withdrawal Amount from $107,250 to $110,000 and reset the Annual Benefit Payment to $5,500 ($110,000 x 5%). At the second contract anniversary, assuming that no withdrawals are taken, the Total Guaranteed Withdrawal Amount is increased to $117,975 ($110,000 increased by 7.25%, compounded annually). Assume the account value has increased to $120,000 at the second contract anniversary due to good market performance. The Automatic Annual Step-Up will increase the Total Guaranteed Withdrawal Amount from $117,975 to $120,000 and reset the Annual Benefit Payment to $6,000 ($120,000 x 5%). Assuming that no withdrawals are taken, each year the Total Guaranteed Withdrawal Amount would increase by 7.25%, compounded annually, from the second contract anniversary through the ninth contract anniversary, and at that point would be equal to $195,867. Assume that during these contract years the account value does not exceed the Total Guaranteed Withdrawal Amount due to poor market performance. Assume the account value at the ninth contract anniversary has E-3 increased to $200,000 due to good market performance. The Automatic Annual Step-Up will increase the Total Guaranteed Withdrawal Amount from $195,867 to $200,000 and reset the Annual Benefit Payment to $10,000 ($200,000 x 5%). At the 10th contract anniversary, assuming that no withdrawals are taken, the Total Guaranteed Withdrawal Amount is increased to $214,500 ($200,000 increased by 7.25%, compounded annually). Assume the account value is less than $214,500. There is no Automatic Annual Step-Up since the account value is below the Total Guaranteed Withdrawal Amount; however, due to the 7.25% increase in the Total Guaranteed Withdrawal Amount, the Annual Benefit Payment is increased to $10,725 ($214,500 x 5%). [GRAPHIC APPEARS HERE] D. Enhanced Guaranteed Withdrawal Benefit and GWB I - How Withdrawals Affect the Benefit Base 1. An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000 ($100,000 + 5% GWB Bonus Amount). Assume that the account value grew to $110,000 because of market performance. If a subsequent withdrawal of $10,000 were made, the Benefit Base would be reduced to $105,000 - $10,000 = $95,000. Assume the withdrawal of $10,000 exceeded the Annual Benefit Payment. Since the account value of $100,000 exceeds the Benefit Base of $95,000, no further reduction to the Benefit Base is made. 2. An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000. Assume that the account value shrank to $90,000 because of market performance. If a subsequent withdrawal of $10,000 were made, the Benefit Base would be reduced to $95,000 and the account value would be reduced to $80,000. Assume the withdrawal of $10,000 exceeded the Annual Benefit Payment. Since the account value of $80,000 is less than the Benefit Base of $95,000, a further reduction of the $15,000 difference is made, bringing the Benefit Base to $80,000. E. Enhanced Guaranteed Withdrawal Benefit and GWB I - How Withdrawals and Subsequent Purchase Payments Affect the Annual Benefit Payment An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000 and the initial Annual Benefit Payment would be $7,350 ($105,000 x 7%). If $7,000 withdrawals were then made for each of the next five years, the Benefit Base would be decreased to $70,000. If a subsequent purchase payment of $10,000 were made the next day, the Benefit Base would be increased to $70,000 + $10,000 + (5% x $10,000) = $80,500. The Annual Benefit Payment would be reset to the greater of a) $7,350 (the Annual Benefit Payment before the second purchase payment) and b) $5,635 (7% multiplied by the Benefit Base after the second purchase payment). In this case, the Annual Benefit Payment would remain at $7,350. F. Enhanced Guaranteed Withdrawal Benefit and GWB I - How Withdrawals Affect the Annual Benefit Payment 1. An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000 and the initial Annual Benefit Payment would be $7,350. If a withdrawal of $9,000 was made the next day, and negative market E-4 performance reduced the account value by an additional $1,000, the account value would be reduced to $100,000 - $9,000 - $1,000 = $90,000. Since the withdrawal of $9,000 exceeded the Annual Benefit Payment of $7,350, the Annual Benefit Payment would be reset to the lower of a) $7,350 (the Annual Benefit Payment before the withdrawal) and b) $6,300 (7% multiplied by the account value after the withdrawal). In this case the Annual Benefit Payment would be reset to $6,300. 2. An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000 and the initial Annual Benefit Payment would be $7,350. If a withdrawal of $10,000 was made two years later after the account value had increased to $150,000, the account value would be reduced to $140,000. Since the withdrawal of $10,000 exceeded the Annual Benefit Payment of $7,350, the Annual Benefit Payment would be reset to the lower of a) $7,350 (the Annual Benefit Payment before the withdrawal) and b) $9,800 (7% multiplied by the account value after the withdrawal). In this case the Annual Benefit Payment would remain at $7,350. G. Enhanced Guaranteed Withdrawal Benefit and GWB I - How Withdrawals and Subsequent Purchase Payments Affect the Guaranteed Withdrawal Amount An initial purchase payment is made of $100,000 and the initial Guaranteed Withdrawal Amount and initial Benefit Base would both be $105,000. Assume that over the next five years, withdrawals reduced the Benefit Base to $70,000. If a subsequent purchase payment of $10,000 was made, the Benefit Base would be increased to $70,000 + $10,000 + (5% x $10,000) = $80,500. The Guaranteed Withdrawal Amount would be reset to the greater of a) $105,000 (the Guaranteed Withdrawal Amount before the second purchase payment) and b) $80,500 (the Benefit Base after the second purchase payment). In this case, the Guaranteed Withdrawal Amount would remain at $105,000. H. Enhanced Guaranteed Withdrawal Benefit and GWB I - Putting It All Together 1. When Withdrawals Do Not Exceed the Annual Benefit Payment An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000, the Guaranteed Withdrawal Amount would be $105,000, and the Annual Benefit Payment would be $7,350. Assume that the Benefit Base was reduced to $82,950 due to 3 years of withdrawing $7,350 each year and assume that the account value was further reduced to $50,000 at year four due to poor market performance. If you withdrew $7,350 at this time, your account value would be reduced to $50,000 - $7,350 = $42,650. Your Benefit Base would be reduced to $82,950 - $7,350 = $75,600. Since the withdrawal of $7,350 did not exceed the Annual Benefit Payment, there would be no additional reduction to the Benefit Base. The Guaranteed Withdrawal Amount would remain at $105,000 and the Annual Benefit Payment would remain at $7,350. [GRAPHIC APPEARS HERE]
Annual Benefit Cumulative Account Benefit Payment Withdrawal Value Base 0 $0 $0 $100,000 $105,000 1 7,350 7,350 85,000 97,650 2 7,350 7,350 68,000 90,300 3 7,350 7,350 50,000 82,950 4 7,350 7,350 42,650 75,600 5 7,350 7,350 35,300 68,250 6 7,350 7,350 27,950 60,900 7 7,350 7,350 20,600 53,550 8 7,350 7,350 13,250 46,200 9 7,350 7,350 5,900 38,850 10 7,350 7,350 0 31,500 11 7,350 7,350 0 24,150 12 7,350 7,350 0 16,800 13 7,350 7,350 0 9,450 14 7,350 7,350 0 2,100 15 2,100 2,100 0 0 16 17 18
E-5 2. When Withdrawals Do Exceed the Annual Benefit Payment An initial purchase payment is made of $100,000. The initial Benefit Base would be $105,000, the Guaranteed Withdrawal Amount would be $105,000, and the Annual Benefit Payment would be $7,350. Assume that the Benefit Base was reduced to $82,950 due to 3 years of withdrawing $7,350 each year. Assume the account value was further reduced to $50,000 at year four due to poor market performance. If you withdrew $10,000 at this time, your account value would be reduced to $50,000 - $10,000 = $40,000. Your Benefit Base would be reduced to $82,950 - $10,000 = $72,950. Since the withdrawal of $10,000 exceeded the Annual Benefit Payment of $7,350 and the resulting Benefit Base would be greater than the resulting account value, there would be an additional reduction to the Benefit Base. The Benefit Base after the withdrawal would be set equal to the account value after the withdrawal = $40,000. The Annual Benefit Payment would be set equal to the lesser of $7,350 and 7% x $40,000 = $2,800. The Guaranteed Withdrawal Amount would remain at $105,000, but this amount now no longer would be guaranteed to be received over time. The new Benefit Base of $40,000 would be now the amount guaranteed to be available to be withdrawn over time. [GRAPHIC APPEARS HERE]
Annual Benefit Cumulative Account Benefit Payment Withdrawals Value Base 0 $0 $0 $100,000 $105,000 1 7,350 7,350 85,000 97,650 2 7,350 7,350 68,000 90,300 3 7,350 7,350 50,000 82,950 4 7,350 10,000 40,000 40,000 5 2,800 2,800 37,200 37,200 6 2,800 2,800 34,400 34,400 7 2,800 2,800 31,600 31,600 8 2,800 2,800 28,800 28,800 9 2,800 2,800 26,000 26,000 10 2,800 2,800 23,200 23,200 11 2,800 2,800 20,400 20,400 12 2,800 2,800 17,600 17,600 13 2,800 2,800 14,800 14,800 14 2,800 2,800 12,000 12,000 15 2,800 2,800 9,200 9,200 16 2,800 2,800 6,400 6,400 17 2,800 2,800 3,600 3,600 18 2,800 2,800 800 800
I. Enhanced GWB - How the Optional Reset Works (may be elected prior to age 81) Assume that a contract had an initial purchase payment of $100,000 and the fee is 0.55%. The initial account value would be $100,000, the initial Benefit Base would be $105,000, the Guaranteed Withdrawal Amount would be $105,000 and the Annual Benefit Payment would be $7,350 (assuming you began withdrawing in your first year). The account value on the third contract anniversary grew due to market performance to $148,350. Assume the fee remains at 0.55%. If an Optional Reset is elected, the charge would remain at 0.55%, the Guaranteed Withdrawal Amount and the Benefit Base would both be reset to $148,350, and the Annual Benefit Payment would become 7% x $148,350 = $10,385. The account value on the sixth contract anniversary grew due to market performance to $179,859. Assume the fee has been increased to 0.60%. If an Optional Reset is elected, the charge would increase to 0.60%, the Guaranteed Withdrawal Amount and the Benefit Base would both be reset to $179,859, and the Annual Benefit Payment would become 7% x $179,859 = $12,590. E-6 The account value on the ninth contract anniversary grew due to market performance to $282,582. Assume the fee is still 0.60%. If an Optional Reset is elected, the charge would remain at 0.60%, the Guaranteed Withdrawal Amount and the Benefit Base would both be reset to $282,582, and the Annual Benefit Payment would become 7% x $282,582 = $19,781. The period of time over which the Annual Benefit Payment may be taken would be lengthened. [GRAPHIC APPEARS HERE]
Annual Benefit Cumulative Account Payment Withdrawal Value 1 7350 7350 105000 2 7350 14700 125000 3 7350 22050 130000 4 10385 32435 148350 5 10385 42819 185000 6 10385 53204 195000 7 12590 65794 179859 8 12590 78384 210000 9 12590 90974 223000 10 19781 110755 282582 11 19781 130535 270000 12 19781 150316 278000 13 0 0 315000
J. Enhanced GWB - How an Optional Reset May Increase the Benefit Base While Decreasing the Guaranteed Withdrawal Amount and Annual Benefit Payment Assume that a contract had an initial purchase payment of $100,000. The initial account value would be $100,000, the initial Benefit Base would be $105,000, the Guaranteed Withdrawal Amount would be $105,000 and the Annual Benefit Payment would be $7,350. Assume that the Benefit Base is reduced to $70,000 due to 5 years of withdrawing $7,000 each year, but also assume that, due to positive market performance, the account value at the end of 5 years is $80,000. If an Optional Reset is elected, the Benefit Base would be reset from $70,000 to $80,000, the Guaranteed Withdrawal Amount would be reduced from $105,000 to $80,000, and the Annual Benefit Payment would be reduced from $7,350 to $5,600 ($80,000 x 7%). Under these circumstances, the Optional Reset increases the Benefit Base (the remaining amount of money you are guaranteed to receive) by $10,000, but also reduces the Annual Benefit Payment, thereby lengthening the period of time over which you will receive the money. This Optional Reset also reduces the Guaranteed Withdrawal Amount, against which the GWB rider charge is calculated. If the GWB rider charge fee rate does not increase in connection with the Optional Reset, the reduced Guaranteed Withdrawal Amount will result in a reduction in the amount of the annual GWB rider charge. E-7 K. Enhanced GWB and GWB I - Annual Benefit Payment Continuing When Account Value Reaches Zero Assume that a contract had an initial purchase payment of $100,000. The initial account value would be $100,000, the initial Benefit Base would be $105,000 and the initial Annual Benefit Payment would be $7,350 ($105,000 x 7%). Assume that the Benefit Base was reduced to $31,500 due to 10 years of withdrawing $7,350 each year and assume that the account value was further reduced to $0 at year 11 due to poor market performance. We would commence making payments to you (equal, on an annual basis, to the Annual Benefit Payment) until the Benefit Base is exhausted. In this situation (assuming monthly payments), there would be 51 payments of $612.50 and a final payment of $262.50, which, in sum, would deplete the $31,500 Benefit Base. The total amount withdrawn over the life of the contract would then be $105,000. [GRAPHIC APPEARS HERE]
Annual Benefit Cumulative Account Benefit Payment Withdrawals Value Base $7350 $7,350 $100,000 $105,000 7350 14,700 73,000 97,650 7350 22,050 52,750 90,300 7350 29,400 37,562.5 82,950 7350 36,750 26,171.88 75,600 7350 44,100 17,628.91 68,250 7350 51,450 11,221.68 60,900 7350 58,800 6,416.26 53,550 7350 66,150 2,812.195 46,200 7350 73,500 109.1461 38,850 7350 80,850 0 31,500 7350 88,200 0 24,150 7350 95,550 0 16,800 7350 102,900 0 9,450 2,100 105,000 0 2,100 0 0
E-8 APPENDIX F ENHANCED DEATH BENEFIT EXAMPLES The purpose of these examples is to illustrate the operation of the death benefit base under the Enhanced Death Benefit rider. The investment results shown are hypothetical and are not representative of past or future performance. Actual investment results may be more or less than those shown and will depend upon a number of factors, including the investment allocation made by a contract owner and the investment experience of the investment portfolios chosen. THE EXAMPLES DO NOT REFLECT THE DEDUCTION OF FEES AND CHARGES, WITHDRAWAL CHARGES OR INCOME TAXES AND TAX PENALTIES. (1) WITHDRAWAL ADJUSTMENTS TO ANNUAL INCREASE AMOUNT Dollar-for-dollar adjustment when withdrawal is less than or equal to 6% of --------------------------------------------------------------------------- the Annual Increase Amount from the prior contract anniversary -------------------------------------------------------------- Assume the initial purchase payment is $100,000 and the Enhanced Death Benefit is selected. Assume that during the first contract year, $6,000 is withdrawn. Because the withdrawal is less than or equal to 6% of the Annual Increase Amount from the prior contract anniversary, the Annual Increase Amount is reduced by the withdrawal on a dollar-for-dollar basis to $100,000 ($100,000 increased by 6% per year, compounded annually, less $6,000 = $100,000). Assuming no other purchase payments or withdrawals are made before the second contract anniversary, the Annual Increase Amount at the second contract anniversary will be $106,000 ($100,000 increased by 6% per year, compounded annually). Proportionate adjustment when withdrawal is greater than 6% of the Annual ------------------------------------------------------------------------- Increase Amount from the prior contract anniversary --------------------------------------------------- Assume the initial purchase payment is $100,000 and the Enhanced Death Benefit is selected. Assume the account value at the first contract anniversary is $100,000. The Annual Increase Amount at the first contract anniversary will be $106,000 ($100,000 increased by 6% per year, compounded annually). Assume that on the first contract anniversary, $10,000 is withdrawn (leaving an account balance of $90,000). Because the withdrawal is greater than 6% of the Annual Increase Amount from the prior contract anniversary, the Annual Increase Amount is reduced by the value of the Annual Increase Amount immediately prior to the withdrawal ($106,000) multiplied by the percentage reduction in the account value attributed to that withdrawal (10%). Therefore, the new Annual Increase Amount is $95,400 ($106,000 x 10% = $10,600; $106,000 - $10,600 = $95,400). Assuming no other purchase payments or withdrawals are made before the second contract anniversary, the Annual Increase Amount at the second contract anniversary will be $101,124 ($95,400 increased by 6% per year, compounded annually). (2) THE 6% ANNUAL INCREASE AMOUNT Example ------- Assume the contract owner is a male, age 55 at issue, and he elects the Enhanced Death Benefit rider. He makes an initial purchase payment of $100,000, and makes no additional purchase payments or partial withdrawals. On the contract issue date, the 6% Annual Increase Amount is equal to $100,000 (the initial purchase payment). The 6% Annual Increase Amount is calculated at each contract anniversary (through the contract anniversary on or following the contract owner's 90th birthday). At the tenth contract anniversary, when the contract owner is age 65, the 6% Annual Increase Amount is $179,085 ($100,000 increased by 6% per year, compounded annually). See section (3) below for an example of the calculation of the Highest Anniversary Value. Determining a death benefit based on the Annual Increase Amount --------------------------------------------------------------- Assume that you make an initial purchase payment of $100,000. Prior to annuitization, your account value fluctuates above and below your initial purchase payment depending on the investment performance of the subaccounts you selected. The 6% Annual Increase Amount, however, accumulates an amount equal to your purchase payments at the Annual Increase Rate of 6% per annum, until the contract anniversary on or following the contract owner's 90th birthday. The 6% Annual Increase Amount is also adjusted for any withdrawals (including any applicable withdrawal charge) made during this period. The 6% Annual Increase Amount line is the value upon which a future death benefit amount can be based (if it is greater than the Highest Anniversary Value and account value on the date the death benefit amount is determined). F-1 (3) THE HIGHEST ANNIVERSARY VALUE (HAV) Example ------- Assume, as in the example in section (2) above, the contract owner is a male, age 55 at issue, and he elects the Enhanced Death Benefit rider. He makes an initial purchase payment of $100,000, and makes no additional purchase payments or partial withdrawals. On the contract issue date, the Highest Anniversary Value is equal to $100,000 (the initial purchase payment). Assume the account value on the first contract anniversary is $108,000 due to good market performance. Because the account value is greater than the Highest Anniversary Value ($100,000), the Highest Anniversary Value is set equal to the account value ($108,000). Assume the account value on the second contract anniversary is $102,000 due to poor market performance. Because the account value is less than the Highest Anniversary Value ($108,000), the Highest Anniversary Value remains $108,000. Assume this process is repeated on each contract anniversary until the tenth contract anniversary, when the account value is $155,000 and the Highest Anniversary Value is $150,000. The Highest Anniversary Value is set equal the account value ($155,000). Determining a death benefit based on the Highest Anniversary Value ------------------------------------------------------------------ Prior to annuitization, the Highest Anniversary Value begins to lock in growth. The Highest Anniversary Value is adjusted upward each contract anniversary if the account value at that time is greater than the amount of the current Highest Anniversary Value. Upward adjustments will continue until the contract anniversary immediately prior to the contract owner's 81st birthday. The Highest Anniversary Value also is adjusted for any withdrawals taken (including any applicable withdrawal charge) or any additional payments made. The Highest Anniversary Value line is the value upon which a future death benefit amount can be based (if it is greater than the Annual Increase Amount and account value on the date the death benefit amount is determined). (4) PUTTING IT ALL TOGETHER Example ------- Continuing the examples in sections (2) and (3) above, assume the contract owner dies after the tenth contract anniversary but prior to the eleventh contract anniversary, and on the date the death benefit amount is determined, the account value is $150,000 due to poor market performance. Because the 6% Annual Increase Amount ($179,085) is greater than the Highest Anniversary Value ($155,000), the 6% Annual Increase Amount ($179,085) is used as the death benefit base. Because the death benefit base ($179,085) is greater than the account value ($150,000), the death benefit base will be the death benefit amount. The above example does not take into account the impact of premium and other taxes. THE DEATH BENEFIT BASE IS NOT AVAILABLE FOR CASH WITHDRAWALS AND IS ONLY USED FOR PURPOSES OF CALCULATING THE DEATH BENEFIT AMOUNT AND THE CHARGE FOR THE BENEFIT. (5) THE OPTIONAL STEP-UP Assume your initial purchase payment is $100,000 and no withdrawals are taken. The 6% Annual Increase Amount increases to $106,000 on the first anniversary ($100,000 increased by 6% per year, compounded annually). Assume your account value at the first contract anniversary is $110,000 due to good market performance, and you elect an Optional Step-Up. The effect of the Optional Step-Up election is: (1) The 6% Annual Increase Amount resets from $106,000 to $110,000; and (2) The Enhanced Death Benefit rider charge is reset to the fee we charge new contract owners for the Enhanced Death Benefit at that time. The 6% Annual Increase Amount increases to $116,600 on the second anniversary ($110,000 increased by 6% per year, compounded annually). Assume your account value at the second contract anniversary is $112,000 due to poor market performance. You may NOT elect an Optional Step-Up at this time, because the account value is less than the 6% Annual Increase Amount F-2 (6) THE OPTIONAL STEP-UP: AUTOMATIC ANNUAL STEP-UP Assume your initial purchase payment is $100,000 and no withdrawals are taken. The 6% Annual Increase Amount increases to $106,000 on the first anniversary ($100,000 increased by 6% per year, compounded annually). Assume your account value at the first contract anniversary is $110,000 due to good market performance, and you elected Optional Step-Ups to occur under the Automatic Annual Step-Up feature prior to the first contract anniversary. Because your account value is higher than your 6% Annual Increase Amount, an Optional Step-Up will automatically occur. The effect of the Optional Step-Up is: (1) The 6% Annual Increase Amount automatically resets from $106,000 to $110,000; and (2) The Enhanced Death Benefit rider charge is reset to the fee we charge new contract owners for the Enhanced Death Benefit at that time. The 6% Annual Increase Amount increases to $116,600 on the second anniversary ($110,000 increased by 6% per year, compounded annually). Assume your account value at the second contract anniversary is $120,000 due to good market performance, and you have not discontinued the Automatic Annual Step-Up feature. Because your account value is higher than your 6% Annual Increase Amount, an Optional Step-Up will automatically occur. The effect of the Optional Step-Up is: (1) The 6% Annual Increase Amount automatically resets from $116,600 to $120,000; and (2) The Enhanced Death Benefit rider charge is reset to the fee we charge new contract owners for the Enhanced Death Benefit at that time. Assume your account value increases by $10,000 at each contract anniversary in years three through seven. At each contract anniversary, your account value would exceed the 6% Annual Increase Amount and an Optional Step-Up would automatically occur (provided you had not discontinued the Automatic Annual Step-Up feature, and other requirements were met). The effect of the Optional Step-Up is: (1) The 6% Annual Increase Amount automatically resets to the higher account value; and (2) The Enhanced Death Benefit rider charge is reset to the fee we charge new contract owners for the Enhanced Death Benefit at that time. After the seventh contract anniversary, the initial Automatic Annual Step-Up election expires. Assume you do not make a new election of the Automatic Annual Step-Up. The 6% Annual Increase Amount increases to $180,200 on the eighth anniversary ($170,000 increased by 6% per year, compounded annually). Assume your account value at the eighth contract anniversary is $160,000 due to poor market performance. An Optional Step-Up is NOT permitted because your account value is lower than your 6% Annual Increase Amount. However, because the Optional Step-Up has locked-in previous gains, the 6% Annual Increase Amount remains at $180,200 despite poor market performance, and, provided the rider continues in effect, will continue to grow at 6% annually (subject to adjustments for additional purchase payments and/or withdrawals) through the contract anniversary on or after your 90th birthday. Also, please note the Enhanced Death Benefit rider charge remains at its current level. F-3 STATEMENT OF ADDITIONAL INFORMATION INDIVIDUAL VARIABLE DEFERRED ANNUITY CONTRACT ISSUED BY METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE AND METLIFE INVESTORS INSURANCE COMPANY CLASS XC THIS IS NOT A PROSPECTUS. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS DATED APRIL 28, 2008, FOR THE INDIVIDUAL VARIABLE DEFERRED ANNUITY CONTRACT THAT IS DESCRIBED HEREIN. THE PROSPECTUS CONCISELY SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING. FOR A COPY OF THE PROSPECTUS WRITE US AT: P.O. BOX 10366, DES MOINES, IOWA 50306-0366, OR CALL (800) 343-8496. THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED APRIL 28, 2008. SAI-408MOXC TABLE OF CONTENTS PAGE COMPANY ................................ 2 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ................................... 2 CUSTODIAN .............................. 3 DISTRIBUTION ........................... 3 CALCULATION OF PERFORMANCE INFORMATION . 4 Total Return ...................... 4 Historical Unit Values ............ 4 Reporting Agencies ................ 5 ANNUITY PROVISIONS ..................... 5 Variable Annuity .................. 5 Fixed Annuity ..................... 6 Mortality and Expense Guarantee ... 7 Legal or Regulatory Restrictions 7 on Transactions TAX STATUS OF THE CONTRACTS ............ 7 CONDENSED FINANCIAL INFORMATION ........ 9 FINANCIAL STATEMENTS ................... 43
1 COMPANY MetLife Investors Insurance Company (MetLife Investors or the Company) was incorporated on August 17, 1981, as Assurance Life Company, a Missouri corporation, and changed its name to Xerox Financial Services Life Insurance Company in 1985. On June 1, 1995, a wholly-owned subsidiary of General American Life Insurance Company (General American Life) purchased Xerox Financial Services Life Insurance Company, which on that date changed its name to Cova Financial Services Life Insurance Company. On January 6, 2000, Metropolitan Life Insurance Company acquired GenAmerica Financial Corporation, the ultimate parent company of General American Life. Cova Financial Services Life Insurance Company changed its name to MetLife Investors Insurance Company on February 12, 2001. On December 31, 2002, MetLife Investors became an indirect subsidiary of MetLife, Inc. (MetLife), the holding company of Metropolitan Life Insurance Company and a listed company on the New York Stock Exchange. On October 1, 2004, MetLife Investors became a direct subsidiary of MetLife. MetLife, through its subsidiaries and affiliates, is a leading provider of insurance and other financial services to individual and institutional customers. On December 31, 2002, MetLife entered into a net worth maintenance agreement with MetLife Investors. Under the agreement, MetLife agreed, without limitation as to the amount, to cause MetLife Investors to have certain minimum capital and surplus levels and liquidity necessary to enable it to meet its current obligations on a timely basis. At December 31, 2007, the capital and surplus of MetLife Investors was in excess of these minimum capital and surplus levels. MetLife and MetLife Investors entered into the agreement in part to enhance and maintain the financial strength of MetLife Investors as set forth in the agreement. Creditors of MetLife Investors (including its policyholders) have certain rights under the agreement to enforce the provisions of the agreement through certain state insurance regulators. However, the agreement provides, among other things, that it does not provide any creditor of MetLife Investors with recourse to or against any of the assets of MetLife. MetLife has the right to terminate the agreement upon thirty days written notice to MetLife Investors. MetLife has agreed not to terminate the agreement unless one of certain designated events occur, including if the Company attains a financial strength rating from Moody's Investors Service, Inc. without giving weight to the support of the agreement, that is the same as or better than its rating of such rating agency with such support. General American Life Insurance Company has entered into a contingent reinsurance agreement with MetLife Investors. Under this agreement, in the event that MetLife Investors' statutory capital and surplus fall below certain levels, General American Life Insurance Company would assume as assumption reinsurance, subject to regulatory approvals and required consents, all of MetLife Investors' life insurance and annuity contracts. At December 31, 2007, the capital and surplus of MetLife Investors was in excess of these minimum capital and surplus levels. We are licensed to do business in the District of Columbia and all states except New Hampshire and New York. We are a member of the Insurance Marketplace Standards Association (IMSA). Companies that belong to IMSA subscribe to a set of ethical standards covering the various aspects of sales and service for individually sold life insurance and annuities. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The financial statements of MetLife Investors Insurance Company (the "Company") included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the fact that the Company changed its method of accounting for income taxes, as required by accounting guidance adopted on January 1, 2007, and includes an explanatory paragraph referring to the fact that the Company's 2006 and 2005 financial statements have been restated), and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal address of Deloitte & Touche LLP is 201 East Kennedy Boulevard, Suite 1200, Tampa, Florida 33602-5827. The financial statements of each of the Sub-Accounts of MetLife Investors Variable Annuity Account One included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in 2 accounting and auditing. The principal address of Deloitte & Touche LLP is 201 East Kennedy Boulevard, Suite 1200, Tampa, Florida 33602-5827. The consolidated financial statements of General American Life Insurance Company (the "Guarantor") included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the fact that the Guarantor changed its method of accounting for deferred acquisition costs, and for income taxes, as required by accounting guidance adopted on January 1, 2007, and changed its method of accounting for defined benefit pension and other postretirement plans as required by accounting guidance adopted on December 31, 2006), and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The principal address of Deloitte & Touche LLP is 201 East Kennedy Boulevard, Suite 1200, Tampa, Florida 33602-5827. CUSTODIAN MetLife Investors Insurance Company, 5 Park Plaza, Suite 1900, Irvine, CA 92614, is the custodian of the assets of the Separate Account. The custodian has custody of all cash of the Separate Account and handles the collection of proceeds of shares of the underlying funds bought and sold by the Separate Account. DISTRIBUTION Information about the distribution of the contracts is contained in the prospectus. (See "Other Information.") Additional information is provided below. The contracts are offered to the public on a continuous basis. We anticipate continuing to offer the contracts, but reserve the right to discontinue the offering. MetLife Investors Distribution Company ("Distributor") serves as principal underwriter for the contracts. Distributor is a Missouri corporation and its home office is located at 5 Park Plaza, Suite 1900, Irvine, CA 92614. In December 2004, MetLife Investors Distribution Company, which was then a Delaware corporation, was merged into General American Distributors, Inc., and the name of the surviving corporation was changed to MetLife Investors Distribution Company. Distributor is an indirect, wholly-owned subsidiary of MetLife, Inc. Distributor is registered as a broker-dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority ("FINRA"). Distributor is not a member of the Securities Investor Protection Corporation. Distributor has entered into selling agreements with other broker-dealers ("selling firms") and compensates them for their services. Distributor (including its predecessor) received sales compensation with respect to all contracts issued from the Separate Account in the following amounts during the periods indicated:
Aggregate Amount of Commissions Retained Aggregate Amount of by Distributor After Commissions Paid to Payments to Selling Fiscal year Distributor Firms - ------------- --------------------- --------------------- 2005 $76,214,486 $0 2006 $92,747,340 $0 2007 $93,279,104 $0
Distributor passes through commissions to selling firms for their sales. In addition we pay compensation to Distributor to offset its expenses, including compensation costs, marketing and distribution expenses, advertising, wholesaling, printing and other expenses of distributing the contracts. As noted in the prospectus, we and Distributor pay compensation to all selling firms in the form of commissions and certain types of non-cash compensation. We and Distributor may pay additional compensation to selected firms, including marketing allowances, introduction fees, persistency payments, preferred status fees and industry conference fees. The terms of any particular agreement governing compensation may vary among selling firms and the amounts may be significant. The amount of additional compensation (non-commission amounts) paid to selected selling firms during 2007 ranged from $4,671,999 to $8,808. The amount of commissions paid to selected selling firms during 2007 ranged from $31,715,674 to $0. The amount of total compensation (includes non-commission as well as commission amounts) paid to selected selling firms during 2007 ranged from $36,387,673 to $8,808. For purposes of calculating such amounts, the amount of compensation received by a selling firm may include additional compensation received by the firm for the sale of insurance products issued by our affiliates within the MetLife Investors group of companies 3 (First MetLife Investors Insurance Company and MetLife Investors USA Insurance Company). The following list sets forth the names of selling firms that received additional compensation in 2007 in connection with the sale of our variable annuity contracts, variable life policies and other insurance products (including the contracts). The selling firms are listed in alphabetical order. A.G. Edwards & Sons, Inc. Commonwealth Edward Jones Firstar Investments HSBC Brokerage J.J.B. Hilliard, W.L. Lyons, Inc. Linsco Private Ledger RBC Dain Rauscher, Inc. Stifel, Nicolaus & Company, Incorporated UBS Financial Services Wachovia Securities, LLC There are other broker dealers who receive compensation for servicing our contracts, and the account value of the contracts or the amount of added purchase payments received may be included in determining their additional compensation, if any. CALCULATION OF PERFORMANCE INFORMATION TOTAL RETURN From time to time, the Company may advertise performance data. Such data will show the percentage change in the value of an accumulation unit based on the performance of an investment portfolio over a period of time, usually a calendar year, determined by dividing the increase (decrease) in value for that unit by the accumulation unit value at the beginning of the period. Any such advertisement will include total return figures for the time periods indicated in the advertisement. Such total return figures will reflect the deduction of the separate account product charges (including certain death benefit rider charges), the expenses for the underlying investment portfolio being advertised, and any applicable account fee, withdrawal charges, Enhanced Death Benefit rider charge, and/or GMIB, GWB or GMAB rider charge. For purposes of calculating performance information, the Enhanced Death Benefit rider charge and the GWB rider charge are currently reflected as a percentage of account value. Premium taxes are not reflected. The deduction of such charges would reduce any percentage increase or make greater any percentage decrease. The hypothetical value of a contract purchased for the time periods described in the advertisement will be determined by using the actual accumulation unit values for an initial $1,000 purchase payment, and deducting any applicable account fee and any applicable sales charge to arrive at the ending hypothetical value. The average annual total return is then determined by computing the fixed interest rate that a $1,000 purchase payment would have to earn annually, compounded annually, to grow to the hypothetical value at the end of the time periods described. The formula used in these calculations is: P (1 + T)n = ERV Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value at the end of the time periods used (or fractional portion thereof) of a hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year periods used. The Company may also advertise performance data which will be calculated in the same manner as described above but which will not reflect the deduction of a withdrawal charge, or applicable Enhanced Death Benefit, GMIB, GWB, or GMAB rider charge. Premium taxes are not reflected. The deduction of such charges would reduce any percentage increase or make greater any percentage decrease. Owners should note that the investment results of each investment portfolio will fluctuate over time, and any presentation of the investment portfolio's total return for any period should not be considered as a representation of what an investment may earn or what the total return may be in any future period. HISTORICAL UNIT VALUES The Company may also show historical accumulation unit values in certain advertisements containing illustrations. 4 These illustrations will be based on actual accumulation unit values. In addition, the Company may distribute sales literature which compares the percentage change in accumulation unit values for any of the investment portfolios against established market indices such as the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average or other management investment companies which have investment objectives similar to the investment portfolio being compared. The Standard & Poor's 500 Composite Stock Price Index is an unmanaged, unweighted average of 500 stocks, the majority of which are listed on the New York Stock Exchange. The Dow Jones Industrial Average is an unmanaged, weighted average of thirty blue chip industrial corporations listed on the New York Stock Exchange. Both the Standard & Poor's 500 Composite Stock Price Index and the Dow Jones Industrial Average assume quarterly reinvestment of dividends. REPORTING AGENCIES The Company may also distribute sales literature which compares the performance of the accumulation unit values of the Contracts with the unit values of variable annuities issued by other insurance companies. Such information will be derived from the Lipper Variable Insurance Products Performance Analysis Service, the VARDS Report or from Morningstar. The Lipper Variable Insurance Products Performance Analysis Service is published by Lipper Analytical Services, Inc., a publisher of statistical data which currently tracks the performance of thousands of investment companies. The rankings compiled by Lipper may or may not reflect the deduction of asset-based insurance charges. The Company's sales literature utilizing these rankings will indicate whether or not such charges have been deducted. Where the charges have not been deducted, the sales literature will indicate that if the charges had been deducted, the ranking might have been lower. The VARDS Report is a monthly variable annuity industry analysis compiled by Variable Annuity Research & Data Service. The VARDS rankings may or may not reflect the deduction of asset-based insurance charges. In addition, VARDS prepares risk adjusted rankings, which consider the effects of market risk on total return performance. This type of ranking may address the question as to which funds provide the highest total return with the least amount of risk. Other ranking services may be used as sources of performance comparison, such as CDA/Weisenberger. Morningstar rates a variable annuity against its peers with similar investment objectives. Morningstar does not rate any variable annuity that has less than three years of performance data. ANNUITY PROVISIONS VARIABLE ANNUITY A variable annuity is an annuity with payments which: (1) are not predetermined as to dollar amount; and (2) will vary in amount in proportion to the amount that the net investment factor exceeds the assumed investment return selected. The Adjusted Contract Value (contract value, less any applicable premium taxes, account fee, and prorated Enhanced Death Benefit, GMIB, GWB or GMAB rider charge, if any) will be applied to the applicable Annuity Table to determine the first annuity payment. The Adjusted Contract Value is determined on the annuity calculation date, which is a business day no more than five (5) business days before the annuity date. The dollar amount of the first variable annuity payment is determined as follows: The first variable annuity payment will be based upon the annuity option elected, the annuitant's age and sex, and the appropriate variable annuity option table. If, as of the annuity calculation date, the then current variable annuity option rates applicable to this class of contracts provide a first annuity payment greater than that which is guaranteed under the same annuity option under this contract, the greater payment will be made. The dollar amount of variable annuity payments after the first payment is determined as follows: 1. the dollar amount of the first variable annuity payment is divided by the value of an annuity unit for each applicable investment portfolio as of the annuity calculation date. This establishes the number of annuity units for each monthly payment. The number of annuity units for each applicable investment portfolio remains fixed during the annuity period, unless you transfer values from the investment portfolio to another investment portfolio; 2. the fixed number of annuity units per payment in each investment portfolio is multiplied by the annuity unit value for that investment portfolio for the business day for which the annuity payment is being calculated. This result is the dollar amount of the payment for each applicable investment portfolio, less any account fee. 5 The account fee will be deducted pro rata out of each annuity payment. The total dollar amount of each variable annuity payment is the sum of all investment portfolio variable annuity payments. ANNUITY UNIT - The initial annuity unit value for each investment portfolio of the Separate Account was set by us. The subsequent annuity unit value for each investment portfolio is determined by multiplying the annuity unit value for the immediately preceding business day by the net investment factor for the investment portfolio for the current business day and multiplying the result by a factor for each day since the last business day which represents the daily equivalent of the AIR you elected. (1) the dollar amount of the first annuity payment is divided by the value of an annuity unit as of the annuity date. This establishes the number of annuity units for each monthly payment. The number of annuity units remains fixed during the annuity payment period. (2) the fixed number of annuity units is multiplied by the annuity unit value for the last valuation period of the month preceding the month for which the payment is due. This result is the dollar amount of the payment. NET INVESTMENT FACTOR - The net investment factor for each investment portfolio is determined by dividing A by B and multiplying by (1-C) where: A is (i) the net asset value per share of the portfolio at the end of the current business day; plus (ii) any dividend or capital gains per share declared on behalf of such portfolio that has an ex-dividend date as of the current business day. B is the net asset value per share of the portfolio for the immediately preceding business day. C is (i) the separate account product charges and for each day since the last business day. The daily charge is equal to the annual separate account product charges divided by 365; plus (ii) a charge factor, if any, for any taxes or any tax reserve we have established as a result of the operation of the Separate Account. Transfers During the Annuity Phase: o You may not make a transfer from the fixed account to the Separate Account; o Transfers among the subaccounts will be made by converting the number of annuity units being transferred to the number of annuity units of the subaccount to which the transfer is made, so that the next annuity payment if it were made at that time would be the same amount that it would have been without the transfer. Thereafter, annuity payments will reflect changes in the value of the new annuity units; and o You may make a transfer from the variable annuity option to the fixed annuity option. The amount transferred from a subaccount of the Separate Account will be equal to the product of "(a)" multiplied by "(b)" multiplied by "(c)", where (a) is the number of annuity units representing your interest in the subaccount per annuity payment; (b) is the annuity unit value for the subaccount; and (c) is the present value of $1.00 per payment period for the remaining annuity benefit period based on the attained age of the annuitant at the time of transfer, calculated using the same actuarial basis as the variable annuity rates applied on the annuity date for the annuity option elected. Amounts transferred to the fixed annuity option will be applied under the annuity option elected at the attained age of the annuitant at the time of the transfer using the fixed annuity option table. If at the time of transfer, the then current fixed annuity option rates applicable to this class of contracts provide a greater payment, the greater payment will be made. All amounts and annuity unit values will be determined as of the end of the business day on which the Company receives a notice. FIXED ANNUITY A fixed annuity is a series of payments made during the annuity phase which are guaranteed as to dollar amount by the Company and do not vary with the investment experience of the Separate Account. The Adjusted Contract Value on the day immediately preceding the annuity date will be used to determine the fixed annuity monthly payment. The monthly annuity payment will be based upon the annuity option elected and the appropriate annuity option table. If, as of the annuity calculation date, the then current annuity option rates applicable to this class of contracts provide an annuity payment greater than that which is guaranteed under the same annuity option under this contract, the greater payment will be made. 6 MORTALITY AND EXPENSE GUARANTEE The Company guarantees that the dollar amount of each annuity payment after the first annuity payment will not be affected by variations in mortality or expense experience. LEGAL OR REGULATORY RESTRICTIONS ON TRANSACTIONS If mandated under applicable law, the Company may be required to reject a premium payment. The Company may also be required to block a contract owner's account and thereby refuse to pay any request for transfers, withdrawals, surrenders, death benefits or continue making annuity payments until instructions are received from the appropriate regulator. TAX STATUS OF THE CONTRACTS Tax law imposes several requirements that variable annuities must satisfy in order to receive the tax treatment normally accorded to annuity contracts. DIVERSIFICATION. In order for your Non-Qualified Contract to be considered an annuity contract for federal income tax purposes, we must comply with certain diversification standards with respect to the investments underlying the contract. We believe that we satisfy and will continue to satisfy these diversification standards. However, the tax law concerning these rules is subject to change and to different interpretations. Inadvertent failure to meet these standards may be correctable. Failure to meet these standards would result in immediate taxation to contract owners of gains under their contracts. Consult your tax adviser prior to purchase. If underlying fund shares are sold directly to tax-qualified retirement plans that later lose their tax-qualified status or to non-qualified plans, the separate accounts investing in the underlying fund may fail the diversification requirements of Section 817, which could have adverse tax consequences for variable contract owners, including losing the benefit of tax deferral. REQUIRED DISTRIBUTIONS. In order to be treated as an annuity contract for Federal income tax purposes, Section 72(s) of the Code generally requires any Non-Qualified Contract to contain certain provisions specifying how your interest in the contract will be distributed in the event of the death of an owner of the contract (or on the death of, or change in, any primary annuitant where the contract is owned by a non-natural person). Specifically, Section 72(s) requires that: (a) if any owner dies on or after the annuity starting date, but prior to the time the entire interest in the contract has been distributed, the entire interest in the contract will be distributed at least as rapidly as under the method of distribution being used as of the date of such owner's death; and (b) if any owner dies prior to the annuity starting date, the entire interest in the contract will be distributed within five years after the date of such owner's death. These requirements will be considered satisfied as to any portion of an owner's interest which is payable to or for the benefit of a designated beneficiary and which is distributed over the life of such designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary, provided that such distributions begin within one year of the owner's death. The designated beneficiary refers to a natural person designated by the owner as a beneficiary and to whom ownership of the contract passes by reason of death. However, if the designated beneficiary is the surviving spouse of the deceased owner, the contract may be continued with the surviving spouse as the new owner. The Non-Qualified Contracts contain provisions that are intended to comply with these Code requirements, although no regulations interpreting these requirements have yet been issued. We intend to review such provisions and modify them if necessary to assure that they comply with the applicable requirements when such requirements are clarified by regulation or otherwise. Other rules may apply to Qualified Contracts. MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS. Federal tax law requires that minimum annual distributions begin by April 1st of the calendar year following the calendar year in which an IRA owner attains age 70 1/2. Participants in qualified plans and 403(b) annuities may defer minimum distributions until the later of April 1st of the calendar year following the calendar year in which they attain age 70 1/2 or the year of retirement (except for 5% or more owners). If you own more than one individual retirement annuity and/or account, you may satisfy the minimum distribution rules on an aggregate basis (i.e., determine the total amount of required distributions from all IRAs and take the required amount from any one or more IRAs). A similar aggregate approach is available to meet your 403(b) minimum distribution requirements if you have multiple 403(b) annuities. Recently promulgated Treasury regulations changed the distribution requirements; 7 therefore, it is important that you consult your tax adviser as to the impact of these regulations on your personal situation. Final income tax regulations regarding minimum distribution requirements were released in June 2004. These regulations affect both deferred and income annuities. Under these new rules, effective with respect to minimum distributions required for the 2006 distribution year, in general, the value of all benefits under a deferred annuity (including death benefits in excess of cash value) must be added to the account value in computing the amount required to be distributed over the applicable period. We will provide you with additional information as to the amount of your interest in the contract that is subject to required minimum distributions under this new rule and either compute the required amount for you or offer to do so at your request. The new rules are not entirely clear and you should consult your tax adviser as to how these rules affect your contract. MINIMUM DISTRIBUTIONS FOR BENEFICIARIES UPON THE CONTRACT OWNER'S DEATH. Upon the death of the contract owner and/or annuitant of a Qualified Contract, the funds remaining in the contract must be completely withdrawn within 5 years from the date of death (including in a single lump sum) or minimum distributions may be taken over the life expectancy of the individual beneficiaries (and in certain situations, trusts for individuals), provided such distributions are payable at least annually and begin within one year from the date of death. Special rules apply in the case of an IRA where the beneficiary is the surviving spouse which allow the spouse to assume the contract as owner. Alternative rules permit a spousal beneficiary under a qualified contract, including an IRA, to defer the minimum distribution requirements until the end of the year in which the deceased spouse would have attained age 70 1/2 or to rollover the death proceeds to his or her own IRA or to another eligible retirement plan in which he or she participates. 8 CONDENSED FINANCIAL INFORMATION The following charts list the Condensed Financial Information (the accumulation unit value information for the accumulation units outstanding) for contracts issued as of December 31, 2007. See "Purchase - Accumulation Units" in the prospectus for information on how accumulation unit values are calculated. The charts present accumulation unit values based upon which riders you select. The charts are in addition to the charts in the prospectus. CLASS XC
1.65% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998644 11.951741 188,983.5826 01/01/2005 to 12/31/2005 11.951741 13.230588 192,469.8754 01/01/2006 to 12/31/2006 13.230588 15.056884 196,663.5853 01/01/2007 to 12/31/2007 15.056884 15.267724 183,925.9084 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.929396 655.0284 01/01/2002 to 12/31/2002 10.929396 8.805453 175,758.5084 01/01/2003 to 12/31/2003 8.805453 11.690181 890,875.6228 01/01/2004 to 12/31/2004 11.690181 13.858377 689,649.6331 01/01/2005 to 12/31/2005 13.858377 15.573010 541,506.2615 01/01/2006 to 12/31/2006 15.573010 19.738183 508,578.8353 01/01/2007 to 12/31/2007 19.738183 19.196255 468,248.8267 ============ ==== ========== ========= ========= ============== LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.984994 1,723.3141 01/01/2002 to 12/31/2002 10.984994 9.636340 273,094.9744 01/01/2003 to 12/31/2003 9.636340 11.959724 728,304.0743 01/01/2004 to 12/31/2004 11.959724 13.457712 472,313.4662 01/01/2005 to 12/31/2005 13.457712 14.304925 355,196.8526 01/01/2006 to 12/31/2006 14.304925 16.136462 303,858.9772 01/01/2007 to 12/31/2007 16.136462 15.440795 309,684.9867 ============ ==== ========== ========= ========= ============== LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 7.790814 7.293775 68,577.6242 01/01/2002 to 12/31/2002 7.293775 5.177286 609,227.4429 01/01/2003 to 12/31/2003 5.177286 6.666256 1,444,785.3500 01/01/2004 to 12/31/2004 6.666256 7.110320 2,197,732.7570 01/01/2005 to 12/31/2005 7.110320 7.943847 1,857,327.7344 01/01/2006 to 12/31/2006 7.943847 7.678353 1,645,430.2590 01/01/2007 to 12/31/2007 7.678353 7.723216 1,432,771.5576 ============ ==== ========== ========= ========= ==============
9 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.65% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.246771 10.621157 0.0000 01/01/2006 to 12/31/2006 10.621157 11.135542 274,472.5365 01/01/2007 to 12/31/2007 11.135542 10.305387 214,294.0251 ============ ==== ========== ========= ========= ============== LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988644 10.322142 0.0000 01/01/2007 to 12/31/2007 10.322142 12.980214 26,979.7464 ============ ==== ========== ========= ========= ============== LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 13.959185 13.951241 211,867.7916 01/01/2002 to 12/31/2002 13.951241 13.644245 961,841.5750 01/01/2003 to 12/31/2003 13.644245 15.992320 1,990,206.6930 01/01/2004 to 12/31/2004 15.992320 17.014558 1,423,919.9610 01/01/2005 to 12/31/2005 17.014558 16.986823 1,399,447.2204 01/01/2006 to 12/31/2006 16.986823 18.238141 1,217,495.8032 01/01/2007 to 12/31/2007 18.238141 19.113056 1,099,384.7378 ============ ==== ========== ========= ========= ============== LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 39.909345 41.312239 333,795.0812 01/01/2002 to 12/31/2002 41.312239 33.272684 1,033,883.0189 01/01/2003 to 12/31/2003 33.272684 42.786777 1,593,251.7660 01/01/2004 to 12/31/2004 42.786777 47.407274 1,462,636.7260 01/01/2005 to 12/31/2005 47.407274 48.215337 1,315,097.2795 01/01/2006 to 12/31/2006 48.215337 55.863563 1,186,099.7281 01/01/2007 to 12/31/2007 55.863563 56.989263 1,028,082.7548 ============ ==== ========== ========= ========= ============== MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 11.845599 8,879.6874 01/01/2002 to 12/31/2002 11.845599 8.446962 354,541.9517 01/01/2003 to 12/31/2003 8.446962 11.538078 728,480.7931 01/01/2004 to 12/31/2004 11.538078 12.078766 635,631.1567 01/01/2005 to 12/31/2005 12.078766 12.863783 950,432.5565 01/01/2006 to 12/31/2006 12.863783 14.448465 777,132.0016 01/01/2007 to 12/31/2007 14.448465 15.784081 623,331.2147 ============ ==== ========== ========= ========= ============== MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.189120 8.050186 45,232.6746 01/01/2002 to 12/31/2002 8.050186 6.270402 304,328.7950 01/01/2003 to 12/31/2003 6.270402 7.668982 574,092.5202 01/01/2004 to 11/19/2004 7.668982 7.860884 411,757.7047 ============ ==== ========== ========= ========= ============== MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988644 10.460946 4,310.7289 01/01/2007 to 12/31/2007 10.460946 14.056678 37,369.9794 ============ ==== ========== ========= ========= ==============
10 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.65% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.739526 8.364799 41,049.8664 01/01/2002 to 12/31/2002 8.364799 7.256874 522,387.8148 01/01/2003 to 12/31/2003 7.256874 9.425479 874,528.2853 01/01/2004 to 12/31/2004 9.425479 11.084222 1,304,324.8450 01/01/2005 to 12/31/2005 11.084222 12.698204 1,644,548.8198 01/01/2006 to 12/31/2006 12.698204 15.829203 1,407,133.1390 01/01/2007 to 12/31/2007 15.829203 17.646923 1,169,698.7894 ============ ==== ========== ========= ========= ============== MONEY MARKET SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.041611 10.134443 77,162.0693 01/01/2002 to 12/31/2002 10.134443 10.077868 745,567.9878 01/01/2003 to 12/31/2003 10.077868 9.955999 890,691.6762 01/01/2004 to 12/31/2004 9.955999 9.855432 509,470.6728 01/01/2005 to 04/30/2005 9.855432 9.860283 3,411.3696 ============ ==== ========== ========= ========= ============== NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998644 12.812153 166,923.8607 01/01/2005 to 12/31/2005 12.812153 14.277527 535,190.5442 01/01/2006 to 12/31/2006 14.277527 19.322711 431,641.1974 01/01/2007 to 12/31/2007 19.322711 16.152793 318,515.9311 ============ ==== ========== ========= ========= ============== OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.579774 8.450379 135,716.3939 01/01/2002 to 12/31/2002 8.450379 6.255898 1,116,165.0721 01/01/2003 to 12/31/2003 6.255898 7.909106 2,898,933.3130 01/01/2004 to 12/31/2004 7.909106 8.277517 2,529,877.5500 01/01/2005 to 12/31/2005 8.277517 8.526290 1,927,136.5714 01/01/2006 to 12/31/2006 8.526290 9.025889 1,813,925.7357 01/01/2007 to 12/31/2007 9.025889 10.145899 1,461,057.7979 ============ ==== ========== ========= ========= ============== PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.418489 1,218,441.4730 01/01/2004 to 12/31/2004 10.418489 11.170963 852,071.8889 01/01/2005 to 12/31/2005 11.170963 11.141080 579,488.0413 01/01/2006 to 12/31/2006 11.141080 11.001649 528,394.1723 01/01/2007 to 12/31/2007 11.001649 11.989080 474,331.6052 ============ ==== ========== ========= ========= ==============
11 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.65% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.075038 10.515687 72,154.0372 01/01/2002 to 12/31/2002 10.515687 11.304919 2,135,803.4105 01/01/2003 to 12/31/2003 11.304919 11.598744 3,129,998.9400 01/01/2004 to 12/31/2004 11.598744 11.976661 2,930,256.0470 01/01/2005 to 12/31/2005 11.976661 12.045993 2,864,523.5732 01/01/2006 to 12/31/2006 12.045993 12.384722 2,757,324.6750 01/01/2007 to 12/31/2007 12.384722 13.102425 2,253,473.7136 ============ ==== ========== ========= ========= ============== RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.564767 9.979690 7,434.6246 ============ ==== ========== ========= ========= ============== RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 6.761758 6.081488 63,122.0696 01/01/2002 to 12/31/2002 6.081488 2.947164 248,653.0442 01/01/2003 to 12/31/2003 2.947164 4.567923 384,195.3425 01/01/2004 to 12/31/2004 4.567923 4.299219 486,242.6251 01/01/2005 to 12/31/2005 4.299219 4.694924 368,658.4428 01/01/2006 to 12/31/2006 4.694924 4.865207 307,457.7590 01/01/2007 to 12/31/2007 4.865207 6.293680 250,181.0592 ============ ==== ========== ========= ========= ============== T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 7.615046 8.220557 107,325.0956 01/01/2002 to 12/31/2002 8.220557 4.525032 874,509.3435 01/01/2003 to 12/31/2003 4.525032 6.081870 2,006,794.9600 01/01/2004 to 12/31/2004 6.081870 7.048322 1,716,682.7400 01/01/2005 to 12/31/2005 7.048322 7.947436 1,739,314.5771 01/01/2006 to 12/31/2006 7.947436 8.299611 1,550,251.7051 01/01/2007 to 12/31/2007 8.299611 9.602874 1,137,931.2798 ============ ==== ========== ========= ========= ============== THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 8.218733 262,587.9067 01/01/2003 to 12/31/2003 8.218733 11.433062 1,022,632.1470 01/01/2004 to 12/31/2004 11.433062 14.226210 749,621.5910 01/01/2005 to 12/31/2005 14.226210 16.160130 675,892.4241 01/01/2006 to 12/31/2006 16.160130 17.983664 622,328.8281 01/01/2007 to 12/31/2007 17.983664 17.153385 554,229.9754 ============ ==== ========== ========= ========= ============== TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998644 11.096411 160,260.3155 01/01/2005 to 12/31/2005 11.096411 12.155042 124,124.2139 01/01/2006 to 12/31/2006 12.155042 12.682656 117,467.0038 01/01/2007 to 12/31/2007 12.682656 15.486352 123,761.6709 ============ ==== ========== ========= ========= ==============
12 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.65% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998644 10.458340 233,041.5843 01/01/2006 to 12/31/2006 10.458340 11.939126 432,481.7855 01/01/2007 to 12/31/2007 11.939126 11.450048 396,995.8450 ============ ==== ========== ========= ========= ============== METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.860067 9.947469 573,196.9846 01/01/2006 to 12/31/2006 9.947469 10.230456 815,314.8727 01/01/2007 to 12/31/2007 10.230456 10.546583 1,101,164.9748 ============ ==== ========== ========= ========= ============== DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 04/02/2001 to 12/31/2001 10.196756 10.136771 167,899.0385 01/01/2002 to 12/31/2002 10.136771 8.320551 1,455,072.3987 01/01/2003 to 12/31/2003 8.320551 10.699997 2,837,066.7900 01/01/2004 to 12/31/2004 10.699997 11.802287 3,113,698.1630 01/01/2005 to 12/31/2005 11.802287 12.786459 3,101,670.2116 01/01/2006 to 12/31/2006 12.786459 14.389697 3,004,904.4939 01/01/2007 to 12/31/2007 14.389697 14.780208 2,577,501.1009 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.163646 11.924478 49,663.5375 01/01/2002 to 12/31/2002 11.924478 10.665887 684,030.8054 01/01/2003 to 12/31/2003 10.665887 13.883167 1,602,593.0700 01/01/2004 to 12/31/2004 13.883167 14.973492 1,026,421.6470 01/01/2005 to 12/31/2005 14.973492 16.158995 867,876.2326 01/01/2006 to 12/31/2006 16.158995 17.830257 790,359.5308 01/01/2007 to 12/31/2007 17.830257 16.296121 695,047.3958 ============ ==== ========== ========= ========= ============== JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 7.615315 525,650.4510 01/01/2003 to 12/31/2003 7.615315 9.714878 1,062,291.4680 01/01/2004 to 12/31/2004 9.714878 10.409513 892,343.7227 01/01/2005 to 12/31/2005 10.409513 11.625804 816,190.2397 01/01/2006 to 12/31/2006 11.625804 11.724679 814,130.3729 01/01/2007 to 12/31/2007 11.724679 12.845133 619,641.8715 ============ ==== ========== ========= ========= ==============
13 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.65% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.843650 10,152.7946 01/01/2002 to 12/31/2002 10.843650 8.264381 322,250.4764 01/01/2003 to 12/31/2003 8.264381 10.395014 529,148.8849 01/01/2004 to 12/31/2004 10.395014 11.275442 537,950.0067 01/01/2005 to 12/31/2005 11.275442 11.578333 515,068.8129 01/01/2006 to 12/31/2006 11.578333 13.121585 414,812.5866 01/01/2007 to 12/31/2007 13.121585 13.550452 357,212.0648 ============ ==== ========== ========= ========= ============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 15.393136 15.351902 0.0000 01/01/2006 to 12/31/2006 15.351902 15.692541 943.5295 01/01/2007 to 12/31/2007 15.692541 16.056909 1,017.6624 ============ ==== ========== ========= ========= ============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.301164 10.687313 777,671.6506 01/01/2005 to 12/31/2005 10.687313 11.604154 899,364.1233 01/01/2006 to 12/31/2006 11.604154 12.972623 932,223.4427 01/01/2007 to 12/31/2007 12.972623 13.127531 801,086.3843 ============ ==== ========== ========= ========= ============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.101328 10.391330 3,996,359.1880 01/01/2005 to 12/31/2005 10.391330 10.949726 5,127,061.1608 01/01/2006 to 12/31/2006 10.949726 12.061156 5,254,087.6894 01/01/2007 to 12/31/2007 12.061156 12.441938 5,357,936.7469 ============ ==== ========== ========= ========= ============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.941459 10.107486 179,571.4468 01/01/2005 to 12/31/2005 10.107486 10.387940 619,534.0776 01/01/2006 to 12/31/2006 10.387940 11.099798 639,937.3383 01/01/2007 to 12/31/2007 11.099798 11.563424 812,162.4307 ============ ==== ========== ========= ========= ============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.241214 10.602224 3,727,116.6000 01/01/2005 to 12/31/2005 10.602224 11.380836 5,704,736.6098 01/01/2006 to 12/31/2006 11.380836 12.717038 5,940,772.0373 01/01/2007 to 12/31/2007 12.717038 13.096001 5,626,447.2583 ============ ==== ========== ========= ========= ============== METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.011402 10.227688 1,174,171.0680 01/01/2005 to 12/31/2005 10.227688 10.645573 1,733,038.4828 01/01/2006 to 12/31/2006 10.645573 11.543319 1,830,936.8523 01/01/2007 to 12/31/2007 11.543319 12.058129 2,371,941.0372 ============ ==== ========== ========= ========= ==============
14 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.75% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998562 11.943726 200,639.3919 01/01/2005 to 12/31/2005 11.943726 13.208544 307,360.8379 01/01/2006 to 12/31/2006 13.208544 15.016817 418,104.5508 01/01/2007 to 12/31/2007 15.016817 15.211790 415,804.5835 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.751972 11.728055 502,035.9448 01/01/2004 to 12/31/2004 11.728055 13.889348 733,353.6073 01/01/2005 to 12/31/2005 13.889348 15.592262 643,962.4400 01/01/2006 to 12/31/2006 15.592262 19.742895 742,984.0450 01/01/2007 to 12/31/2007 19.742895 19.181531 687,008.4094 ============ ==== ========== ========= ========= ============ LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 9.728989 11.998433 263,550.1272 01/01/2004 to 12/31/2004 11.998433 13.487739 224,052.4404 01/01/2005 to 12/31/2005 13.487739 14.322557 160,332.2470 01/01/2006 to 12/31/2006 14.322557 16.140250 154,272.9954 01/01/2007 to 12/31/2007 16.140250 15.428895 144,273.1358 ============ ==== ========== ========= ========= ============ LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 5.505944 6.697139 707,471.8090 01/01/2004 to 12/31/2004 6.697139 7.136100 781,225.4021 01/01/2005 to 12/31/2005 7.136100 7.964706 525,101.1448 01/01/2006 to 12/31/2006 7.964706 7.690836 495,540.0535 01/01/2007 to 12/31/2007 7.690836 7.727995 422,370.8947 ============ ==== ========== ========= ========= ============ LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.246575 10.619411 0.0000 01/01/2006 to 12/31/2006 10.619411 11.122610 59,256.6729 01/01/2007 to 12/31/2007 11.122610 10.283068 71,461.8140 ============ ==== ========== ========= ========= ============ LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988562 10.315213 2,215.1197 01/01/2007 to 12/31/2007 10.315213 12.958474 117,424.9721 ============ ==== ========== ========= ========= ============ LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 14.697264 16.066264 652,133.2433 01/01/2004 to 12/31/2004 16.066264 17.076098 685,346.9420 01/01/2005 to 12/31/2005 17.076098 17.031269 537,149.8991 01/01/2006 to 12/31/2006 17.031269 18.267637 542,621.3729 01/01/2007 to 12/31/2007 18.267637 19.124730 519,702.0840 ============ ==== ========== ========= ========= ============
15 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.75% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 34.555426 42.984805 334,537.2375 01/01/2004 to 12/31/2004 42.984805 47.578964 429,989.9089 01/01/2005 to 12/31/2005 47.578964 48.341721 351,515.8593 01/01/2006 to 12/31/2006 48.341721 55.954181 341,504.5455 01/01/2007 to 12/31/2007 55.954181 57.024330 308,668.0904 ============ ==== ========== ========= ========= ============ MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.707674 11.575448 303,307.8198 01/01/2004 to 12/31/2004 11.575448 12.105739 468,862.0298 01/01/2005 to 12/31/2005 12.105739 12.879664 362,246.6080 01/01/2006 to 12/31/2006 12.879664 14.451878 329,252.6982 01/01/2007 to 12/31/2007 14.451878 15.771940 291,662.2626 ============ ==== ========== ========= ========= ============ MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.425734 7.704481 135,372.7607 01/01/2004 to 11/19/2004 7.704481 7.890285 166,048.9595 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988562 10.453918 3,471.4578 01/01/2007 to 12/31/2007 10.453918 14.033128 81,889.3680 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 7.334391 9.469098 216,291.5659 01/01/2004 to 12/31/2004 9.469098 11.124362 522,437.5979 01/01/2005 to 12/31/2005 11.124362 12.727210 405,795.7495 01/01/2006 to 12/31/2006 12.727210 15.829364 403,883.4304 01/01/2007 to 12/31/2007 15.829364 17.620509 445,604.3010 ============ ==== ========== ========= ========= ============ MONEY MARKET SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.096666 10.002057 107,542.8246 01/01/2004 to 12/31/2004 10.002057 9.891100 253,746.9493 01/01/2005 to 04/30/2005 9.891100 9.892743 0.0000 ============ ==== ========== ========= ========= ============ NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998562 12.803566 163,702.3876 01/01/2005 to 12/31/2005 12.803566 14.253740 136,325.5664 01/01/2006 to 12/31/2006 14.253740 19.271313 157,880.1882 01/01/2007 to 12/31/2007 19.271313 16.093623 149,821.9519 ============ ==== ========== ========= ========= ============
16 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.75% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------- OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.545686 7.945738 1,199,037.8673 01/01/2004 to 12/31/2004 7.945738 8.307522 1,304,920.5870 01/01/2005 to 12/31/2005 8.307522 8.548668 994,431.8974 01/01/2006 to 12/31/2006 8.548668 9.040556 971,145.3829 01/01/2007 to 12/31/2007 9.040556 10.152174 883,697.9359 ============ ==== ========== ========= ========= ============== PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.411529 736,447.3370 01/01/2004 to 12/31/2004 10.411529 11.152314 986,886.9436 01/01/2005 to 12/31/2005 11.152314 11.111391 778,414.1933 01/01/2006 to 12/31/2006 11.111391 10.961391 713,291.4137 01/01/2007 to 12/31/2007 10.961391 11.933208 682,836.8400 ============ ==== ========== ========= ========= ============== PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 11.613154 11.652364 706,866.7231 01/01/2004 to 12/31/2004 11.652364 12.019969 763,670.5952 01/01/2005 to 12/31/2005 12.019969 12.077499 699,133.5903 01/01/2006 to 12/31/2006 12.077499 12.404736 849,038.1120 01/01/2007 to 12/31/2007 12.404736 13.110413 719,451.5509 ============ ==== ========== ========= ========= ============== RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.564450 9.978019 6,824.1118 ============ ==== ========== ========= ========= ============== RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 3.305316 4.589108 136,427.2265 01/01/2004 to 12/31/2004 4.589108 4.314826 312,990.2164 01/01/2005 to 12/31/2005 4.314826 4.707273 199,315.4728 01/01/2006 to 12/31/2006 4.707273 4.873139 208,861.1208 01/01/2007 to 12/31/2007 4.873139 6.297612 297,168.9507 ============ ==== ========== ========= ========= ============== T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 4.758231 6.110051 711,884.3786 01/01/2004 to 12/31/2004 6.110051 7.073886 539,705.6911 01/01/2005 to 12/31/2005 7.073886 7.968314 522,229.9930 01/01/2006 to 12/31/2006 7.968314 8.313116 501,887.7220 01/01/2007 to 12/31/2007 8.313116 9.608835 502,456.6517 ============ ==== ========== ========= ========= ============== THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.471513 11.454065 510,324.5346 01/01/2004 to 12/31/2004 11.454065 14.238069 658,400.3957 01/01/2005 to 12/31/2005 14.238069 16.157491 582,506.2236 01/01/2006 to 12/31/2006 16.157491 17.962804 632,083.8801 01/01/2007 to 12/31/2007 17.962804 17.116257 590,073.6714 ============ ==== ========== ========= ========= ==============
17 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.75% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998562 11.088963 163,554.1683 01/01/2005 to 12/31/2005 11.088963 12.134782 122,346.8702 01/01/2006 to 12/31/2006 12.134782 12.648888 121,994.0982 01/01/2007 to 12/31/2007 12.648888 15.429601 147,231.5203 ============ ==== ========== ========= ========= ============== VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998562 10.451325 22,966.7521 01/01/2006 to 12/31/2006 10.451325 11.919227 85,062.7874 01/01/2007 to 12/31/2007 11.919227 11.419472 96,248.9567 ============ ==== ========== ========= ========= ============== METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.892445 9.973519 458,380.6783 01/01/2006 to 12/31/2006 9.973519 10.247024 687,210.1040 01/01/2007 to 12/31/2007 10.247024 10.553046 1,015,568.2644 ============ ==== ========== ========= ========= ============== DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 05/01/2003 to 12/31/2003 8.556367 10.749521 812,394.0970 01/01/2004 to 12/31/2004 10.749521 11.845032 1,387,014.0070 01/01/2005 to 12/31/2005 11.845032 12.819984 1,232,480.4169 01/01/2006 to 12/31/2006 12.819984 14.413047 1,309,198.0454 01/01/2007 to 12/31/2007 14.413047 14.789310 1,315,469.2794 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.939577 13.947388 619,951.3971 01/01/2004 to 12/31/2004 13.947388 15.027679 769,904.3927 01/01/2005 to 12/31/2005 15.027679 16.201314 750,785.7937 01/01/2006 to 12/31/2006 16.201314 17.859135 844,703.5159 01/01/2007 to 12/31/2007 17.859135 16.306100 761,548.8160 ============ ==== ========== ========= ========= ============== JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.069248 9.732750 509,533.6949 01/01/2004 to 12/31/2004 9.732750 10.418212 663,087.6564 01/01/2005 to 12/31/2005 10.418212 11.623927 515,598.7796 01/01/2006 to 12/31/2006 11.623927 11.711098 513,916.9419 01/01/2007 to 12/31/2007 11.711098 12.817358 492,311.6930 ============ ==== ========== ========= ========= ==============
18 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.75% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------- METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.627802 10.428700 163,727.6214 01/01/2004 to 12/31/2004 10.428700 11.300646 287,263.4410 01/01/2005 to 12/31/2005 11.300646 11.591091 396,623.4327 01/01/2006 to 12/31/2006 11.591091 13.120340 392,218.9338 01/01/2007 to 12/31/2007 13.120340 13.532831 377,287.7898 ============ ==== ========== ========= ========= =============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 15.232212 15.181339 490.4303 01/01/2006 to 12/31/2006 15.181339 15.502724 25,596.8450 01/01/2007 to 12/31/2007 15.502724 15.846744 29,409.6249 ============ ==== ========== ========= ========= =============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.300629 10.685617 496,059.1309 01/01/2005 to 12/31/2005 10.685617 11.590752 933,205.2691 01/01/2006 to 12/31/2006 11.590752 12.944726 1,106,411.7940 01/01/2007 to 12/31/2007 12.944726 13.086132 1,026,255.7098 ============ ==== ========== ========= ========= =============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.100803 10.389680 3,598,348.2350 01/01/2005 to 12/31/2005 10.389680 10.937077 7,366,079.1747 01/01/2006 to 12/31/2006 10.937077 12.035216 10,524,181.7495 01/01/2007 to 12/31/2007 12.035216 12.402700 12,389,849.2039 ============ ==== ========== ========= ========= =============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.940942 10.105881 89,756.6426 01/01/2005 to 12/31/2005 10.105881 10.375938 551,207.4189 01/01/2006 to 12/31/2006 10.375938 11.075921 918,626.7875 01/01/2007 to 12/31/2007 11.075921 11.526954 1,598,877.3764 ============ ==== ========== ========= ========= =============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.240681 10.600541 3,639,293.8540 01/01/2005 to 12/31/2005 10.600541 11.367691 6,735,952.1977 01/01/2006 to 12/31/2006 11.367691 12.689689 9,320,109.9604 01/01/2007 to 12/31/2007 12.689689 13.054701 12,268,807.7092 ============ ==== ========== ========= ========= =============== METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.010881 10.226064 1,315,354.3950 01/01/2005 to 12/31/2005 10.226064 10.633274 2,644,268.1902 01/01/2006 to 12/31/2006 10.633274 11.518490 3,520,388.0639 01/01/2007 to 12/31/2007 11.518490 12.020101 4,956,840.2576 ============ ==== ========== ========= ========= ===============
19 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.80% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998521 11.939720 269,252.5508 01/01/2005 to 12/31/2005 11.939720 13.197536 349,356.2707 01/01/2006 to 12/31/2006 13.197536 14.996823 366,355.5134 01/01/2007 to 12/31/2007 14.996823 15.183900 272,368.6003 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.925670 10.0000 01/01/2002 to 12/31/2002 10.925670 8.789245 23,744.1676 01/01/2003 to 12/31/2003 8.789245 11.651185 614,792.3152 01/01/2004 to 12/31/2004 11.651185 13.791399 844,731.6342 01/01/2005 to 12/31/2005 13.791399 15.474588 837,023.8301 01/01/2006 to 12/31/2006 15.474588 19.584134 745,520.9303 01/01/2007 to 12/31/2007 19.584134 19.017716 627,653.5260 ============ ==== ========== ========= ========= ============== LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.981256 1,158.6675 01/01/2002 to 12/31/2002 10.981256 9.618604 12,911.9264 01/01/2003 to 12/31/2003 9.618604 11.919827 422,071.7829 01/01/2004 to 12/31/2004 11.919827 13.392661 368,115.1203 01/01/2005 to 12/31/2005 13.392661 14.214507 308,960.7342 01/01/2006 to 12/31/2006 14.214507 16.010503 278,322.4644 01/01/2007 to 12/31/2007 16.010503 15.297171 242,339.9123 ============ ==== ========== ========= ========= ============== LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 7.790426 7.285235 5,330.5546 01/01/2002 to 12/31/2002 7.285235 5.163465 89,241.3611 01/01/2003 to 12/31/2003 5.163465 6.638491 936,260.0392 01/01/2004 to 12/31/2004 6.638491 7.070062 2,084,113.6850 01/01/2005 to 12/31/2005 7.070062 7.887068 1,702,529.6789 01/01/2006 to 12/31/2006 7.887068 7.612069 1,355,423.3051 01/01/2007 to 12/31/2007 7.612069 7.645002 1,041,174.5476 ============ ==== ========== ========= ========= ============== LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.246477 10.618538 28,040.4414 01/01/2006 to 12/31/2006 10.618538 11.116150 367,326.8825 01/01/2007 to 12/31/2007 11.116150 10.271927 243,054.4120 ============ ==== ========== ========= ========= ============== LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988521 10.311750 156.2923 01/01/2007 to 12/31/2007 10.311750 12.947617 80,801.0690 ============ ==== ========== ========= ========= ==============
20 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.80% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 13.958495 13.934910 41,643.4787 01/01/2002 to 12/31/2002 13.934910 13.607857 183,438.0434 01/01/2003 to 12/31/2003 13.607857 15.925780 1,026,911.4563 01/01/2004 to 12/31/2004 15.925780 16.918301 1,025,538.3330 01/01/2005 to 12/31/2005 16.918301 16.865474 1,019,329.1949 01/01/2006 to 12/31/2006 16.865474 18.080789 883,966.3053 01/01/2007 to 12/31/2007 18.080789 18.919602 722,771.4459 ============ ==== ========== ========= ========= ============== LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 39.907383 41.263886 62,136.3978 01/01/2002 to 12/31/2002 41.263886 33.183838 193,615.0006 01/01/2003 to 12/31/2003 33.183838 42.608637 694,811.9466 01/01/2004 to 12/31/2004 42.608637 47.138957 782,579.5836 01/01/2005 to 12/31/2005 47.138957 47.870784 706,835.4937 01/01/2006 to 12/31/2006 47.870784 55.381470 634,180.4254 01/01/2007 to 12/31/2007 55.381470 56.412292 488,664.9173 ============ ==== ========== ========= ========= ============== MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 11.841568 60.8234 01/01/2002 to 12/31/2002 11.841568 8.431404 49,027.0668 01/01/2003 to 12/31/2003 8.431404 11.499598 381,795.2233 01/01/2004 to 12/31/2004 11.499598 12.020385 597,576.0166 01/01/2005 to 12/31/2005 12.020385 12.782480 817,804.6238 01/01/2006 to 12/31/2006 12.782480 14.335678 626,501.9730 01/01/2007 to 12/31/2007 14.335678 15.637262 585,719.6194 ============ ==== ========== ========= ========= ============== MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.188716 8.040755 3,993.1489 01/01/2002 to 12/31/2002 8.040755 6.253646 38,626.0334 01/01/2003 to 12/31/2003 6.253646 7.637036 224,000.1853 01/01/2004 to 11/19/2004 7.637036 7.817754 212,619.4835 ============ ==== ========== ========= ========= ============== MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988521 10.450406 9,664.2596 01/01/2007 to 12/31/2007 10.450406 14.021368 75,218.3346 ============ ==== ========== ========= ========= ==============
21 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.80% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.739093 8.354994 2,838.0714 01/01/2002 to 12/31/2002 8.354994 7.237479 78,810.0767 01/01/2003 to 12/31/2003 7.237479 9.386204 329,880.9111 01/01/2004 to 12/31/2004 9.386204 11.021453 907,434.3050 01/01/2005 to 12/31/2005 11.021453 12.607434 1,182,055.3583 01/01/2006 to 12/31/2006 12.607434 15.680393 1,003,465.2248 01/01/2007 to 12/31/2007 15.680393 17.454683 828,521.3989 ============ ==== ========== ========= ========= ============== MONEY MARKET SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.041115 10.122589 10,516.7910 01/01/2002 to 12/31/2002 10.122589 10.050994 226,239.9556 01/01/2003 to 12/31/2003 10.050994 9.914562 253,610.2645 01/01/2004 to 12/31/2004 9.914562 9.799660 229,972.3926 01/01/2005 to 04/30/2005 9.799660 9.799690 2,245.9017 ============ ==== ========== ========= ========= ============== NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998521 12.799274 214,119.3092 01/01/2005 to 12/31/2005 12.799274 14.241861 441,658.2120 01/01/2006 to 12/31/2006 14.241861 19.245665 320,390.7743 01/01/2007 to 12/31/2007 19.245665 16.064120 249,511.4729 ============ ==== ========== ========= ========= ============== OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.579351 8.440489 10,882.6021 01/01/2002 to 12/31/2002 8.440489 6.239188 183,738.0480 01/01/2003 to 12/31/2003 6.239188 7.876171 1,617,537.5980 01/01/2004 to 12/31/2004 7.876171 8.230659 2,057,514.8250 01/01/2005 to 12/31/2005 8.230659 8.465353 1,702,010.0549 01/01/2006 to 12/31/2006 8.465353 8.947983 1,528,712.0855 01/01/2007 to 12/31/2007 8.947983 10.043168 1,441,276.4124 ============ ==== ========== ========= ========= ============== PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.408048 905,824.8266 01/01/2004 to 12/31/2004 10.408048 11.142998 1,303,099.0940 01/01/2005 to 12/31/2005 11.142998 11.096573 1,077,939.2457 01/01/2006 to 12/31/2006 11.096573 10.941314 951,956.8605 01/01/2007 to 12/31/2007 10.941314 11.905367 761,114.7117 ============ ==== ========== ========= ========= ==============
22 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.80% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.074541 10.503380 7,939.7406 01/01/2002 to 12/31/2002 10.503380 11.274776 350,470.5383 01/01/2003 to 12/31/2003 11.274776 11.550473 1,496,751.5824 01/01/2004 to 12/31/2004 11.550473 11.908891 2,143,706.6570 01/01/2005 to 12/31/2005 11.908891 11.959923 1,998,118.3819 01/01/2006 to 12/31/2006 11.959923 12.277851 1,862,279.1932 01/01/2007 to 12/31/2007 12.277851 12.969788 1,393,983.3777 ============ ==== ========== ========= ========= ============== RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.564292 9.977183 9,938.1847 ============ ==== ========== ========= ========= ============== RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 6.761420 6.074341 1,856.7190 01/01/2002 to 12/31/2002 6.074341 2.939266 12,119.9922 01/01/2003 to 12/31/2003 2.939266 4.548861 164,020.3205 01/01/2004 to 12/31/2004 4.548861 4.274839 426,221.9721 01/01/2005 to 12/31/2005 4.274839 4.661325 372,468.2153 01/01/2006 to 12/31/2006 4.661325 4.823166 339,909.0895 01/01/2007 to 12/31/2007 4.823166 6.229901 296,934.7843 ============ ==== ========== ========= ========= ============== T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 7.614667 8.210931 6,367.6263 01/01/2002 to 12/31/2002 8.210931 4.512937 148,563.8294 01/01/2003 to 12/31/2003 4.512937 6.056532 1,269,649.0726 01/01/2004 to 12/31/2004 6.056532 7.008410 1,223,969.1320 01/01/2005 to 12/31/2005 7.008410 7.890626 1,286,289.4990 01/01/2006 to 12/31/2006 7.890626 8.227961 894,709.4546 01/01/2007 to 12/31/2007 8.227961 9.505627 924,956.0286 ============ ==== ========== ========= ========= ============== THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 8.210477 42,984.0519 01/01/2003 to 12/31/2003 8.210477 11.404493 722,639.6064 01/01/2004 to 12/31/2004 11.404493 14.169346 832,311.1906 01/01/2005 to 12/31/2005 14.169346 16.071495 750,702.2762 01/01/2006 to 12/31/2006 16.071495 17.858290 704,913.6963 01/01/2007 to 12/31/2007 17.858290 17.008110 491,512.3578 ============ ==== ========== ========= ========= ============== TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998521 11.085242 190,130.9966 01/01/2005 to 12/31/2005 11.085242 12.124664 136,071.5114 01/01/2006 to 12/31/2006 12.124664 12.632037 137,547.2820 01/01/2007 to 12/31/2007 12.632037 15.401303 129,885.6461 ============ ==== ========== ========= ========= ==============
23 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.80% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998521 10.447819 73,067.2632 01/01/2006 to 12/31/2006 10.447819 11.909290 147,636.9975 01/01/2007 to 12/31/2007 11.909290 11.404215 160,904.1045 ============ ==== ========== ========= ========= ============== METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.799354 9.876390 447,409.0187 01/01/2006 to 12/31/2006 9.876390 10.142173 864,570.9573 01/01/2007 to 12/31/2007 10.142173 10.439815 856,002.8871 ============ ==== ========== ========= ========= ============== DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 04/02/2001 to 12/31/2001 10.196255 10.124913 16,457.1567 01/01/2002 to 12/31/2002 10.124913 8.298345 202,643.9669 01/01/2003 to 12/31/2003 8.298345 10.655482 1,474,369.6395 01/01/2004 to 12/31/2004 10.655482 11.735525 2,258,518.5490 01/01/2005 to 12/31/2005 11.735525 12.695134 2,126,938.6942 01/01/2006 to 12/31/2006 12.695134 14.265570 1,861,949.3347 01/01/2007 to 12/31/2007 14.265570 14.630624 1,485,940.4058 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.163146 11.910526 5,807.5593 01/01/2002 to 12/31/2002 11.910526 10.637413 108,947.6561 01/01/2003 to 12/31/2003 10.637413 13.825385 790,096.7979 01/01/2004 to 12/31/2004 13.825385 14.888758 751,116.7984 01/01/2005 to 12/31/2005 14.888758 16.043544 672,683.9022 01/01/2006 to 12/31/2006 16.043544 17.676407 585,909.8382 01/01/2007 to 12/31/2007 17.676407 16.131145 436,474.4776 ============ ==== ========== ========= ========= ============== JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 7.607663 116,797.5739 01/01/2003 to 12/31/2003 7.607663 9.690594 693,976.7877 01/01/2004 to 12/31/2004 9.690594 10.367887 1,013,673.3400 01/01/2005 to 12/31/2005 10.367887 11.562016 829,752.7829 01/01/2006 to 12/31/2006 11.562016 11.642913 734,085.5057 01/01/2007 to 12/31/2007 11.642913 12.736327 586,119.8675 ============ ==== ========== ========= ========= ==============
24 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.80% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.839954 16,945.1694 01/01/2002 to 12/31/2002 10.839954 8.249162 58,698.7199 01/01/2003 to 12/31/2003 8.249162 10.360344 175,602.3744 01/01/2004 to 12/31/2004 10.360344 11.220948 238,445.5579 01/01/2005 to 12/31/2005 11.220948 11.505159 288,646.7270 01/01/2006 to 12/31/2006 11.505159 13.019175 345,337.9029 01/01/2007 to 12/31/2007 13.019175 13.424435 284,178.8531 ============ ==== ========== ========= ========= =============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 15.152382 15.096769 0.0000 01/01/2006 to 12/31/2006 15.096769 15.408678 12,178.5029 01/01/2007 to 12/31/2007 15.408678 15.742695 18,483.9709 ============ ==== ========== ========= ========= =============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.300361 10.684769 770,710.4046 01/01/2005 to 12/31/2005 10.684769 11.584057 1,453,588.0931 01/01/2006 to 12/31/2006 11.584057 12.930800 1,628,008.7238 01/01/2007 to 12/31/2007 12.930800 13.065482 1,412,136.3213 ============ ==== ========== ========= ========= =============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.100540 10.388855 4,952,534.8100 01/01/2005 to 12/31/2005 10.388855 10.930758 10,550,036.2918 01/01/2006 to 12/31/2006 10.930758 12.022266 13,290,375.5830 01/01/2007 to 12/31/2007 12.022266 12.383127 16,411,173.0140 ============ ==== ========== ========= ========= =============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.940683 10.105078 98,200.4986 01/01/2005 to 12/31/2005 10.105078 10.369941 410,833.9250 01/01/2006 to 12/31/2006 10.369941 11.064002 614,186.3552 01/01/2007 to 12/31/2007 11.064002 11.508762 1,111,839.0685 ============ ==== ========== ========= ========= =============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.240415 10.599700 4,070,272.4060 01/01/2005 to 12/31/2005 10.599700 11.361125 8,659,604.2002 01/01/2006 to 12/31/2006 11.361125 12.676036 11,369,186.8771 01/01/2007 to 12/31/2007 12.676036 13.034100 15,838,198.3746 ============ ==== ========== ========= ========= =============== METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.010620 10.225252 1,018,815.0550 01/01/2005 to 12/31/2005 10.225252 10.627130 2,765,842.5590 01/01/2006 to 12/31/2006 10.627130 11.506096 3,802,320.2469 01/01/2007 to 12/31/2007 11.506096 12.001131 4,928,840.2004 ============ ==== ========== ========= ========= ===============
25 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.90% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998438 11.931716 133,009.4275 01/01/2005 to 12/31/2005 11.931716 13.175555 127,028.8005 01/01/2006 to 12/31/2006 13.175555 14.956929 133,000.0339 01/01/2007 to 12/31/2007 14.956929 15.128293 120,066.3037 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.923190 238.7124 01/01/2002 to 12/31/2002 10.923190 8.778461 34,160.0234 01/01/2003 to 12/31/2003 8.778461 11.625277 380,772.7126 01/01/2004 to 12/31/2004 11.625277 13.746952 430,732.8361 01/01/2005 to 12/31/2005 13.746952 15.409353 354,309.2494 01/01/2006 to 12/31/2006 15.409353 19.482154 312,515.3022 01/01/2007 to 12/31/2007 19.482154 18.899669 285,968.3884 ============ ==== ========== ========= ========= ============ LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.978760 10,541.2587 01/01/2002 to 12/31/2002 10.978760 9.606799 37,804.5906 01/01/2003 to 12/31/2003 9.606799 11.893317 252,033.9427 01/01/2004 to 12/31/2004 11.893317 13.349490 199,024.9843 01/01/2005 to 12/31/2005 13.349490 14.154574 156,263.8409 01/01/2006 to 12/31/2006 14.154574 15.927114 147,604.3052 01/01/2007 to 12/31/2007 15.927114 15.202206 127,382.0185 ============ ==== ========== ========= ========= ============ LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 7.790167 7.279536 65,463.3365 01/01/2002 to 12/31/2002 7.279536 5.154251 166,911.1376 01/01/2003 to 12/31/2003 5.154251 6.620031 659,293.7894 01/01/2004 to 12/31/2004 6.620031 7.043338 568,209.4072 01/01/2005 to 12/31/2005 7.043338 7.849430 433,969.7607 01/01/2006 to 12/31/2006 7.849430 7.568189 375,516.3553 01/01/2007 to 12/31/2007 7.568189 7.593294 357,066.5919 ============ ==== ========== ========= ========= ============ LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.246282 10.616793 2,002.7801 01/01/2006 to 12/31/2006 10.616793 11.103240 15,165.4620 01/01/2007 to 12/31/2007 11.103240 10.249680 19,468.6499 ============ ==== ========== ========= ========= ============ LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988438 10.304828 3,867.0656 01/01/2007 to 12/31/2007 10.304828 12.925932 30,466.2269 ============ ==== ========== ========= ========= ============
26 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.90% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 13.958037 13.924032 23,513.6885 01/01/2002 to 12/31/2002 13.924032 13.583639 107,698.4759 01/01/2003 to 12/31/2003 13.583639 15.881558 598,811.8673 01/01/2004 to 12/31/2004 15.881558 16.854422 627,149.8832 01/01/2005 to 12/31/2005 16.854422 16.785051 418,969.1869 01/01/2006 to 12/31/2006 16.785051 17.976644 377,830.9449 01/01/2007 to 12/31/2007 17.976644 18.791730 338,864.3287 ============ ==== ========== ========= ========= ============ LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 39.906073 41.231685 30,484.5085 01/01/2002 to 12/31/2002 41.231685 33.124735 96,188.7420 01/01/2003 to 12/31/2003 33.124735 42.490294 341,376.5167 01/01/2004 to 12/31/2004 42.490294 46.960946 344,306.4949 01/01/2005 to 12/31/2005 46.960946 47.642491 292,601.0808 01/01/2006 to 12/31/2006 47.642491 55.062441 288,901.2803 01/01/2007 to 12/31/2007 55.062441 56.030968 250,298.3204 ============ ==== ========== ========= ========= ============ MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 11.838879 2,176.0544 01/01/2002 to 12/31/2002 11.838879 8.421029 75,923.5912 01/01/2003 to 12/31/2003 8.421029 11.473990 260,483.4454 01/01/2004 to 12/31/2004 11.473990 11.981598 340,065.9128 01/01/2005 to 12/31/2005 11.981598 12.728544 284,898.6440 01/01/2006 to 12/31/2006 12.728544 14.260960 246,871.7946 01/01/2007 to 12/31/2007 14.260960 15.540130 212,706.1786 ============ ==== ========== ========= ========= ============ MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.188447 8.034479 38,364.8937 01/01/2002 to 12/31/2002 8.034479 6.242515 102,732.6144 01/01/2003 to 12/31/2003 6.242515 7.615832 193,664.6165 01/01/2004 to 11/19/2004 7.615832 7.789155 264,344.9394 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988438 10.443386 3,848.0428 01/01/2007 to 12/31/2007 10.443386 13.997877 29,645.1320 ============ ==== ========== ========= ========= ============
27 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.90% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.738807 8.348474 20,284.9095 01/01/2002 to 12/31/2002 8.348474 7.224602 79,376.4973 01/01/2003 to 12/31/2003 7.224602 9.360152 222,073.2009 01/01/2004 to 12/31/2004 9.360152 10.979856 426,569.1466 01/01/2005 to 12/31/2005 10.979856 12.543118 342,726.8846 01/01/2006 to 12/31/2006 12.543118 15.577096 310,122.8863 01/01/2007 to 12/31/2007 15.577096 17.313567 278,333.0576 ============ ==== ========== ========= ========= ============== MONEY MARKET SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.040784 10.114681 40,482.2793 01/01/2002 to 12/31/2002 10.114681 10.033111 166,400.6075 01/01/2003 to 12/31/2003 10.033111 9.887032 304,112.7764 01/01/2004 to 12/31/2004 9.887032 9.762657 93,724.0831 01/01/2005 to 04/30/2005 9.762657 9.759505 0.0000 ============ ==== ========== ========= ========= ============== NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998438 12.790697 147,425.6869 01/01/2005 to 12/31/2005 12.790697 14.218141 133,742.7889 01/01/2006 to 12/31/2006 14.218141 19.194490 132,911.5595 01/01/2007 to 12/31/2007 19.194490 16.005296 120,966.0584 ============ ==== ========== ========= ========= ============== OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.579068 8.433892 62,431.3684 01/01/2002 to 12/31/2002 8.433892 6.228069 283,782.0988 01/01/2003 to 12/31/2003 6.228069 7.854290 1,094,970.7307 01/01/2004 to 12/31/2004 7.854290 8.199570 1,170,419.1560 01/01/2005 to 12/31/2005 8.199570 8.424977 892,127.0772 01/01/2006 to 12/31/2006 8.424977 8.892595 910,892.6432 01/01/2007 to 12/31/2007 8.892595 9.975273 808,015.5291 ============ ==== ========== ========= ========= ============== PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.401088 608,509.8350 01/01/2004 to 12/31/2004 10.401088 11.124393 827,824.6975 01/01/2005 to 12/31/2005 11.124393 11.067004 552,429.7063 01/01/2006 to 12/31/2006 11.067004 10.901273 537,207.9281 01/01/2007 to 12/31/2007 10.901273 11.849895 437,638.2083 ============ ==== ========== ========= ========= ==============
28 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.90% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.074208 10.495175 84,050.5665 01/01/2002 to 12/31/2002 10.495175 11.254708 292,866.2732 01/01/2003 to 12/31/2003 11.254708 11.518393 789,557.8663 01/01/2004 to 12/31/2004 11.518393 11.863917 812,494.9265 01/01/2005 to 12/31/2005 11.863917 11.902882 646,631.6028 01/01/2006 to 12/31/2006 11.902882 12.207117 585,550.2474 01/01/2007 to 12/31/2007 12.207117 12.882116 542,542.4162 ============ ==== ========== ========= ========= ============ RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.563975 9.975512 4,599.8967 ============ ==== ========== ========= ========= ============ RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 6.761195 6.069589 29,610.6961 01/01/2002 to 12/31/2002 6.069589 2.934022 51,289.3483 01/01/2003 to 12/31/2003 2.934022 4.536216 122,905.1606 01/01/2004 to 12/31/2004 4.536216 4.258682 283,167.5172 01/01/2005 to 12/31/2005 4.258682 4.639082 230,903.0364 01/01/2006 to 12/31/2006 4.639082 4.795367 163,244.9070 01/01/2007 to 12/31/2007 4.795367 6.187776 161,648.8623 ============ ==== ========== ========= ========= ============ T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 7.614414 8.204508 63,188.7244 01/01/2002 to 12/31/2002 8.204508 4.504875 202,939.8126 01/01/2003 to 12/31/2003 4.504875 6.039673 756,611.6907 01/01/2004 to 12/31/2004 6.039673 6.981901 591,807.1868 01/01/2005 to 12/31/2005 6.981901 7.852952 598,574.9466 01/01/2006 to 12/31/2006 7.852952 8.180513 573,069.1221 01/01/2007 to 12/31/2007 8.180513 9.441318 445,288.8641 ============ ==== ========== ========= ========= ============ THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 8.204986 41,589.6497 01/01/2003 to 12/31/2003 8.204986 11.385490 502,413.5804 01/01/2004 to 12/31/2004 11.385490 14.131572 462,454.9926 01/01/2005 to 12/31/2005 14.131572 16.012689 377,094.0003 01/01/2006 to 12/31/2006 16.012689 17.775216 345,165.9059 01/01/2007 to 12/31/2007 17.775216 16.911972 299,209.1362 ============ ==== ========== ========= ========= ============ TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998438 11.077804 98,920.2506 01/01/2005 to 12/31/2005 11.077804 12.104461 77,624.4304 01/01/2006 to 12/31/2006 12.104461 12.598415 69,911.0420 01/01/2007 to 12/31/2007 12.598415 15.344884 57,361.9080 ============ ==== ========== ========= ========= ============
29 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.90% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998438 10.440811 40,290.3754 01/01/2006 to 12/31/2006 10.440811 11.889440 89,322.9589 01/01/2007 to 12/31/2007 11.889440 11.373762 97,140.7244 ============ ==== ========== ========= ========= ============== METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.759091 9.829291 137,056.0915 01/01/2006 to 12/31/2006 9.829291 10.083745 359,479.0254 01/01/2007 to 12/31/2007 10.083745 10.369242 711,766.0045 ============ ==== ========== ========= ========= ============== DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 04/02/2001 to 12/31/2001 10.195919 10.116997 98,674.2839 01/01/2002 to 12/31/2002 10.116997 8.283563 298,086.7589 01/01/2003 to 12/31/2003 8.283563 10.625867 846,109.7706 01/01/2004 to 12/31/2004 10.625867 11.691186 1,119,896.1890 01/01/2005 to 12/31/2005 11.691186 12.634573 1,066,833.8705 01/01/2006 to 12/31/2006 12.634573 14.183373 1,089,614.0542 01/01/2007 to 12/31/2007 14.183373 14.531708 927,884.0979 ============ ==== ========== ========= ========= ============== HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.162814 11.901244 48,232.2937 01/01/2002 to 12/31/2002 11.901244 10.618492 203,954.4481 01/01/2003 to 12/31/2003 10.618492 13.787013 646,623.9795 01/01/2004 to 12/31/2004 13.787013 14.832557 539,145.4642 01/01/2005 to 12/31/2005 14.832557 15.967065 422,064.0253 01/01/2006 to 12/31/2006 15.967065 17.574617 362,659.5132 01/01/2007 to 12/31/2007 17.574617 16.022131 318,593.9459 ============ ==== ========== ========= ========= ============== JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 7.602564 81,514.1250 01/01/2003 to 12/31/2003 7.602564 9.674439 416,549.8094 01/01/2004 to 12/31/2004 9.674439 10.340233 480,073.4891 01/01/2005 to 12/31/2005 10.340233 11.519694 397,023.3546 01/01/2006 to 12/31/2006 11.519694 11.588731 361,058.9605 01/01/2007 to 12/31/2007 11.588731 12.664321 327,248.8920 ============ ==== ========== ========= ========= ==============
30 CONDENSED FINANCIAL INFORMATION (CONTINUED)
1.90% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.837498 3,279.2139 01/01/2002 to 12/31/2002 10.837498 8.239034 65,683.2682 01/01/2003 to 12/31/2003 8.239034 10.337295 201,383.4761 01/01/2004 to 12/31/2004 10.337295 11.184770 243,847.2311 01/01/2005 to 12/31/2005 11.184770 11.455096 206,098.9303 01/01/2006 to 12/31/2006 11.455096 12.947028 179,713.2007 01/01/2007 to 12/31/2007 12.947028 13.333947 150,974.1653 ============ ==== ========== ========= ========= ============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 14.993974 14.929039 55.3420 01/01/2006 to 12/31/2006 14.929039 15.222294 2,816.2629 01/01/2007 to 12/31/2007 15.222294 15.536642 7,259.2480 ============ ==== ========== ========= ========= ============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.299826 10.683074 854,286.2431 01/01/2005 to 12/31/2005 10.683074 11.570684 1,085,604.0976 01/01/2006 to 12/31/2006 11.570684 12.903002 982,017.6110 01/01/2007 to 12/31/2007 12.903002 13.024293 602,080.7795 ============ ==== ========== ========= ========= ============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.100015 10.387206 1,652,136.3990 01/01/2005 to 12/31/2005 10.387206 10.918136 3,503,926.6874 01/01/2006 to 12/31/2006 10.918136 11.996419 4,321,235.4166 01/01/2007 to 12/31/2007 11.996419 12.344089 4,364,179.2308 ============ ==== ========== ========= ========= ============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.940166 10.103473 237,400.2227 01/01/2005 to 12/31/2005 10.103473 10.357964 1,551,394.7620 01/01/2006 to 12/31/2006 10.357964 11.040211 1,598,217.3594 01/01/2007 to 12/31/2007 11.040211 11.472478 1,714,054.4038 ============ ==== ========== ========= ========= ============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.239883 10.598018 2,470,811.3740 01/01/2005 to 12/31/2005 10.598018 11.348007 3,576,428.7736 01/01/2006 to 12/31/2006 11.348007 12.648785 4,554,633.4817 01/01/2007 to 12/31/2007 12.648785 12.993010 4,817,668.7273 ============ ==== ========== ========= ========= ============== METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.010099 10.223628 880,821.1168 01/01/2005 to 12/31/2005 10.223628 10.614857 1,549,485.5517 01/01/2006 to 12/31/2006 10.614857 11.481355 1,827,127.5085 01/01/2007 to 12/31/2007 11.481355 11.963296 2,290,443.2291 ============ ==== ========== ========= ========= ==============
31 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.00% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998356 11.923714 10,450.6397 01/01/2005 to 12/31/2005 11.923714 13.153602 7,623.7011 01/01/2006 to 12/31/2006 13.153602 14.917127 6,070.2771 01/01/2007 to 12/31/2007 14.917127 15.072869 6,341.9985 ============ ==== ========== ========= ========= =========== HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.670416 11.599408 55,165.3654 01/01/2004 to 12/31/2004 11.599408 13.702620 66,678.8731 01/01/2005 to 12/31/2005 13.702620 15.344356 35,083.5705 01/01/2006 to 12/31/2006 15.344356 19.380650 28,226.4570 01/01/2007 to 12/31/2007 19.380650 18.782294 27,457.1850 ============ ==== ========== ========= ========= =========== LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 9.638372 11.866859 51,183.3036 01/01/2004 to 12/31/2004 11.866859 13.306444 27,809.2191 01/01/2005 to 12/31/2005 13.306444 14.094875 19,662.4351 01/01/2006 to 12/31/2006 14.094875 15.844132 17,492.7856 01/01/2007 to 12/31/2007 15.844132 15.107798 16,118.8973 ============ ==== ========== ========= ========= =========== LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 5.448435 6.616144 75,072.8937 01/01/2004 to 12/31/2004 6.616144 7.032146 62,707.5702 01/01/2005 to 12/31/2005 7.032146 7.829149 25,984.5683 01/01/2006 to 12/31/2006 7.829149 7.541105 13,713.0445 01/01/2007 to 12/31/2007 7.541105 7.558515 11,961.5755 ============ ==== ========== ========= ========= =========== LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.246086 10.615048 0.0000 01/01/2006 to 12/31/2006 10.615048 11.090346 4,124.1062 01/01/2007 to 12/31/2007 11.090346 10.227481 4,288.0187 ============ ==== ========== ========= ========= =========== LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988356 10.297910 2,758.2841 01/01/2007 to 12/31/2007 10.297910 12.904282 2,749.4513 ============ ==== ========== ========= ========= =========== LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 14.543946 15.872127 80,162.2800 01/01/2004 to 12/31/2004 15.872127 16.827533 68,536.8793 01/01/2005 to 12/31/2005 16.827533 16.741568 41,825.0854 01/01/2006 to 12/31/2006 16.741568 17.912204 35,750.0599 01/01/2007 to 12/31/2007 17.912204 18.705553 34,798.0264 ============ ==== ========== ========= ========= ===========
32 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.00% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 34.194526 42.464964 47,913.7885 01/01/2004 to 12/31/2004 42.464964 46.885921 39,259.4652 01/01/2005 to 12/31/2005 46.885921 47.518965 20,457.2287 01/01/2006 to 12/31/2006 47.518965 54.864963 19,189.0896 01/01/2007 to 12/31/2007 54.864963 55.773897 19,022.8501 ============ ==== ========== ========= ========= =========== MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.626518 11.448459 46,140.0597 01/01/2004 to 12/31/2004 11.448459 11.942952 57,561.5874 01/01/2005 to 12/31/2005 11.942952 12.674847 35,490.0774 01/01/2006 to 12/31/2006 12.674847 14.186639 32,083.1735 01/01/2007 to 12/31/2007 14.186639 15.443604 26,980.6352 ============ ==== ========== ========= ========= =========== MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.358618 7.611301 21,275.8013 01/01/2004 to 11/19/2004 7.611301 7.777635 18,278.4033 ============ ==== ========== ========= ========= =========== MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988356 10.436370 0.0000 01/01/2007 to 12/31/2007 10.436370 13.974426 1,827.1664 ============ ==== ========== ========= ========= =========== MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 7.257802 9.354589 51,538.1236 01/01/2004 to 12/31/2004 9.354589 10.962337 54,327.5799 01/01/2005 to 12/31/2005 10.962337 12.510627 34,777.9654 01/01/2006 to 12/31/2006 12.510627 15.521265 33,235.5079 01/01/2007 to 12/31/2007 15.521265 17.234173 27,961.0586 ============ ==== ========== ========= ========= =========== MONEY MARKET SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 9.991329 9.881184 24,492.9905 01/01/2004 to 12/31/2004 9.881184 9.747102 12,492.9116 01/01/2005 to 04/30/2005 9.747102 9.740779 0.0000 ============ ==== ========== ========= ========= =========== NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998356 12.782124 13,333.2561 01/01/2005 to 12/31/2005 12.782124 14.194452 4,611.3398 01/01/2006 to 12/31/2006 14.194452 19.143432 5,630.2057 01/01/2007 to 12/31/2007 19.143432 15.946665 7,496.8842 ============ ==== ========== ========= ========= ===========
33 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.00% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ----------------- OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 6.477297 7.849613 181,964.4460 01/01/2004 to 12/31/2004 7.849613 8.186475 171,216.7095 01/01/2005 to 12/31/2005 8.186475 8.403139 91,948.5743 01/01/2006 to 12/31/2006 8.403139 8.864521 78,934.7952 01/01/2007 to 12/31/2007 8.864521 9.929508 71,711.9768 ============ ==== ========== ========= ========= ============ PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.394134 75,558.6112 01/01/2004 to 12/31/2004 10.394134 11.105815 93,839.0293 01/01/2005 to 12/31/2005 11.105815 11.037506 50,658.5510 01/01/2006 to 12/31/2006 11.037506 10.861386 33,384.9054 01/01/2007 to 12/31/2007 10.861386 11.794665 29,563.9404 ============ ==== ========== ========= ========= ============ PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 11.492012 11.511554 110,672.6700 01/01/2004 to 12/31/2004 11.511554 11.844988 138,041.2961 01/01/2005 to 12/31/2005 11.844988 11.872043 116,827.9137 01/01/2006 to 12/31/2006 11.872043 12.163353 111,539.2523 01/01/2007 to 12/31/2007 12.163353 12.823035 115,633.6858 ============ ==== ========== ========= ========= ============ RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.563658 9.973841 0.0000 ============ ==== ========== ========= ========= ============ RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 05/01/2003 to 12/31/2003 3.270753 4.533561 20,840.3739 01/01/2004 to 12/31/2004 4.533561 4.251921 45,311.2102 01/01/2005 to 12/31/2005 4.251921 4.627103 29,125.9559 01/01/2006 to 12/31/2006 4.627103 4.778214 26,879.0961 01/01/2007 to 12/31/2007 4.778214 6.159452 21,835.1960 ============ ==== ========== ========= ========= ============ T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 4.708482 6.036086 91,538.9027 01/01/2004 to 12/31/2004 6.036086 6.970762 59,303.0571 01/01/2005 to 12/31/2005 6.970762 7.832612 48,954.5280 01/01/2006 to 12/31/2006 7.832612 8.151187 44,819.1091 01/01/2007 to 12/31/2007 8.151187 9.398020 40,749.5257 ============ ==== ========== ========= ========= ============ THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.420782 11.366509 74,926.8634 01/01/2004 to 12/31/2004 11.366509 14.093881 67,854.5964 01/01/2005 to 12/31/2005 14.093881 15.954074 47,591.4425 01/01/2006 to 12/31/2006 15.954074 17.692495 34,113.6584 01/01/2007 to 12/31/2007 17.692495 16.816338 31,107.5482 ============ ==== ========== ========= ========= ============
34 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.00% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998356 11.070369 11,978.0632 01/01/2005 to 12/31/2005 11.070369 12.084285 5,688.5853 01/01/2006 to 12/31/2006 12.084285 12.564869 3,027.6685 01/01/2007 to 12/31/2007 12.564869 15.288651 2,807.4339 ============ ==== ========== ========= ========= ============ VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998356 10.433808 0.0000 01/01/2006 to 12/31/2006 10.433808 11.869623 2,076.9520 01/01/2007 to 12/31/2007 11.869623 11.343390 3,350.9521 ============ ==== ========== ========= ========= ============ METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.740285 9.803847 3,097.1410 01/01/2006 to 12/31/2006 9.803847 10.047619 18,744.6900 01/01/2007 to 12/31/2007 10.047619 10.321710 2,918.7384 ============ ==== ========== ========= ========= ============ DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 05/01/2003 to 12/31/2003 8.467022 10.619550 146,752.5980 01/01/2004 to 12/31/2004 10.619550 11.672528 153,950.0918 01/01/2005 to 12/31/2005 11.672528 12.601842 92,005.2372 01/01/2006 to 12/31/2006 12.601842 14.132531 74,754.4337 01/01/2007 to 12/31/2007 14.132531 14.465062 67,513.0736 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.825376 13.778783 100,285.6024 01/01/2004 to 12/31/2004 13.778783 14.808845 74,111.3091 01/01/2005 to 12/31/2005 14.808845 15.925655 44,092.0624 01/01/2006 to 12/31/2006 15.925655 17.511568 32,906.1501 01/01/2007 to 12/31/2007 17.511568 15.948596 28,640.2936 ============ ==== ========== ========= ========= ============ JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.020892 9.658301 72,122.8253 01/01/2004 to 12/31/2004 9.658301 10.312638 57,329.7716 01/01/2005 to 12/31/2005 10.312638 11.477507 24,617.5534 01/01/2006 to 12/31/2006 11.477507 11.534778 21,951.5352 01/01/2007 to 12/31/2007 11.534778 12.592692 21,974.2301 ============ ==== ========== ========= ========= ============
35 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.00% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 8.547392 10.314288 24,672.9505 01/01/2004 to 12/31/2004 10.314288 11.148694 26,460.3400 01/01/2005 to 12/31/2005 11.148694 11.406769 41,035.6655 01/01/2006 to 12/31/2006 11.406769 12.879559 41,312.2018 01/01/2007 to 12/31/2007 12.879559 13.251129 41,675.5899 ============ ==== ========== ========= ========= ============ WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 14.837222 14.763172 0.0000 01/01/2006 to 12/31/2006 14.763172 15.038163 35.1964 01/01/2007 to 12/31/2007 15.038163 15.333285 53.0323 ============ ==== ========== ========= ========= ============ MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.299291 10.681379 50,889.6879 01/01/2005 to 12/31/2005 10.681379 11.557321 204,623.8015 01/01/2006 to 12/31/2006 11.557321 12.875254 221,223.5060 01/01/2007 to 12/31/2007 12.875254 12.983219 216,091.0039 ============ ==== ========== ========= ========= ============ METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.099490 10.385557 136,592.1743 01/01/2005 to 12/31/2005 10.385557 10.905523 464,762.8098 01/01/2006 to 12/31/2006 10.905523 11.970617 633,308.9436 01/01/2007 to 12/31/2007 11.970617 12.305159 616,624.2159 ============ ==== ========== ========= ========= ============ METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.939649 10.101868 14,945.8261 01/01/2005 to 12/31/2005 10.101868 10.345995 119,666.9780 01/01/2006 to 12/31/2006 10.345995 11.016462 59,384.7414 01/01/2007 to 12/31/2007 11.016462 11.436295 56,696.8388 ============ ==== ========== ========= ========= ============ METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.239351 10.596336 302,812.7407 01/01/2005 to 12/31/2005 10.596336 11.334900 592,279.2799 01/01/2006 to 12/31/2006 11.334900 12.621582 871,871.2044 01/01/2007 to 12/31/2007 12.621582 12.952034 781,362.9324 ============ ==== ========== ========= ========= ============ METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.009579 10.222004 23,895.0235 01/01/2005 to 12/31/2005 10.222004 10.602593 49,051.8261 01/01/2006 to 12/31/2006 10.602593 11.456660 49,197.6711 01/01/2007 to 12/31/2007 11.456660 11.925566 137,663.7950 ============ ==== ========== ========= ========= ============
36 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.05% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- MET INVESTORS SERIES TRUST GOLDMAN SACHS MID-CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998315 11.919714 29,794.7616 01/01/2005 to 12/31/2005 11.919714 13.142639 37,366.2615 01/01/2006 to 12/31/2006 13.142639 14.897265 56,504.7705 01/01/2007 to 12/31/2007 14.897265 15.045233 50,734.2491 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK INTERNATIONAL SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.919466 340.2305 01/01/2002 to 12/31/2002 10.919466 8.762286 36,410.5630 01/01/2003 to 12/31/2003 8.762286 11.586477 182,582.6893 01/01/2004 to 12/31/2004 11.586477 13.680486 168,476.9573 01/01/2005 to 12/31/2005 13.680486 15.311936 154,556.2620 01/01/2006 to 12/31/2006 15.311936 19.330066 146,514.7975 01/01/2007 to 12/31/2007 19.330066 18.723852 126,635.3246 ============ ==== ========== ========= ========= ============ LAZARD MID-CAP SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.975020 629.9823 01/01/2002 to 12/31/2002 10.975020 9.589118 38,257.9137 01/01/2003 to 12/31/2003 9.589118 11.853651 106,352.6452 01/01/2004 to 12/31/2004 11.853651 13.284973 52,411.1468 01/01/2005 to 12/31/2005 13.284973 14.065118 51,357.3498 01/01/2006 to 12/31/2006 14.065118 15.802802 41,921.1770 01/01/2007 to 12/31/2007 15.802802 15.060813 35,223.2081 ============ ==== ========== ========= ========= ============ LEGG MASON PARTNERS AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B) (FORMERLY LEGG MASON AGGRESSIVE GROWTH SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 7.789783 7.271012 16,318.1633 01/01/2002 to 12/31/2002 7.271012 5.140483 132,602.3687 01/01/2003 to 12/31/2003 5.140483 6.592476 297,313.6151 01/01/2004 to 12/31/2004 6.592476 7.003478 283,004.8534 01/01/2005 to 12/31/2005 7.003478 7.793346 253,898.2606 01/01/2006 to 12/31/2006 7.793346 7.502875 226,031.8420 01/01/2007 to 12/31/2007 7.502875 7.516415 196,045.5408 ============ ==== ========== ========= ========= ============ LEGG MASON VALUE EQUITY SUB-ACCOUNT (CLASS B) 11/07/2005 to 12/31/2005 10.245988 10.614176 0.0000 01/01/2006 to 12/31/2006 10.614176 11.083909 1,743.8763 01/01/2007 to 12/31/2007 11.083909 10.216408 3,288.4347 ============ ==== ========== ========= ========= ============ LOOMIS SAYLES GLOBAL MARKETS SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988315 10.294456 1,393.9570 01/01/2007 to 12/31/2007 10.294456 12.893478 1,880.2115 ============ ==== ========== ========= ========= ============
37 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.05% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- LORD ABBETT BOND DEBENTURE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 13.957349 13.907731 2,588.8797 01/01/2002 to 12/31/2002 13.907731 13.547402 67,528.9644 01/01/2003 to 12/31/2003 13.547402 15.815460 229,157.2426 01/01/2004 to 12/31/2004 15.815460 16.759052 179,476.4777 01/01/2005 to 12/31/2005 16.759052 16.665125 178,125.3743 01/01/2006 to 12/31/2006 16.665125 17.821527 148,889.0881 01/01/2007 to 12/31/2007 17.821527 18.601507 97,987.5195 ============ ==== ========== ========= ========= ============ LORD ABBETT GROWTH AND INCOME SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 39.904113 41.183429 9,333.7391 01/01/2002 to 12/31/2002 41.183429 33.036285 65,386.1766 01/01/2003 to 12/31/2003 33.036285 42.313390 147,144.4656 01/01/2004 to 12/31/2004 42.313390 46.695155 115,863.7494 01/01/2005 to 12/31/2005 46.695155 47.302031 107,960.4473 01/01/2006 to 12/31/2006 47.302031 54.587274 93,914.5650 01/01/2007 to 12/31/2007 54.587274 55.463710 78,671.2624 ============ ==== ========== ========= ========= ============ MET/AIM SMALL CAP GROWTH SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 11.834858 1,764.1353 01/01/2002 to 12/31/2002 11.834858 8.405523 56,709.2871 01/01/2003 to 12/31/2003 8.405523 11.435723 146,506.8029 01/01/2004 to 12/31/2004 11.435723 11.923685 124,361.7777 01/01/2005 to 12/31/2005 11.923685 12.648094 117,834.8457 01/01/2006 to 12/31/2006 12.648094 14.149636 98,558.1937 01/01/2007 to 12/31/2007 14.149636 15.395578 78,475.8430 ============ ==== ========== ========= ========= ============ MET/PUTNAM RESEARCH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.188043 8.025064 5,701.7970 01/01/2002 to 12/31/2002 8.025064 6.225832 24,894.5220 01/01/2003 to 12/31/2003 6.225832 7.584109 61,311.8186 01/01/2004 to 11/19/2004 7.584109 7.746419 53,311.1923 ============ ==== ========== ========= ========= ============ MFS (Reg. TM) EMERGING MARKETS EQUITY SUB-ACCOUNT (CLASS B) 05/01/2006 to 12/31/2006 9.988315 10.432867 889.1976 01/01/2007 to 12/31/2007 10.432867 13.962722 10,568.8972 ============ ==== ========== ========= ========= ============
38 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.05% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- MFS (Reg. TM) RESEARCH INTERNATIONAL SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.738378 8.338689 9,933.1038 01/01/2002 to 12/31/2002 8.338689 7.205307 88,957.2529 01/01/2003 to 12/31/2003 7.205307 9.321176 100,770.3415 01/01/2004 to 12/31/2004 9.321176 10.917708 129,381.3181 01/01/2005 to 12/31/2005 10.917708 12.453487 119,588.1671 01/01/2006 to 12/31/2006 12.453487 15.442674 109,058.1471 01/01/2007 to 12/31/2007 15.442674 17.138290 79,073.2851 ============ ==== ========== ========= ========= ============ MONEY MARKET SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.040289 10.102844 306.4676 01/01/2002 to 12/31/2002 10.102844 10.006335 285,008.2019 01/01/2003 to 12/31/2003 10.006335 9.845860 302,466.9561 01/01/2004 to 12/31/2004 9.845860 9.707388 257,879.8395 01/01/2005 to 04/30/2005 9.707388 9.699509 0.0000 ============ ==== ========== ========= ========= ============ NEUBERGER BERMAN REAL ESTATE SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998315 12.777839 29,159.8348 01/01/2005 to 12/31/2005 12.777839 14.182623 30,872.6490 01/01/2006 to 12/31/2006 14.182623 19.117954 27,608.8524 01/01/2007 to 12/31/2007 19.117954 15.917430 17,656.9405 ============ ==== ========== ========= ========= ============ OPPENHEIMER CAPITAL APPRECIATION SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 8.578646 8.424014 29,578.4411 01/01/2002 to 12/31/2002 8.424014 6.211432 207,712.8074 01/01/2003 to 12/31/2003 6.211432 7.821582 509,656.2995 01/01/2004 to 12/31/2004 7.821582 8.153153 380,063.9083 01/01/2005 to 12/31/2005 8.153153 8.364763 365,564.9472 01/01/2006 to 12/31/2006 8.364763 8.819638 315,721.0117 01/01/2007 to 12/31/2007 8.819638 9.874268 247,187.3502 ============ ==== ========== ========= ========= ============ PIMCO INFLATION PROTECTED BOND SUB-ACCOUNT (CLASS B) 05/01/2003 to 12/31/2003 10.000000 10.390659 167,112.4699 01/01/2004 to 12/31/2004 10.390659 11.096537 173,529.3705 01/01/2005 to 12/31/2005 11.096537 11.022786 181,775.7139 01/01/2006 to 12/31/2006 11.022786 10.841492 169,133.5733 01/01/2007 to 12/31/2007 10.841492 11.767146 134,736.2843 ============ ==== ========== ========= ========= ============
39 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.05% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- PIMCO TOTAL RETURN SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.073711 10.482897 9,214.1780 01/01/2002 to 12/31/2002 10.482897 11.224688 182,944.5664 01/01/2003 to 12/31/2003 11.224688 11.470430 426,520.8561 01/01/2004 to 12/31/2004 11.470430 11.796756 321,896.6936 01/01/2005 to 12/31/2005 11.796756 11.817806 308,656.1112 01/01/2006 to 12/31/2006 11.817806 12.101748 255,275.3577 01/01/2007 to 12/31/2007 12.101748 12.751678 162,330.3587 ============ ==== ========== ========= ========= ============ RAINIER LARGE CAP EQUITY SUB-ACCOUNT (CLASS B) 11/12/2007 to 12/31/2007 9.563499 9.973006 89.2228 ============ ==== ========== ========= ========= ============ RCM TECHNOLOGY SUB-ACCOUNT (CLASS B) (FORMERLY RCM GLOBAL TECHNOLOGY SUB-ACCOUNT (CLASS B)) 04/02/2001 to 12/31/2001 6.760856 6.062465 7,708.3984 01/01/2002 to 12/31/2002 6.062465 2.926172 47,901.4830 01/01/2003 to 12/31/2003 2.926172 4.517320 64,329.8616 01/01/2004 to 12/31/2004 4.517320 4.234564 105,189.6061 01/01/2005 to 12/31/2005 4.234564 4.605918 93,067.9772 01/01/2006 to 12/31/2006 4.605918 4.753966 94,257.8113 01/01/2007 to 12/31/2007 4.753966 6.125116 79,940.3561 ============ ==== ========== ========= ========= ============ T. ROWE PRICE MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 7.614032 8.194891 8,954.6560 01/01/2002 to 12/31/2002 8.194891 4.492827 159,796.3238 01/01/2003 to 12/31/2003 4.492827 6.014504 267,329.7713 01/01/2004 to 12/31/2004 6.014504 6.942358 148,030.4815 01/01/2005 to 12/31/2005 6.942358 7.796808 144,425.5056 01/01/2006 to 12/31/2006 7.796808 8.109881 136,935.1169 01/01/2007 to 12/31/2007 8.109881 9.345696 102,184.7905 ============ ==== ========== ========= ========= ============ THIRD AVENUE SMALL CAP VALUE SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 8.196735 72,766.6136 01/01/2003 to 12/31/2003 8.196735 11.357032 193,939.0137 01/01/2004 to 12/31/2004 11.357032 14.075075 139,302.8073 01/01/2005 to 12/31/2005 14.075075 15.924850 120,847.2119 01/01/2006 to 12/31/2006 15.924850 17.651281 116,698.9607 01/01/2007 to 12/31/2007 17.651281 16.768726 96,792.9561 ============ ==== ========== ========= ========= ============ TURNER MID-CAP GROWTH SUB-ACCOUNT (CLASS B) 05/01/2004 to 12/31/2004 9.998315 11.066653 34,713.8777 01/01/2005 to 12/31/2005 11.066653 12.074209 32,149.7555 01/01/2006 to 12/31/2006 12.074209 12.548130 29,531.2781 01/01/2007 to 12/31/2007 12.548130 15.260611 27,094.3388 ============ ==== ========== ========= ========= ============
40 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.05% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- --------------- VAN KAMPEN COMSTOCK SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 9.998315 10.430310 1,400.1505 01/01/2006 to 12/31/2006 10.430310 11.859735 8,088.7758 01/01/2007 to 12/31/2007 11.859735 11.328245 11,122.7092 ============ ==== ========== ========= ========= ============ METROPOLITAN SERIES FUND, INC. BLACKROCK MONEY MARKET SUB-ACCOUNT (CLASS B) (FORMERLY MONEY MARKET SUB-ACCOUNT (CLASS B)) 05/01/2005 to 12/31/2005 9.698978 9.759037 261,542.5906 01/01/2006 to 12/31/2006 9.759037 9.996712 190,015.2652 01/01/2007 to 12/31/2007 9.996712 10.264256 196,944.5392 ============ ==== ========== ========= ========= ============ DAVIS VENTURE VALUE SUB-ACCOUNT (CLASS E) 04/02/2001 to 12/31/2001 10.195418 10.105156 20,441.9015 01/01/2002 to 12/31/2002 10.105156 8.261442 236,334.7065 01/01/2003 to 12/31/2003 8.261442 10.581621 399,222.9674 01/01/2004 to 12/31/2004 10.581621 11.625009 364,252.9470 01/01/2005 to 12/31/2005 11.625009 12.544286 354,730.8415 01/01/2006 to 12/31/2006 12.544286 14.060972 329,792.9437 01/01/2007 to 12/31/2007 14.060972 14.384584 274,592.6325 ============ ==== ========== ========= ========= ============ HARRIS OAKMARK FOCUSED VALUE SUB-ACCOUNT (CLASS B) 04/02/2001 to 12/31/2001 10.162315 11.887327 10,686.6444 01/01/2002 to 12/31/2002 11.887327 10.590154 162,682.5986 01/01/2003 to 12/31/2003 10.590154 13.729638 276,868.3804 01/01/2004 to 12/31/2004 13.729638 14.748628 166,433.9639 01/01/2005 to 12/31/2005 14.748628 15.852993 157,126.1261 01/01/2006 to 12/31/2006 15.852993 17.422981 150,699.7968 01/01/2007 to 12/31/2007 17.422981 15.859936 130,950.4692 ============ ==== ========== ========= ========= ============ JENNISON GROWTH SUB-ACCOUNT (CLASS B) 05/01/2002 to 12/31/2002 10.000000 7.594921 121,879.8141 01/01/2003 to 12/31/2003 7.594921 9.650244 199,008.3441 01/01/2004 to 12/31/2004 9.650244 10.298871 171,353.3633 01/01/2005 to 12/31/2005 10.298871 11.456474 164,152.0048 01/01/2006 to 12/31/2006 11.456474 11.507898 145,653.8203 01/01/2007 to 12/31/2007 11.507898 12.557032 114,842.7858 ============ ==== ========== ========= ========= ============
41 CONDENSED FINANCIAL INFORMATION (CONTINUED)
2.05% SEPARATE ACCOUNT PRODUCT CHARGES NUMBER OF ACCUMULATION ACCUMULATION ACCUMULATION UNIT VALUE AT UNIT VALUE AT UNITS BEGINNING OF END OF OUTSTANDING AT PERIOD PERIOD END OF PERIOD --------------- --------------- ------------------ METLIFE STOCK INDEX SUB-ACCOUNT (CLASS B) 10/09/2001 to 12/31/2001 10.000000 10.833803 3,661.6899 01/01/2002 to 12/31/2002 10.833803 8.223862 132,062.8953 01/01/2003 to 12/31/2003 8.223862 10.302806 119,737.2190 01/01/2004 to 12/31/2004 10.302806 11.130703 54,845.2262 01/01/2005 to 12/31/2005 11.130703 11.382685 56,658.6744 01/01/2006 to 12/31/2006 11.382685 12.845959 53,768.9954 01/01/2007 to 12/31/2007 12.845959 13.209916 49,255.7418 ============ ==== ========== ========= ========= ============== WESTERN ASSET MANAGEMENT U.S. GOVERNMENT SUB-ACCOUNT (CLASS B) 05/01/2005 to 12/31/2005 14.759517 14.680991 333.7694 01/01/2006 to 12/31/2006 14.680991 14.947001 12,729.9737 01/01/2007 to 12/31/2007 14.947001 15.232679 19,245.2937 ============ ==== ========== ========= ========= ============== MET INVESTORS SERIES TRUST - ASSET ALLOCATION PROGRAM (CLASS B) METLIFE AGGRESSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.299023 10.680531 54,519.7300 01/01/2005 to 12/31/2005 10.680531 11.550645 114,890.9979 01/01/2006 to 12/31/2006 11.550645 12.861402 160,412.9569 01/01/2007 to 12/31/2007 12.861402 12.962731 256,757.6564 ============ ==== ========== ========= ========= ============== METLIFE BALANCED STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.099227 10.384732 207,422.6878 01/01/2005 to 12/31/2005 10.384732 10.899222 349,605.5454 01/01/2006 to 12/31/2006 10.899222 11.957737 610,315.4482 01/01/2007 to 12/31/2007 11.957737 12.285740 891,745.6891 ============ ==== ========== ========= ========= ============== METLIFE DEFENSIVE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 9.939390 10.101066 23,417.1825 01/01/2005 to 12/31/2005 10.101066 10.340016 11,321.9424 01/01/2006 to 12/31/2006 10.340016 11.004607 11,550.6243 01/01/2007 to 12/31/2007 11.004607 11.418246 49,779.7517 ============ ==== ========== ========= ========= ============== METLIFE GROWTH STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.239085 10.595495 1,138,710.7510 01/01/2005 to 12/31/2005 10.595495 11.328352 1,459,786.6930 01/01/2006 to 12/31/2006 11.328352 12.608002 1,576,021.8847 01/01/2007 to 12/31/2007 12.608002 12.931595 1,674,347.3867 ============ ==== ========== ========= ========= ============== METLIFE MODERATE STRATEGY SUB-ACCOUNT (CLASS B) 11/22/2004 to 12/31/2004 10.009318 10.221193 82,997.5473 01/01/2005 to 12/31/2005 10.221193 10.596466 192,291.6757 01/01/2006 to 12/31/2006 10.596466 11.444331 191,399.8204 01/01/2007 to 12/31/2007 11.444331 11.906745 205,033.1411 ============ ==== ========== ========= ========= ==============
42 FINANCIAL STATEMENTS The financial statements of the Separate Account, the Company and General American Life Insurance Company are included herein. The financial statements of the Company should be considered only as bearing upon the ability of the Company to meet its obligations under the contract. The consolidated financial statements of General American Life Insurance Company are included because for Class XC contracts issued on or before December 31, 2002, General American Life Insurance Company agreed to ensure that the Company will have sufficient funds to meet its obligations under the contracts. 43 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Contract Owners of MetLife Investors Variable Annuity Account One and the Board of Directors of MetLife Investors Insurance Company: We have audited the accompanying statements of assets and liabilities of MetLife Investors Variable Annuity Account One (the "Separate Account") of MetLife Investors Insurance Company (the "Company") comprising each of the individual Sub-Accounts listed in Appendix A as of December 31, 2007, and the related statements of operations for the periods presented in the year then ended, and the statements of changes in net assets for each of the periods presented in the two years then ended. We have also audited the statements of operations for the periods presented in the year then ended and the statements of changes in net assets for each of the periods presented in the two years ended December 31, 2007, for each of the individual Sub-Accounts listed in Appendix B. These financial statements are the responsibility of the Separate Account's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Separate Account is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2007, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the Sub-Accounts constituting the Separate Account of the Company as of December 31, 2007, the results of their operations for each of the periods presented in the year then ended, and the changes in their net assets for each of the periods presented in the two years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, FL March 24, 2008 APPENDIX A MIST Lord Abbett Growth and Income Sub-Account MIST Lord Abbett Bond Debenture Sub-Account MIST Van Kampen Mid-Cap Growth Sub-Account MIST Lord Abbett Mid-Cap Value Sub-Account MIST Oppenheimer Capital Appreciation Sub-Account MIST PIMCO Inflation Protected Bond Sub-Account MIST Legg Mason Partners Aggressive Growth Sub-Account MIST PIMCO Total Return Sub-Account MIST RCM Technology Sub-Account MIST T. Rowe Price Mid-Cap Growth Sub-Account MIST MFS Research International Sub-Account MIST Met/AIM Small Cap Growth Sub-Account MIST Lazard Mid-Cap Sub-Account MIST Harris Oakmark International Sub-Account MIST Third Avenue Small Cap Value Sub-Account MIST Neuberger Berman Real Estate Sub-Account MIST Turner Mid-Cap Growth Sub-Account MIST Goldman Sachs Mid Cap Value Sub-Account MIST MetLife Defensive Strategy Sub-Account MIST MetLife Moderate Strategy Sub-Account MIST MetLife Balanced Strategy Sub-Account MIST MetLife Growth Strategy Sub-Account MIST MetLife Aggressive Strategy Sub-Account MIST Van Kampen Comstock Sub-Account MIST Cyclical Growth ETF Sub-Account MIST Cyclical Growth and Income ETF Sub-Account MIST Legg Mason Value Equity Sub-Account MIST Met/AIM Capital Appreciation Sub-Account MIST Pioneer Fund Sub-Account MIST Pioneer Strategic Income Sub-Account MIST MFS Emerging Markets Equity Sub-Account MIST Loomis Sayles Global Markets Sub-Account MIST Strategic Growth and Income Sub-Account MIST Strategic Conservative Growth Sub-Account MIST Strategic Growth Sub-Account MIST Rainier Large Cap Equity Sub-Account Russell Multi-Style Equity Sub-Account Russell Aggressive Equity Sub-Account Russell Non-U.S. Sub-Account Russell Core Bond Sub-Account Russell Real Estate Securities Sub-Account AIM V.I. International Growth Sub-Account DWS Government & Agency Securities Sub-Account MSF Davis Venture Value Sub-Account MSF Harris Oakmark Focused Value Sub-Account MSF Jennison Growth Sub-Account MSF MFS Total Return Sub-Account MSF Capital Guardian U.S. Equity Sub-Account MSF FI International Stock Sub-Account MSF BlackRock Money Market Sub-Account MSF MetLife Stock Index Sub-Account MSF BlackRock Bond Income Sub-Account MSF BlackRock Strategic Value Sub-Account MSF Franklin Templeton Small Cap Growth Sub-Account MSF Western Asset Management Strategic Bond Opportunities Sub-Account MSF Western Asset Management U.S. Government Sub-Account MSF T. Rowe Price Small Cap Growth Sub-Account MSF T. Rowe Price Large Cap Growth Sub-Account MSF Oppenheimer Global Equity Sub-Account Putnam VT Growth and Income Sub-Account Putnam VT Vista Sub-Account Putnam VT Equity Income Sub-Account FTVIPT Templeton Growth Securities Sub-Account FTVIPT Templeton Foreign Securities Sub-Account FTVIPT Templeton Developing Markets Securities Sub-Account Fidelity VIP Growth Opportunties Sub-Account Fidelity VIP Equity-Income Sub-Account PIMCO VIT High Yield Sub-Account PIMCO VIT Low Duration Sub-Account PIMCO VIT StocksPLUS Growth and Income Sub-Account PIMCO VIT Total Return Sub-Account American Funds Global Growth Sub-Account APPENDIX B MIST Lord Abbett America's Value Sub-Account MIST Met/Putnam Capital Opportunities Sub-Account MIST Pioneer Mid-Cap Value Sub-Account [THIS PAGE INTENTIONALLY LEFT BLANK] 1 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 2007
MIST MIST MIST MIST LORD ABBETT LORD ABBETT VAN KAMPEN LORD ABBETT GROWTH AND INCOME BOND DEBENTURE MID-CAP GROWTH MID-CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------- ---------------- ---------------- ---------------- ASSETS: Investments at fair value......... $ 1,075,806,784 $ 297,944,054 $ 62,714,143 $ 300,179,301 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 1,075,806,784 297,944,054 62,714,143 300,179,301 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... 692 990 327 511 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 692 990 327 511 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 1,075,806,092 $ 297,943,064 $ 62,713,816 $ 300,178,790 ================ ================ ================ ================ Units outstanding................. 18,549,732 15,243,991 4,713,956 10,670,585 Unit value (accumulation)......... $17.17 - $64.94 $14.04 - $20.75 $12.65 - $13.83 $26.10 - $29.40
The accompanying notes are an integral part of these financial statements. 2
MIST MIST MIST MIST MIST MIST OPPENHEIMER PIMCO INFLATION LEGG MASON PARTNERS PIMCO RCM T. ROWE PRICE CAPITAL APPRECIATION PROTECTED BOND AGGRESSIVE GROWTH TOTAL RETURN TECHNOLOGY MID-CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - -------------------- ---------------- ------------------- ---------------- ---------------- ---------------- $ 137,208,190 $ 58,385,547 $ 87,874,937 $ 283,534,651 $ 13,379,824 $ 92,324,303 -- -- -- -- -- -- -- -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 137,208,190 58,385,547 87,874,937 283,534,651 13,379,824 92,324,303 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 805 394 378 686 686 420 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 805 394 378 686 686 420 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 137,207,385 $ 58,385,153 $ 87,874,559 $ 283,533,965 $ 13,379,138 $ 92,323,883 ================ ================ ================ ================ ================ ================ 13,026,225 4,886,261 10,825,029 21,297,880 2,132,403 9,539,996 $9.77 - $12.72 $11.60 - $12.19 $7.44 - $10.90 $12.62 - $14.09 $6.06 - $6.43 $9.25 - $10.08
The accompanying notes are an integral part of these financial statements. 3 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST MIST MIST MIST MFS RESEARCH MET/AIM SMALL CAP LAZARD HARRIS OAKMARK INTERNATIONAL GROWTH MID-CAP INTERNATIONAL SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ----------------- ---------------- ---------------- ASSETS: Investments at fair value......... $ 212,535,675 $ 71,015,930 $ 57,996,717 $ 91,235,396 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 212,535,675 71,015,930 57,996,717 91,235,396 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... 953 374 905 165 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 953 374 905 165 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 212,534,722 $ 71,015,556 $ 57,995,812 $ 91,235,231 ================ ================ ================ ================ Units outstanding................. 10,899,017 4,651,987 3,770,936 4,762,025 Unit value (accumulation)......... $16.96 - $25.97 $9.20 - $16.11 $14.87 - $16.45 $18.49 - $19.59
The accompanying notes are an integral part of these financial statements. 4
MIST MIST MIST MIST MIST MIST THIRD AVENUE NEUBERGER BERMAN TURNER MID-CAP GOLDMAN SACHS METLIFE METLIFE SMALL CAP VALUE REAL ESTATE GROWTH MID CAP VALUE DEFENSIVE STRATEGY MODERATE STRATEGY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ---------------- ---------------- ---------------- ------------------ ----------------- $ 77,454,566 $ 49,736,654 $ 15,254,809 $ 33,020,924 $ 144,052,893 $ 480,378,554 -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 77,454,566 49,736,654 15,254,809 33,020,924 144,052,893 480,378,554 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 461 525 673 491 423 317 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 461 525 673 491 423 317 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 77,454,105 $ 49,736,129 $ 15,254,136 $ 33,020,433 $ 144,052,470 $ 480,378,237 ================ ================ ================ ================ ================ ================ 4,502,597 2,938,688 986,986 2,167,077 12,464,828 39,851,796 $16.58 - $19.37 $15.74 - $23.87 $15.09 - $15.69 $14.88 - $15.47 $11.31 - $11.90 $11.79 - $12.41
The accompanying notes are an integral part of these financial statements. 5 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST MIST MIST MIST METLIFE METLIFE METLIFE VAN KAMPEN BALANCED STRATEGY GROWTH STRATEGY AGGRESSIVE STRATEGY COMSTOCK SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------- ---------------- ------------------- ---------------- ASSETS: Investments at fair value......... $ 1,240,119,491 $ 1,381,940,169 $ 125,554,882 $ 82,325,956 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 1,240,119,491 1,381,940,169 125,554,882 82,325,956 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... 308 311 315 821 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 308 311 315 821 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 1,240,119,183 $ 1,381,939,858 $ 125,554,567 $ 82,325,135 ================ ================ ================ ================ Units outstanding................. 99,569,767 105,495,650 9,584,925 7,096,082 Unit value (accumulation)......... $12.17 - $12.80 $12.81 - $13.47 $12.84 - $13.51 $11.24 - $11.73
The accompanying notes are an integral part of these financial statements. 6
MIST MIST MIST MIST MIST CYCLICAL CYCLICAL GROWTH LEGG MASON MET/AIM MIST PIONEER GROWTH ETF AND INCOME ETF VALUE EQUITY CAPITAL APPRECIATION PIONEER FUND STRATEGIC INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ---------------- ---------------- -------------------- ---------------- ---------------- $ 35,243,498 $ 57,258,938 $ 28,657,843 $ 17,444,123 $ 694,530 $ 1,516,083 -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 35,243,498 57,258,938 28,657,843 17,444,123 694,530 1,516,083 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 166 56 771 835 544 846 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 166 56 771 835 544 846 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 35,243,332 $ 57,258,882 $ 28,657,072 $ 17,443,288 $ 693,986 $ 1,515,237 ================ ================ ================ ================ ================ ================ 2,966,761 4,939,205 2,772,017 6,414,526 32,107 72,551 $11.76 - $11.92 $11.47 - $11.63 $10.15 - $10.49 $15.23 - $16.19 $19.29 - $22.32 $19.14 - $21.63
The accompanying notes are an integral part of these financial statements. 7 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MIST MIST MIST MIST MFS EMERGING LOOMIS SAYLES STRATEGIC STRATEGIC MARKETS EQUITY GLOBAL MARKETS GROWTH AND INCOME CONSERVATIVE GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ----------------- ------------------- ASSETS: Investments at fair value......... $ 6,785,580 $ 14,023,253 $ 279,701,802 $ 282,881,830 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 6,785,580 14,023,253 279,701,802 282,881,830 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... 601 726 110 47 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 601 726 110 47 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 6,784,979 $ 14,022,527 $ 279,701,692 $ 282,881,783 ================ ================ ================ ================ Units outstanding................. 482,984 1,085,823 26,151,881 25,976,646 Unit value (accumulation)......... $13.89 - $14.14 $12.83 - $13.06 $10.64 - $10.72 $10.83 - $10.91
The accompanying notes are an integral part of these financial statements. 8
MIST MIST STRATEGIC RAINIER RUSSELL RUSSELL RUSSELL RUSSELL GROWTH LARGE CAP EQUITY MULTI-STYLE EQUITY AGGRESSIVE EQUITY NON-U.S. CORE BOND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ---------------- ------------------ ----------------- ---------------- ---------------- $ 150,092,414 $ 1,150,081 $ 18,778,653 $ 4,129,637 $ 9,316,819 $ 14,474,367 -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 150,092,414 1,150,081 18,778,653 4,129,637 9,316,819 14,474,367 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 38 451 66 68 33 40 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 38 451 66 68 33 40 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 150,092,376 $ 1,149,630 $ 18,778,587 $ 4,129,569 $ 9,316,786 $ 14,474,327 ================ ================ ================ ================ ================ ================ 13,578,671 115,191 1,311,535 267,701 494,438 962,148 $11.00 - $11.08 $9.97 - $9.98 $14.32 $15.43 $18.84 $15.04
The accompanying notes are an integral part of these financial statements. 9 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
RUSSELL AIM V.I. DWS MSF REAL ESTATE INTERNATIONAL GOVERNMENT & AGENCY DAVIS VENTURE SECURITIES GROWTH SECURITIES VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ------------------- ---------------- ASSETS: Investments at fair value......... $ 2,112,446 $ 13,840,571 $ 1,049,086 $ 286,644,675 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 2,112,446 13,840,571 1,049,086 286,644,675 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... -- 944 321 649 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. -- 944 321 649 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 2,112,446 $ 13,839,627 $ 1,048,765 $ 286,644,026 ================ ================ ================ ================ Units outstanding................. 73,964 647,307 72,036 17,773,074 Unit value (accumulation)......... $28.56 $13.29 - $30.15 $14.22 - $14.61 $14.23 - $42.65
The accompanying notes are an integral part of these financial statements. 10
MSF MSF MSF MSF MSF HARRIS OAKMARK JENNISON MSF CAPITAL GUARDIAN FI INTERNATIONAL BLACKROCK FOCUSED VALUE GROWTH MFS TOTAL RETURN U.S. EQUITY STOCK MONEY MARKET SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 67,473,830 $ 70,724,623 $ 86,771,043 $ 153,904,458 $ 8,921,204 $ 109,888,716 -- -- -- -- -- -- -- -- -- -- -- -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 67,473,830 70,724,623 86,771,043 153,904,458 8,921,204 109,888,716 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 329 733 552 378 660 795 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 329 733 552 378 660 795 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 67,473,501 $ 70,723,890 $ 86,770,491 $ 153,904,080 $ 8,920,544 $ 109,887,921 ================ ================ ================ ================ ================ ================ 4,151,214 5,787,011 3,404,791 12,051,365 432,898 10,356,826 $15.69 - $16.65 $5.45 - $15.28 $12.91 - $52.56 $12.26 - $13.19 $12.83 - $21.73 $10.16 - $11.22
The accompanying notes are an integral part of these financial statements. 11 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
MSF MSF MSF MSF METLIFE STOCK BLACKROCK BLACKROCK STRATEGIC FRANKLIN TEMPLETON INDEX BOND INCOME VALUE SMALL CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ------------------- ------------------ ASSETS: Investments at fair value......... $ 38,415,638 $ 29,400,854 $ 2,389,930 $ 13,363,985 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 38,415,638 29,400,854 2,389,930 13,363,985 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... 389 704 520 654 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 389 704 520 654 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 38,415,249 $ 29,400,150 $ 2,389,410 $ 13,363,331 ================ ================ ================ ================ Units outstanding................. 2,846,982 580,953 118,620 1,193,998 Unit value (accumulation)......... $10.31 - $13.82 $42.95 - $56.83 $19.51 - $20.41 $10.81 - $11.67
The accompanying notes are an integral part of these financial statements. 12
MSF WESTERN ASSET MSF WESTERN ASSET MSF MSF MSF MANAGEMENT STRATEGIC MANAGEMENT U.S. T. ROWE PRICE T. ROWE PRICE LARGE OPPENHEIMER PUTNAM VT BOND OPPORTUNITIES GOVERNMENT SMALL CAP GROWTH CAP GROWTH GLOBAL EQUITY GROWTH AND INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - -------------------- ----------------- ---------------- ------------------- ---------------- ----------------- $ 5,877,666 $ 1,941,171 $ 11,606,201 $ 73,226,866 $ 19,497,686 $ 15,744,539 -- -- -- -- -- -- -- -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 5,877,666 1,941,171 11,606,201 73,226,866 19,497,686 15,744,539 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 356 574 818 520 716 968 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 356 574 818 520 716 968 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 5,877,310 $ 1,940,597 $ 11,605,383 $ 73,226,346 $ 19,496,970 $ 15,743,571 ================ ================ ================ ================ ================ ================ 279,280 123,153 724,186 4,816,195 928,692 1,019,458 $19.80 - $21.80 $15.03 - $16.81 $15.07 - $17.25 $14.53 - $16.29 $19.16 - $21.70 $13.20 - $60.63
The accompanying notes are an integral part of these financial statements. 13 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED) DECEMBER 31, 2007
FTVIPT TEMPLETON FTVIPT TEMPLETON PUTNAM VT PUTNAM VT GROWTH FOREIGN VISTA EQUITY INCOME SECURITIES SECURITIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ---------------- ---------------- ASSETS: Investments at fair value......... $ 3,664,609 $ 44,392,276 $ 18,988,790 $ 52,175,644 Other receivables................. -- -- -- -- Due from MetLife Investors Insurance Company............... -- -- -- -- ---------------- ---------------- ---------------- ---------------- Total Assets.................. 3,664,609 44,392,276 18,988,790 52,175,644 ---------------- ---------------- ---------------- ---------------- LIABILITIES: Other payables.................... -- -- -- -- Due to MetLife Investors Insurance Company......................... 340 615 893 410 ---------------- ---------------- ---------------- ---------------- Total Liabilities............. 340 615 893 410 ---------------- ---------------- ---------------- ---------------- NET ASSETS......................... $ 3,664,269 $ 44,391,661 $ 18,987,897 $ 52,175,234 ================ ================ ================ ================ Units outstanding................. 264,111 2,648,811 963,068 2,895,980 Unit value (accumulation)......... $13.29 - $16.69 $16.07 - $16.96 $16.68 - $20.94 $15.73 - $39.15
The accompanying notes are an integral part of these financial statements. 14
FTVIPT TEMPLETON FIDELITY VIP PIMCO VIT DEVELOPING GROWTH FIDELITY VIP PIMCO VIT PIMCO VIT STOCKSPLUS MARKETS SECURITIES OPPORTUNITIES EQUITY-INCOME HIGH YIELD LOW DURATION GROWTH AND INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ------------------ ---------------- ---------------- ---------------- ---------------- ----------------- $ 41,234,477 $ 197,918 $ 8,848,013 $ 8,446,469 $ 8,993,203 $ 1,513,402 -- -- -- -- -- -- -- -- -- -- -- -- ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 41,234,477 197,918 8,848,013 8,446,469 8,993,203 1,513,402 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- -- -- -- -- -- 211 61 425 339 312 423 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 211 61 425 339 312 423 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 41,234,266 $ 197,857 $ 8,847,588 $ 8,446,130 $ 8,992,891 $ 1,512,979 ================ ================ ================ ================ ================ ================ 1,736,965 16,783 506,284 589,348 689,390 135,574 $16.12 - $26.13 $11.79 $15.32 - $65.79 $13.82 - $14.64 $12.59 - $13.28 $10.63 - $16.07
The accompanying notes are an integral part of these financial statements. 15 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF ASSETS AND LIABILITIES -- (CONCLUDED) DECEMBER 31, 2007
AMERICAN FUNDS PIMCO VIT GLOBAL TOTAL RETURN GROWTH SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ASSETS: Investments at fair value................... $ 18,565,806 $ 10,518,454 Other receivables........................... -- -- Due from MetLife Investors Insurance Company -- -- ---------------- ---------------- Total Assets............................ 18,565,806 10,518,454 ---------------- ---------------- LIABILITIES: Other payables.............................. -- -- Due to MetLife Investors Insurance Company.. 68 856 ---------------- ---------------- Total Liabilities....................... 68 856 ---------------- ---------------- NET ASSETS................................... $ 18,565,738 $ 10,517,598 ================ ================ Units outstanding........................... 1,271,571 344,425 Unit value (accumulation)................... $14.30 - $14.69 $27.80 - $31.43
The accompanying notes are an integral part of these financial statements. 16 [THIS PAGE INTENTIONALLY LEFT BLANK] 17 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2007
MIST MIST MIST MIST LORD ABBETT LORD ABBETT VAN KAMPEN LORD ABBETT GROWTH AND INCOME BOND DEBENTURE MID-CAP GROWTH MID-CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------- ---------------- ---------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 11,468,193 $ 15,736,758 $ -- $ 2,158,214 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 14,086,657 3,594,662 615,658 3,374,882 Administrative charges................ 2,375,667 689,747 135,794 732,416 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 16,462,324 4,284,409 751,452 4,107,298 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... (4,994,131) 11,452,349 (751,452) (1,949,084) ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... 53,542,788 374,700 5,110,259 39,821,401 Realized gains (losses) on sale of investments......................... 61,635,858 5,665,466 3,129,030 23,400,107 ---------------- ---------------- ---------------- ---------------- 115,178,646 6,040,166 8,239,289 63,221,508 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... (79,135,154) (2,410,074) 4,492,175 (66,496,374) ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 36,043,492 3,630,092 12,731,464 (3,274,866) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 31,049,361 $ 15,082,441 $ 11,980,012 $ (5,223,950) ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 18
MIST MIST MIST MIST MIST MIST LORD ABBETT MET/PUTNAM OPPENHEIMER PIMCO INFLATION LEGG MASON PARTNERS PIMCO AMERICA'S VALUE CAPITAL OPPORTUNITIES CAPITAL APPRECIATION PROTECTED BOND AGGRESSIVE GROWTH TOTAL RETURN SUB-ACCOUNT (A) SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- --------------------- -------------------- ---------------- ------------------- ---------------- $ 3,040,371 $ 50,136 $ 33,114 $ 1,351,120 $ 36,533 $ 9,446,728 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- 227,029 147,018 1,864,672 904,473 1,278,137 3,544,787 70,141 21,717 326,675 153,178 224,906 672,056 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- 297,170 168,735 2,191,347 1,057,651 1,503,043 4,216,843 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- 2,743,201 (118,599) (2,158,233) 293,469 (1,466,510) 5,229,885 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- 4,169,965 2,132,497 8,625,738 -- 8,970,425 -- 11,501,721 6,973,573 3,946,497 (311,237) 3,131,606 2,331,006 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- 15,671,686 9,106,070 12,572,235 (311,237) 12,102,031 2,331,006 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- (12,639,161) (5,709,570) 6,087,101 5,102,007 (9,681,223) 8,899,903 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- 3,032,525 3,396,500 18,659,336 4,790,770 2,420,808 11,230,909 - ---------------- ---------------- -------------- ---------------- ---------------- ---------------- $ 5,775,726 $ 3,277,901 $ 16,501,103 $ 5,084,239 $ 954,298 $ 16,460,794 ================ ================ ============== ================ ================ ================
The accompanying notes are an integral part of these financial statements. 19 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007
MIST MIST MIST MIST RCM T. ROWE PRICE MFS RESEARCH MET/AIM SMALL CAP TECHNOLOGY MID-CAP GROWTH INTERNATIONAL GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ---------------- ----------------- INVESTMENT INCOME: Dividends............................. $ -- $ 42,665 $ 2,952,236 $ -- ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 165,633 1,309,532 2,700,522 1,064,048 Administrative charges................ 27,939 239,359 486,581 189,197 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 193,572 1,548,891 3,187,103 1,253,245 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... (193,572) (1,506,226) (234,867) (1,253,245) ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... 412,704 4,422,191 31,848,021 1,104,413 Realized gains (losses) on sale of investments......................... 1,199,051 13,923,489 21,330,598 4,462,671 ---------------- ---------------- ---------------- ---------------- 1,611,755 18,345,680 53,178,619 5,567,084 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... 1,394,620 (2,363,951) (28,438,195) 2,748,635 ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 3,006,375 15,981,729 24,740,424 8,315,719 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 2,812,803 $ 14,475,503 $ 24,505,557 $ 7,062,474 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 20
MIST MIST MIST MIST MIST MIST LAZARD HARRIS OAKMARK THIRD AVENUE NEUBERGER BERMAN TURNER MID-CAP GOLDMAN SACHS MID-CAP INTERNATIONAL SMALL CAP VALUE REAL ESTATE GROWTH MID-CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 116,160 $ 879,362 $ 918,432 $ 568,694 $ -- $ 189,104 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 831,730 1,571,027 1,310,219 817,477 197,274 554,954 133,438 269,549 225,305 146,202 33,699 95,574 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 965,168 1,840,576 1,535,524 963,679 230,973 650,528 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (849,008) (961,214) (617,092) (394,985) (230,973) (461,424) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,897,231 8,818,451 5,987,108 5,328,354 443,620 3,429,066 752,152 10,278,399 6,474,063 8,595,656 738,386 2,428,310 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,649,383 19,096,850 12,461,171 13,924,010 1,182,006 5,857,376 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (8,367,898) (20,427,971) (15,368,056) (22,726,254) 1,656,841 (4,801,691) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (4,718,515) (1,331,121) (2,906,885) (8,802,244) 2,838,847 1,055,685 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ (5,567,523) $ (2,292,335) $ (3,523,977) $ (9,197,229) $ 2,607,874 $ 594,261 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 21 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007
MIST MIST MIST MIST METLIFE METLIFE METLIFE METLIFE DEFENSIVE STRATEGY MODERATE STRATEGY BALANCED STRATEGY GROWTH STRATEGY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------ ----------------- ----------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 2,083,242 $ 7,689,378 $ 17,433,693 $ 13,483,312 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 1,717,310 5,879,979 15,320,921 17,118,146 Administrative charges................ 293,308 1,016,029 2,706,902 3,000,593 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 2,010,618 6,896,008 18,027,823 20,118,739 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... 72,624 793,370 (594,130) (6,635,427) ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... 2,337,334 9,901,354 32,235,933 38,157,281 Realized gains (losses) on sale of investments......................... 3,426,470 1,439,405 1,677,094 2,498,052 ---------------- ---------------- ---------------- ---------------- 5,763,804 11,340,759 33,913,027 40,655,333 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... (1,339,403) 3,240,393 (6,671,966) (9,782,182) ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 4,424,401 14,581,152 27,241,061 30,873,151 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 4,497,025 $ 15,374,522 $ 26,646,931 $ 24,237,724 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 22
MIST MIST MIST MIST MIST MIST METLIFE VAN KAMPEN CYCLICAL CYCLICAL GROWTH LEGG MASON MET/AIM AGGRESSIVE STRATEGY COMSTOCK GROWTH ETF AND INCOME ETF VALUE EQUITY CAPITAL APPRECIATION SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ------------------- ---------------- ---------------- ---------------- ---------------- -------------------- $ 1,868,607 $ 1,112,100 $ -- $ 166 $ 1,096 $ 90 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,116,338 777,926 394,581 495,729 412,872 233,649 358,650 204,629 87,926 103,157 82,186 36,971 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,474,988 982,555 482,507 598,886 495,058 270,620 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (606,381) 129,545 (482,507) (598,720) (493,962) (270,530) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 8,878,766 1,675,720 -- 2,608 36,951 246 10,969,159 1,310,709 688,517 490,625 680,756 (1,083,309) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 19,847,925 2,986,429 688,517 493,233 717,707 (1,083,063) ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (16,495,905) (6,500,013) 961,089 992,983 (2,403,673) 3,322,820 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,352,020 (3,513,584) 1,649,606 1,486,216 (1,685,966) 2,239,757 ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 2,745,639 $ (3,384,039) $ 1,167,099 $ 887,496 $ (2,179,928) $ 1,969,227 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 23 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007
MIST MIST MIST MIST PIONEER PIONEER MFS EMERGING PIONEER FUND MID-CAP VALUE STRATEGIC INCOME MARKETS EQUITY SUB-ACCOUNT SUB-ACCOUNT (A) SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ---------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 4,301 $ 768 $ 6,307 $ 4,098 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 4,073 266 8,084 72,499 Administrative charges................ 1,362 99 2,565 12,759 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 5,435 365 10,649 85,258 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... (1,134) 403 (4,342) (81,160) ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... -- 27,359 -- -- Realized gains (losses) on sale of investments......................... 14,144 (10,197) 1,498 1,806,676 ---------------- ---------------- ---------------- ---------------- 14,144 17,162 1,498 1,806,676 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... (1,486) (3,102) 60,651 (483,026) ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 12,658 14,060 62,149 1,323,650 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 11,524 $ 14,463 $ 57,807 $ 1,242,490 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 24
MIST MIST MIST MIST MIST LOOMIS SAYLES STRATEGIC STRATEGIC STRATEGIC RAINIER RUSSELL GLOBAL MARKETS GROWTH AND INCOME CONSERVATIVE GROWTH GROWTH LARGE CAP EQUITY MULTI-STYLE EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT (B) SUB-ACCOUNT - ---------------- ----------------- ------------------- ---------------- ---------------- ------------------ $ -- $ 5,861,644 $ 4,620,640 $ 2,453,560 $ 571 $ 221,215 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 47,554 2,990,264 2,906,508 1,765,111 962 272,779 7,196 606,220 602,670 353,991 145 32,731 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 54,750 3,596,484 3,509,178 2,119,102 1,107 305,510 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (54,750) 2,265,160 1,111,462 334,458 (536) (84,295) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 6,938,744 6,854,822 6,014,550 -- 777,378 83,104 475,020 264,552 1,045,177 27 617,111 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 83,104 7,413,764 7,119,374 7,059,727 27 1,394,489 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 384,134 207,704 4,900,898 1,758,041 11,289 592,416 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 467,238 7,621,468 12,020,272 8,817,768 11,316 1,986,905 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 412,488 $ 9,886,628 $ 13,131,734 $ 9,152,226 $ 10,780 $ 1,902,610 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 25 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007
RUSSELL RUSSELL RUSSELL RUSSELL REAL ESTATE AGGRESSIVE EQUITY NON-U.S. CORE BOND SECURITIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------- ---------------- ---------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 17,439 $ 251,812 $ 759,863 $ 62,286 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 60,505 132,124 185,019 35,477 Administrative charges................ 7,258 15,854 22,201 4,257 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 67,763 147,978 207,220 39,734 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... (50,324) 103,834 552,643 22,552 ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... 591,962 1,949,889 -- 297,248 Realized gains (losses) on sale of investments......................... 214,743 760,913 (2,625) 356,837 ---------------- ---------------- ---------------- ---------------- 806,705 2,710,802 (2,625) 654,085 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... (630,885) (1,924,328) 269,128 (1,146,552) ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 175,820 786,474 266,503 (492,467) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 125,496 $ 890,308 $ 819,146 $ (469,915) ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 26
DWS MSF MSF MSF MSF AIM V.I. GOVERNMENT & AGENCY DAVIS VENTURE HARRIS OAKMARK JENNISON MFS INTERNATIONAL GROWTH SECURITIES VALUE FOCUSED VALUE GROWTH TOTAL RETURN SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - -------------------- ------------------- ------------- ---------------- ---------------- ---------------- $ 54,056 $ 61,034 $ 2,085,651 $ 275,016 $ 140,656 $ 1,687,262 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- 171,545 14,541 4,029,594 1,198,762 1,004,530 711,601 29,628 2,285 772,355 203,841 182,940 211,034 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- 201,173 16,826 4,801,949 1,402,603 1,187,470 922,635 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- (147,117) 44,208 (2,716,298) (1,127,587) (1,046,814) 764,627 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- -- -- -- 10,649,236 2,679,877 2,872,802 2,774,652 (2,240) 26,405,264 3,856,635 5,203,360 1,365,316 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- 2,774,652 (2,240) 26,405,264 14,505,871 7,883,237 4,238,118 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- (916,127) 3,658 (14,384,112) (19,716,259) (53,240) (2,480,780) ---------------- ---------------- ------------- ---------------- ---------------- ---------------- 1,858,525 1,418 12,021,152 (5,210,388) 7,829,997 1,757,338 ---------------- ---------------- ------------- ---------------- ---------------- ---------------- $ 1,711,408 $ 45,626 $ 9,304,854 $ (6,337,975) $ 6,783,183 $ 2,521,965 ================ ================ ============= ================ ================ ================
The accompanying notes are an integral part of these financial statements. 27 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007
MSF MSF MSF MSF CAPITAL GUARDIAN FI INTERNATIONAL BLACKROCK METLIFE U.S. EQUITY STOCK MONEY MARKET STOCK INDEX SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ---------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 638,518 $ 77,947 $ 4,875,630 $ 349,798 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 1,851,323 111,238 1,394,001 577,720 Administrative charges................ 368,335 22,770 241,666 101,734 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 2,219,658 134,008 1,635,667 679,454 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... (1,581,140) (56,061) 3,239,963 (329,656) ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... 10,186,889 474,685 -- 867,847 Realized gains (losses) on sale of investments......................... 9,793,969 2,266,398 -- 3,414,759 ---------------- ---------------- ---------------- ---------------- 19,980,858 2,741,083 -- 4,282,606 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... (19,731,356) (1,871,753) -- (2,637,207) ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 249,502 869,330 -- 1,645,399 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ (1,331,638) $ 813,269 $ 3,239,963 $ 1,315,743 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 28
MSF MSF MSF MSF WESTERN ASSET MSF WESTERN ASSET MSF BLACKROCK BLACKROCK FRANKLIN TEMPLETON MANAGEMENT STRATEGIC MANAGEMENT U.S. T. ROWE PRICE BOND INCOME STRATEGIC VALUE SMALL CAP GROWTH BOND OPPORTUNITIES GOVERNMENT SMALL CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ---------------- ------------------ -------------------- ----------------- ---------------- $ 797,596 $ 1,498 $ -- $ 142,615 $ 33,103 $ -- - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 303,741 32,526 166,396 72,297 23,576 149,680 60,907 6,506 34,344 13,441 3,737 25,163 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 364,648 39,032 200,740 85,738 27,313 174,843 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 432,948 (37,534) (200,740) 56,877 5,790 (174,843) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- -- 310,688 859,985 5,306 -- -- (157,357) (80,767) 980,081 26,565 6,291 613,009 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (157,357) 229,921 1,840,066 31,871 6,291 613,009 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 1,003,600 (324,702) (1,127,390) 45,831 22,512 540,791 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 846,243 (94,781) 712,676 77,702 28,803 1,153,800 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 1,279,191 $ (132,315) $ 511,936 $ 134,579 $ 34,593 $ 978,957 ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 29 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONTINUED) FOR THE YEAR ENDED DECEMBER 31, 2007
MSF MSF T. ROWE PRICE OPPENHEIMER PUTNAM VT PUTNAM VT LARGE CAP GROWTH GLOBAL EQUITY GROWTH AND INCOME VISTA SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ----------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 196,544 $ 165,831 $ 290,707 $ -- ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 973,051 155,497 219,602 55,332 Administrative charges................ 189,990 45,526 33,397 7,164 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 1,163,041 201,023 252,999 62,496 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... (966,497) (35,192) 37,708 (62,496) ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... 728,505 274,958 2,917,551 -- Realized gains (losses) on sale of investments......................... 6,157,851 404,030 367,080 (91,634) ---------------- ---------------- ---------------- ---------------- 6,886,356 678,988 3,284,631 (91,634) ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... 497,289 247,590 (4,429,636) 303,960 ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. 7,383,645 926,578 (1,145,005) 212,326 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 6,417,148 $ 891,386 $ (1,107,297) $ 149,830 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 30
FTVIPT FTVIPT FTVIPT TEMPLETON FIDELITY VIP PUTNAM VT TEMPLETON TEMPLETON DEVELOPING MARKETS GROWTH FIDELITY VIP EQUITY INCOME GROWTH SECURITIES FOREIGN SECURITIES SECURITIES OPPORTUNITIES EQUITY-INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ----------------- ------------------ ------------------ ---------------- ---------------- $ 562,067 $ 209,115 $ 1,041,805 $ 922,077 $ -- $ 152,382 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 334,024 133,684 653,288 513,798 2,770 121,321 106,477 37,770 121,367 95,664 332 21,699 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 440,501 171,454 774,655 609,462 3,102 143,020 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 121,566 37,661 267,150 312,615 (3,102) 9,362 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 2,794,799 655,838 2,315,088 3,113,197 -- 756,482 658,651 415,734 9,018,820 12,822,975 1,990 296,214 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 3,453,450 1,071,572 11,333,908 15,936,172 1,990 1,052,696 - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- (2,799,230) (1,077,442) (4,646,750) (6,630,584) 44,671 (1,072,377) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- 654,220 (5,870) 6,687,158 9,305,588 46,661 (19,681) - ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- $ 775,786 $ 31,791 $ 6,954,308 $ 9,618,203 $ 43,559 $ (10,319) ================ ================ ================ ================ ================ ================
The accompanying notes are an integral part of these financial statements. 31 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENT OF OPERATIONS -- (CONCLUDED) FOR THE YEAR ENDED DECEMBER 31, 2007
PIMCO VIT PIMCO VIT PIMCO VIT STOCKSPLUS PIMCO VIT HIGH YIELD LOW DURATION GROWTH AND INCOME TOTAL RETURN SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------- ---------------- ----------------- ---------------- INVESTMENT INCOME: Dividends............................. $ 646,015 $ 426,981 $ 119,348 $ 939,256 ---------------- ---------------- ---------------- ---------------- EXPENSES: Mortality and expense risk charges.... 113,617 112,406 19,522 248,966 Administrative charges................ 23,077 22,175 3,670 44,258 ---------------- ---------------- ---------------- ---------------- Total expenses...................... 136,694 134,581 23,192 293,224 ---------------- ---------------- ---------------- ---------------- Net investment income (loss).......... 509,321 292,400 96,156 646,032 ---------------- ---------------- ---------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS: Realized gain distributions........... -- -- -- -- Realized gains (losses) on sale of investments......................... 107,324 (23,753) 51,946 90,176 ---------------- ---------------- ---------------- ---------------- 107,324 (23,753) 51,946 90,176 ---------------- ---------------- ---------------- ---------------- Change in unrealized gains (losses) on investments...................... (393,524) 232,553 (69,013) 558,878 ---------------- ---------------- ---------------- ---------------- Net realized and unrealized gains (losses) on investments............. (286,200) 208,800 (17,067) 649,054 ---------------- ---------------- ---------------- ---------------- Net increase (decrease) in net assets resulting from operations........... $ 223,121 $ 501,200 $ 79,089 $ 1,295,086 ================ ================ ================ ================
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 32
AMERICAN FUNDS GLOBAL GROWTH SUB-ACCOUNT ---------------- $ 200,568 ---------------- 38,877 12,646 ---------------- 51,523 ---------------- 149,045 ---------------- 193,835 26,968 ---------------- 220,803 ---------------- 111,988 ---------------- 332,791 ---------------- $ 481,836 ================
The accompanying notes are an integral part of these financial statements. 33 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST LORD ABBETT MIST LORD ABBETT MIST VAN KAMPEN GROWTH AND INCOME BOND DEBENTURE MID-CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------------- --------------------------- ------------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)................. $ (4,994,131) $ 4,207,987 $ 11,452,349 $ 17,135,760 $ (751,452) $ (712,478) Net realized gains (losses)............... 115,178,646 156,588,096 6,040,166 3,005,339 8,239,289 5,449,499 Change in unrealized gains (losses) on investments............ (79,135,154) 29,716,801 (2,410,074) 3,199,197 4,492,175 (877,039) -------------- -------------- ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations...... 31,049,361 190,512,884 15,082,441 23,340,296 11,980,012 3,859,982 -------------- -------------- ------------- ------------- ------------ ------------ CONTRACT TRANSACTIONS: Purchase payments received from contract owners........ 11,212,350 18,035,238 4,240,291 5,947,236 1,504,132 2,078,778 Net transfers (including fixed account)......... (54,262,515) (40,604,330) 11,783,676 (8,443,067) (117,997) 1,106,291 Contract charges......... (1,668,932) (1,805,767) (612,646) (647,089) (85,621) (79,144) Transfers for contract benefits and terminations........... (164,838,040) (178,793,095) (40,523,084) (39,505,959) (7,307,159) (6,529,955) -------------- -------------- ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from contract transactions........... (209,557,137) (203,167,954) (25,111,763) (42,648,879) (6,006,645) (3,424,030) -------------- -------------- ------------- ------------- ------------ ------------ Net increase (decrease) in net assets.......... (178,507,776) (12,655,070) (10,029,322) (19,308,583) 5,973,367 435,952 NET ASSETS: Beginning of period...... 1,254,313,868 1,266,968,938 307,972,386 327,280,969 56,740,449 56,304,497 -------------- -------------- ------------- ------------- ------------ ------------ End of period............ $1,075,806,092 $1,254,313,868 $ 297,943,064 $ 307,972,386 $ 62,713,816 $ 56,740,449 ============== ============== ============= ============= ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 34
MIST LORD ABBETT MIST LORD ABBETT MIST MET/PUTNAM MIST OPPENHEIMER MID-CAP VALUE AMERICA'S VALUE CAPITAL OPPORTUNITIES CAPITAL APPRECIATION SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - --------------------------- -------------------------- -------------------------- --------------------------- 2007 2006 2007 (A) 2006 2007 (A) 2006 2007 2006 ---- ---- -------- ---- -------- ---- ---- ---- $ (1,949,084) $ (2,257,433) $ 2,743,201 $ 596,368 $ (118,599) $ (491,568) $ (2,158,233) $ (2,086,703) 63,221,508 46,923,780 15,671,686 1,883,835 9,106,070 7,785,420 12,572,235 3,033,823 (66,496,374) (12,362,885) (12,639,161) 7,572,480 (5,709,570) (2,383,918) 6,087,101 7,579,900 - ------------- ------------- ------------- ------------ ------------- ------------ ------------- ------------- (5,223,950) 32,303,462 5,775,726 10,052,683 3,277,901 4,909,934 16,501,103 8,527,020 - ------------- ------------- ------------- ------------ ------------- ------------ ------------- ------------- 4,043,298 10,948,608 1,081,454 3,300,626 279,479 935,403 2,855,465 6,355,183 30,314,787 (15,493,315) (90,125,966) 12,565,543 (39,587,223) 554,569 (5,712,512) 840,829 (587,954) (609,622) (56,927) (128,618) (7,412) (24,120) (370,835) (371,026) (32,984,406) (30,986,703) (2,831,067) (5,413,361) (2,225,504) (7,350,629) (18,448,880) (17,451,181) - ------------- ------------- ------------- ------------ ------------- ------------ ------------- ------------- 785,725 (36,141,032) (91,932,506) 10,324,190 (41,540,660) (5,884,777) (21,676,762) (10,626,195) - ------------- ------------- ------------- ------------ ------------- ------------ ------------- ------------- (4,438,225) (3,837,570) (86,156,780) 20,376,873 (38,262,759) (974,843) (5,175,659) (2,099,175) 304,617,015 308,454,585 86,156,780 65,779,907 38,262,759 39,237,602 142,383,044 144,482,219 - ------------- ------------- ------------- ------------ ------------- ------------ ------------- ------------- $ 300,178,790 $ 304,617,015 $ -- $ 86,156,780 $ -- $ 38,262,759 $ 137,207,385 $ 142,383,044 ============= ============= ============= ============ ============= ============ ============= =============
The accompanying notes are an integral part of these financial statements. 35 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST PIMCO INFLATION MIST LEGG MASON PARTNERS MIST PIMCO PROTECTED BOND AGGRESSIVE GROWTH TOTAL RETURN SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------------- --------------------------- --------------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss).................. $ 293,469 $ 1,386,316 $ (1,466,510) $ (1,896,244) $ 5,229,885 $ 3,816,053 Net realized gains (losses)................ (311,237) 1,589,701 12,102,031 11,480,328 2,331,006 1,574,507 Change in unrealized gains (losses) on investments............. 5,102,007 (3,885,799) (9,681,223) (13,562,408) 8,899,903 5,445,910 ------------- ------------ ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from operations............ 5,084,239 (909,782) 954,298 (3,978,324) 16,460,794 10,836,470 ------------- ------------ ------------- ------------- ------------- ------------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners.................. 1,107,113 2,159,664 1,029,435 1,981,797 6,705,950 15,241,496 Net transfers (including fixed account).......... (4,135,018) (1,812,617) (11,218,628) (12,043,393) (36,672,842) (4,324,914) Contract charges.......... (212,872) (241,826) (260,696) (339,409) (746,145) (950,165) Transfers for contract benefits and terminations............ (8,108,229) (6,929,967) (11,475,909) (11,233,010) (29,825,925) (32,330,859) ------------- ------------ ------------- ------------- ------------- ------------- Net increase (decrease) in net assets resulting from contract transactions............ (11,349,006) (6,824,746) (21,925,798) (21,634,015) (60,538,962) (22,364,442) ------------- ------------ ------------- ------------- ------------- ------------- Net increase (decrease) in net assets.............. (6,264,767) (7,734,528) (20,971,500) (25,612,339) (44,078,168) (11,527,972) NET ASSETS: Beginning of period....... 64,649,920 72,384,448 108,846,059 134,458,398 327,612,133 339,140,105 ------------- ------------ ------------- ------------- ------------- ------------- End of period............. $ 58,385,153 $ 64,649,920 $ 87,874,559 $ 108,846,059 $ 283,533,965 $ 327,612,133 ============= ============ ============= ============= ============= =============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 36
MIST MIST T. ROWE PRICE MIST MFS RESEARCH MIST MET/AIM RCM TECHNOLOGY MID-CAP GROWTH INTERNATIONAL SMALL CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ------------------------- --------------------------- --------------------------- --------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ (193,572) $ (194,937) $ (1,506,226) $ (1,909,540) $ (234,867) $ 735,721 $ (1,253,245) $ (1,464,312) 1,611,755 428,043 18,345,680 14,848,937 53,178,619 35,842,722 5,567,084 16,357,294 1,394,620 152,202 (2,363,951) (7,278,039) (28,438,195) 14,955,814 2,748,635 (4,111,860) - ------------ ------------ ------------- ------------- ------------- ------------- ------------- ------------- 2,812,803 385,308 14,475,503 5,661,358 24,505,557 51,534,257 7,062,474 10,781,122 - ------------ ------------ ------------- ------------- ------------- ------------- ------------- ------------- 623,149 383,661 1,858,117 8,423,368 3,091,828 10,387,035 1,104,874 1,888,474 1,020,488 (769,581) (21,806,132) (17,936,273) (20,789,635) (19,817,321) (11,524,866) (15,019,833) (39,441) (40,170) (304,641) (388,849) (467,382) (510,817) (248,344) (291,838) (1,857,208) (1,028,153) (9,828,883) (9,454,020) (27,464,298) (26,987,184) (8,793,334) (7,121,033) - ------------ ------------ ------------- ------------- ------------- ------------- ------------- ------------- (253,012) (1,454,243) (30,081,539) (19,355,774) (45,629,487) (36,928,287) (19,461,670) (20,544,230) - ------------ ------------ ------------- ------------- ------------- ------------- ------------- ------------- 2,559,791 (1,068,935) (15,606,036) (13,694,416) (21,123,930) 14,605,970 (12,399,196) (9,763,108) 10,819,347 11,888,282 107,929,919 121,624,335 233,658,652 219,052,682 83,414,752 93,177,860 - ------------ ------------ ------------- ------------- ------------- ------------- ------------- ------------- $ 13,379,138 $ 10,819,347 $ 92,323,883 $ 107,929,919 $ 212,534,722 $ 233,658,652 $ 71,015,556 $ 83,414,752 ============ ============ ============= ============= ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements. 37 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST LAZARD MIST HARRIS OAKMARK MIST THIRD AVENUE MID-CAP INTERNATIONAL SMALL CAP VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------- --------------------------- -------------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..................... $ (849,008) $ (432,815) $ (961,214) $ 925,587 $ (617,092) $(1,230,930) Net realized gains (losses)................... 3,649,383 4,754,637 19,096,850 13,888,764 12,461,171 14,422,537 Change in unrealized gains (losses) on investments................ (8,367,898) (653,859) (20,427,971) 9,881,090 (15,368,056) (2,597,666) ------------ ------------ ------------- ------------- ------------- ------------ Net increase (decrease) in net assets resulting from operations.......... (5,567,523) 3,667,963 (2,292,335) 24,695,441 (3,523,977) 10,593,941 ------------ ------------ ------------- ------------- ------------- ------------ CONTRACT TRANSACTIONS: Purchase payments received from contract owners....... 970,650 901,367 3,589,805 7,169,518 2,373,546 6,653,989 Net transfers (including fixed account)............. 38,717,032 (859,320) (7,371,011) (9,193,619) (9,566,979) (5,088,444) Contract charges............. (122,812) (105,774) (366,378) (347,519) (306,577) (337,148) Transfers for contract benefits and terminations............... (8,322,280) (3,090,745) (14,345,886) (8,161,127) (11,509,670) (7,816,576) ------------ ------------ ------------- ------------- ------------- ------------ Net increase (decrease) in net assets resulting from contract transactions...... 31,242,590 (3,154,472) (18,493,470) (10,532,747) (19,009,680) (6,588,179) ------------ ------------ ------------- ------------- ------------- ------------ Net increase (decrease) in net assets................. 25,675,067 513,491 (20,785,805) 14,162,694 (22,533,657) 4,005,762 NET ASSETS: Beginning of period.......... 32,320,745 31,807,254 112,021,036 97,858,342 99,987,762 95,982,000 ------------ ------------ ------------- ------------- ------------- ------------ End of period................ $ 57,995,812 $ 32,320,745 $ 91,235,231 $ 112,021,036 $ 77,454,105 $ 99,987,762 ============ ============ ============= ============= ============= ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 38
MIST NEUBERGER BERMAN MIST TURNER MIST GOLDMAN SACHS MIST METLIFE REAL ESTATE MID-CAP GROWTH MID CAP VALUE DEFENSIVE STRATEGY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - --------------------------- ------------------------ ------------------------- -------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ (394,985) $ (342,063) $ (230,973) $ (222,569) $ (461,424) $ (577,073) $ 72,624 $(1,389,452) 13,924,010 12,095,979 1,182,006 677,556 5,857,376 1,887,312 5,763,804 2,032,596 (22,726,254) 12,680,369 1,656,841 72,340 (4,801,691) 3,011,251 (1,339,403) 4,934,458 - ------------- ------------- ------------ ----------- ------------ ------------ ------------- ------------ (9,197,229) 24,434,285 2,607,874 527,327 594,261 4,321,490 4,497,025 5,577,602 - ------------- ------------- ------------ ----------- ------------ ------------ ------------- ------------ 1,380,038 3,030,842 316,041 664,247 1,763,452 4,291,786 18,083,629 10,297,041 (16,110,806) (13,815,895) 1,405,514 (140,495) (2,913,613) 3,240,340 50,416,359 18,699,841 (172,173) (230,847) (49,879) (44,388) (131,808) (111,845) (421,775) (285,542) (5,909,025) (7,107,238) (1,551,821) (983,635) (4,431,382) (2,443,369) (20,031,173) (8,366,819) - ------------- ------------- ------------ ----------- ------------ ------------ ------------- ------------ (20,811,966) (18,123,138) 119,855 (504,271) (5,713,351) 4,976,912 48,047,040 20,344,521 - ------------- ------------- ------------ ----------- ------------ ------------ ------------- ------------ (30,009,195) 6,311,147 2,727,729 23,056 (5,119,090) 9,298,402 52,544,065 25,922,123 79,745,324 73,434,177 12,526,407 12,503,351 38,139,523 28,841,121 91,508,405 65,586,282 - ------------- ------------- ------------ ----------- ------------ ------------ ------------- ------------ $ 49,736,129 $ 79,745,324 $ 15,254,136 $12,526,407 $ 33,020,433 $ 38,139,523 $ 144,052,470 $ 91,508,405 ============= ============= ============ =========== ============ ============ ============= ============
The accompanying notes are an integral part of these financial statements. 39 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST METLIFE MIST METLIFE MIST METLIFE MODERATE STRATEGY BALANCED STRATEGY GROWTH STRATEGY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------------- ---------------------------- ---------------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)................. $ 793,370 $ (4,618,914) $ (594,130) $(12,946,129) $ (6,635,427) $(13,704,779) Net realized gains (losses)............... 11,340,759 3,377,687 33,913,027 5,782,251 40,655,333 6,111,883 Change in unrealized gains (losses) on investments............ 3,240,393 23,106,963 (6,671,966) 82,185,415 (9,782,182) 99,396,907 ------------- ------------- -------------- ------------- -------------- ------------- Net increase (decrease) in net assets resulting from operations...... 15,374,522 21,865,736 26,646,931 75,021,537 24,237,724 91,804,011 ------------- ------------- -------------- ------------- -------------- ------------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners........ 88,123,674 55,255,371 248,140,018 170,013,131 359,280,576 209,814,414 Net transfers (including fixed account)......... 90,812,816 29,799,661 161,679,772 61,356,986 100,035,711 55,941,825 Contract charges......... (1,418,022) (932,471) (3,691,226) (2,565,804) (4,214,074) (2,676,545) Transfers for contract benefits and terminations........... (28,457,799) (17,211,342) (94,872,655) (49,970,789) (83,736,881) (38,089,246) ------------- ------------- -------------- ------------- -------------- ------------- Net increase (decrease) in net assets resulting from contract transactions........... 149,060,669 66,911,219 311,255,909 178,833,524 371,365,332 224,990,448 ------------- ------------- -------------- ------------- -------------- ------------- Net increase (decrease) in net assets.......... 164,435,191 88,776,955 337,902,840 253,855,061 395,603,056 316,794,459 NET ASSETS: Beginning of period...... 315,943,046 227,166,091 902,216,343 648,361,282 986,336,802 669,542,343 ------------- ------------- -------------- ------------- -------------- ------------- End of period............ $ 480,378,237 $ 315,943,046 $1,240,119,183 $ 902,216,343 $1,381,939,858 $ 986,336,802 ============= ============= ============== ============= ============== =============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 40
MIST METLIFE MIST VAN KAMPEN MIST CYCLICAL MIST CYCLICAL AGGRESSIVE STRATEGY COMSTOCK GROWTH ETF GROWTH AND INCOME ETF SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - --------------------------- ------------------------- ------------------------- ------------------------ 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ (606,381) $ (2,512,890) $ 129,545 $ (825,026) $ (482,507) $ 94,404 $ (598,720) $ 43,837 19,847,925 5,604,525 2,986,429 2,151,219 688,517 77,151 493,233 153,621 (16,495,905) 13,278,939 (6,500,013) 8,620,101 961,089 1,993,642 992,983 1,496,315 - ------------- ------------- ------------ ------------ ------------ ------------ ------------ ----------- 2,745,639 16,370,574 (3,384,039) 9,946,294 1,167,099 2,165,197 887,496 1,693,773 - ------------- ------------- ------------ ------------ ------------ ------------ ------------ ----------- 8,773,830 14,475,787 5,084,048 13,727,379 6,953,032 7,733,726 21,569,605 7,875,358 (16,236,835) (5,417,137) 5,074,707 23,762,330 641,745 10,709,880 10,800,285 12,097,096 (521,857) (525,929) (178,491) (147,760) (99,194) (38,640) (86,387) (21,394) (23,365,665) (11,010,162) (6,023,327) (3,276,760) (1,304,305) (1,028,459) (1,492,568) (168,590) - ------------- ------------- ------------ ------------ ------------ ------------ ------------ ----------- (31,350,527) (2,477,441) 3,956,937 34,065,189 6,191,278 17,376,507 30,790,935 19,782,470 - ------------- ------------- ------------ ------------ ------------ ------------ ------------ ----------- (28,604,888) 13,893,133 572,898 44,011,483 7,358,377 19,541,704 31,678,431 21,476,243 154,159,455 140,266,322 81,752,237 37,740,754 27,884,955 8,343,251 25,580,451 4,104,208 - ------------- ------------- ------------ ------------ ------------ ------------ ------------ ----------- $ 125,554,567 $ 154,159,455 $ 82,325,135 $ 81,752,237 $ 35,243,332 $ 27,884,955 $ 57,258,882 $25,580,451 ============= ============= ============ ============ ============ ============ ============ ===========
The accompanying notes are an integral part of these financial statements. 41 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST LEGG MASON MIST MET/AIM MIST VALUE EQUITY CAPITAL APPRECIATION PIONEER FUND SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------- ------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 (B) ---- ---- ---- ---- ---- -------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)......................... $ (493,962) $ (408,931) $ (270,530) $ (302,018) $ (1,134) $ (722) Net realized gains (losses)...... 717,707 881,156 (1,083,063) (1,140,817) 14,144 105 Change in unrealized gains (losses) on investments........ (2,403,673) 2,183,499 3,322,820 2,481,117 (1,486) 13,512 ------------- ----------- ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations................... (2,179,928) 2,655,724 1,969,227 1,038,282 11,524 12,895 ------------- ----------- ------------ ------------ ----------- ----------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners........... 610,917 2,288,641 27,164 49,164 37,715 62,925 Net transfers (including fixed account)....................... (7,944,133) 35,901,716 (1,443,656) (1,445,918) 342,557 298,822 Contract charges................. (109,257) (90,464) (23,940) (26,637) (1,078) (85) Transfers for contract benefits and terminations............... (1,930,339) (881,422) (3,664,772) (4,358,389) (70,842) (447) ------------- ----------- ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from contract transactions................... (9,372,812) 37,218,471 (5,105,204) (5,781,780) 308,352 361,215 ------------- ----------- ------------ ------------ ----------- ----------- Net increase (decrease) in net assets......................... (11,552,740) 39,874,195 (3,135,977) (4,743,498) 319,876 374,110 NET ASSETS: Beginning of period.............. 40,209,812 335,617 20,579,265 25,322,763 374,110 -- ------------- ----------- ------------ ------------ ----------- ----------- End of period.................... $ 28,657,072 $40,209,812 $ 17,443,288 $ 20,579,265 $ 693,986 $ 374,110 ============= =========== ============ ============ =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 42
MIST PIONEER MIST PIONEER MIST MFS MIST LOOMIS SAYLES MID-CAP VALUE STRATEGIC INCOME EMERGING MARKETS EQUITY GLOBAL MARKETS SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ----------------------- ----------------------- ------------------------ ----------------------- 2007 (A) 2006 (B) 2007 2006 (B) 2007 2006 (B) 2007 2006 (B) -------- -------- ---- -------- ---- -------- ---- -------- $ 403 $ (17) $ (4,342) $ 15,859 $ (81,160) $ 58,566 $ (54,750) $ 748 17,162 1,228 1,498 35 1,806,676 14,319 83,104 78 (3,102) 3,102 60,651 (11,458) (483,026) 1,134,292 384,134 31,271 - ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- 14,463 4,313 57,807 4,436 1,242,490 1,207,177 412,488 32,097 - ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- 10,956 17,175 120,856 39,204 816,921 462,546 740,921 115,373 (101,240) 55,000 1,042,216 289,143 (6,771,533) 10,436,193 12,610,746 215,828 -- -- (1,762) (50) (22,391) (1,210) (5,199) (264) (361) (306) (67,625) 31,012 (627,808) 42,594 (99,502) 39 - ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- (90,645) 71,869 1,093,685 359,309 (6,604,811) 10,940,123 13,246,966 330,976 - ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- (76,182) 76,182 1,151,492 363,745 (5,362,321) 12,147,300 13,659,454 363,073 76,182 -- 363,745 -- 12,147,300 -- 363,073 -- - ----------- ----------- ----------- ----------- ------------ ----------- ----------- ----------- $ -- $ 76,182 $ 1,515,237 $ 363,745 $ 6,784,979 $12,147,300 $14,022,527 $ 363,073 =========== =========== =========== =========== ============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements. 43 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST STRATEGIC MIST STRATEGIC MIST STRATEGIC GROWTH AND INCOME CONSERVATIVE GROWTH GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------- ------------------------- ------------------------ 2007 2006 (B) 2007 2006 (B) 2007 2006 (B) ---- -------- ---- -------- ---- -------- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ 2,265,160 $ 20,232 $ 1,111,462 $ 82,724 $ 334,458 $ 57,744 Net realized gains (losses)... 7,413,764 141 7,119,374 1,951 7,059,727 -- Change in unrealized gains (losses) on investments..... 207,704 209,529 4,900,898 546,482 1,758,041 264,505 ------------- ----------- ------------ ------------ ------------ ----------- Net increase (decrease) in net assets resulting from operations................ 9,886,628 229,902 13,131,734 631,157 9,152,226 322,249 ------------- ----------- ------------ ------------ ------------ ----------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners........ 26,396,889 1,211,729 32,055,966 1,105,723 7,514,317 1,537,830 Net transfers (including fixed account).................... 159,227,059 95,412,765 140,802,228 104,977,332 68,985,882 70,482,231 Contract charges.............. (799,810) (18,738) (759,860) (31,022) (464,927) (16,497) Transfers for contract benefits and terminations................ (11,580,641) (264,091) (8,655,756) (375,719) (7,339,660) (81,275) ------------- ----------- ------------ ------------ ------------ ----------- Net increase (decrease) in net assets resulting from contract transactions....... 173,243,497 96,341,665 163,442,578 105,676,314 68,695,612 71,922,289 ------------- ----------- ------------ ------------ ------------ ----------- Net increase (decrease) in net assets.................. 183,130,125 96,571,567 176,574,312 106,307,471 77,847,838 72,244,538 NET ASSETS: Beginning of period........... 96,571,567 -- 106,307,471 -- 72,244,538 -- ------------- ----------- ------------ ------------ ------------ ----------- End of period................. $ 279,701,692 $96,571,567 $282,881,783 $106,307,471 $150,092,376 $72,244,538 ============= =========== ============ ============ ============ ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 44
MIST RAINIER RUSSELL RUSSELL RUSSELL LARGE CAP EQUITY MULTI-STYLE EQUITY AGGRESSIVE EQUITY NON-U.S. SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ---------------- ------------------------- ------------------------- ------------------------- 2007 (C) 2007 2006 2007 2006 2007 2006 -------- ---- ---- ---- ---- ---- ---- $ (536) $ (84,295) $ (110,938) $ (50,324) $ (77,199) $ 103,834 $ 97,149 27 1,394,489 (300,076) 806,705 1,208,911 2,710,802 1,113,733 11,289 592,416 3,182,129 (630,885) (355,344) (1,924,328) 1,173,994 ----------- ------------ ------------ ------------ ------------ ------------ ------------ 10,780 1,902,610 2,771,115 125,496 776,368 890,308 2,384,876 ----------- ------------ ------------ ------------ ------------ ------------ ------------ 10,612 3,000 11,800 5,463 5,862 1,500 6,300 1,132,471 (885,723) (633,246) (111,636) (34,592) (424,537) (384,818) (486) (5,573) (7,086) (1,152) (1,517) (2,554) (3,094) (3,747) (6,311,113) (7,604,211) (1,170,972) (2,182,966) (2,539,176) (3,442,092) ----------- ------------ ------------ ------------ ------------ ------------ ------------ 1,138,850 (7,199,409) (8,232,743) (1,278,297) (2,213,213) (2,964,767) (3,823,704) ----------- ------------ ------------ ------------ ------------ ------------ ------------ 1,149,630 (5,296,799) (5,461,628) (1,152,801) (1,436,845) (2,074,459) (1,438,828) -- 24,075,386 29,537,014 5,282,370 6,719,215 11,391,245 12,830,073 ----------- ------------ ------------ ------------ ------------ ------------ ------------ $ 1,149,630 $ 18,778,587 $ 24,075,386 $ 4,129,569 $ 5,282,370 $ 9,316,786 $ 11,391,245 =========== ============ ============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements. 45 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
RUSSELL RUSSELL AIM V.I. CORE BOND REAL ESTATE SECURITIES INTERNATIONAL GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------- ------------------------ ------------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 552,643 $ 520,829 $ 22,552 $ 15,773 $ (147,117) $ (66,442) Net realized gains (losses)...... (2,625) (54,647) 654,085 813,282 2,774,652 2,500,901 Change in unrealized gains (losses) on investments........ 269,128 (122,880) (1,146,552) 115,604 (916,127) 1,599,095 ------------ ------------ ------------ ----------- ------------ ------------ Net increase (decrease) in net assets resulting from operations................... 819,146 343,302 (469,915) 944,659 1,711,408 4,033,554 ------------ ------------ ------------ ----------- ------------ ------------ CONTRACT TRANSACTIONS: Purchase payments received from contract owners........... -- 4,000 -- 1,616 237,958 2,372,526 Net transfers (including fixed account)....................... 591,776 404,957 (83,243) (68,219) (2,862,172) (2,080,569) Contract charges................. (3,283) (4,145) (565) (711) (29,000) (39,792) Transfers for contract benefits and terminations............... (2,287,628) (4,764,149) (550,204) (885,607) (1,612,501) (1,253,438) ------------ ------------ ------------ ----------- ------------ ------------ Net increase (decrease) in net assets resulting from contract transactions................... (1,699,135) (4,359,337) (634,012) (952,921) (4,265,715) (1,001,273) ------------ ------------ ------------ ----------- ------------ ------------ Net increase (decrease) in net assets......................... (879,989) (4,016,035) (1,103,927) (8,262) (2,554,307) 3,032,281 NET ASSETS: Beginning of period.............. 15,354,316 19,370,351 3,216,373 3,224,635 16,393,934 13,361,653 ------------ ------------ ------------ ----------- ------------ ------------ End of period.................... $ 14,474,327 $ 15,354,316 $ 2,112,446 $ 3,216,373 $ 13,839,627 $ 16,393,934 ============ ============ ============ =========== ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 46
DWS GOVERNMENT & MSF DAVIS VENTURE MSF HARRIS OAKMARK MSF JENNISON AGENCY SECURITIES VALUE FOCUSED VALUE GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ----------------------- --------------------------- -------------------------- -------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ 44,208 $ 42,659 $ (2,716,298) $ (2,709,478) $ (1,127,587) $(1,416,472) $ (1,046,814) $(1,436,156) (2,240) (1,023) 26,405,264 15,793,935 14,505,871 12,197,262 7,883,237 4,885,114 3,658 (4,537) (14,384,112) 27,324,982 (19,716,259) (2,238,381) (53,240) (2,097,865) - ----------- ----------- ------------- ------------- ------------- ------------ ------------- ------------ 45,626 37,099 9,304,854 40,409,439 (6,337,975) 8,542,409 6,783,183 1,351,093 - ----------- ----------- ------------- ------------- ------------- ------------ ------------- ------------ 767 761 9,227,908 22,355,028 1,561,994 2,906,709 2,021,231 7,868,279 (62,290) 4,378 (36,082,691) (12,655,306) (5,363,293) (4,299,336) (12,266,830) (4,848,473) (1,213) (1,331) (894,124) (1,004,041) (280,871) (301,853) (241,555) (295,255) (255,573) (465,011) (29,176,963) (22,380,028) (10,713,648) (7,324,827) (9,657,087) (6,287,419) - ----------- ----------- ------------- ------------- ------------- ------------ ------------- ------------ (318,309) (461,203) (56,925,870) (13,684,347) (14,795,818) (9,019,307) (20,144,241) (3,562,868) - ----------- ----------- ------------- ------------- ------------- ------------ ------------- ------------ (272,683) (424,104) (47,621,016) 26,725,092 (21,133,793) (476,898) (13,361,058) (2,211,775) 1,321,448 1,745,552 334,265,042 307,539,950 88,607,294 89,084,192 84,084,948 86,296,723 - ----------- ----------- ------------- ------------- ------------- ------------ ------------- ------------ $ 1,048,765 $ 1,321,448 $ 286,644,026 $ 334,265,042 $ 67,473,501 $ 88,607,294 $ 70,723,890 $ 84,084,948 =========== =========== ============= ============= ============= ============ ============= ============
The accompanying notes are an integral part of these financial statements. 47 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MSF MFS MSF CAPITAL GUARDIAN MSF FI TOTAL RETURN U.S. EQUITY INTERNATIONAL STOCK SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------- --------------------------- ------------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)...................... $ 764,627 $ 1,630,831 $ (1,581,140) $ (787,381) $ (56,061) $ (27,667) Net realized gains (losses)... 4,238,118 1,991,791 19,980,858 6,059,175 2,741,083 2,092,382 Change in unrealized gains (losses) on investments..... (2,480,780) 4,263,278 (19,731,356) 9,805,564 (1,871,753) (162,004) ------------ ------------ ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from operations................ 2,521,965 7,885,900 (1,331,638) 15,077,358 813,269 1,902,711 ------------ ------------ ------------- ------------- ------------ ------------ CONTRACT TRANSACTIONS: Purchase payments received from contract owners........ 2,971,797 2,876,120 1,826,006 3,524,218 118,021 226,120 Net transfers (including fixed account).................... 5,661,719 13,470,604 (5,604,110) 7,022,730 (3,454,663) (3,374,197) Contract charges.............. (154,144) (123,484) (240,222) (238,373) (32,136) (49,910) Transfers for contract benefits and terminations................ (8,149,348) (5,411,971) (21,814,215) (24,667,700) (555,807) (614,107) ------------ ------------ ------------- ------------- ------------ ------------ Net increase (decrease) in net assets resulting from contract transactions....... 330,024 10,811,269 (25,832,541) (14,359,125) (3,924,585) (3,812,094) ------------ ------------ ------------- ------------- ------------ ------------ Net increase (decrease) in net assets...................... 2,851,989 18,697,169 (27,164,179) 718,233 (3,111,316) (1,909,383) NET ASSETS: Beginning of period........... 83,918,502 65,221,333 181,068,259 180,350,026 12,031,860 13,941,243 ------------ ------------ ------------- ------------- ------------ ------------ End of period................. $ 86,770,491 $ 83,918,502 $ 153,904,080 $ 181,068,259 $ 8,920,544 $ 12,031,860 ============ ============ ============= ============= ============ ============
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 48
MSF BLACKROCK MSF METLIFE MSF BLACKROCK MSF BLACKROCK MONEY MARKET STOCK INDEX BOND INCOME STRATEGIC VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - --------------------------- ------------------------- ------------------------- ------------------------ 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ 3,239,963 $ 2,220,027 $ (329,656) $ 24,269 $ 432,948 $ 1,416,338 $ (37,534) $ (52,954) -- -- 4,282,606 4,713,944 (157,357) (514,672) 229,921 779,295 -- -- (2,637,207) (292,674) 1,003,600 308,380 (324,702) (199,526) - ------------- ------------- ------------ ------------ ------------ ------------ ----------- ------------ 3,239,963 2,220,027 1,315,743 4,445,539 1,279,191 1,210,046 (132,315) 526,815 - ------------- ------------- ------------ ------------ ------------ ------------ ----------- ------------ 24,525,877 12,933,299 831,403 1,149,224 1,231,591 4,722,725 28,675 45,353 82,824,803 70,315,009 266,696 727,724 (7,094,151) 2,606,598 (319,905) (1,420,091) (318,953) (216,128) (123,990) (109,731) (54,741) (95,537) (8,907) (13,711) (91,619,481) (51,784,172) (3,686,152) (2,734,334) (2,251,227) (4,048,484) (179,167) (243,694) - ------------- ------------- ------------ ------------ ------------ ------------ ----------- ------------ 15,412,246 31,248,008 (2,712,043) (967,117) (8,168,528) 3,185,302 (479,304) (1,632,143) - ------------- ------------- ------------ ------------ ------------ ------------ ----------- ------------ 18,652,209 33,468,035 (1,396,300) 3,478,422 (6,889,337) 4,395,348 (611,619) (1,105,328) 91,235,712 57,767,677 39,811,549 36,333,127 36,289,487 31,894,139 3,001,029 4,106,357 - ------------- ------------- ------------ ------------ ------------ ------------ ----------- ------------ $ 109,887,921 $ 91,235,712 $ 38,415,249 $ 39,811,549 $ 29,400,150 $ 36,289,487 $ 2,389,410 $ 3,001,029 ============= ============= ============ ============ ============ ============ =========== ============
The accompanying notes are an integral part of these financial statements. 49 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MSF WESTERN ASSET MSF WESTERN ASSET MSF FRANKLIN TEMPLETON MANAGEMENT STRATEGIC MANAGEMENT SMALL CAP GROWTH BOND OPPORTUNITIES U.S. GOVERNMENT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ---------------------- -------------------- ----------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (200,740) $ (357,497) $ 56,877 $ 213,863 $ 5,790 $ (3,868) Net realized gains (losses)...... 1,840,066 2,186,804 31,871 74,708 6,291 8,980 Change in unrealized gains (losses) on investments........ (1,127,390) 92,344 45,831 (77,850) 22,512 15,639 ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 511,936 1,921,651 134,579 210,721 34,593 20,751 ------------ ------------ ----------- ----------- ----------- ----------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners................ 1,211,623 4,255,248 138,787 101,795 588,059 192,197 Net transfers (including fixed account)....................... (8,429,640) (2,650,893) 11,202 (57,135) 309,580 835,478 Contract charges................. (40,179) (77,651) (16,322) (17,724) (2,997) (697) Transfers for contract benefits and terminations............... (610,551) (1,113,565) (545,786) (650,893) (57,170) (47,218) ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from contract transactions................... (7,868,747) 413,139 (412,119) (623,957) 837,472 979,760 ------------ ------------ ----------- ----------- ----------- ----------- Net increase (decrease) in net assets......................... (7,356,811) 2,334,790 (277,540) (413,236) 872,065 1,000,511 NET ASSETS: Beginning of period.............. 20,720,142 18,385,352 6,154,850 6,568,086 1,068,532 68,021 ------------ ------------ ----------- ----------- ----------- ----------- End of period.................... $ 13,363,331 $ 20,720,142 $ 5,877,310 $ 6,154,850 $ 1,940,597 $ 1,068,532 ============ ============ =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 50
MSF T. ROWE PRICE MSF T. ROWE PRICE MSF OPPENHEIMER PUTNAM VT SMALL CAP GROWTH LARGE CAP GROWTH GLOBAL EQUITY GROWTH AND INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - ------------------------- --------------------------- ------------------------ ------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ (174,843) $ (187,629) $ (966,497) $ (1,733,106) $ (35,192) $ 115,962 $ 37,708 $ 92,247 613,009 459,600 6,886,356 19,301,398 678,988 268,259 3,284,631 973,609 540,791 67,327 497,289 (2,423,457) 247,590 1,343,446 (4,429,636) 1,808,364 - ------------ ------------ ------------- ------------- ------------ ----------- ------------ ------------ 978,957 339,298 6,417,148 15,144,835 891,386 1,727,667 (1,107,297) 2,874,220 - ------------ ------------ ------------- ------------- ------------ ----------- ------------ ------------ 128,842 115,995 1,180,528 10,404,062 593,732 1,533,347 173,693 279,458 (482,627) (549,288) (42,288,504) (34,424,655) 2,688,988 9,379,682 (332,401) (864,566) (22,563) (25,141) (219,216) (392,970) (34,234) (17,185) (13,766) (13,940) (1,438,408) (1,368,806) (6,567,377) (9,116,422) (1,775,559) (789,504) (3,855,070) (3,404,512) - ------------ ------------ ------------- ------------- ------------ ----------- ------------ ------------ (1,814,756) (1,827,240) (47,894,569) (33,529,985) 1,472,927 10,106,340 (4,027,544) (4,003,560) - ------------ ------------ ------------- ------------- ------------ ----------- ------------ ------------ (835,799) (1,487,942) (41,477,421) (18,385,150) 2,364,313 11,834,007 (5,134,841) (1,129,340) 12,441,182 13,929,124 114,703,767 133,088,917 17,132,657 5,298,650 20,878,412 22,007,752 - ------------ ------------ ------------- ------------- ------------ ----------- ------------ ------------ $ 11,605,383 $ 12,441,182 $ 73,226,346 $ 114,703,767 $ 19,496,970 $17,132,657 $ 15,743,571 $ 20,878,412 ============ ============ ============= ============= ============ =========== ============ ============
The accompanying notes are an integral part of these financial statements. 51 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
PUTNAM VT PUTNAM VT FTVIPT TEMPLETON VISTA EQUITY INCOME GROWTH SECURITIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------- ------------------------- ------------------------ 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ (62,496) $ (80,454) $ 121,566 $ 12,971 $ 37,661 $ (6,042) Net realized gains (losses)...... (91,634) (182,393) 3,453,450 999,701 1,071,572 364,109 Change in unrealized gains (losses) on investments........ 303,960 510,354 (2,799,230) 4,430,015 (1,077,442) 906,637 ------------ ------------ ------------ ------------ ------------ ----------- Net increase (decrease) in net assets resulting from operations................... 149,830 247,507 775,786 5,442,687 31,791 1,264,704 ------------ ------------ ------------ ------------ ------------ ----------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners........... 45,530 50,831 2,042,424 2,204,480 2,446,243 1,782,108 Net transfers (including fixed account)....................... (640,816) (408,852) 5,143,454 9,592,767 6,683,188 4,443,080 Contract charges................. (2,196) (2,714) (82,070) (57,915) (26,308) (6,979) Transfers for contract benefits and terminations............... (952,330) (987,903) (3,298,665) (1,897,164) (1,105,032) (931,583) ------------ ------------ ------------ ------------ ------------ ----------- Net increase (decrease) in net assets resulting from contract transactions................... (1,549,812) (1,348,638) 3,805,143 9,842,168 7,998,091 5,286,626 ------------ ------------ ------------ ------------ ------------ ----------- Net increase (decrease) in net assets......................... (1,399,982) (1,101,131) 4,580,929 15,284,855 8,029,882 6,551,330 NET ASSETS: Beginning of period.............. 5,064,251 6,165,382 39,810,732 24,525,877 10,958,015 4,406,685 ------------ ------------ ------------ ------------ ------------ ----------- End of period.................... $ 3,664,269 $ 5,064,251 $ 44,391,661 $ 39,810,732 $ 18,987,897 $10,958,015 ============ ============ ============ ============ ============ ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 52
FTVIPT TEMPLETON FTVIPT DEVELOPING FIDELITY VIP FIDELITY VIP FOREIGN SECURITIES MARKETS SECURITIES GROWTH OPPORTUNITIES EQUITY-INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT - --------------------------- --------------------------- ----------------------- ------------------------- 2007 2006 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- ---- ---- $ 267,150 $ (118,593) $ 312,615 $ (183,808) $ (3,102) $ (1,190) $ 9,362 $ 134,443 11,333,908 8,146,492 15,936,172 11,370,221 1,990 (27,594) 1,052,696 1,529,181 (4,646,750) 5,357,400 (6,630,584) 1,413,976 44,671 35,547 (1,072,377) (168,505) - ------------- ------------- ------------- ------------- ----------- ----------- ------------ ------------ 6,954,308 13,385,299 9,618,203 12,600,389 43,559 6,763 (10,319) 1,495,119 - ------------- ------------- ------------- ------------- ----------- ----------- ------------ ------------ 1,159,342 4,976,140 598,648 3,273,494 1,250 2,650 68,011 136,465 (18,625,145) (12,719,345) (14,587,546) (14,560,453) (6,290) (11,985) 518,279 130,922 (131,977) (200,260) (107,596) (148,180) (189) (199) (24,212) (23,849) (4,984,549) (5,633,440) (3,171,172) (4,473,829) (65,156) (120,023) (860,963) (1,471,240) - ------------- ------------- ------------- ------------- ----------- ----------- ------------ ------------ (22,582,329) (13,576,905) (17,267,666) (15,908,968) (70,385) (129,557) (298,885) (1,227,702) - ------------- ------------- ------------- ------------- ----------- ----------- ------------ ------------ (15,628,021) (191,606) (7,649,463) (3,308,579) (26,826) (122,794) (309,204) 267,417 67,803,255 67,994,861 48,883,729 52,192,308 224,683 347,477 9,156,792 8,889,375 - ------------- ------------- ------------- ------------- ----------- ----------- ------------ ------------ $ 52,175,234 $ 67,803,255 $ 41,234,266 $ 48,883,729 $ 197,857 $ 224,683 $ 8,847,588 $ 9,156,792 ============= ============= ============= ============= =========== =========== ============ ============
The accompanying notes are an integral part of these financial statements. 53 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY STATEMENTS OF CHANGES IN NET ASSETS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
PIMCO VIT PIMCO VIT PIMCO VIT STOCKSPLUS HIGH YIELD LOW DURATION GROWTH AND INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------------ ------------------------ ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- INCREASE (DECREASE) IN NET ASSETS: FROM OPERATIONS: Net investment income (loss)..... $ 509,321 $ 863,011 $ 292,400 $ 266,483 $ 96,156 $ 49,459 Net realized gains (losses)...... 107,324 255,170 (23,753) (33,431) 51,946 36,393 Change in unrealized gains (losses) on investments........ (393,524) 119,847 232,553 1,182 (69,013) 96,200 ------------ ----------- ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations................... 223,121 1,238,028 501,200 234,234 79,089 182,052 ------------ ----------- ------------ ----------- ----------- ----------- CONTRACT TRANSACTIONS: Purchase payments received from contract owners................ 236,367 2,347,587 85,852 17,400 55,775 5,176 Net transfers (including fixed account)....................... (5,917,985) (171,562) (109,712) (301,757) 2,522 (58,760) Contract charges................. (29,500) (51,040) (28,171) (31,100) (4,149) (3,692) Transfers for contract benefits and terminations............... (499,934) (808,796) (1,159,110) (615,942) (75,136) (100,383) ------------ ----------- ------------ ----------- ----------- ----------- Net increase (decrease) in net assets resulting from contract transactions................... (6,211,052) 1,316,189 (1,211,141) (931,399) (20,988) (157,659) ------------ ----------- ------------ ----------- ----------- ----------- Net increase (decrease) in net assets......................... (5,987,931) 2,554,217 (709,941) (697,165) 58,101 24,393 NET ASSETS: Beginning of period.............. 14,434,061 11,879,844 9,702,832 10,399,997 1,454,878 1,430,485 ------------ ----------- ------------ ----------- ----------- ----------- End of period.................... $ 8,446,130 $14,434,061 $ 8,992,891 $ 9,702,832 $ 1,512,979 $ 1,454,878 ============ =========== ============ =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period May 1, 2006 to December 31, 2006. (c)For the period November 12, 2007 to December 31, 2007. The accompanying notes are an integral part of these financial statements. 54
PIMCO VIT AMERICAN FUNDS TOTAL RETURN GLOBAL GROWTH SUB-ACCOUNT SUB-ACCOUNT ------------------------- ----------------------- 2007 2006 2007 2006 (B) ---- ---- ---- -------- $ 646,032 $ 758,980 $ 149,045 $ (138) 90,176 226,273 220,803 -- 558,878 (425,395) 111,988 3,336 ------------ ------------ ----------- ----------- 1,295,086 559,858 481,836 3,198 ------------ ------------ ----------- ----------- 5,445 109,039 1,764,876 87,400 (3,013,968) (1,623,350) 8,265,449 234,855 (33,199) (44,580) (5,398) (76) (2,974,796) (4,147,286) (314,508) (34) ------------ ------------ ----------- ----------- (6,016,518) (5,706,177) 9,710,419 322,145 ------------ ------------ ----------- ----------- (4,721,432) (5,146,319) 10,192,255 325,343 23,287,170 28,433,489 325,343 -- ------------ ------------ ----------- ----------- $ 18,565,738 $ 23,287,170 $10,517,598 $ 325,343 ============ ============ =========== ===========
The accompanying notes are an integral part of these financial statements. 55 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS 1. ORGANIZATION MetLife Investors Variable Annuity Account One (the "Separate Account"), a separate account of MetLife Investors Insurance Company (the "Company"), was established by the Company's Board of Directors on February 24, 1987 to support operations of the Company with respect to certain variable annuity contracts (the "Contracts"). The Company is a direct wholly-owned subsidiary of MetLife, Inc., a Delaware corporation. The Separate Account is registered as a unit investment trust under the Investment Company Act of 1940, as amended, and exists in accordance with the regulations of the Missouri Department of Insurance. The Separate Account is divided into Sub-Accounts, each of which is treated as an individual accounting entity for financial reporting purposes. Each Sub-Account invests in shares of the corresponding portfolio, series, or fund (with the same name) of registered investment management companies (the "Trusts") which are presented below: Met Investors Series Trust ("MIST") Russell Investment Funds ("Russell") AIM Variable Insurance Funds ("AIM V.I.") DWS Variable Series ("DWS") Metropolitan Series Fund, Inc. ("MSF") Putnam Variable Trust ("Putnam VT") Franklin Templeton Variable Insurance Products ("FTVIPT") Fidelity Variable Insurance Products ("Fidelity VIP") PIMCO Variable Insurance Trust ("PIMCO VIT") American Funds Insurance Series ("American Funds") The assets of the Separate Account are registered in the name of the Company. Under applicable insurance law, the assets and liabilities of the Separate Account are clearly identified and distinguished from the Company's other assets and liabilities. The portion of the Separate Account's assets applicable to the Contracts is not chargeable with liabilities arising out of any other business the Company may conduct. Purchase payments applied to the Separate Account are invested in one or more Sub-Accounts in accordance with the selection made by the contract owner. The following Sub-Accounts were available for investment as of December 31, 2007: MIST Lord Abbett Growth and Income Sub-Account* MIST Lord Abbett Bond Debenture Sub-Account* MIST Van Kampen Mid-Cap Growth Sub-Account* MIST Lord Abbett Mid-Cap Value Sub-Account* MIST Oppenheimer Capital Appreciation Sub-Account* MIST PIMCO Inflation Protected Bond Sub-Account MIST Legg Mason Partners Aggressive Growth Sub-Account* MIST PIMCO Total Return Sub-Account* MIST RCM Technology Sub-Account MIST T. Rowe Price Mid-Cap Growth Sub-Account* MIST MFS Research International Sub-Account* MIST Met/AIM Small Cap Growth Sub-Account MIST Lazard Mid-Cap Sub-Account MIST Harris Oakmark International Sub-Account MIST Third Avenue Small Cap Value Sub-Account* MIST Neuberger Berman Real Estate Sub-Account* MIST Turner Mid-Cap Growth Sub-Account MIST Goldman Sachs Mid-Cap Value Sub-Account MIST MetLife Defensive Strategy Sub-Account 56 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONTINUED) MIST MetLife Moderate Strategy Sub-Account MIST MetLife Balanced Strategy Sub-Account MIST MetLife Growth Strategy Sub-Account MIST MetLife Aggressive Strategy Sub-Account MIST Van Kampen Comstock Sub-Account MIST Cyclical Growth ETF Sub-Account MIST Cyclical Growth and Income ETF Sub-Account MIST Legg Mason Value Equity Sub-Account MIST Met/AIM Capital Appreciation Sub-Account MIST Pioneer Fund Sub-Account MIST Pioneer Strategic Income Sub-Account MIST MFS Emerging Markets Equity Sub-Account MIST Loomis Sayles Global Markets Sub-Account MIST Strategic Growth and Income Sub-Account MIST Strategic Conservative Growth Sub-Account MIST Strategic Growth Sub-Account MIST Rainier Large Cap Equity Sub-Account Russell Multi-Style Equity Sub-Account Russell Aggressive Equity Sub-Account Russell Non-U.S. Sub-Account Russell Core Bond Sub-Account Russell Real Estate Securities Sub-Account AIM V.I. International Growth Sub-Account DWS Government & Agency Securities Sub-Account MSF Davis Venture Value Sub-Account* MSF Harris Oakmark Focused Value Sub-Account MSF Jennison Growth Sub-Account* MSF MFS Total Return Sub-Account* MSF Capital Guardian U.S. Equity Sub-Account MSF FI International Stock Sub-Account* MSF BlackRock Money Market Sub-Account* MSF MetLife Stock Index Sub-Account* MSF BlackRock Bond Income Sub-Account* MSF BlackRock Strategic Value Sub-Account MSF Franklin Templeton Small Cap Growth Sub-Account MSF Western Asset Management Strategic Bond Opportunities Sub-Account MSF Western Asset Management U.S. Government Sub-Account MSF T. Rowe Price Small Cap Growth Sub-Account* MSF T. Rowe Price Large Cap Growth Sub-Account* MSF Oppenheimer Global Equity Sub-Account Putnam VT Growth and Income Sub-Account* Putnam VT Vista Sub-Account* Putnam VT Equity Income Sub-Account FTVIPT Templeton Growth Securities Sub-Account* FTVIPT Templeton Foreign Securities Sub-Account FTVIPT Templeton Developing Markets Securities Sub-Account Fidelity VIP Growth Opportunities Sub-Account Fidelity VIP Equity-Income Sub-Account 57 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 1. ORGANIZATION -- (CONCLUDED) PIMCO VIT High Yield Sub-Account PIMCO VIT Low Duration Sub-Account PIMCO VIT StocksPLUS Growth and Income Sub-Account PIMCO VIT Total Return Sub-Account American Funds Global Growth Sub-Account * This Sub-Account invests in two or more share classes within the underlying portfolio, series, or fund of the Trusts that may assess 12b-1 fees. The following Sub-Accounts ceased operations during the year ended December 31, 2007: MIST Lord Abbett America's Value Sub-Account MIST Met/Putnam Capital Opportunities Sub-Account MIST Pioneer Mid-Cap Value Sub-Account AIM V.I. Capital Appreciation Sub-Account MFS Investors Trust Sub-Account DWS Small Cap Growth Sub-Account The operations of the Sub-Accounts were affected by the following changes that occurred during the year ended December 31, 2007: NAME CHANGES: Old Name New Name - -------- -------- RCM Global Technology Portfolio RCM Technology Portfolio Legg Mason Aggressive Growth Portfolio Legg Mason Partners Aggressive Growth Portfolio MERGERS: Old Name New Name - -------- -------- Lord Abbett America's Value Portfolio Lord Abbett Bond Debenture Portfolio Pioneer Mid-Cap Value Portfolio Lazard Mid Cap Portfolio Met/Putnam Capital Opportunities Lazard Mid Cap Portfolio Portfolio SUBSTITUTIONS: Old Name New Name - -------- -------- AIM V.I. Capital Appreciation Fund Met/AIM Capital Appreciation Portfolio MFS Investors Trust Series Capital Guardian U.S. Equity Portfolio DWS Small Cap Growth VIP T. Rowe Price Small Cap Growth Portfolio This report is prepared for the general information of contract owners and is not an offer of units of the Separate Account or shares of the Separate Account's underlying investments. It should not be used in connection with any offer except in conjunction with the prospectus for the Separate Account products offered by the Company and the prospectus of the underlying portfolio, series, or fund which collectively contain all the pertinent information, including additional information on charges and expenses. 2. SIGNIFICANT ACCOUNTING POLICIES BASIS OF ACCOUNTING The financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for variable annuity separate accounts registered as unit investment trusts. 58 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) VALUATION OF INVESTMENTS Investments are reported at fair value and are based on the net asset value per share as determined by the underlying assets of the portfolio, series, or fund of the Trusts, which value their investment securities at fair value. Changes in fair value are recorded in the statement of operations. SECURITY TRANSACTIONS Security transactions are recorded on a trade date basis. Realized gains and losses on the sales of investments are computed on the basis of the identified cost of the investment sold. Income from dividends and realized gain distributions are recorded on the ex-distribution date. FEDERAL INCOME TAXES The operations of the Separate Account form a part of the total operations of the Company and are not taxed separately. The Company is taxed as a life insurance company under the provisions of the Internal Revenue Code ("IRC"). Under the current provisions of the IRC, the Company does not expect to incur federal income taxes on the earnings of the Separate Account to the extent the earnings are credited under the Contracts. Accordingly, no charge is being made currently to the Separate Account for federal income taxes. The Company will periodically review the status of this policy in the event of changes in the tax law. A charge may be made in future years for any federal income taxes that would be attributable to the Contracts. ANNUITY PAYOUTS Net assets allocated to Contracts in the payout period are computed according to industry standard mortality tables. The assumed investment return is 3.0 percent. The mortality risk is fully borne by the Company and may result in additional amounts being transferred into the Separate Account by the Company to cover greater longevity of annuitants than expected. Conversely, if amounts allocated exceed amounts required, transfers may be made to the Company. PURCHASE PAYMENTS Purchase payments received from contract owners by the Company are credited as accumulation units as of the end of the valuation period in which received, as provided in the prospectus. NET TRANSFERS The contract owner has the opportunity to transfer funds between Sub-Accounts within the Separate Account or the fixed account, which is an investment option in the Company's general account. USE OF ESTIMATES The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT Effective January 1, 2007, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 48, ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES--AN INTERPRETATION OF FASB STATEMENT NO. 109 ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company's financial statements. FIN 48 requires companies to determine whether it is "more likely than not" that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be 59 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES -- (CONCLUDED) recorded in the financial statements. It also provides guidance on the recognition, measurement, and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. The adoption of FIN 48 had no impact on the financial statements of the Separate Account. FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, FAIR VALUE MEASUREMENTS ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP and requires enhanced disclosures about fair value measurements. SFAS 157 does not require additional fair value measurements. The pronouncement is effective for fiscal years beginning after November 15, 2007. The guidance in SFAS 157 will be applied prospectively with certain exceptions. The Company believes the adoption of SFAS 157 will have no material impact on the financial statements of the Separate Account. 3. EXPENSES AND RELATED PARTY TRANSACTIONS The following annual Separate Account charges are asset-based charges and assessed through a daily reduction in unit values: Mortality and Expense Risk--The mortality risk assumed by the Company is the risk that those insured may die sooner than anticipated and therefore, the Company will pay aggregate amount of death benefits greater than anticipated. The expense risk assumed is where expenses incurred in issuing and administering the Contracts will exceed the amounts realized from the administrative charges assessed against the Contracts. In addition, the charge compensates the Company for the risk that the investor may live longer than estimated and the Company would be obligated to pay more in income payments than anticipated. Administrative--The Company has responsibility for the administration of the Contracts and the Separate Account. Generally, the administrative charge is related to the maintenance, including distribution, of each contract and the Separate Account. Optional Death Benefit Rider--For an additional charge, the total death benefit payable may be increased based on the earnings in the Contracts. The table below represents the range of effective annual rates for each respective charge for the year ended December 31, 2007: Mortality and Expense Risk 0.50% - 1.60% ------------------------------------------ Administrative 0.15% - 0.25% ------------------------------------------ Optional Death Benefit Rider 0.15% - 0.35%
The above referenced charges may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designation of the charge or associated with a particular contract. A contract maintenance fee of $30 is assessed on an annual basis for Contracts with a value of less than $50,000. A transfer fee of $25 may be deducted after twelve transfers are made in a contract year or, if less, 2% of the amount transferred, from the contract value. In addition, most Contracts impose a surrender charge which ranges from 0% to 8% if the contract is partially or fully surrendered within the specified surrender charge period. A transaction charge of the lesser of $10 or 2% of the surrender is imposed on surrenders as well as $10 for annuitizations. For those contract owners who choose optional living benefit riders, these charges range from 60 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 3. EXPENSES AND RELATED PARTY TRANSACTIONS -- (CONTINUED) ..35% to 1.50% of your account value and are charged at each contract anniversary date. These charges are assessed through the redemption of units and are recorded as contract charges in the accompanying statements of changes in net assets. Certain investments in the various portfolios, series, or funds in the MIST and MSF Trusts hold shares which are managed by Met Investors Advisory, LLC and MetLife Advisers, LLC, respectively. Both act in the capacity of investment advisor and are indirect affiliates of the Company. 61 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. STATEMENT OF INVESTMENTS
FOR THE YEAR ENDED AS OF DECEMBER 31, 2007 DECEMBER 31, 2007 ------------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ----------- ------------- ------------- -------------- MIST Lord Abbett Growth and Income Sub-Account........................ 37,362,629 900,689,264 70,356,584 231,359,318 MIST Lord Abbett Bond Debenture Sub-Account........................ 23,716,950 285,962,616 44,344,039 57,616,903 MIST Van Kampen Mid-Cap Growth Sub-Account........................ 5,398,464 48,410,250 8,290,921 9,938,434 MIST Lord Abbett Mid-Cap Value Subaccount......................... 15,370,412 305,095,180 111,789,284 73,130,740 MIST Lord Abbett America's Value Subaccount (a)..................... -- -- 8,983,692 94,003,035 MIST Met/Putnam Capital Opportunities Subaccount (a)..................... -- -- 2,900,289 42,427,049 MIST Oppenheimer Capital Appreciation Sub-Account........................ 13,898,215 115,995,038 14,943,350 30,151,799 MIST PIMCO Inflation Protected Bond Sub-Account........................ 5,336,887 56,321,366 3,209,486 14,264,630 MIST Legg Mason Partners Aggressive Growth Sub-Account................. 11,814,109 84,099,825 10,552,346 24,973,849 MIST PIMCO Total Return Sub-Account.. 23,263,631 265,788,681 17,612,654 72,920,871 MIST RCM Technology Sub-Account...... 1,991,045 10,033,666 4,179,121 4,212,316 MIST T. Rowe Price Mid-Cap Growth Sub-Account........................ 9,527,766 73,665,517 17,663,992 44,829,148 MIST MFS Research International Sub-Account........................ 14,808,710 177,661,951 40,471,315 54,486,113 MIST Met/AIM Small Cap Growth Sub-Account........................ 4,840,965 60,378,425 3,918,053 23,527,857 MIST Lazard Mid Cap Sub-Account...... 4,782,342 64,075,615 45,202,156 11,910,438 MIST Harris Oakmark International Sub-Account........................ 5,338,525 82,388,891 19,691,193 30,327,266 MIST Third Avenue Small Cap Value Sub-Account........................ 4,938,906 71,467,866 8,407,466 22,046,670 MIST Neuberger Berman Real Estate Sub-Account........................ 3,547,724 49,277,565 11,399,578 27,277,650 MIST Turner Mid-Cap Growth Sub-Account........................ 1,003,606 11,364,914 2,946,373 2,613,198 MIST Goldman Sachs Mid-Cap Value Sub-Account........................ 2,440,571 32,675,666 8,997,169 11,742,389 MIST MetLife Defensive Strategy Sub-Account........................ 12,804,702 138,308,396 80,375,074 29,917,654 MIST MetLife Moderate Strategy Sub-Account........................ 41,057,996 444,685,682 169,996,918 10,241,210 MIST MetLife Balanced Strategy Sub-Account........................ 102,320,090 1,127,079,630 352,783,848 9,885,827 MIST MetLife Growth Strategy Sub-Account........................ 107,543,982 1,241,663,822 414,941,749 12,054,250
62 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. STATEMENT OF INVESTMENTS -- (CONTINUED)
FOR THE YEAR ENDED AS OF DECEMBER 31, 2007 DECEMBER 31, 2007 ---------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) ---------- ----------- ------------- -------------- MIST MetLife Aggressive Strategy Sub-Account............................. 9,980,515 116,103,746 32,288,629 55,366,455 MIST Van Kampen Comstock Sub-Account...... 7,337,429 79,520,505 14,772,834 9,009,813 MIST Cyclical Growth ETF Sub-Account...... 2,929,634 32,175,010 9,868,644 4,159,709 MIST Cyclical Growth and Income ETF Sub-Account............................. 4,881,410 54,777,354 34,981,946 4,787,068 MIST Legg Mason Value Equity Sub-Account.. 2,737,139 28,880,765 907,900 10,736,954 MIST Met/AIM Capital Appreciation Sub-Account............................. 1,445,052 16,733,438 20,401,074 25,774,398 MIST Pioneer Fund Sub-Account............. 45,603 682,504 421,867 114,105 MIST Pioneer Mid-Cap Value Sub-Account (a) -- -- 151,039 213,921 MIST Pioneer Strategic Income Sub-Account. 151,306 1,466,891 1,287,468 197,277 MIST MFS Emerging Markets Equity Sub-Account............................. 473,853 6,134,315 9,109,523 15,794,893 MIST Loomis Sayles Global Markets Sub-Account............................. 1,060,760 13,607,848 13,550,898 357,956 MIST Strategic Growth and Income Sub-Account............................. 26,817,047 279,284,569 189,468,322 7,020,809 MIST Strategic Conservative Growth Sub-Account............................. 26,437,554 277,434,450 175,017,690 3,608,781 MIST Strategic Growth Sub-Account......... 14,040,450 148,069,869 87,037,006 11,992,347 MIST Rainier Large Cap Equity Sub-Account (b)......................... 115,008 1,138,792 1,139,817 1,053 Russell Multi-Style Equity Sub-Account.... 1,199,914 17,128,460 1,193,103 7,699,366 Russell Aggressive Equity Sub-Account..... 317,909 4,278,027 687,872 1,424,463 Russell Non-U.S. Sub-Account.............. 706,355 8,310,918 2,262,926 3,173,937 Russell Core Bond Sub-Account............. 1,402,555 14,385,119 1,430,997 2,577,447 Russell Real Estate Securities Sub-account 138,794 2,262,798 445,850 760,061 AIM V.I. International Growth Sub-Account. 413,717 10,020,669 2,403,422 6,813,605 DWS Government & Agency Securities Sub-Account............................. 84,740 1,023,991 79,102 352,882 MSF Davis Venture Value Sub-Account....... 7,906,654 216,411,104 14,513,729 74,155,252 MSF Harris Oakmark Focused Value Sub-Account............................. 314,769 72,303,104 13,873,080 19,146,933 MSF Jennison Growth Sub-Account........... 5,227,173 56,260,574 4,189,128 22,699,569 MSF MFS Total Return Sub-Account.......... 566,722 80,612,015 11,106,807 1,471,095 MSF Capital Guardian U.S. Equity Sub-Account............................. 12,416,171 141,690,461 23,151,316 40,377,367 MSF FI International Stock Sub-Account.... 563,314 6,752,904 1,648,600 5,153,903 MSF BlackRock Money Market Sub-Account.... 1,098,887 109,888,716 149,052,778 130,398,911 MSF MetLife Stock Index Sub-Account....... 1,064,702 36,441,109 16,252,119 18,425,582 MSF BlackRock Bond Income Sub-Account..... 265,558 28,204,971 7,515,499 15,250,384 MSF BlackRock Strategic Value Sub-Account. 159,862 2,676,819 616,576 822,209
63 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 4. STATEMENT OF INVESTMENTS -- (CONCLUDED)
FOR THE YEAR ENDED AS OF DECEMBER 31, 2007 DECEMBER 31, 2007 ----------------------- ---------------------------- COST OF PROCEEDS SHARES COST ($) PURCHASES ($) FROM SALES ($) --------- ---------- ------------- -------------- MSF Franklin Templeton Small Cap Growth Sub-Account................................. 1,273,974 13,422,127 3,377,997 10,586,846 MSF Western Asset Management Strategic Bond Opportunities Sub-Account................... 463,894 5,717,099 1,180,443 1,530,022 MSF Western Asset Management U.S. Government Sub-Account................................. 156,168 1,902,840 1,436,254 592,418 MSF T. Rowe Price Small Cap Growth Sub-Account................................. 680,308 9,389,084 2,277,198 4,264,300 MSF T. Rowe Price Large Cap Growth Sub-Account................................. 4,461,145 61,513,758 2,627,787 50,756,094 MSF Oppenheimer Global Equity Sub-Account..... 1,117,987 17,611,204 3,810,955 2,097,545 Putnam VT Growth and Income Sub-Account....... 677,786 17,079,132 3,949,116 5,020,439 Putnam VT Vista Sub-Account................... 235,948 3,572,872 127,615 1,739,584 Putnam VT Equity Income Sub-Account........... 2,965,416 40,835,741 9,169,042 2,446,919 FTVIPT Templeton Growth Securities Sub-Account................................. 1,228,042 18,429,343 10,060,893 1,368,413 FTVIPT Templeton Foreign Securities Sub-Account................................. 2,565,695 37,741,147 5,776,629 25,776,310 FTVIPT Templeton Developing Markets Securities Sub-Account................................. 2,571,812 22,827,827 6,058,574 19,900,217 Fidelity VIP Growth Opportunities Sub-Account. 8,847 165,992 5,342 78,767 Fidelity VIP Equity-Income Sub-Account........ 374,809 9,215,908 2,531,673 2,064,289 PIMCO VIT High Yield Sub-Account.............. 1,049,251 8,570,968 1,103,144 6,804,548 PIMCO VIT Low Duration Sub-Account............ 873,126 8,922,098 1,163,497 2,081,936 PIMCO VIT StocksPLUS Growth and Income Sub-Account................................. 137,084 1,364,998 347,336 271,745 PIMCO VIT Total Return Sub-Account............ 1,769,858 18,027,482 1,948,173 7,318,703 American Funds Global Growth Sub-Account...... 420,738 10,403,130 10,363,573 309,419
(a)For the period January 1, 2007 to April 27, 2007. (b)For the period November 12, 2007 to December 31, 2007. 64 [THIS PAGE INTENTIONALLY LEFT BLANK] 65 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST LORD ABBETT MIST LORD ABBETT MIST VAN KAMPEN GROWTH AND INCOME BOND DEBENTURE MID-CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 22,197,014 26,137,911 16,590,983 19,002,390 5,207,161 5,540,015 Units issued and transferred from other funding options..................... 758,098 1,187,483 2,414,744 1,365,191 566,342 694,113 Units redeemed and transferred to other funding options.... (4,405,380) (5,128,380) (3,761,736) (3,776,598) (1,059,547) (1,026,967) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 18,549,732 22,197,014 15,243,991 16,590,983 4,713,956 5,207,161 =========== =========== =========== =========== =========== =========== MIST OPPENHEIMER MIST PIMCO MIST LEGG MASON PARTNERS CAPITAL APPRECIATION INFLATION PROTECTED BOND AGGRESSIVE GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 15,156,483 16,165,489 5,893,926 6,511,274 13,441,619 15,958,225 Units issued and transferred from other funding options..................... 1,865,281 2,979,206 539,287 838,475 821,885 1,065,575 Units redeemed and transferred to other funding options.... (3,995,539) (3,988,212) (1,546,952) (1,455,823) (3,438,475) (3,582,181) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 13,026,225 15,156,483 4,886,261 5,893,926 10,825,029 13,441,619 =========== =========== =========== =========== =========== =========== MIST MFS MIST MET/AIM MIST LAZARD RESEARCH INTERNATIONAL SMALL CAP GROWTH MID-CAP SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 13,357,797 15,507,023 5,984,113 7,550,815 2,006,766 2,227,684 Units issued and transferred from other funding options..................... 1,089,411 2,325,619 447,020 513,599 2,592,898 274,155 Units redeemed and transferred to other funding options.... (3,548,191) (4,474,845) (1,779,146) (2,080,301) (828,728) (495,073) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 10,899,017 13,357,797 4,651,987 5,984,113 3,770,936 2,006,766 =========== =========== =========== =========== =========== =========== MIST TURNER MIST GOLDMAN SACHS MIST METLIFE MID-CAP GROWTH MID-CAP VALUE DEFENSIVE STRATEGY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 989,402 1,029,884 2,536,265 2,181,767 8,262,424 6,322,085 Units issued and transferred from other funding options..................... 241,838 207,373 603,616 1,109,308 8,777,923 4,917,609 Units redeemed and transferred to other funding options.... (244,254) (247,855) (972,804) (754,810) (4,575,519) (2,977,270) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 986,986 989,402 2,167,077 2,536,265 12,464,828 8,262,424 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007 (b)For the period November 12, 2007 to December 31, 2007. 66
MIST LORD ABBETT MIST LORD ABBETT MIST MET/PUTNAM MID-CAP VALUE AMERICA'S VALUE CAPITAL OPPORTUNITIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ------------------------ ------------------------ 2007 2006 2007 (A) 2006 2007 (A) 2006 ---- ---- -------- ---- -------- ---- 10,813,416 12,134,519 5,264,244 4,568,630 1,916,921 2,212,145 2,728,519 1,316,845 299,594 1,311,892 54,027 267,836 (2,871,350) (2,637,948) (5,563,838) (616,278) (1,970,948) (563,060) ----------- ----------- ------------ ----------- ------------ ----------- 10,670,585 10,813,416 -- 5,264,244 -- 1,916,921 =========== =========== ============ =========== ============ =========== MIST PIMCO MIST RCM MIST T. ROWE PRICE TOTAL RETURN TECHNOLOGY MID CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ------------------------ ------------------------ 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 26,133,024 27,888,652 2,231,169 2,539,048 12,903,767 15,203,506 2,663,362 5,644,119 913,172 571,231 2,124,155 2,952,292 (7,498,506) (7,399,747) (1,011,938) (879,110) (5,487,926) (5,252,031) ----------- ----------- ------------ ----------- ------------ ----------- 21,297,880 26,133,024 2,132,403 2,231,169 9,539,996 12,903,767 =========== =========== ============ =========== ============ =========== MIST HARRIS MIST THIRD AVENUE MIST NEUBERGER OAKMARK INTERNATIONAL SMALL CAP VALUE BERMAN REAL ESTATE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ------------------------ ------------------------ 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 5,683,024 6,295,353 5,547,538 5,920,257 3,924,423 4,868,446 1,038,029 1,230,954 479,229 1,329,569 554,362 678,283 (1,959,028) (1,843,283) (1,524,170) (1,702,288) (1,540,097) (1,622,306) ----------- ----------- ------------ ----------- ------------ ----------- 4,762,025 5,683,024 4,502,597 5,547,538 2,938,688 3,924,423 =========== =========== ============ =========== ============ =========== MIST METLIFE MIST METLIFE MIST METLIFE MODERATE STRATEGY BALANCED STRATEGY GROWTH STRATEGY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ------------------------ ------------------------ 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 27,420,828 21,366,533 74,894,089 59,266,853 77,651,335 58,883,485 17,398,719 9,530,887 37,005,670 24,230,743 40,086,102 26,068,145 (4,967,751) (3,476,592) (12,329,992) (8,603,507) (12,241,787) (7,300,295) ----------- ----------- ------------ ----------- ------------ ----------- 39,851,796 27,420,828 99,569,767 74,894,089 105,495,650 77,651,335 =========== =========== ============ =========== ============ ===========
67 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MIST METLIFE MIST VAN KAMPEN MIST CYCLICAL AGGRESSIVE STRATEGY COMSTOCK GROWTH ETF SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 11,904,491 12,099,254 6,796,669 3,599,394 2,443,105 820,546 Units issued and transferred from other funding options.......... 2,445,664 3,061,704 2,139,027 4,851,096 969,920 1,806,891 Units redeemed and transferred to other funding options.......... (4,765,230) (3,256,467) (1,839,614) (1,653,821) (446,264) (184,332) ----------- ----------- ----------- ----------- --------- --------- Units end of year................ 9,584,925 11,904,491 7,096,082 6,796,669 2,966,761 2,443,105 =========== =========== =========== =========== ========= ========= MIST PIONEER MIST PIONEER MIST PIONEER FUND MID-CAP VALUE STRATEGIC INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ------------------- 2007 2006 2007 (A) 2006 2007 2006 ---- ---- -------- ---- ---- ---- Units beginning of year.......... 18,039 -- 6,262 -- 18,435 -- Units issued and transferred from other funding options.......... 20,488 18,242 9,615 6,586 68,000 18,490 Units redeemed and transferred to other funding options.......... (6,420) (203) (15,877) (324) (13,884) (55) ----------- ----------- ----------- ----------- --------- --------- Units end of year................ 32,107 18,039 -- 6,262 72,551 18,435 =========== =========== =========== =========== ========= ========= MIST STRATEGIC MIST STRATEGIC MIST RAINIER CONSERVATIVE GROWTH GROWTH LARGE CAP EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ------------------- 2007 2006 2007 2006 2007 (B) ---- ---- ---- ---- -------- Units beginning of year.......... 10,385,745 -- 7,005,283 -- -- Units issued and transferred from other funding options.......... 17,029,897 10,454,798 8,190,553 7,061,619 115,322 Units redeemed and transferred to other funding options.......... (1,438,996) (69,053) (1,617,165) (56,336) (131) ----------- ----------- ----------- ----------- ------------------- Units end of year................ 25,976,646 10,385,745 13,578,671 7,005,283 115,191 =========== =========== =========== =========== =================== RUSSELL RUSSELL AIM V.I. CORE BOND REAL ESTATE SECURITIES INTERNATIONAL GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- ----------------------- ------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year.......... 1,079,274 1,392,616 93,434 125,482 855,393 894,527 Units issued and transferred from other funding options.......... 59,738 60,639 3,870 7,795 146,205 406,284 Units redeemed and transferred to other funding options.......... (176,864) (373,981) (23,340) (39,843) (354,291) (445,418) ----------- ----------- ----------- ----------- --------- --------- Units end of year................ 962,148 1,079,274 73,964 93,434 647,307 855,393 =========== =========== =========== =========== ========= =========
(a)For the period January 1, 2007 to April 27, 2007 (b)For the period November 12, 2007 to December 31, 2007. 68
MIST CYCLICAL MIST LEGG MASON MIST MET/AIM GROWTH AND INCOME ETF VALUE EQUITY CAPITAL APPRECIATION SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 2,292,596 405,183 3,604,696 31,606 1,713,687 2,204,039 3,296,626 2,151,507 216,238 4,271,650 8,040,816 54,052 (650,017) (264,094) (1,048,917) (698,560) (3,339,977) (544,404) ----------- --------- ----------- ----------- ----------- ----------- 4,939,205 2,292,596 2,772,017 3,604,696 6,414,526 1,713,687 =========== ========= =========== =========== =========== =========== MIST MFS EMERGING MIST LOOMIS MIST STRATEGIC MARKETS EQUITY SAYLES GLOBAL MARKETS GROWTH AND INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 1,163,479 -- 35,233 -- 9,468,531 -- 826,922 1,177,672 1,103,169 35,269 18,704,065 9,568,746 (1,507,417) (14,193) (52,579) (36) (2,020,715) (100,215) ----------- --------- ----------- ----------- ----------- ----------- 482,984 1,163,479 1,085,823 35,233 26,151,881 9,468,531 =========== ========= =========== =========== =========== =========== RUSSELL RUSSELL RUSSELL MULTI-STYLE EQUITY AGGRESSIVE EQUITY NON-U.S. SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 1,829,723 2,495,854 349,188 502,797 656,427 901,452 24,410 50,439 8,669 15,113 8,676 14,815 (542,598) (716,570) (90,156) (168,722) (170,665) (259,840) ----------- --------- ----------- ----------- ----------- ----------- 1,311,535 1,829,723 267,701 349,188 494,438 656,427 =========== ========= =========== =========== =========== =========== DWS GOVERNMENT & MSF DAVIS MSF HARRIS OAKMARK AGENCY SECURITIES VENTURE VALUE FOCUSED VALUE SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT --------------------- ----------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 94,778 128,534 21,712,702 23,065,635 4,979,605 5,521,791 3,139 4,462 2,366,154 3,988,581 549,758 653,346 (25,881) (38,218) (6,305,782) (5,341,514) (1,378,149) (1,195,532) ----------- --------- ----------- ----------- ----------- ----------- 72,036 94,778 17,773,074 21,712,702 4,151,214 4,979,605 =========== ========= =========== =========== =========== ===========
69 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
MSF JENNISON MSF MFS MSF CAPITAL GUARDIAN GROWTH TOTAL RETURN U.S. EQUITY SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- --------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 7,501,567 7,810,159 3,537,012 3,290,732 13,997,926 15,182,070 Units issued and transferred from other funding options..................... 606,542 2,357,896 434,036 667,547 1,445,517 1,677,223 Units redeemed and transferred to other funding options.... (2,321,098) (2,666,488) (566,257) (421,267) (3,392,078) (2,861,367) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 5,787,011 7,501,567 3,404,791 3,537,012 12,051,365 13,997,926 =========== =========== =========== =========== =========== =========== MSF BLACKROCK MSF BLACKROCK MSF FRANKLIN TEMPLETON BOND INCOME STRATEGIC VALUE SMALL-CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- --------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 772,347 700,921 141,367 222,081 1,914,092 1,835,415 Units issued and transferred from other funding options..................... 202,309 434,070 19,449 30,155 345,178 1,226,647 Units redeemed and transferred to other funding options.... (393,703) (362,644) (42,196) (110,869) (1,065,272) (1,147,970) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 580,953 772,347 118,620 141,367 1,193,998 1,914,092 =========== =========== =========== =========== =========== =========== MSF T. ROWE PRICE MSF OPPENHEIMER PUTNAM VT LARGE CAP GROWTH GLOBAL EQUITY GROWTH AND INCOME SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- --------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 8,132,948 4,655,618 857,647 305,962 1,289,872 1,598,305 Units issued and transferred from other funding options..................... 308,170 7,586,549 239,186 653,823 57,241 60,122 Units redeemed and transferred to other funding options.... (3,624,923) (4,109,219) (168,141) (102,138) (327,655) (368,555) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 4,816,195 8,132,948 928,692 857,647 1,019,458 1,289,872 =========== =========== =========== =========== =========== =========== FTVIPT TEMPLETON FTVIPT TEMPLETON DEVELOPING FIDELITY VIP FOREIGN SECURITIES MARKETS SECURITIES GROWTH OPPORTUNITIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ----------------------- --------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year....... 4,229,198 5,193,955 2,629,249 3,488,075 23,148 37,228 Units issued and transferred from other funding options..................... 244,352 705,865 177,611 470,215 497 1,296 Units redeemed and transferred to other funding options.... (1,577,570) (1,670,622) (1,069,895) (1,329,041) (6,862) (15,376) ----------- ----------- ----------- ----------- ----------- ----------- Units end of year............. 2,895,980 4,229,198 1,736,965 2,629,249 16,783 23,148 =========== =========== =========== =========== =========== ===========
(a)For the period January 1, 2007 to April 27, 2007 (b)For the period November 12, 2007 to December 31, 2007. 70
MSF FL MSF BLACKROCK MSF METLIFE INTERNATIONAL STOCK MONEY MARKET STOCK INDEX SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------- ------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 632,428 837,397 8,885,438 5,790,856 3,050,585 3,159,767 62,065 93,049 22,874,297 17,559,482 1,365,097 1,308,220 (261,595) (298,018) (21,402,909) (14,464,900) (1,568,700) (1,417,402) --------- --------- ------------ ------------ ----------- ----------- 432,898 632,428 10,356,826 8,885,438 2,846,982 3,050,585 ========= ========= ============ ============ =========== =========== MSF WESTERN ASSET MSF WESTERN ASSET MANAGEMENT STRATEGIC MANAGEMENT MSF T. ROWE PRICE BOND OPPORTUNITIES U.S. GOVERNMENT SMALL CAP GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------- ------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 298,802 329,226 69,720 4,435 887,179 1,020,337 57,703 47,489 91,375 119,291 161,850 102,239 (77,225) (77,913) (37,942) (54,006) (324,843) (235,397) --------- --------- ------------ ------------ ----------- ----------- 279,280 298,802 123,153 69,720 724,186 887,179 ========= ========= ============ ============ =========== =========== PUTNAM VT PUTNAM VT FTVIPT TEMPLETON VISTA EQUITY INCOME GROWTH SECURITIES SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------- ------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 374,568 475,451 2,427,699 1,760,798 560,530 263,350 13,881 29,096 600,522 873,100 542,132 364,060 (124,338) (129,979) (379,410) (206,199) (139,594) (66,880) --------- --------- ------------ ------------ ----------- ----------- 264,111 374,568 2,648,811 2,427,699 963,068 560,530 ========= ========= ============ ============ =========== =========== FIDELITY VIP PIMCO VIT PIMCO VIT EQUITY-INCOME HIGH YIELD LOW DURATION SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT ------------------- ------------------------- ----------------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- 549,152 639,119 1,027,968 910,444 786,353 863,341 89,166 84,408 66,199 667,768 82,220 110,966 (132,034) (174,375) (504,819) (550,244) (179,183) (187,954) --------- --------- ------------ ------------ ----------- ----------- 506,284 549,152 589,348 1,027,968 689,390 786,353 ========= ========= ============ ============ =========== ===========
71 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 5. SCHEDULES OF UNITS -- (CONCLUDED) FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
PIMCO VIT STOCKSPLUS PIMCO VIT AMERICAN FUNDS GROWTH AND INCOME TOTAL RETURN GLOBAL GROWTH SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT -------------------- ------------------- --------------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- Units beginning of year........................ 138,195 154,607 1,708,329 2,134,374 12,186 -- Units issued and transferred from other funding options...................................... 22,082 10,434 121,089 231,678 362,190 12,197 Units redeemed and transferred to other funding options...................................... (24,703) (26,846) (557,847) (657,723) (29,951) (11) -------- -------- --------- --------- -------- ------ Units end of year.............................. 135,574 138,195 1,271,571 1,708,329 344,425 12,186 ======== ======== ========= ========= ======== ======
(a)For the period January 1, 2007 to April 27, 2007 (b)For the period November 12, 2007 to December 31, 2007. 72 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS The following table is a summary of unit values and units outstanding for the Contracts, net investment income ratios, and expense ratios, excluding expenses for the underlying portfolio, series, or fund for each of the five years in the period ended December 31, 2007:
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 -------------------------------------- ------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ------------- ------------ --------------- -------------- MIST Lord Abbett 2007 18,549,732 17.17 - 64.94 1,075,806,092 0.98 0.75 - 2.35 1.30 - 3.13 Growth and Income 2006 22,197,014 16.65 - 62.97 1,254,313,868 1.73 0.75 - 2.35 15.06 - 16.91 Sub-Account 2005 26,137,911 12.48 - 52.55 1,266,968,938 0.94 0.75 - 2.35 1.00 - 2.62 2004 29,905,303 11.76 - 52.34 1,416,012,804 0.43 0.75 - 2.35 10.02 - 11.80 2003 28,329,579 11.27 - 46.75 1,205,120,382 1.00 0.75 - 2.35 27.70 - 29.75 MIST Lord Abbett Bond 2007 15,243,991 14.04 - 20.75 297,943,064 5.12 0.75 - 2.35 4.06 - 5.94 Debenture 2006 16,590,983 13.37 - 19.63 307,972,386 6.82 0.75 - 2.35 6.62 - 8.33 Sub-Account 2005 19,002,390 12.42 - 18.12 327,280,969 -- 0.75 - 2.35 (0.86) - 0.74 2004 18,478,641 12.78 - 17.98 317,240,246 2.98 0.75 - 2.35 5.65 - 7.36 2003 20,138,758 11.49 - 16.75 323,680,445 2.04 0.75 - 2.35 16.39 - 18.27 MIST Van Kampen 2007 4,713,956 12.65 - 13.83 62,713,816 -- 0.75 - 1.90 21.15 - 22.78 Mid-Cap Growth 2006 5,207,161 10.44 - 11.26 56,740,449 -- 0.75 - 1.90 6.34 - 7.56 Sub-Account 2005 -- -- -- -- 2004 -- -- -- -- 2003 -- -- -- -- MIST Lord Abbett 2007 10,670,585 26.10 - 29.40 300,178,790 0.67 0.75 - 1.90 (1.30) - 0.04 Mid-Cap Value 2006 10,813,416 26.44 - 29.45 304,617,015 0.61 0.75 - 1.90 10.07 - 11.34 Sub-Account 2005 12,134,519 24.02 - 26.45 308,454,585 0.50 0.75 - 1.90 6.02 - 7.24 2004 11,567,876 22.66 - 24.66 275,539,168 3.16 0.75 - 1.90 22.15 - 23.57 2003 9,083,775 18.55 - 19.96 176,105,641 2.56 0.75 - 1.90 23.51 - 24.94 MIST Lord Abbett 2007 -- -- -- 3.46 0.75 - 1.90 6.37 - 6.77 America's Value 2006 5,264,244 15.86 - 16.54 86,156,780 1.83 0.75 - 1.90 12.60 - 13.90 Sub-Account/(a)/ 2005 4,568,630 14.08 - 14.52 65,779,907 -- 0.75 - 1.90 2.00 - 3.17 2004 2,316,906 13.81 - 14.07 32,408,165 4.84 0.75 - 1.90 15.51 - 16.85 2003 448,416 11.95 - 12.05 5,384,408 7.51 0.75 - 1.90 19.53 - 20.45 MIST Met/Putnam 2007 -- -- -- 0.13 0.75 - 1.90 8.54 - 8.94 Capital Opportunities 2006 1,916,921 9.59 - 20.65 38,262,759 0.09 0.75 - 1.90 12.47 - 13.77 Sub-Account/(a)/ 2005 2,212,145 8.42 - 18.17 39,237,602 0.26 0.75 - 1.90 7.73 - 8.97 2004 2,720,782 7.71 - 16.69 44,580,546 -- 0.75 - 1.90 16.1 - 17.44 2003 3,308,161 6.56 - 14.22 46,460,529 -- 0.75 - 1.90 25.87 - 27.32 MIST Oppenheimer 2007 13,026,225 9.77 - 12.72 137,207,385 0.02 0.75 - 2.35 11.62 - 13.43 Capital Appreciation 2006 15,156,483 8.75 - 11.27 142,383,044 0.14 0.75 - 2.35 5.12 - 6.81 Sub-Account 2005 16,165,489 8.31 - 10.60 144,482,219 0.02 0.75 - 2.35 2.29 - 3.93 2004 17,566,329 8.12 - 10.24 148,102,308 7.09 1.30 - 2.35 3.93 - 5.03 2003 15,380,749 7.80 - 9.73 121,535,657 -- 0.75 - 2.35 25.55 - 27.57 MIST PIMCO Inflation 2007 4,886,261 11.60 - 12.19 58,385,153 2.21 1.30 - 2.35 8.21 - 9.36 Protected Bond 2006 5,893,926 10.72 - 11.14 64,649,920 3.73 1.30 - 2.35 (1.94 - 0.91) Sub-Account 2005 6,511,274 10.93 - 11.25 72,384,448 -- 1.30 - 2.35 (0.96) - 0.08 2004 8,692,539 11.04 - 11.24 96,965,591 4.57 1.30 - 2.35 6.47 - 7.60 2003 7,706,190 10.37 - 10.44 80,239,422 5.18 1.30 - 2.35 3.57 - 4.24
73 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------ --------------- --------------- MIST Legg Mason Partners 2007 10,825,029 7.44 - 10.90 87,874,559 0.04 1.30 - 2.35 (0.12) - 1.17 Aggressive Growth Sub-Account 2006 13,441,619 7.44 - 10.77 108,846,059 -- 1.30 - 2.35 (4.01) - (3.00) 2005 15,958,225 7.74 - 11.10 134,458,398 -- 1.30 - 2.35 10.95 - 12.11 2004 20,250,042 6.97 - 9.89 152,910,724 -- 1.30 - 2.35 5.92 - 7.04 2003 8,421,303 6.58 - 9.22 56,084,564 -- 1.30 - 2.35 27.86 - 29.21 MIST PIMCO Total Return 2007 21,297,880 12.62 - 14.09 283,533,965 3.30 0.75 - 2.35 5.05 - 6.93 Sub-Account 2006 26,133,024 12.00 - 13.17 327,612,133 2.60 0.75 - 2.35 2.10 - 3.74 2005 27,888,652 11.74 - 12.68 339,140,105 0.01 0.75 - 2.35 (0.12) - 1.49 2004 28,087,932 11.74 - 12.48 338,736,886 6.52 0.75 - 2.35 2.54 - 4.19 2003 16,389,544 11.44 - 11.96 190,243,251 2.83 0.75 - 2.35 1.88 - 3.53 MIST RCM Technology 2007 2,132,403 6.06 - 6.43 13,379,138 -- 1.30 - 2.35 28.45 - 29.82 Sub-Account 2006 2,231,169 4.71 - 4.95 10,819,347 -- 1.30 - 2.35 2.91 - 3.99 2005 2,539,048 4.58 - 4.76 11,888,282 -- 1.30 - 2.35 8.44 - 9.59 2004 3,357,357 4.22 - 4.35 14,409,596 0.08 1.30 - 2.35 (6.54) - (5.55) 2003 1,767,899 4.51 - 4.60 8,065,893 -- 1.30 - 2.35 53.91 - 55.54 MIST T. Rowe Price Mid-Cap 2007 9,539,996 9.25 - 10.08 92,323,883 0.04 0.85 - 2.35 14.89 - 16.64 Growth Sub-Account 2006 12,903,767 8.04 - 8.75 107,929,919 -- 0.75 - 2.35 3.70 - 5.37 2005 15,203,506 7.75 - 8.30 121,624,335 -- 0.85 - 2.35 11.97 - 13.66 2004 15,078,256 6.91 - 7.30 106,863,377 -- 0.75 - 2.35 15.08 - 16.94 2003 11,428,214 6.00 - 6.24 69,508,837 -- 0.75 - 2.35 33.47 - 35.62 MIST MFS Research International 2007 10,899,017 16.96 - 25.97 212,534,722 1.33 0.75 - 2.35 10.65 - 12.64 Sub-Account 2006 13,357,797 15.31 - 23.06 233,658,652 1.75 0.75 - 2.35 23.63 - 25.62 2005 15,507,023 12.37 - 18.32 219,052,682 0.46 0.75 - 2.35 13.73 - 15.55 2004 12,888,678 10.87 - 15.82 159,862,343 0.25 0.75 - 2.35 16.78 - 18.66 2003 7,636,043 9.30 - 13.33 86,352,331 0.62 0.75 - 2.35 28.98 - 31.06 MIST Met/AIM Small Cap Growth 2007 4,651,987 9.20 - 16.11 71,015,556 -- 1.30 - 2.35 8.48 - 9.85 Sub-Account 2006 5,984,113 8.37 - 14.69 83,414,752 -- 1.30 - 2.35 11.54 - 12.71 2005 7,550,815 7.45 - 13.04 93,177,860 -- 1.30 - 2.35 5.76 - 6.87 2004 4,667,993 11.85 - 12.20 56,301,565 -- 1.30 - 2.35 3.95 - 5.05 2003 3,833,712 7.16 - 11.61 44,193,099 -- 1.30 - 2.35 35.64 - 37.07 MIST Lazard Mid-Cap 2007 3,770,936 14.87 - 16.45 57,995,812 0.21 0.75 - 2.35 (4.98) - (1.86) Sub-Account 2006 2,006,766 15.64 - 16.41 32,320,745 0.31 1.30 - 2.35 12.02 - 13.20 2005 2,227,684 13.95 - 14.50 31,807,254 0.06 1.30 - 2.35 5.56 - 6.67 2004 2,722,902 13.20 - 13.59 36,591,722 -- 1.30 - 2.35 11.74 - 12.92 2003 3,736,086 11.80 - 12.03 44,638,929 1.56 1.30 - 2.35 23.25 - 24.55 MIST Harris Oakmark 2007 4,762,025 18.49 - 19.59 91,235,231 0.82 1.30 - 2.35 (3.43) - (2.40) International Sub-Account 2006 5,683,024 19.13 - 20.07 112,021,036 2.59 1.30 - 2.35 25.86 - 27.19 2005 6,295,353 15.18 - 15.78 97,858,342 -- 1.30 - 2.35 11.59 - 12.77 2004 6,954,807 13.59 - 13.99 96,251,804 -- 1.30 - 2.35 17.72 - 18.96 2003 6,077,658 11.53 - 11.76 70,998,028 2.46 1.30 - 2.35 28.08 - 31.11 MIST Third Avenue Small Cap 2007 4,502,597 16.58 - 19.37 77,454,105 1.01 1.30 - 2.35 (5.29) - (4.15) Value Sub-Account 2006 5,547,538 17.49 - 20.21 99,987,762 0.45 1.30 - 2.35 10.51 - 11.67 2005 5,920,257 15.81 - 18.08 95,982,000 -- 1.30 - 2.35 12.8 - 13.99 2004 6,296,258 14.00 - 14.35 89,472,332 2.06 1.30 - 2.35 23.56 - 24.87 2003 6,229,319 11.32 - 12.95 71,162,799 1.71 1.30 - 2.35 38.14 - 39.60
74 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 --------------------------------------- ---------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ----------- ------------- ------------- ------------ --------------- ----------------- MIST Neuberger Berman Real 2007 2,938,688 15.74 - 23.87 49,736,129 0.92 1.30 - 2.35 (16.99) - (15.99) Estate Sub-Account 2006 3,924,423 18.97 - 28.41 79,745,324 1.10 1.30 - 2.35 34.40 - 36.22 2005 4,868,446 14.11 - 20.89 73,434,177 -- 1.30 - 2.35 10.66 - 11.83 2004 1,552,403 12.75 - 12.87 19,879,342 5.12 1.30 - 2.35 27.52 - 28.68 MIST Turner Mid-Cap Growth 2007 986,986 15.09 - 15.69 15,254,136 -- 1.30 - 2.35 21.25 - 22.54 Sub-Account 2006 989,402 12.45 - 12.96 12,526,407 -- 0.85 - 2.35 3.61 - 5.18 2005 1,029,884 12.01 - 12.32 12,503,351 -- 1.30 - 2.35 8.78 - 9.92 2004 1,457,917 11.04 - 11.16 16,169,474 -- 0.85 - 2.35 10.44 - 11.56 Goldman Sachs Mid-Cap 2007 2,167,077 14.88 - 15.47 33,020,433 0.50 1.30 - 2.35 0.69 - 1.76 Value Sub-Account 2006 2,536,265 14.78 - 15.38 38,139,523 -- 0.85 - 2.35 13.01 - 14.71 2005 2,181,767 13.08 - 13.41 28,841,121 0.72 1.30 - 2.35 9.93 - 11.09 2004 1,750,355 11.90 - 12.02 20,909,564 1.57 0.85 - 2.35 18.96 - 20.16 MIST MetLife Defensive 2007 12,464,828 11.31 - 11.90 144,052,470 1.78 0.75 - 2.35 3.45 - 5.12 Strategy Sub-Account 2006 8,262,424 10.93 - 11.32 91,508,405 0.01 0.75 - 2.35 6.11 - 7.82 2005 6,322,085 10.30 - 10.43 65,586,282 1.03 1.30 - 2.35 2.06 - 3.13 2004 1,937,189 10.10 - 10.11 19,576,879 8.88 1.30 - 2.35 0.96 - 1.13 MIST MetLife Moderate 2007 39,851,796 11.79 - 12.41 480,378,237 1.90 0.75 - 2.35 3.73 - 5.41 Strategy Sub-Account 2006 27,420,828 11.37 - 11.77 315,943,046 0.01 0.75 - 2.35 7.68 - 9.41 2005 21,366,533 10.56 - 10.69 227,166,091 1.28 1.30 - 2.35 3.36 - 4.45 2004 10,636,014 10.22 - 10.23 108,759,780 6.77 1.30 - 2.35 2.16 - 2.33 MIST MetLife Balanced 2007 99,569,767 12.17 - 12.80 1,240,119,183 1.62 0.75 - 2.35 2.43 - 4.09 Strategy Sub-Account 2006 74,894,089 11.88 - 12.30 902,216,343 0.01 0.75 - 2.35 9.38 - 11.14 2005 59,266,853 10.86 - 10.99 648,361,282 1.20 1.30 - 2.35 4.64 - 5.74 2004 31,037,036 10.38 - 10.40 322,474,174 5.05 1.30 - 2.35 3.80 - 3.97 MIST MetLife Growth 2007 105,495,650 12.81 - 13.47 1,381,939,858 1.13 0.75 - 2.35 2.26 - 3.92 Strategy Sub-Account 2006 77,651,335 12.53 - 12.97 986,336,802 0.01 0.75 - 2.35 10.96 - 12.75 2005 58,883,485 11.29 - 11.43 669,542,343 1.12 1.30 - 2.35 6.60 - 7.72 2004 31,746,255 10.59 - 10.61 336,536,558 3.18 1.30 - 2.35 5.90 - 6.08 MIST MetLife Aggressive 2007 9,584,925 12.84 - 13.51 125,554,567 1.31 0.75 - 2.35 0.48 - 2.11 Strategy Sub-Account 2006 11,904,491 12.78 - 13.23 154,159,455 0.01 0.75 - 2.35 11.02 - 12.80 2005 12,099,254 11.51 - 11.65 140,266,322 0.87 1.30 - 2.35 7.82 - 8.96 2004 7,251,678 10.68 - 10.69 77,491,222 1.17 1.30 - 2.35 6.75 - 6.93 MIST Van Kampen Comstock 2007 7,096,082 11.24 - 11.73 82,325,135 1.33 0.75 - 2.35 (4.77) - (3.22) Sub-Account 2006 6,796,669 11.80 - 12.12 81,752,237 -- 0.75 - 2.35 13.36 - 15.19 2005 3,599,394 10.41 - 10.52 37,740,754 2.41 0.75 - 2.20 4.22 - 5.22 MIST Cyclical Growth ETF 2007 2,966,761 11.76 - 11.92 35,243,332 -- 1.30 - 1.90 3.62 - 4.25 Sub-Account 2006 2,443,105 11.34 - 11.43 27,884,955 1.53 1.30 - 1.90 11.71 - 12.38 2005 820,546 10.16 - 10.17 8,343,251 3.11 1.30 - 1.65 1.62 - 1.71 MIST Cyclical Growth and 2007 4,939,205 11.47 - 11.63 57,258,882 -- 1.30 - 1.90 3.40 - 4.03 Income ETF Sub-Account 2006 2,292,596 11.09 - 11.17 25,580,451 2.21 1.30 - 1.90 9.63 - 10.29 2005 405,183 10.12 - 10.13 4,104,208 2.73 1.30 - 1.90 1.17 - 1.33
75 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------ --------------- --------------- MIST Legg Mason Value 2007 2,772,017 10.15 - 10.49 28,657,072 -- 0.85 - 2.35 (8.10) - (6.71) Equity Sub-Account 2006 3,604,696 11.05 - 11.25 40,209,812 -- 0.75 - 2.35 4.11 - 5.79 2005 31,606 10.61 - 10.63 335,617 -- 1.55 - 1.90 (1.35) - (1.34) MIST Met/AIM Capital 2007 6,414,526 1.63 - 17.43 17,443,288 -- 1.30 - 1.80 9.91 - 55.14 Appreciation Sub-Account 2006 1,713,687 6.90 - 23.85 20,579,265 0.05 0.85 - 1.90 4.07 - 5.51 2005 2,204,039 6.54 - 22.78 25,322,763 0.06 0.85 - 1.80 6.90 - 7.92 2004 2,771,084 6.06 - 21.25 29,706,684 -- 0.85 - 1.90 4.33 - 5.72 2003 3,341,333 5.74 - 20.25 34,170,813 -- 0.85 - 1.90 26.75 - 28.42 MIST Pioneer Fund 2007 32,107 19.29 - 22.32 693,986 0.77 0.75 - 1.80 3.12 - 4.22 Sub-Account 2006 18,039 18.46 - 21.42 374,110 -- 0.75 - 1.90 13.75 - 15.06 MIST Pioneer Mid-Cap 2007 -- -- -- 0.69 0.75 - 1.30 10.50 - 10.70 Value Sub-Account(a) 2006 6,262 11.97 - 12.21 76,182 0.47 0.75 - 1.90 10.45 - 11.72 MIST Pioneer Strategic 2007 72,551 19.14 - 21.63 1,515,237 0.61 0.75 - 1.80 4.73 - 5.85 Income Sub-Account 2006 18,435 18.05 - 20.43 363,745 12.02 0.75 - 1.90 4.31 - 5.51 MIST MFS Emerging 2007 482,984 13.89 - 14.14 6,784,979 0.08 1.30 - 2.35 33.43 - 34.85 Markets Equity Sub-Account 2006 1,163,479 10.41 - 10.49 12,147,300 2.49 1.30 - 2.35 4.12 - 4.86 MIST Loomis Sayles 2007 1,085,823 12.83 - 13.06 14,022,527 -- 1.30 - 2.35 24.87 - 26.19 Global Markets Sub-Account 2006 35,233 10.27 - 10.35 363,073 1.42 1.30 - 2.35 2.74 - 3.46 MIST Strategic Growth and 2007 26,151,881 10.64 - 10.72 279,701,692 2.44 1.30 - 1.90 4.41 - 5.04 Income Sub-Account 2006 9,468,531 10.19 - 10.26 96,571,565 0.15 0.85 - 1.90 1.93 - 2.08 MIST Strategic 2007 25,976,646 10.83 - 10.91 282,881,783 1.93 1.30 - 1.90 5.90 - 6.54 Conservative Growth 2006 10,385,745 10.23 - 10.33 106,307,471 0.25 0.85 - 1.90 2.30 - 2.44 Sub-Account MIST Strategic Growth 2007 13,578,671 11.00 - 11.08 150,092,376 1.75 1.30 - 1.90 6.73 - 7.38 Sub-Account 2006 7,005,283 10.31 - 10.40 72,244,538 0.23 0.85 - 1.90 3.07 - 3.22 MIST Rainier Large Cap 2007 115,191 9.97 - 9.98 1,149,630 0.07 1.40 - 2.05 (0.27) - (0.16) Equity Sub-Account(b) Russell Multi-Style Equity 2007 1,311,535 14.32 18,778,587 1.02 1.40 8.82 Sub-Account 2006 1,829,723 13.16 24,075,386 0.98 1.40 11.18 2005 2,495,854 11.83 29,537,014 1.12 1.40 5.78 2004 3,502,648 11.19 39,185,661 0.76 1.40 8.28 2003 4,207,248 10.33 43,469,136 0.75 1.40 27.07 Russell Aggressive Equity 2007 267,701 15.43 4,129,569 0.36 1.40 1.97 Sub-Account 2006 349,188 15.13 5,282,370 0.17 1.40 13.20 2005 502,797 13.36 6,719,215 0.17 1.40 4.89 2004 691,249 12.74 8,807,286 3.49 1.40 13.13 2003 855,054 11.26 9,629,644 0.10 1.40 43.58
76 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------ --------------- --------------- Russell Non-U.S. Sub-Account 2007 494,438 18.84 9,316,786 2.39 1.40 8.58 2006 656,427 17.35 11,391,245 2.18 1.40 21.93 2005 901,452 14.23 12,830,073 1.58 1.40 12.11 2004 1,261,708 12.70 16,017,662 1.87 1.40 16.65 2003 1,617,799 10.88 17,606,468 2.61 1.40 36.86 Russell Core Bond 2007 962,148 15.04 14,474,327 5.14 1.40 5.74 Sub-Account 2006 1,079,274 14.23 15,354,316 4.38 1.40 2.28 2005 1,392,616 13.91 19,370,351 3.51 1.40 (0.06) 2004 1,719,866 13.83 23,779,833 4.13 1.40 3.21 2003 2,133,352 13.40 28,579,979 5.13 1.40 4.68 Russell Real Estate 2007 73,964 28.56 2,112,446 2.21 1.40 (17.03) Securities Sub-Account 2006 93,434 34.42 3,216,373 1.87 1.40 33.96 2005 125,482 25.70 3,224,635 2.04 1.40 11.39 2004 167,353 23.07 3,860,845 8.13 1.40 33.01 2003 197,639 17.34 3,428,028 5.25 1.40 35.30 AIM V.I. International 2007 647,307 13.29 - 30.15 13,839,627 0.39 0.85 - 1.90 12.25 - 13.71 Growth Sub-Account 2006 855,393 11.69 - 26.70 16,393,934 1.06 0.85 - 1.90 25.48 - 27.15 2005 894,527 9.19 - 21.15 13,361,653 0.76 0.85 - 1.90 15.49 - 16.93 2004 511,893 7.86 - 18.21 6,219,932 0.63 0.85 - 1.90 21.37 - 22.95 2003 569,813 6.39 - 14.91 5,651,858 0.52 0.85 - 1.90 26.18 - 27.97 DWS Government & Agency 2007 72,036 14.22 - 14.61 1,048,765 5.24 1.40 - 1.80 4.05 - 4.47 Securities Sub-Account 2006 94,778 13.67 - 13.98 1,321,448 4.15 1.40 - 1.80 2.31 - 2.72 2005 128,534 13.36 - 13.61 1,745,552 4.17 1.40 - 1.80 0.75 - 1.15 2004 166,555 13.26 - 13.46 2,237,156 3.82 1.40 - 1.80 1.90 - 2.31 2003 228,371 13.01 - 13.15 3,000,315 4.84 1.40 - 1.80 0.43 - 0.84 MSF Davis Venture Value 2007 17,773,074 14.23 - 42.65 286,644,026 0.67 0.75 - 2.35 1.99 - 3.65 Sub-Account 2006 21,712,702 13.94 - 41.15 334,265,042 0.71 0.75 - 2.35 11.76 - 13.55 2005 23,065,635 12.46 - 36.24 307,539,950 0.52 0.75 - 2.35 7.59 - 9.32 2004 22,830,671 11.57 - 33.15 274,155,409 0.46 0.75 - 2.35 9.53 - 11.30 2003 15,450,341 10.56 - 29.78 166,549,898 0.24 0.75 - 2.35 27.7 - 29.76 MSF Harris Oakmark 2007 4,151,214 15.69 - 16.65 67,473,501 0.34 1.30 - 2.35 (9.25) - (8.28) Focused Value Sub-Account 2006 4,979,605 17.28 - 18.16 88,607,294 0.09 1.30 - 2.35 9.58 - 10.73 2005 5,521,791 15.75 - 16.40 89,084,192 -- 1.30 - 2.35 7.17 - 8.29 2004 6,638,629 14.68 - 15.14 99,304,225 1.21 1.30 - 2.35 7.10 - 8.23 2003 7,973,293 13.70 - 13.99 110,603,910 0.05 1.30 - 2.35 29.26 - 30.62 MSF Jennison Growth 2007 5,787,011 5.45 - 15.28 70,723,890 0.19 0.75 - 2.35 8.79 - 10.55 Sub-Account 2006 7,501,567 4.96 - 13.84 84,084,948 -- 0.75 - 2.35 0.15 - 1.76 2005 7,810,159 4.90 - 13.61 86,296,723 -- 0.75 - 2.35 10.91 - 11.52 2004 7,626,777 10.24 - 10.50 79,365,969 0.01 0.75 - 2.35 6.40 - 7.53 2003 6,208,252 4.28 - 11.78 60,266,190 0.15 0.75 - 2.35 25.11 - 26.68 MSF MFS Total Return 2007 3,404,791 12.91 - 52.56 86,770,491 1.94 0.75 - 1.90 2.15 - 3.34 Sub-Account 2006 3,537,012 12.63 - 50.86 83,918,502 3.25 0.75 - 1.90 9.83 - 11.10 2005 3,290,732 11.49 - 45.78 65,221,333 1.44 0.75 - 1.90 0.92 - 2.08 2004 2,647,889 11.37 - 44.85 40,836,250 3.02 0.75 - 1.90 8.90 - 10.16 2003 1,645,037 10.43 - 40.71 19,115,194 1.11 0.75 - 1.80 14.53 - 15.86
77 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ------------------------------------ -------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) ---------- ------------- ----------- ------------ --------------- --------------- MSF Capital Guardian U.S. 2007 12,051,365 12.26 - 13.19 153,904,080 0.37 0.75 - 1.90 (2.21) - (0.93) Equity Sub-Account 2006 17,802,246 9.67 - 13.31 181,068,259 2.36 0.75 - 1.90 3.39 - 11.13 2005 21,252,919 8.69 - 12.19 219,601,065 0.09 0.75 - 1.90 3.52 - 5.59 2004 14,805,068 8.29 - 11.62 242,802,695 0.21 0.75 - 1.90 6.95 - 10.34 2003 11,575,252 7.60 - 10.73 113,215,017 0.07 0.75 - 1.90 19.25 - 36.42 MSF FI International Stock 2007 432,898 12.83 - 21.73 8,920,544 0.83 0.85 - 1.80 8.10 - 9.13 Sub-Account 2006 632,428 11.79 - 19.91 12,031,860 1.25 0.75 - 1.90 14.05 - 15.36 2005 837,397 10.26 - 17.28 13,941,243 0.44 0.85 - 1.90 15.38 - 16.59 2004 930,015 8.82 - 14.82 13,351,662 1.33 0.75 - 1.90 15.75 - 17.09 2003 1,073,966 7.57 - 12.67 13,379,338 0.02 0.75 - 1.90 25.43 - 26.88 MSF BlackRock Money 2007 10,356,826 10.16 - 11.22 109,887,921 4.74 0.75 - 2.35 2.37 - 4.18 Market Sub-Account 2006 8,885,438 9.91 - 10.78 91,235,712 4.58 0.75 - 2.35 2.13 - 3.77 2005 5,790,856 9.70 - 10.39 57,767,677 3.20 0.75 - 2.35 0.42 - 1.49 2004 2,068,250 9.91 - 10.01 20,502,724 1.06 0.85 - 1.40 (0.42 - 0.13 2003 2,219,930 9.82 - 10.22 22,099,713 0.83 0.75 - 2.35 (1.90 - 0.32) MSF MetLife Stock Index 2007 2,846,982 10.31 - 13.82 38,415,249 0.87 1.30 - 2.25 2.63 - 3.80 Sub-Account 2006 3,050,585 9.93 - 13.34 39,811,549 1.74 1.30 - 2.35 12.52 - 13.70 2005 3,159,767 8.72 - 11.73 36,333,127 1.33 1.30 - 2.25 2.06 - 3.03 2004 3,058,217 11.06 - 11.39 34,452,591 0.77 1.30 - 2.25 7.71 - 8.85 2003 2,324,078 7.75 - 10.46 24,133,821 1.36 1.30 - 2.25 24.90 - 26.22 MSF BlackRock Bond 2007 580,953 42.95 - 56.83 29,400,150 2.87 0.75 - 1.90 4.02 - 5.23 Income Sub-Account 2006 772,347 41.29 - 54.01 36,289,487 5.17 0.75 - 1.90 2.18 - 3.36 2005 700,921 40.41 - 52.26 31,894,139 3.33 0.75 - 1.90 0.24 - 1.39 2004 253,118 40.31 - 47.26 11,838,393 -- 0.30 - 1.90 2.21 - 2.82 2003 -- 39.44 - 49.85 -- -- 0.75 - 1.90 3.60 - 4.79 MSF BlackRock Strategic 2007 118,620 19.51 - 20.41 2,389,410 0.06 1.30 - 1.90 (5.51) - (4.94) Value Sub-Account 2006 141,367 20.65 - 22.25 3,001,029 0.08 0.75 - 1.90 14.26 - 15.57 2005 222,081 18.07 - 19.25 4,106,357 -- 1.30 - 1.90 1.96 - 2.57 2004 276,925 17.72 - 18.66 5,002,257 -- 0.75 - 1.90 12.89 - 14.20 2003 -- 15.70 - 16.34 -- -- 0.75 - 1.90 46.92 - 48.61 MSF Franklin Templeton 2007 1,193,998 10.81 - 11.67 13,363,331 -- 0.75 - 1.90 2.34 - 3.53 Small Cap Growth 2006 1,914,092 10.56 - 11.01 20,720,142 -- 1.30 - 1.90 7.66 - 8.31 Sub-Account 2005 1,835,415 9.81 - 10.15 18,385,352 -- 1.30 - 1.90 2.43 - 3.05 2004 173,767 9.58 - 9.83 1,692,231 -- 1.30 - 1.90 9.05 - 9.71 2003 -- 8.78 - 8.95 -- -- 1.30 - 1.90 41.88 - 42.74 MSF Western Asset 2007 279,280 19.80 - 21.80 5,877,310 2.46 1.30 - 1.90 1.74 - 2.58 Management Strategic 2006 298,802 19.46 - 22.38 6,154,850 4.79 0.75 - 1.90 2.86 - 4.04 Bond Opportunities 2005 329,226 18.92 - 21.51 6,568,086 3.05 1.30 - 1.90 0.64 - 1.24 Sub-Account 2004 335,209 18.80 - 21.13 6,620,128 -- 0.75 - 1.90 4.29 - 5.50 2003 -- 18.03 - 20.03 -- -- 0.75 - 1.90 10.48 - 11.76 MSF Western Asset 2007 123,153 15.03 - 16.81 1,940,597 2.18 1.30 - 2.15 1.81 - 2.68 Management U.S. 2006 69,720 14.41 - 17.30 1,068,532 0.98 0.85 - 2.35 1.51 - 3.04 Government Sub-Account 2005 4,435 14.20 - 16.79 68,021 -- 1.55 - 2.15 (0.60) - (0.20)
78 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED) 6. FINANCIAL HIGHLIGHTS -- (CONTINUED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ----------------------------------- -------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) --------- ------------- ----------- ------------ --------------- --------------- MSF T. Rowe Price Small 2007 724,186 15.07 - 17.25 11,605,383 -- 0.85 - 1.90 7.46 - 8.93 Cap Growth Sub-Account 2006 887,179 9.67 - 15.83 12,441,182 -- 0.75 - 1.90 1.68 - 2.86 2005 1,020,337 9.35 - 15.37 13,929,124 -- 0.85 - 1.90 8.64 - 10.07 2004 1,124,853 8.89 - 13.96 27,932,877 -- 0.75 - 1.90 8.89 - 10.15 2003 256,266 8.15 - 12.68 2,111,377 -- 0.75 - 1.90 30.57 - 39.93 MSF T. Rowe Price Large 2007 4,816,195 14.53 - 16.29 73,226,346 0.24 0.85 - 1.90 7.13 - 8.45 Cap Growth Sub-Account 2006 8,132,948 13.56 - 15.02 114,703,767 0.20 0.75 - 1.90 10.76 - 12.04 2005 4,655,618 12.24 - 13.38 59,163,838 0.42 0.85 - 1.90 4.33 - 5.69 2003 -- 10.90 - 11.61 -- -- 0.75 - 1.90 28.30 - 29.78 MSF Oppenheimer Global 2007 928,692 19.16 - 21.70 19,496,970 0.87 0.75 - 1.90 4.25 - 5.46 Equity Sub-Account 2006 857,647 18.38 - 20.58 17,132,657 2.02 0.75 - 1.90 14.17 - 15.48 2005 305,962 16.10 - 17.82 5,298,650 -- 0.75 - 1.90 16.73 - 17.62 Putnam VT Growth and 2007 1,019,458 13.20 - 60.63 15,743,571 1.55 0.75 - 1.90 (7.82) - (6.74) Income Sub-Account 2006 1,289,872 14.30 - 65.01 20,878,412 1.78 0.75 - 1.90 13.74 - 15.05 2005 1,598,305 12.56 - 56.51 22,007,752 1.76 0.75 - 1.90 3.25 - 4.44 2004 1,842,883 12.16 - 54.11 23,304,488 1.82 0.75 - 1.90 9.02 - 10.28 2003 2,199,215 11.14 - 49.06 24,920,622 2.06 0.75 - 1.90 24.99 - 26.43 Putnam VT Vista Sub-Account 2007 264,111 13.29 - 16.69 3,664,269 -- 1.30 - 1.90 1.84 - 2.62 2006 374,568 13.04 - 16.29 5,064,251 -- 1.30 - 1.90 3.47 - 4.09 2005 475,451 12.59 - 15.65 6,165,382 -- 1.30 - 1.90 10.04 - 10.70 2004 566,204 11.43 - 14.13 6,616,254 -- 1.30 - 1.90 16.37 - 17.07 2003 654,733 9.81 - 12.07 6,526,173 -- 1.30 - 1.90 30.66 - 31.45 Putnam VT Equity Income 2007 2,648,811 16.07 - 16.96 44,391,661 1.30 0.75 - 1.90 1.24 - 2.41 Sub-Account 2006 2,427,699 15.87 - 16.56 39,810,732 1.07 0.75 - 1.90 16.61 - 17.96 2005 1,760,798 13.61 - 14.04 24,525,877 0.80 0.75 - 1.90 3.53 - 4.72 2004 869,958 13.15 - 13.40 11,601,025 0.08 0.75 - 1.90 9.71 - 10.98 2003 214,736 11.98 - 12.08 2,589,178 0.74 0.75 - 1.90 16.56 - 17.20 FTVIPT Templeton Growth 2007 963,068 16.68 - 20.94 18,987,897 1.32 0.75 - 1.90 0.41 - 1.68 Securities Sub-Account 2006 560,530 16.40 - 20.46 10,958,015 1.12 0.75 - 1.90 19.52 - 20.90 2005 263,350 13.54 - 17.08 4,406,685 1.18 0.85 - 1.80 6.93 - 8.14 2004 326,660 12.52 - 15.83 5,089,682 1.24 0.85 - 1.80 13.95 - 15.26 2003 355,502 10.86 - 13.70 4,832,036 1.63 0.75 - 1.90 29.65 - 31.15 FTVIPT Templeton Foreign 2007 2,895,980 15.73 - 39.15 52,175,234 1.92 0.85 - 1.90 13.27 - 14.80 Securities Sub-Account 2006 4,229,198 13.80 - 37.24 67,803,255 1.29 0.75 - 1.90 19.17 - 20.54 2005 5,193,955 11.44 - 30.90 67,994,861 1.17 0.85 - 1.90 8.10 - 9.54 2004 4,880,998 10.44 - 28.26 55,594,415 1.06 0.75 - 1.90 16.29 - 17.64 2003 2,898,825 8.86 - 24.02 27,135,338 1.74 0.75 - 1.90 29.73 - 31.23 FTVIPT Templeton 2007 1,736,965 16.12 - 26.13 41,234,266 2.21 1.30 - 1.90 26.35 - 27.28 Developing Markets 2006 2,629,249 12.75 - 20.53 48,883,729 1.13 1.30 - 1.90 25.69 - 26.44 Securities Sub-Account 2005 3,488,075 10.15 - 16.21 52,192,308 1.28 1.30 - 1.90 25.04 - 25.79 2004 3,465,025 8.12 - 12.86 42,862,966 1.80 1.30 - 1.90 22.36 - 23.10 2003 3,014,050 6.63 - 10.45 31,239,919 1.21 1.30 - 1.90 50.12 - 51.02
79 METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE OF METLIFE INVESTORS INSURANCE COMPANY NOTES TO THE FINANCIAL STATEMENTS -- (CONCLUDED) 6. FINANCIAL HIGHLIGHTS -- (CONCLUDED)
AS OF DECEMBER 31 FOR THE YEAR ENDED DECEMBER 31 ---------------------------------- -------------------------------------------- UNIT VALUE/1/ INVESTMENT/2/ EXPENSE RATIO/3/ TOTAL RETURN/4/ LOWEST TO NET INCOME LOWEST TO LOWEST TO UNITS HIGHEST ($) ASSETS ($) RATIO (%) HIGHEST (%) HIGHEST (%) --------- ------------- ---------- ------------ --------------- --------------- Fidelity VIP Growth 2007 16,783 11.79 197,857 -- 1.40 21.46 Opportunities Sub-Account 2006 23,148 9.71 224,683 0.91 1.40 3.99 2005 37,228 9.33 347,477 0.99 1.40 7.38 2004 52,541 8.69 456,684 0.58 1.40 (5.70) 2003 65,087 8.22 535,242 0.83 1.40 28.07 - 28.07 Fidelity VIP Equity-Income 2007 506,284 15.32 - 65.79 8,847,588 1.62 1.30 - 1.90 (0.64) - 0.11 Sub-Account 2006 549,152 15.41 - 65.81 9,156,792 3.01 1.30 - 1.90 17.68 - 18.38 2005 639,119 13.08 - 55.59 8,889,375 1.50 1.30 - 1.90 3.59 - 4.21 2004 703,824 12.61 - 53.35 9,118,491 1.71 1.30 - 1.90 9.13 - 9.79 2003 596,776 11.55 - 48.59 6,958,046 1.46 1.30 - 1.90 27.58 - 28.35 PIMCO VIT High Yield 2007 589,348 13.82 - 14.64 8,446,130 6.83 1.30 - 1.90 1.55 - 2.16 Sub-Account 2006 1,027,968 13.61 - 14.33 14,434,061 6.97 1.30 - 1.90 7.06 - 7.70 2005 910,444 12.71 - 13.31 11,879,844 6.41 1.30 - 1.90 2.17 - 2.78 2004 332,838 12.44 - 12.95 4,215,670 7.15 1.30 - 1.90 7.50 - 8.14 2003 406,399 11.57 - 11.97 4,768,549 6.14 1.30 - 1.90 20.62 - 21.35 PIMCO VIT Low Duration 2007 689,390 12.59 - 13.28 8,992,891 4.73 1.30 - 1.90 5.34 - 5.98 Sub-Account 2006 786,353 11.95 - 12.53 9,702,832 4.18 1.30 - 1.90 2.03 - 2.64 2005 863,341 11.71 - 12.21 10,399,997 2.75 1.30 - 1.90 (0.88) - (0.29) 2004 966,209 11.82 - 12.24 11,692,980 1.58 1.30 - 1.90 (0.09) - (0.52) 2003 1,080,533 11.83 - 12.18 13,038,249 1.86 1.30 - 1.90 0.42 - 1.03 PIMCO VIT StocksPLUS Growth 2007 135,574 10.63 - 16.07 1,512,979 7.64 1.30 - 1.90 4.84 - 5.47 and Income Sub-Account 2006 138,195 10.13 - 15.24 1,454,878 4.90 1.30 - 1.90 12.74 - 13.42 2005 154,607 8.97 - 13.44 1,430,485 2.26 1.30 - 1.90 1.55 - 2.16 2004 176,526 8.83 - 13.15 1,585,771 1.76 1.30 - 1.90 8.72 - 9.38 2003 150,319 8.11 - 12.03 1,229,167 2.20 1.30 - 1.90 27.93 - 28.70 PIMCO VIT Total Return 2007 1,271,571 14.30 - 14.69 18,565,738 4.74 1.40 - 1.80 6.81 - 7.24 Sub-Account 2006 1,708,329 13.39 - 13.70 23,287,170 4.40 1.40 - 1.80 2.00 - 2.41 2005 2,134,374 13.13 - 13.38 28,433,489 3.37 1.40 - 1.80 0.63 - 1.03 2004 2,624,882 13.04 - 13.24 34,640,594 3.44 1.40 - 1.80 2.97 - 3.39 2003 2,785,578 12.67 - 12.81 35,590,216 3.43 1.40 - 1.80 3.18 - 3.60 American Funds Global Growth 2007 344,425 27.80 - 31.43 10,517,598 3.93 0.75 - 1.90 12.68 - 13.99 Sub-Account 2006 12,186 24.68 - 27.58 325,343 -- 0.75 - 1.90 18.17 - 19.53
1 The Company sells a number of variable annuity products which have unique combinations of features and fees that are charged against the contract owner's account balance. Differences in the fee structures result in a variety of unit values, expense ratios, and total returns. 2 These amounts represent the dividends, excluding distributions of capital gains, received by the Sub-Account from the underlying portfolio, series, or fund net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense risk charges, that are assessed against contract owner accounts either through reductions in the unit values or the redemption of units. The investment income ratio is calculated for each period indicated or from the effective date through the end of the reporting period. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the underlying portfolio, series, or fund in which the Sub-Account invests. 3 These amounts represent the annualized contract expenses of the Separate Account, consisting primarily of mortality and expense risk charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying portfolio, series, or fund have been excluded. 4 These amounts represent the total return for the period indicated, including changes in the value of the underlying portfolio, series, or fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. The total return is calculated for each period indicated or from the effective date through the end of the reporting period. As the total return is presented as a range of minimum to maximum values, based on the product grouping representing the minimum and maximum expense ratio amounts, some individual contract total returns are not within the ranges presented. (a)For the period January 1, 2007 to April 27, 2007 (b)For the period November 12, 2007 to December 31, 2007. 80 METLIFE INVESTORS INSURANCE COMPANY Financial Statements for the Years Ended December 31, 2007, 2006 (as restated) and 2005 (as restated) and Report of Independent Registered Public Accounting Firm REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of MetLife Investors Insurance Company: We have audited the accompanying balance sheets of MetLife Investors Insurance Company (the "Company") as of December 31, 2007 and 2006, and the related statements of income, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of MetLife Investors Insurance Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, the Company changed its method of accounting for income taxes as required by accounting guidance adopted on January 1, 2007. As discussed in Note 13, the accompanying 2006 and 2005 financial statements have been restated. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, Florida April 21, 2008 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) BALANCE SHEETS DECEMBER 31, 2007 AND 2006 (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
2007 2006 ------- ------------ AS RESTATED, SEE NOTE 13 ASSETS Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $2,043 and $2,093, respectively)........................................... $ 2,017 $ 2,084 Equity securities available-for-sale, at estimated fair value (cost: $21 and $1, respectively).................. 18 1 Mortgage loans on real estate.............................. 74 90 Policy loans............................................... 29 28 Real estate joint ventures held-for-investment............. 1 2 Other limited partnership interests........................ 2 2 Short-term investments..................................... 74 83 Other invested assets...................................... 28 15 ------- ------- Total investments....................................... 2,243 2,305 Cash and cash equivalents.................................... 81 117 Accrued investment income.................................... 20 22 Premiums and other receivables............................... 906 993 Deferred policy acquisition costs and value of business acquired................................................... 598 633 Current income tax recoverable............................... 2 76 Other assets................................................. 131 124 Separate account assets...................................... 9,432 8,757 ------- ------- Total assets............................................ $13,413 $13,027 ======= ======= LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES: Future policy benefits..................................... $ 292 $ 288 Policyholder account balances.............................. 2,167 2,543 Other policyholder funds................................... 34 31 Deferred income tax liability.............................. 116 94 Payables for collateral under securities loaned transactions............................................ 541 529 Other liabilities.......................................... 43 63 Separate account liabilities............................... 9,432 8,757 ------- ------- Total liabilities....................................... 12,625 12,305 ------- ------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 8) STOCKHOLDER'S EQUITY: Common stock, par value $2 per share; 5,000,000 shares authorized; 2,899,446 shares issued and outstanding........ 6 6 Additional paid-in capital................................... 586 586 Retained earnings............................................ 210 133 Accumulated other comprehensive loss......................... (14) (3) ------- ------- Total stockholder's equity.............................. 788 722 ------- ------- Total liabilities and stockholder's equity.............. $13,413 $13,027 ======= =======
See accompanying notes to financial statements. F-2 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
2007 2006 2005 ---- ---- ---- AS RESTATED, SEE NOTE 13 REVENUES Premiums..................................................... $ 12 $ 65 $122 Universal life and investment-type product policy fees....... 162 143 115 Net investment income........................................ 104 106 114 Other revenues............................................... 59 62 61 Net investment gains (losses)................................ 99 (60) (13) ---- ---- ---- Total revenues.......................................... 436 316 399 ---- ---- ---- EXPENSES Policyholder benefits and claims............................. 36 91 142 Interest credited to policyholder account balances........... 100 114 120 Other expenses............................................... 205 122 111 ---- ---- ---- Total expenses.......................................... 341 327 373 ---- ---- ---- Income before provision (benefit) for income tax............. 95 (11) 26 Provision (benefit) for income tax........................... 23 (17) 3 ---- ---- ---- Net income................................................... $ 72 $ 6 $ 23 ==== ==== ====
See accompanying notes to financial statements. F-3 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) STATEMENTS OF STOCKHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
ACCUMULATED ADDITIONAL OTHER COMMON PAID-IN RETAINED COMPREHENSIVE STOCK CAPITAL EARNINGS LOSS TOTAL ------ ---------- -------- ------------- ----- Balance at January 1, 2005.............. $6 $586 $104 $ 6 $702 Comprehensive income: Net income, as restated, see Note 13.. 23 23 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax................... (10) (10) ---- Comprehensive income.................. 13 -- ---- ---- ---- ---- Balance at December 31, 2005 as restated, see Note 13................. 6 586 127 (4) 715 Comprehensive income: Net income, as restated, see Note 13.. 6 6 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax................... 1 1 ---- Comprehensive income.................. 7 -- ---- ---- ---- ---- Balance at December 31, 2006, as restated, see Note 13................. 6 586 133 (3) 722 Cumulative effect of a change in accounting principle, net of income tax (Note 1).......................... 5 5 -- ---- ---- ---- ---- Balance at January 1, 2007.............. 6 586 138 (3) 727 Comprehensive income: Net income............................ 72 72 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax................... (11) (11) ---- Comprehensive income.................. 61 -- ---- ---- ---- ---- Balance at December 31, 2007............ $6 $586 $210 $(14) $788 == ==== ==== ==== ====
See accompanying notes to financial statements. F-4 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
2007 2006 2005 ------- ------- ------- AS RESTATED, SEE NOTE 13 CASH FLOWS FROM OPERATING ACTIVITIES Net income.............................................. $ 72 $ 6 $ 23 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of premiums and accretion of discounts associated with investments, net................. -- 4 8 (Gains) losses from sales of investments and businesses, net.................................. (99) 60 13 Interest credited to policyholder account balances......................................... 100 114 120 Universal life and investment-type product policy fees............................................. (162) (143) (115) Change in accrued investment income................ 2 2 (3) Change in premiums and other receivables........... 206 (28) (74) Change in deferred policy acquisition costs, net... 38 (27) (21) Change in insurance-related liabilities............ (1) 52 125 Change in income tax payable....................... 102 (15) 24 Change in other assets............................. 132 121 83 Change in other liabilities........................ 9 1 6 ------- ------- ------- Net cash provided by operating activities............... 399 147 189 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Sales, maturities and repayments of: Fixed maturity securities.......................... 925 1,435 2,025 Mortgage loans on real estate...................... 16 32 67 Real estate joint ventures......................... 1 1 2 Purchases of: Fixed maturity securities.......................... (910) (1,162) (2,245) Equity securities.................................. (21) -- -- Mortgage loans on real estate...................... -- (58) -- Net change in short-term investments.................. 9 (4) 24 Net change in other invested assets................... 1 1 (6) ------- ------- ------- Net cash provided by (used in) investing activities..... 21 245 (133) ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Policyholder account balances: Deposits........................................... 1,579 1,421 1,355 Withdrawals........................................ (2,047) (1,733) (1,589) Net change in payables for collateral under securities loaned transactions................................ 12 20 21 ------- ------- ------- Net cash used in financing activities................... (456) (292) (213) ------- ------- ------- Change in cash and cash equivalents..................... (36) 100 (157) Cash and cash equivalents, beginning of year............ 117 17 174 ------- ------- ------- CASH AND CASH EQUIVALENTS, END OF YEAR.................. $ 81 $ 117 $ 17 ======= ======= ======= Supplemental disclosures of cash flow information: Net cash received during the year for: Income tax......................................... $ 84 $ 2 $ 19 ======= ======= =======
See accompanying notes to financial statements. F-5 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS MetLife Investors Insurance Company ("MLIIC"), a Missouri domiciled life insurance company (the "Company") is a wholly-owned subsidiary of MetLife, Inc. ("MetLife"). On November 9, 2006, MetLife Investors Insurance Company of California ("MLIICCA"), a California domiciled life insurance company was merged into MLIIC. The Company markets and administers traditional life, universal life, variable annuity and fixed annuity products. The Company is licensed to do business in 48 states and the District of Columbia. Most of the policies issued present no significant mortality or longevity risk to the Company, but rather represent investment deposits by the policyholders. BASIS OF PRESENTATION The accompanying financial statements include the accounts of MLIIC and its former subsidiary through the date of merger. Intercompany transactions have been eliminated for all periods presented on a consolidated basis. The Company uses the equity method of accounting for investments in equity securities in which it has more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture's or partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture's or partnership's operations. Certain amounts in the prior years' financial statements have been reclassified to conform with the 2007 presentation. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to adopt accounting policies and make estimates and assumptions that affect amounts reported in the financial statements. The most critical estimates include those used in determining: (i) the fair value of investments in the absence of quoted market values; (ii) investment impairments; (iii) the recognition of income on certain investments; (iv) the fair value of and accounting for derivatives; (v) the capitalization and amortization of deferred policy acquisition costs ("DAC") and the establishment and amortization of value of business acquired ("VOBA"); (vi) the liability for future policyholder benefits; (vii) accounting for income taxes and the valuation of deferred tax assets; (viii) accounting for reinsurance transactions; and (ix) the liability for litigation and regulatory matters. F-6 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) A description of such critical estimates is incorporated within the discussion of the related accounting policies which follows. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's businesses and operations. Actual results could differ from these estimates. Investments The Company's investments are in fixed maturity and equity securities, mortgage loans on real estate, policy loans, real estate joint ventures and other limited partnerships, short-term investments and other invested assets. The accounting policies related to each are as follows: Fixed Maturity and Equity Securities. The Company's fixed maturity and equity securities are classified as available-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income or loss, net of policyholder related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Investment gains and losses on sales of securities are determined on a specific identification basis. Interest income on fixed maturity securities is recorded when earned using an effective yield method giving effect to amortization of premiums and accretion of discounts. Dividends on equity securities are recorded when declared. These dividends and interest income are recorded as part of net investment income. Included within fixed maturity securities are loan-backed securities including mortgage-backed and asset-backed securities. Amortization of the premium or discount from the purchase of these securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for single class and multi-class mortgage-backed and asset-backed securities are obtained from broker-dealer survey values or internal estimates. For credit-sensitive mortgage-backed and asset-backed securities and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. For all other mortgage-backed and asset-backed securities, the effective yield is recalculated on a retrospective basis. The cost of fixed maturity and equity securities is adjusted for impairments in value deemed to be other-than-temporary in the period in which the determination is made. These impairments are included within net investment gains (losses) and the cost basis of the fixed maturity and equity securities is reduced accordingly. The Company does not change the revised cost basis for subsequent recoveries in value. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in fair value. The Company's review of its fixed maturity and equity securities for impairments includes an analysis of the total gross unrealized losses by three categories of securities: (i) securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%; (ii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for less than six months; and (iii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for six months or greater. Additionally, management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used by the Company in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the market value has been below cost or amortized cost; (ii) the potential for impairments of F-7 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) securities when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vi) the Company's ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost or amortized cost (See also Note 2); (vii) unfavorable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and (viii) other subjective factors, including concentrations and information obtained from regulators and rating agencies. Securities Lending. Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% of the fair value of the securities loaned. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions are reported as investment income and investment expense, respectively, within net investment income. Mortgage Loans on Real Estate. Mortgage loans on real estate are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts, and prepayment fees are reported in net investment income. Loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Valuation allowances are established for the excess carrying value of the loan over the present value of expected future cash flows discounted at the loan's original effective interest rate, the value of the loan's collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or the loan's market value if the loan is being sold. The Company also establishes allowances for loan losses when a loss contingency exists for pools of loans with similar characteristics, such as mortgage loans based on similar property types or loan to value risk factors. A loss contingency exists when the likelihood that a future event will occur is probable based on past events. Interest income earned on impaired loans is accrued on the principal amount of the loan based on the loan's contractual interest rate. However, interest ceases to be accrued for loans on which interest is generally more than 60 days past due and/or where the collection of interest is not considered probable. Cash receipts on such impaired loans are recorded as a reduction of the recorded investment. Gains and losses from the sale of loans and changes in valuation allowances are reported in net investment gains (losses). Policy Loans. Policy loans are stated at unpaid principal balances. Interest income on such loans is recorded as earned using the contractually agreed upon interest rate. Generally, interest is capitalized on the policy's anniversary date. Real Estate Joint Ventures and Other Limited Partnership Interests. The Company uses the equity method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture's or partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture's or the partnership's operations. In addition to the investees performing regular evaluations for the impairment of underlying investments, the Company routinely evaluates its investments in real estate joint ventures and other limited partnerships for impairments. For its cost method investments, the Company F-8 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) follows an impairment analysis which is similar to the process followed for its fixed maturity and equity securities as described previously. For equity method investees, the Company considers financial and other information provided by the investee, other known information and inherent risks in the underlying investments, as well as future capital commitments, in determining whether an impairment has occurred. When an other-than- temporary impairment is deemed to have occurred, the Company records a realized capital loss within net investment gains (losses) to record the investment at its fair value. Short-term Investments. Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition and are stated at amortized cost, which approximates fair value. Other Invested Assets. Other invested assets consist primarily of stand-alone derivatives with positive fair values. Estimates and Uncertainties. The Company's investments are exposed to three primary sources of risk: credit, interest rate and market valuation. The financial statement risks, stemming from such investment risks, are those associated with the recognition of impairments, the recognition of income on certain investments, and the determination of fair values. The determination of the amount of allowances and impairments, as applicable, are described previously by investment type. The determination of such allowances and impairments is highly subjective and is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. The recognition of income on certain investments (e.g., loan-backed securities including mortgage-backed and asset-backed securities) is dependent upon market conditions, which could result in prepayments and changes in amounts to be earned. The fair values of publicly held fixed maturity securities and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases where quoted market prices are not available, such as for private fixed maturity securities, fair values are estimated using present value or valuation techniques. The determination of fair values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include: coupon rate, maturity, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of comparable securities. The use of different methodologies and assumptions may have a material effect on the estimated fair value amounts. Additionally, when the Company enters into certain real estate joint ventures and other limited partnerships for which the Company may be deemed to be the primary beneficiary under Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46(r), Consolidation of Variable Interest Entities -- An Interpretation of ARB No. 51, it may be required to consolidate such investments. The accounting rules for the determination of the primary beneficiary are complex and require evaluation of the contractual rights and obligations associated with each party involved in the entity, an estimate of the entity's expected losses and expected residual returns and the allocation of such estimates to each party. F-9 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The use of different methodologies and assumptions as to the determination of the fair value of investments, the timing and amount of impairments, the recognition of income, or consolidation of investments may have a material effect on the amounts presented within the financial statements. Derivative Financial Instruments Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter market. The Company uses a variety of derivatives, including swaps and forwards, to manage the risk associated with variability in cash flows or changes in fair values related to the Company's financial instruments. To a lesser extent, the Company may use credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment contracts and engages in certain reinsurance contracts that have embedded derivatives. Freestanding derivatives are carried on the Company's balance sheet either as assets within other invested assets or as liabilities within other liabilities at fair value as determined by quoted market prices or through the use of pricing models. The determination of fair value, when quoted market values are not available, is based on valuation methodologies and assumptions deemed appropriate under the circumstances. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, market volatility, and liquidity. Values can also be affected by changes in estimates and assumptions used in pricing models. Such assumptions include estimates of volatility, interest rates, foreign currency exchange rates, other financial indices and credit ratings. Essential to the analysis of the fair value is risk of counterparty default. The use of different assumptions may have a material effect on the estimated derivative fair value amounts, as well as the amount of reported net income. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the fair value of the derivative are generally reported in net investment gains (losses). The fluctuations in fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either: (i) a hedge of the fair value of a recognized asset or liability or an unrecognized firm commitment ("fair value hedge"); or (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow hedge"). In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. Assessments of hedge effectiveness and measurements of ineffectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income. The accounting for derivatives is complex and interpretations of the primary accounting standards continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under these accounting standards. If it was determined that hedge accounting designations were not appropriately applied, reported net income could be materially affected. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate F-10 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) accounting treatment may result in a differing impact on the financial statements of the Company from that previously reported. Under a fair value hedge, changes in the fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the fair value of the hedged item related to the designated risk being hedged, are reported within net investment gains (losses). The fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the statement of income within interest income or interest expense to match the location of the hedged item. Under a cash flow hedge, changes in the fair value of the hedging derivative measured as effective are reported within other comprehensive income (loss), a separate component of stockholder's equity, and the deferred gains or losses on the derivative are reclassified into the statement of income when the Company's earnings are affected by the variability in cash flows of the hedged item. Changes in the fair value of the hedging instrument measured as ineffectiveness are reported within net investment gains (losses). The fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the statement of income within interest income or interest expense to match the location of the hedged item. The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; (iv) a hedged firm commitment no longer meets the definition of a firm commitment; or (v) the derivative is de- designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the fair value or cash flows of a hedged item, the derivative continues to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in net investment gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the statement of income when the Company's earnings are affected by the variability in cash flows of the hedged item. When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur by the end of the specified time period or the hedged item no longer meets the definition of a firm commitment, the derivative continues to be carried on the balance sheet at its fair value, with changes in fair value recognized currently in net investment gains (losses). Any asset or liability associated with a recognized firm commitment is derecognized from the balance sheet, and recorded currently in net investment gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income (loss) pursuant to the cash flow hedge of a forecasted transaction are recognized immediately in net investment gains (losses). In all other situations in which hedge accounting is discontinued, the derivative is carried at its fair value on the balance sheet, with changes in its fair value recognized in the current period as net investment gains (losses). The Company is also a party to financial instruments that contain terms which are deemed to be embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. If the instrument would not be accounted for in its entirety at fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried on the balance sheet at fair value with the host contract and changes in their fair value are reported currently in net investment gains (losses). If the Company is unable to properly identify and measure an F-11 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at fair value, with changes in fair value recognized in the current period in net investment gains (losses). Additionally, the Company may elect to carry an entire contract on the balance sheet at fair value, with changes in fair value recognized in the current period in net investment gains (losses) if that contract contains an embedded derivative that requires bifurcation. There is a risk that embedded derivatives requiring bifurcation may not be identified and reported at fair value in the financial statements and that their related changes in fair value could materially affect reported net income. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Deferred Policy Acquisition Costs and Value of Business Acquired The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that vary with and relate to the production of new business are deferred as DAC. Such costs consist principally of commissions and agency and policy issue expenses. VOBA is an intangible asset that reflects the estimated fair value of in-force contracts in a life insurance company acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in- force at the acquisition date. VOBA is based on actuarially determined projections, by each block of business, of future policy and contract charges, premiums, mortality, separate account performance, surrenders, operating expenses, investment returns and other factors. Actual experience on the purchased business may vary from these projections. The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA are aggregated in the financial statements for reporting purposes. DAC and VOBA on life insurance or investment-type contracts are amortized in proportion to gross premiums or gross profits, depending on the type of contract as described below. The Company amortizes DAC and VOBA related to non-participating and non- dividend-paying traditional contracts (term insurance and non-participating whole life insurance) over the entire premium paying period in proportion to the present value of actual historic and expected future gross premiums. The present value of expected premiums is based upon the premium requirement of each policy and assumptions for mortality, persistency, and investment returns at policy issuance, or policy acquisition, as it relates to VOBA, that include provisions for adverse deviation and are consistent with the assumptions used to calculate future policyholder benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after policy issuance or acquisition is caused only by variability in premium volumes. The Company amortizes DAC and VOBA related to fixed and variable universal life contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon returns in excess of the amounts credited to policyholders, mortality, persistency, interest crediting rates, expenses to administer the business, creditworthiness of reinsurance counterparties, the effect of any hedges used, and certain economic variables, such as inflation. Of these factors, the Company anticipates that investment returns, expenses, and persistency are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated gross profits, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to F-12 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) earnings. The opposite result occurs when the actual gross profits are below the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business remaining in-force, which impacts expected future gross profits. Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force account balances on such contracts each reporting period. Returns that are higher than the Company's long-term expectation produce higher account balances, which increases the Company's future fee expectations and decreases future benefit payment expectations on minimum death benefit guarantees, resulting in higher expected future gross profits. The opposite result occurs when returns are lower than the Company's long-term expectation. The Company's practice to determine the impact of gross profits resulting from returns on separate accounts assumes that long- term appreciation in equity markets is not changed by short-term market fluctuations, but is only changed when sustained interim deviations are expected. The Company monitors these changes and only changes the assumption when its long-term expectation changes. The Company also reviews periodically other long-term assumptions underlying the projections of estimated gross profits. These include investment returns, interest crediting rates, mortality, persistency, and expenses to administer business. Management annually updates assumptions used in the calculation of estimated gross profits which may have significantly changed. If the update of assumptions causes expected future gross profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes expected future gross profits to decrease. Prior to 2007, DAC related to any internally replaced contract was generally expensed at the date of replacement. As described more fully in "Adoption of New Accounting Pronouncements", effective January 1, 2007, the Company adopted Statement of Position ("SOP") 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts ("SOP 05-1"). Under SOP 05-1, an internal replacement is defined as a modification in product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If the modification substantially changes the contract, the DAC is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. Sales Inducements The Company has two different types of sales inducements which are included in other assets: (i) the policyholder receives a bonus whereby the policyholder's initial account balance is increased by an amount equal to a specified percentage of the customer's deposit; and (ii) the policyholder receives a higher interest rate using a dollar cost averaging method than would have been received based on the normal general account interest rate credited. The Company defers sales inducements and amortizes them over the life of the policy using the same methodology and assumptions used to amortize DAC. Goodwill Goodwill, which is included in other assets, is the excess of cost over the fair value of net assets acquired. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test. Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment. If the carrying value of goodwill exceeds its fair value, the excess is recognized as an impairment and recorded as a charge against net income. The fair value is determined using a market multiple, a discounted cash flow model, or a cost approach. The critical estimates necessary in determining fair value are projected earnings, comparative market multiples and the discount rate. F-13 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The Company recognized no impairments of goodwill during the years ended December 31, 2007, 2006 and 2005. Goodwill was $33 million at both December 31, 2007 and 2006. Liability for Future Policy Benefits and Policyholder Account Balances The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance and traditional annuities. Generally, amounts are payable over an extended period of time and related liabilities are calculated as the present value of future expected benefits to be paid reduced by the present value of future expected premiums. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, policy lapse, renewal, retirement, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. Utilizing these assumptions, liabilities are established on a block of business basis. Future policy benefit liabilities for non-participating traditional life insurance policies are equal to the aggregate of the present value of expected future benefit payments and related expenses less the present value of expected future net premiums. Assumptions as to mortality and persistency are based upon the Company's experience when the basis of the liability is established. The interest rate for the aggregate future policy benefit liabilities is approximately 5%. Future policy benefit liabilities for individual and group traditional fixed annuities after annuitization are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 3% to 8%. The Company establishes future policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity contracts as follows: - Annuity guaranteed minimum death benefit ("GMDB") liabilities are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the GMDB liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility are consistent with the historical experience of the Standard & Poor's 500 Index. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. - Guaranteed minimum income benefit ("GMIB") liabilities are determined by estimating the expected value of the 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 total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used for estimating the GMIB liabilities are consistent with those used for estimating the GMDB liabilities. In addition, the calculation of guaranteed annuitization benefit liabilities incorporates an assumption for the percentage of the potential annuitizations that may be elected by the contractholder. The Company establishes policyholder account balances for guaranteed minimum benefit riders relating to certain variable annuity products as follows: - Guaranteed minimum withdrawal benefit riders ("GMWB") guarantee the contractholder a return of their purchase payment via partial withdrawals, even if the account value is reduced to zero, provided that the contractholder's cumulative withdrawals in a contract year do not exceed a certain limit. The initial F-14 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) guaranteed withdrawal amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts). The GMWB is an embedded derivative, which is measured at fair value separately from the host variable annuity product. The risk associated with GMWB riders written is ceded 100% to an affiliate through a reinsurance agreement. - Guaranteed minimum accumulation benefit riders ("GMAB") provide the contractholder, after a specified period of time determined at the time of issuance of the variable annuity contract, with a minimum accumulation of their purchase payments even if the account value is reduced to zero. The initial guaranteed accumulation amount is equal to the initial benefit base as defined in the contract (typically, the initial purchase payments plus applicable bonus amounts). The GMAB is also an embedded derivative, which is measured at fair value separately from the host variable annuity product. The risk associated with GMAB riders written is ceded 100% to an affiliate through a reinsurance agreement. - For both GMWB and GMAB, the initial benefit base is increased by additional purchase payments made within a certain time period and decreases by benefits paid and/or withdrawal amounts. After a specified period of time, the benefit base may also increase as a result of an optional reset as defined in the contract. The fair values of the GMWB and GMAB riders are calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior. In measuring the fair value of GMWBs and GMABs, the Company attributes a portion of the fees collected from the policyholder equal to the present value of expected future guaranteed minimum withdrawal and accumulation benefits (at inception). The changes in fair value are reported in net investment gains (losses). Any additional fees represent "excess" fees and are reported in universal life and investment-type product policy fees. These riders may be more costly than expected in volatile or declining markets, causing an increase in liabilities for future policy benefits, negatively affecting net income. The Company periodically reviews its estimates of actuarial liabilities for future policy benefits and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these policies, guarantees and riders and in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur. Policyholder account balances relate to investment-type contracts and universal life-type policies. Investment-type contracts principally include traditional individual fixed annuities in the accumulation phase and non- variable group annuity contracts. Policyholder account balances are equal to: (i) policy account values, which consist of an accumulation of gross premium payments; and (ii) credited interest, ranging from 2% to 14% less expenses, mortality charges, and withdrawals. Other Policyholder Funds Other policyholder funds include policy and contract claims and unearned revenue liabilities. The liability for policy and contract claims generally relates to incurred but not reported death claims as well as claims which have been reported but not yet settled. The liability for these claims is based on the Company's estimated ultimate cost of settling all claims. The Company derives estimates for the development of incurred but not reported claims principally from actuarial analyses of historical patterns of claims and claims development for each line of business. The methods used to determine these estimates are continually reviewed. Adjustments resulting from this continuous review process and differences between estimates and payments for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or payments are made. F-15 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The unearned revenue liability relates to universal life-type and investment-type products and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized using the product's estimated gross profits similar to DAC. Such amortization is recorded in universal life and investment-type product policy fees. Recognition of Insurance Revenue and Related Benefits Premiums related to traditional life and annuity policies with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided against such revenues to recognize profits over the estimated lives of the policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into operations in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Deposits related to universal life-type and investment-type products are credited to policyholder account balances. Revenues from such contracts consist of amounts assessed against policyholder account balances for mortality, policy administration and surrender charges and are recorded in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are charged to operations include interest credited and benefit claims incurred in excess of related policyholder account balances. Premiums, policy fees and policyholder benefits and expenses are presented net of reinsurance. Other Revenues Other revenues primarily include fee income on financial reinsurance treaties. Such fees are recognized in the period in which services are performed. Income Taxes The Company joins with MetLife and its includable life insurance and non- life insurance subsidiaries in filing a consolidated U.S. federal income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended. The Company's accounting for income taxes represents management's best estimate of various events and transactions. Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established as well as the amount of such allowances. When making such determination, consideration is given to, among other things, the following: (i) future taxable income exclusive of reversing temporary differences and carryforwards; (ii) future reversals of existing taxable temporary differences; (iii) taxable income in prior carryback years; and (iv) tax planning strategies. F-16 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The Company may be required to change its provision for income taxes in certain circumstances. Examples of such circumstances include when the ultimate deductibility of certain items is challenged by taxing authorities (See also Note 7) or when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, future events such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax and the effective tax rate. Any such changes could significantly affect the amounts reported in the financial statements in the year these changes occur. As described more fully in "Adoption of New Accounting Pronouncements", the Company adopted FIN No. 48, Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB Statement No. 109 ("FIN 48") effective January 1, 2007. Under FIN 48, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax. Reinsurance The Company enters into reinsurance transactions as a purchaser of reinsurance for its life insurance products. For each of its reinsurance contracts, the Company determines if the contract provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. The Company reviews all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid, and the liabilities ceded related to the underlying contracts is considered the net cost of reinsurance at the inception of the contract. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid on the reinsurance of in-force blocks, as well as amounts paid related to new business, are recorded as ceded premiums and ceded future policy benefit liabilities are established. The assumptions used to account for long-duration reinsurance contracts are consistent with those used for the underlying contracts. Ceded policyholder and contract related liabilities, other than those currently due, are reported gross on the balance sheet. Amounts currently recoverable under reinsurance contracts are included in premiums and other receivables and amounts currently payable are included in other liabilities. Such assets and liabilities relating to reinsurance contracts with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance contract. Premiums, fees and policyholder benefits and claims are net of reinsurance ceded. If the Company determines that a reinsurance contract does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the contract using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within other assets. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the Company evaluates F-17 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate. Amounts received from reinsurers for policy administration are reported in other revenues. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded reinsurance and evaluates the financial strength of counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed previously. Separate Accounts Separate accounts are established in conformity with insurance laws and are generally not chargeable with liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. The Company reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if: (i) such separate accounts are legally recognized; (ii) assets supporting the contract liabilities are legally insulated from the Company's general account liabilities; (iii) investments are directed by the contractholder; and (iv) all investment performance, net of contract fees and assessments, is passed through to the contractholder. The Company reports separate account assets meeting such criteria at their fair value. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to contractholders of such separate accounts are offset within the same line in the statements of income. The Company's revenues reflect fees charged to the separate accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. Employee Benefit Plans The Company participates in a noncontributory defined benefit pension plan sponsored by Metropolitan Life Insurance Company ("MLIC"), an affiliate. The Company does not bear direct obligation for benefits under this plan. MLIC allocated a proportionate share of net expense related to the plan to the Company. The Company's share of net expense for the pension plan was $0 for the year ended December 31, 2007 and insignificant for each of the years ended December 31, 2006 and 2005. Litigation Contingencies The Company is a party to a number of legal actions and is involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company's financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in the Company's financial statements. It is possible that an adverse outcome in certain of the Company's litigation and regulatory investigations, or the use of different assumptions in the determination of amounts recorded could have a material effect upon the Company's net income or cash flows. F-18 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Income Taxes Effective January 1, 2007, the Company adopted FIN 48. FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company's financial statements. FIN 48 requires companies to determine whether it is "more likely than not" that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement, and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. As a result of the implementation of FIN 48, the Company recognized a $5 million decrease in the liability for unrecognized tax benefits and a corresponding increase to the January 1, 2007 balance of retained earnings. Upon adoption of FIN 48, the Company did not have any unrecognized tax benefits. See also Note 7. Insurance Contracts Effective January 1, 2007, the Company adopted SOP 05-1 which provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in Statement of Financial Accounting Standards ("SFAS") No. 97, Accounting and Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for Realized Gains and Losses from the Sale of Investments. SOP 05-1 defines an internal replacement and is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the American Institute of Certified Public Accountants ("AICPA") issued related Technical Practice Aids ("TPAs") to provide further clarification of SOP 05-1. The TPAs became effective concurrently with the adoption of SOP 05-1. As a result of the adoption of SOP 05-1 and the related TPAs, if an internal replacement modification substantially changes a contract, then the DAC is written off immediately through income and any new deferrable costs associated with the new replacement are deferred. If a contract modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are immediately expensed. The adoption of SOP 05-1 and the related TPAs had no effect on the Company's financial statements. Derivative Financial Instruments The Company has adopted guidance relating to derivative financial instruments as follows: - Effective January 1, 2006, the Company adopted prospectively SFAS No. 155, Accounting for Certain Hybrid Instruments ("SFAS 155"). SFAS 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging ("SFAS 133") and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("SFAS 140"). SFAS 155 allows financial instruments that have embedded derivatives to be accounted for as a whole, eliminating the need to bifurcate the derivative from its host, if the holder elects to account for the whole instrument on a fair value basis. In addition, among other changes, SFAS 155: (i) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (ii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; F-19 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) (iii) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and (iv) amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose entity ("QSPE") from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial interest. The adoption of SFAS 155 did not have a material impact on the Company's financial statements. - Effective October 1, 2006, the Company adopted SFAS 133 Implementation Issue No. B40, Embedded Derivatives: Application of Paragraph 13(b) to Securitized Interests in Prepayable Financial Assets ("Issue B40"). Issue B40 clarifies that a securitized interest in prepayable financial assets is not subject to the conditions in paragraph 13(b) of SFAS 133, if it meets both of the following criteria: (i) the right to accelerate the settlement if the securitized interest cannot be controlled by the investor; and (ii) the securitized interest itself does not contain an embedded derivative (including an interest rate-related derivative) for which bifurcation would be required other than an embedded derivative that results solely from the embedded call options in the underlying financial assets. The adoption of Issue B40 did not have a material impact on the Company's financial statements. - Effective January 1, 2006, the Company adopted prospectively SFAS 133 Implementation Issue No. B38, Embedded Derivatives: Evaluation of Net Settlement with Respect to the Settlement of a Debt Instrument through Exercise of an Embedded Put Option or Call Option ("Issue B38") and SFAS 133 Implementation Issue No. B39, Embedded Derivatives: Application of Paragraph 13(b) to Call Options That Are Exercisable Only by the Debtor ("Issue B39"). Issue B38 clarifies that the potential settlement of a debtor's obligation to a creditor occurring upon exercise of a put or call option meets the net settlement criteria of SFAS 133. Issue B39 clarifies that an embedded call option, in which the underlying is an interest rate or interest rate index, that can accelerate the settlement of a debt host financial instrument should not be bifurcated and fair valued if the right to accelerate the settlement can be exercised only by the debtor (issuer/borrower) and the investor will recover substantially all of its initial net investment. The adoption of Issues B38 and B39 did not have a material impact on the Company's financial statements. Other Effective January 1, 2007, the Company adopted SFAS No. 156, Accounting for Servicing of Financial Assets -- an amendment of FASB Statement No. 140 ("SFAS 156"). Among other requirements, SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations. The adoption of SFAS 156 did not have an impact on the Company's financial statements. Effective November 15, 2006, the Company adopted U.S. Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in current year financial statements for purposes of assessing materiality. SAB 108 requires that registrants quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when relevant quantitative and qualitative factors are considered, is material. SAB 108 permits companies to initially apply its provisions by either restating prior financial statements or recording a cumulative effect adjustment to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment to retained earnings for errors that were previously deemed immaterial but are material under the guidance in SAB 108. The adoption of SAB 108 did not have a material impact on the Company's financial statements. F-20 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) Effective January 1, 2006, the Company adopted SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3 ("SFAS 154"). SFAS 154 requires retrospective application to prior periods' financial statements for a voluntary change in accounting principle unless it is deemed impracticable. It also requires that a change in the method of depreciation, amortization, or depletion for long-lived, non- financial assets be accounted for as a change in accounting estimate rather than a change in accounting principle. The adoption of SFAS 154 did not have a material impact on the Company's financial statements. In June 2005, the Emerging Issues Task Force, ("EITF") reached consensus on Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights ("EITF 04-5"). EITF 04-5 provides a framework for determining whether a general partner controls and should consolidate a limited partnership or a similar entity in light of certain rights held by the limited partners. The consensus also provides additional guidance on substantive rights. EITF 04-5 was effective after June 29, 2005 for all newly formed partnerships and for any pre-existing limited partnerships that modified their partnership agreements after that date. For all other limited partnerships, EITF 04-5 required adoption by January 1, 2006 through a cumulative effect of a change in accounting principle recorded in opening equity or applied retrospectively by adjusting prior period financial statements. The adoption of the provisions of EITF 04-5 did not have a material impact on the Company's financial statements. Effective November 9, 2005, the Company prospectively adopted the guidance in FASB Staff Position ("FSP") No. FAS 140-2, Clarification of the Application of Paragraphs 40(b) and 40(c) of FAS 140 ("FSP 140-2"). FSP 140-2 clarified certain criteria relating to derivatives and beneficial interests when considering whether an entity qualifies as a QSPE. Under FSP 140-2, the criteria must only be met at the date the QSPE issues beneficial interests or when a derivative financial instrument needs to be replaced upon the occurrence of a specified event outside the control of the transferor. The adoption of FSP 140-2 did not have a material impact on the Company's financial statements. Effective July 1, 2005, the Company adopted SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 ("SFAS 153"). SFAS 153 amended prior guidance to eliminate the exception for nonmonetary exchanges of similar productive assets and replaced it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS 153 were required to be applied prospectively for fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 did not have a material impact on the Company's financial statements. In June 2005, the FASB completed its review of EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides accounting guidance regarding the determination of when an impairment of debt and marketable equity securities and investments accounted for under the cost method should be considered other-than- temporary and recognized in income. EITF 03-1 also requires certain quantitative and qualitative disclosures for debt and marketable equity securities classified as available-for-sale or held-to-maturity under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. The FASB decided not to provide additional guidance on the meaning of other-than-temporary impairment but has issued FSP Nos. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments ("FSP 115-1"), which nullifies the accounting guidance on the determination of whether an investment is other-than-temporarily impaired as set forth in EITF 03-1. As required by FSP 115-1, the Company adopted this guidance on a prospective basis, which had no material impact on the Company's financial statements, and has provided the required disclosures. F-21 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Fair Value In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. Effective January 1, 2008, the Company adopted SFAS 157 and applied the provisions of the statement prospectively to assets and liabilities measured and disclosed at fair value. In addition to new disclosure requirements, the adoption of SFAS 157 primarily changes the valuation of embedded derivatives associated with annuity contracts. The change in valuation of embedded derivatives associated with annuity contracts results from the incorporation of risk margins and the Company's own credit standing in their valuation. As a result of the adoption of SFAS 157 on January 1, 2008, the Company expects such changes to result in a gain in the range of $10 million to $15 million, net of income tax, in the Company's statement of income. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 permits entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to report related unrealized gains and losses in earnings. The fair value option is generally applied on an instrument-by-instrument basis and is generally an irrevocable election. Effective January 1, 2008, the Company did not elect the fair value option for any instruments. Accordingly, there was no impact on the Company's retained earnings or equity as of January 1, 2008. In June 2007, the AICPA issued SOP 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies ("SOP 07-1") . Upon adoption of SOP 07-1, the Company must also adopt the provisions of FASB Staff Position No. FSP FIN 46(r)-7, Application of FASB Interpretation No. 46 to Investment Companies ("FSP FIN 46(r)-7"), which permanently exempts investment companies from applying the provisions of FIN No. 46(r), Consolidation of Variable Interest Entities -- An Interpretation of Accounting Research Bulletin No. 51, and its December 2003 revision ("FIN 46(r)") to investments carried at fair value. SOP 07-1 provides guidance for determining whether an entity falls within the scope of the AICPA Audit and Accounting Guide Investment Companies and whether investment company accounting should be retained by a parent company upon consolidation of an investment company subsidiary or by an equity method investor in an investment company. In certain circumstances, SOP 07-1 precludes retention of specialized accounting for investment companies (i.e., fair value accounting), when similar direct investments exist in the consolidated group and are measured on a basis inconsistent with that applied to investment companies. Additionally, SOP 07-1 precludes retention of specialized accounting for investment companies if the reporting entity does not distinguish through documented policies the nature and type of investments to be held in the investment companies from those made in the consolidated group where other accounting guidance is being applied. In February 2008, the FASB issued FSP No. SOP 7-1-1, Effective Date of AICPA Statement of Position 07-1, which delays indefinitely the effective date of SOP 07-1. The Company is closely monitoring further FASB developments. In May 2007, the FASB issued FSP No. FIN 39-1, Amendment of FASB Interpretation No. 39 ("FSP 39-1"). FSP 39-1 amends FIN No. 39, Offsetting of Amounts Related to Certain Contracts ("FIN 39"), to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. FSP 39-1 also amends FIN 39 for certain terminology modifications. FSP 39-1 applies to fiscal years beginning after November 15, 2007. FSP 39-1 will be applied retrospectively, unless it is impracticable to do so. Upon adoption of FSP 39-1, the Company is permitted to change its accounting policy to offset or not offset fair value amounts recognized for derivative instruments under master netting arrangements. The adoption of FSP 39-1 will not have an impact on the Company's financial statements. F-22 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) Business Combinations In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations -- A Replacement of FASB Statement No. 141 ("SFAS 141(r)") and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements -- An Amendment of ARB No. 51 ("SFAS 160") which are effective for fiscal years beginning after December 15, 2008. Under SFAS 141(r) and SFAS 160: - All business combinations (whether full, partial, or "step" acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions. - Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date. - The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date. - Certain acquired contingent liabilities are recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies. - Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. - Noncontrolling interests (formerly known as "minority interests") are valued at fair value at the acquisition date and are presented as equity rather than liabilities. - When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized. - Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions. - When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized. The pronouncements are effective for fiscal years beginning on or after December 15, 2008 and apply prospectively to business combinations. Presentation and disclosure requirements related to noncontrolling interests must be retrospectively applied. The Company is currently evaluating the impact of SFAS 141(r) on its accounting for future acquisitions and the impact of SFAS 160 on its financial statements. Other In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities -- An Amendment of FASB Statement No. 133 ("SFAS 161"). SFAS 161 requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS 161 on its financial statements. In February 2008, the FASB issued FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions ("FSP 140- 3"). FSP 140-3 provides guidance for evaluating whether to account for a transfer of a financial asset and repurchase financing as a single transaction or as two separate transactions. FSP 140-3 is effective prospectively for financial statements issued for fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact of FSP 140-3 on its financial statements. F-23 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) In January 2008, the FASB cleared SFAS 133 Implementation Issue E23, Clarification of the Application of the Shortcut Method ("Issue E23"). Issue E23 amends SFAS 133 by permitting interest rate swaps to have a non-zero fair value at inception, as long as the difference between the transaction price (zero) and the fair value (exit price), as defined by SFAS 157, is solely attributable to a bid-ask spread. In addition, entities would not be precluded from assuming no ineffectiveness in a hedging relationship of interest rate risk involving an interest bearing asset or liability in situations where the hedged item is not recognized for accounting purposes until settlement date as long as the period between trade date and settlement date of the hedged item is consistent with generally established conventions in the marketplace. Issue E23 is effective for hedging relationships designated on or after January 1, 2008. The Company does not expect the adoption of Issue E23 to have a material impact on its financial statements. In December 2007, the FASB ratified as final the consensus on EITF Issue No. 07-6, Accounting for the Sale of Real Estate When the Agreement Includes a Buy-Sell Clause ("EITF 07-6"). EITF 07-6 addresses whether the existence of a buy-sell arrangement would preclude partial sales treatment when real estate is sold to a jointly owned entity. The consensus concludes that the existence of a buy-sell clause does not necessarily preclude partial sale treatment under current guidance. EITF 07-6 applies prospectively to new arrangements entered into and assessments on existing transactions performed in fiscal years beginning after December 15, 2008. The Company does not expect the adoption of EITF 07-6 to have a material impact on its financial statements. 2. INVESTMENTS FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized gain and loss, and estimated fair value of the Company's fixed maturity and equity securities, the percentage that each sector represents by the total fixed maturity securities holdings and by the total equity securities holdings at:
DECEMBER 31, 2007 ------------------------------------------------- COST OR GROSS UNREALIZED AMORTIZED ---------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ---- ---- ---------- ----- (IN MILLIONS) U.S. corporate securities............. $ 825 $ 6 $16 $ 815 40.4% Residential mortgage-backed securities.......................... 459 2 6 455 22.6 Commercial mortgage-backed securities.......................... 289 1 6 284 14.1 U.S. Treasury/agency securities....... 225 3 -- 228 11.3 Foreign corporate securities.......... 136 1 4 133 6.6 Asset-backed securities............... 95 -- 9 86 4.2 Foreign government securities......... 14 2 -- 16 0.8 State and political subdivision securities.......................... -- -- -- -- -- ------ --- --- ------ ----- Total fixed maturity securities..... $2,043 $15 $41 $2,017 100.0% ====== === === ====== ===== Common stock.......................... $ -- $-- $-- $ -- --% Non-redeemable preferred stock........ 21 -- 3 18 100.0 ------ --- --- ------ ----- Total equity securities............. $ 21 $-- $ 3 $ 18 100.0% ====== === === ====== =====
F-24 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED)
DECEMBER 31, 2006 ------------------------------------------------ GROSS COST OR UNREALIZED AMORTIZED --------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ---- ---- ---------- ----- (IN MILLIONS) U.S. corporate securities.............. $ 884 $ 4 $10 $ 878 42.1% Residential mortgage-backed securities........................... 479 4 3 480 23.0 Commercial mortgage-backed securities.. 281 1 5 277 13.3 U.S. Treasury/agency securities........ 231 -- 1 230 11.0 Foreign corporate securities........... 104 -- 1 103 5.0 Asset-backed securities................ 96 -- -- 96 4.6 Foreign government securities.......... 14 2 -- 16 0.8 State and political subdivision securities........................... 4 -- -- 4 0.2 ------ --- --- ------ ----- Total fixed maturities............... $2,093 $11 $20 $2,084 100.0% ====== === === ====== ===== Common stock........................... $ 1 $-- $-- $ 1 100.0% Non-redeemable preferred stock......... -- -- -- -- -- ------ --- --- ------ ----- Total equity securities.............. $ 1 $-- $-- $ 1 100.0% ====== === === ====== =====
The Company held foreign currency derivatives with notional amounts of $8 million to hedge the exchange rate risk associated with foreign denominated fixed maturity securities at both December 31, 2007 and 2006. The Company is not exposed to any significant concentrations of credit risk in its equity securities portfolio. The Company is exposed to concentrations of credit risk related to U.S. Treasury securities and obligations of U.S. government corporations and agencies. Additionally, at December 31, 2007 and 2006, the Company had exposure to fixed maturity securities backed by sub-prime mortgages with estimated fair values of $19 million and $21 million, respectively, and unrealized losses of $7 million and less than $1 million, respectively. These securities are classified within asset-backed securities in the immediately preceding tables. At December 31, 2007, 44% have been guaranteed by financial guarantors, all of which were guaranteed by financial guarantors who remained Aaa rated through March 2008. Overall, at December 31, 2007, $9 million of the estimated fair value of the Company's fixed maturity securities were credit enhanced by financial guarantors, all of which are included within asset-backed securities, and were guaranteed by financial guarantors who remained Aaa rated through March 2008. The Company held fixed maturity securities at estimated fair values that were below investment grade or not rated by an independent rating agency that totaled $88 million and $104 million at December 31, 2007 and 2006, respectively. These securities had net unrealized gains of less than $1 million and $2 million at December 31, 2007 and 2006, respectively. Non-income producing fixed maturity securities were less than $1 million at December 31, 2007. There were no non-income producing fixed maturity securities at December 31, 2006. Net unrealized gains associated with non-income producing fixed maturity securities were less than $1 million at December 31, 2007. F-25 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), are as follows:
DECEMBER 31, ----------------------------------------------- 2007 2006 ---------------------- ---------------------- AMORTIZED ESTIMATED AMORTIZED ESTIMATED COST FAIR VALUE COST FAIR VALUE --------- ---------- --------- ---------- (IN MILLIONS) Due in one year or less................. $ 74 $ 74 $ 72 $ 71 Due after one year through five years... 508 506 537 534 Due after five years through ten years.. 311 306 431 430 Due after ten years..................... 307 306 197 196 ------ ------ ------ ------ Subtotal.............................. 1,200 1,192 1,237 1,231 Mortgage-backed and other asset-backed securities............................ 843 825 856 853 ------ ------ ------ ------ Total fixed maturity securities....... $2,043 $2,017 $2,093 $2,084 ====== ====== ====== ======
Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. Actual maturities may differ from contractual maturities due to the exercise of prepayment options. Sales or disposals of fixed maturity securities classified as available- for-sale are as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 2005 ---- ------ ------ (IN MILLIONS) Proceeds............................................. $657 $1,051 $1,645 Gross investment gains............................... $ 1 $ 4 $ 2 Gross investment losses.............................. $ (6) $ (21) $ (19)
F-26 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) UNREALIZED LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the estimated fair value and gross unrealized loss of the Company's fixed maturity (aggregated by sector) and equity securities in an unrealized loss position, aggregated by length of time that the securities have been in a continuous unrealized loss position at:
DECEMBER 31, 2007 --------------------------------------------------------------------- EQUAL TO OR GREATER THAN LESS THAN 12 MONTHS 12 MONTHS TOTAL --------------------- ----------------------- --------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSS VALUE LOSS VALUE LOSS --------- ---------- --------- ---------- --------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) U.S. corporate securities........... $305 $11 $143 $ 5 $ 448 $16 Residential mortgage-backed securities........................ 215 5 68 1 283 6 Commercial mortgage-backed securities........................ 16 -- 174 6 190 6 U.S. Treasury/agency securities..... -- -- -- -- -- -- Foreign corporate securities........ 78 4 23 -- 101 4 Asset-backed securities............. 51 6 17 3 68 9 State and political subdivision securities........................ -- -- -- -- -- -- ---- --- ---- --- ------ --- Total fixed maturity securities... $665 $26 $425 $15 $1,090 $41 ==== === ==== === ====== === Equity securities................... $ 18 $ 3 $ -- $-- $ 18 $ 3 ==== === ==== === ====== === Total number of securities in an unrealized loss position.......... 154 103 ==== ====
DECEMBER 31, 2006 --------------------------------------------------------------------- EQUAL TO OR GREATER THAN LESS THAN 12 MONTHS 12 MONTHS TOTAL --------------------- ----------------------- --------------------- ESTIMATED GROSS ESTIMATED GROSS ESTIMATED GROSS FAIR UNREALIZED FAIR UNREALIZED FAIR UNREALIZED VALUE LOSS VALUE LOSS VALUE LOSS --------- ---------- --------- ---------- --------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) U.S. corporate securities........... $367 $ 3 $261 $ 7 $ 628 $10 Residential mortgage-backed securities........................ 99 1 114 2 213 3 Commercial mortgage-backed securities........................ 96 1 141 4 237 5 U.S. Treasury/agency securities..... 162 1 3 -- 165 1 Foreign corporate securities........ 50 1 20 -- 70 1 Asset-backed securities............. 20 -- 7 -- 27 -- State and political subdivision securities........................ -- -- 4 -- 4 -- ---- --- ---- --- ------ --- Total fixed maturity securities... $794 $ 7 $550 $13 $1,344 $20 ==== === ==== === ====== === Equity securities................... $ -- $-- $ -- $-- $ -- $-- ==== === ==== === ====== === Total number of securities in an unrealized loss position.......... 179 124 ==== ====
F-27 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) AGING OF GROSS UNREALIZED LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized loss and number of securities for fixed maturity and equity securities, where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:
DECEMBER 31, 2007 ---------------------------------------------------------------- COST OR AMORTIZED GROSS UNREALIZED COST LOSS NUMBER OF SECURITIES -------------------- -------------------- -------------------- LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Less than six months.................. $ 431 $11 $11 $ 4 88 5 Six months or greater but less than nine months......................... 152 -- 7 -- 44 -- Nine months or greater but less than twelve months....................... 119 -- 8 -- 20 -- Twelve months or greater.............. 439 -- 14 -- 101 -- ------ --- --- --- Total............................... $1,141 $11 $40 $ 4 ====== === === ===
DECEMBER 31, 2006 ---------------------------------------------------------------- COST OR AMORTIZED GROSS UNREALIZED COST LOSS NUMBER OF SECURITIES -------------------- -------------------- -------------------- LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Less than six months.................. $ 695 $-- $ 5 $-- 136 -- Six months or greater but less than nine months......................... 41 -- 1 -- 21 -- Nine months or greater but less than twelve months....................... 65 -- 1 -- 22 -- Twelve months or greater.............. 563 -- 13 -- 124 -- ------ --- --- --- Total............................... $1,364 $-- $20 $-- ====== === === ===
At December 31, 2007 and 2006, $40 million and $20 million, respectively, of unrealized losses related to securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 4% and 1%, respectively, of the cost or amortized cost of such securities. At December 31, 2007, $4 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 36% of the cost or amortized cost of such securities. All such unrealized losses related to securities that were in an unrealized loss position for a period of less than six months. At December 31, 2006, there were no unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost. F-28 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) At December 31, 2007 and 2006, the Company had $44 million and $20 million, respectively, of gross unrealized losses related to its fixed maturity and equity securities. These securities are concentrated, calculated as a percentage of gross unrealized loss, as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- SECTOR: U.S. corporate securities.................................... 36% 50% Asset-backed securities...................................... 20 -- Commercial mortgage-backed securities........................ 14 25 Residential mortgage-backed securities....................... 14 15 Foreign corporate securities................................. 9 5 U.S. Treasury/agency securities.............................. -- 5 Other........................................................ 7 -- --- --- Total...................................................... 100% 100% === === INDUSTRY: Finance...................................................... 35% 12% Mortgage-backed.............................................. 28 40 Industrial................................................... 13 31 Utility...................................................... 3 11 Government................................................... -- 5 Other........................................................ 21 1 --- --- Total...................................................... 100% 100% === ===
As described more fully in Note 1, the Company performs a regular evaluation, on a security-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such securities are other-than-temporarily impaired. One of the criteria which the Company considers in its other-than-temporary impairment analysis is its intent and ability to hold securities for a period of time sufficient to allow for the recovery of their value to an amount equal to or greater than cost or amortized cost. The Company's intent and ability to hold securities considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company's need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security and that security is not expected to recover prior to the expected time of sale, the security will be deemed other-than- temporarily impaired in the period that the sale decision was made and an other- than-temporary impairment loss will be recognized. Based upon the Company's current evaluation of the securities in accordance with its impairment policy, the cause of the decline being principally attributable to the general rise in interest rates during the holding period, and the Company's current intent and ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover, the Company has concluded that the aforementioned securities are not other-than-temporarily impaired. F-29 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) SECURITIES LENDING The Company participates in a securities lending program whereby blocks of securities, which are included in fixed maturity and equity securities, are loaned to third parties, primarily major brokerage firms. The Company requires a minimum of 102% of the fair value of the loaned securities to be separately maintained as collateral for the loans. Securities with a cost or amortized cost of $523 million and $515 million and an estimated fair value of $525 million and $511 million were on loan under the program at December 31, 2007 and 2006, respectively. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $541 million and $529 million at December 31, 2007 and 2006, respectively. There was no security collateral on deposit from customers in connection with the securities lending transactions at December 31, 2007 and 2006. ASSETS ON DEPOSIT AND ASSETS PLEDGED AS COLLATERAL The Company had investment assets on deposit with regulatory agencies with a fair market value of $7 million and $13 million at December 31, 2007 and 2006, respectively, consisting primarily of fixed maturity securities. Certain of the Company's fixed maturity securities are pledged as collateral for various derivative transactions as described in Note 3. MORTGAGE LOANS ON REAL ESTATE Mortgage loans on real estate are categorized as follows:
DECEMBER 31, ----------------------------------- 2007 2006 ---------------- ---------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- (IN MILLIONS) Agricultural mortgage loans................... $40 54% $43 48% Commercial mortgage loans..................... 34 46 47 52 --- --- --- --- Total mortgage loans on real estate......... $74 100% $90 100% === === === ===
Mortgage loans on real estate are collateralized by properties located in the United States. At December 31, 2007, 20%, 17% and 15% of the value of the Company's mortgage loans on real estate were collateralized by property located in District of Columbia, Alabama and California, respectively. Generally, the Company, as the lender, only loans up to 75% of the purchase price of the underlying real estate. Information regarding loan valuation allowances for mortgage loans on real estate is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Balance at January 1,................................. $-- $-- $ 1 Deductions............................................ -- -- (1) --- --- --- Balance at December 31,............................... $-- $-- $-- === === ===
F-30 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) NET INVESTMENT INCOME The components of net investment income are as follows:
YEARS ENDED DECEMBER 31, ------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Fixed maturity securities.............................. $118 $119 $114 Equity securities...................................... 1 -- -- Mortgage loans on real estate.......................... 5 5 9 Policy loans........................................... 2 2 3 Other limited partnership interests.................... 1 1 -- Cash, cash equivalents and short-term investments...... 8 7 6 ---- ---- ---- Total investment income.............................. 135 134 132 Less: Investment expenses.............................. 31 28 18 ---- ---- ---- Net investment income................................ $104 $106 $114 ==== ==== ====
For each of the years ended December 31, 2007 and 2006, affiliated investment expenses of $1 million are included in the table above. For the year ended December 31, 2005, there were no affiliated investment expenses. See Related Party Investment Transactions for discussion of affiliated net investment income related to short-term investments included in the table above. NET INVESTMENT GAINS (LOSSES) The components of net investment gains (losses) are as follows:
YEARS ENDED DECEMBER 31, ------------------------ AS RESTATED, SEE NOTE 13 -------------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Fixed maturity securities........................... $ (6) $(17) $(17) Equity securities................................... (1) -- -- Mortgage loans on real estate....................... -- -- 1 Other limited partnership interests................. -- (1) -- Derivatives......................................... 106 (42) 3 ---- ---- ---- Net investment gains (losses)..................... $ 99 $(60) $(13) ==== ==== ====
For the years ended December 31, 2007, 2006 and 2005, affiliated net investment gains (losses) of $110 million, ($38) million and ($8) million, respectively, are included in the table above. The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to declines in fair value occurring in the period of the disposition or are as a result of management's decision to sell securities based on current conditions or the Company's need to shift the portfolio to maintain its portfolio management objectives. For the year ended December 31, 2007, the Company recorded losses of $2 million from fixed maturity and equity securities deemed other-than-temporarily impaired which were included within net investment gains (losses). Losses from fixed maturity and equity securities deemed other-than-temporarily impaired, included within net investment gains (losses), were less than $1 million for each of the years ended December 31, 2006 and 2005. F-31 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) NET UNREALIZED INVESTMENT GAINS (LOSSES) The components of net unrealized investment gains (losses), included in accumulated other comprehensive loss, are as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Fixed maturity securities............................ $(26) $(9) $(9) Equity securities.................................... (3) -- -- ---- --- --- Subtotal........................................... (29) (9) (9) ---- --- --- Amounts allocated from DAC and VOBA.................. 8 4 3 Deferred income tax.................................. 7 2 2 ---- --- --- Subtotal........................................... 15 6 5 ---- --- --- Net unrealized investment gains (losses)............. $(14) $(3) $(4) ==== === ===
The changes in net unrealized investment gains (losses) are as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Balance, January 1,.................................. $ (3) $(4) $ 6 Unrealized investment gains (losses) during the year............................................... (20) -- (25) Unrealized investment gains (losses) relating to: DAC and VOBA....................................... 4 1 10 Deferred income tax................................ 5 -- 5 ---- --- ---- Balance, December 31,................................ $(14) $(3) $ (4) ==== === ==== Net change in unrealized investment gains (losses)... $(11) $ 1 $(10) ==== === ====
VARIABLE INTEREST ENTITIES The following table presents the total assets of and maximum exposure to loss relating to variable interest entities ("VIEs") for which the Company has concluded that it holds significant variable interests but it is not the primary beneficiary and which have not been consolidated:
DECEMBER 31, 2007 ----------------------- NOT PRIMARY BENEFICIARY ----------------------- MAXIMUM TOTAL EXPOSURE TO ASSETS(1) LOSS(2) --------- ----------- (IN MILLIONS) Trust preferred securities(3).......................... $500 $20 ---- --- Total................................................ $500 $20 ==== ===
- -------- (1) The assets of the trust preferred securities are reflected at the carrying amounts at which such assets would have been reflected on the Company's balance sheet had the Company consolidated the VIE from the date of its initial investment in the entity. F-32 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) (2) The maximum exposure to loss relating to trust preferred securities is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by other partners. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. (3) Trust preferred securities are complex, uniquely structured investments which contain features of both equity and debt, may have an extended or no stated maturity, and may be callable at the issuer's option after a defined period of time. RELATED PARTY INVESTMENT TRANSACTIONS As of December 31, 2007 and 2006, the Company held $70 million and $77 million, respectively, of its total invested assets in the MetLife Intermediate Income Pool, an affiliated partnership. These amounts are included in short-term investments. Net investment income from these invested assets was $4 million, $3 million and $3 million for the years ended December 31, 2007, 2006 and 2005, respectively. In the normal course of business, the Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Assets transferred to and from affiliates, inclusive of amounts related to reinsurance agreements, are as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Estimated fair value of assets transferred to affiliates......................................... $23 $127 $-- Amortized cost of assets transferred to affiliates... $23 $129 $-- Net investment gains (losses) recognized on transfers.......................................... $-- $ (2) $-- Estimated fair value of assets transferred from affiliates......................................... $-- $ 21 $ 4
3. DERIVATIVE FINANCIAL INSTRUMENTS TYPES OF DERIVATIVE FINANCIAL INSTRUMENTS The following table presents the notional amount and current market or fair value of derivative financial instruments held at:
DECEMBER 31, 2007 DECEMBER 31, 2006 ------------------------------- ------------------------------- CURRENT MARKET CURRENT MARKET OR FAIR VALUE OR FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate swaps............. $ 9 $-- $-- $ 2 $-- $-- Interest rate floors............ 2,460 27 -- 2,460 15 -- Foreign currency swaps.......... 8 1 -- 8 -- -- Financial forwards.............. -- -- -- -- -- 1 Credit default swaps............ 30 -- -- 30 -- -- ------ --- --- ------ --- --- Total......................... $2,507 $28 $-- $2,500 $15 $ 1 ====== === === ====== === ===
The above table does not include notional amounts for equity variance swaps. At both December 31, 2007 and 2006, the Company owned 2,500 equity variance swaps. Fair values of equity variance swaps are included in financial forwards in the preceding table. F-33 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The following table presents the notional amount of derivative financial instruments by maturity at December 31, 2007:
REMAINING LIFE ---------------------------------------------------------------------- ONE YEAR AFTER ONE YEAR AFTER FIVE YEARS AFTER OR LESS THROUGH FIVE YEARS THROUGH TEN YEARS TEN YEARS TOTAL -------- ------------------ ----------------- --------- ------ (IN MILLIONS) Interest rate swaps...... $-- $ 9 $ -- $-- $ 9 Interest rate floors..... -- -- 2,460 -- 2,460 Foreign currency swaps... -- -- -- 8 8 Credit default swaps..... -- 30 -- -- 30 --- --- ------ --- ------ Total.................. $-- $39 $2,460 $ 8 $2,507 === === ====== === ======
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. Interest rate floors are used by the Company primarily to protect its minimum rate guarantee liabilities against declines in interest rates below a specified level. Foreign currency swaps are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a forward exchange rate calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the inception and termination of the currency swap by each party. Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. Equity variance swaps are included in financial forwards in the preceding table. Credit default swaps are used by the Company to hedge against credit- related changes in the value of its investments and to diversify its credit risk exposure in certain portfolios. In a credit default swap transaction, the Company agrees with another party, at specified intervals, to pay a premium to insure credit risk. If a credit event, as defined by the contract, occurs, generally the contract will require the swap to be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. F-34 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) HEDGING The following table presents the notional amount and fair value of derivatives by type of hedge designation at:
DECEMBER 31, 2007 DECEMBER 31, 2006 ------------------------------- ------------------------------- FAIR VALUE FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Fair value...................... $ 8 $ 1 $-- $ -- $-- $-- Cash flow....................... 4 -- -- 8 -- -- Non-qualifying.................. 2,495 27 -- 2,492 15 1 ------ --- --- ------ --- --- Total......................... $2,507 $28 $-- $2,500 $15 $ 1 ====== === === ====== === ===
The Company recognized insignificant net investment income (expense) from settlement payments related to qualifying hedges for the years ended December 31, 2007 and 2006. The Company did not have any qualifying hedges for the year ended December 31, 2005. The Company recognized insignificant net investment gains (losses) from settlement payments related to non-qualifying hedges for the years ended December 31, 2007 and 2006. The Company recognized net investment gains (losses) from settlement payments related to non-qualifying hedges of $1 million for the year ended December 31, 2005. FAIR VALUE HEDGES The Company designates and accounts for interest rate swaps to convert fixed rate investments to floating rate investments as fair value hedges when they have met the requirements of SFAS 133. The Company recognized insignificant amounts in net investment gains (losses) representing the ineffective portion of all fair value hedges for the year ended December 31, 2007. The Company did not have any fair value hedges during the years ended December 31, 2006 and 2005. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge. CASH FLOW HEDGES The Company designates and accounts for foreign currency swaps used to hedge the foreign currency cash flow exposure of foreign currency denominated investments and liabilities as cash flow hedges, when they have met the requirements of SFAS 133. For each of the years ended December 31, 2007 and 2006, the Company recognized no net investment gains (losses) as the ineffective portion of all cash flow hedges. For the year ended December 31, 2005, the Company had no cash flow hedges. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date or in the additional time period permitted by SFAS 133. There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments for the years ended December 31, 2007, 2006 and 2005. For the years ended December 31, 2007, 2006 and 2005, the net amount deferred in other comprehensive income (loss) relating to cash flow hedges was insignificant. At December 31, 2007, 2006 and 2005, the net amount accumulated in other comprehensive income (loss) relating to cash flow hedges was insignificant. F-35 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) At December 31, 2007, an insignificant amount of the deferred net gains (losses) on derivatives accumulated in other comprehensive income (loss) is expected to be reclassified to earnings during the year ending December 31, 2008. NON-QUALIFYING DERIVATIVES AND DERIVATIVES FOR PURPOSES OTHER THAN HEDGING The Company enters into the following derivatives that do not qualify for hedge accounting under SFAS 133 or for purposes other than hedging: (i) interest rate swaps and purchased floors to economically hedge its exposure to interest rate volatility; (ii) foreign currency swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to economically hedge exposure to adverse movements in credit; and (iv) equity variance swaps to economically hedge liabilities embedded in certain variable annuity products. The following table presents changes in fair value related to derivatives that do not qualify for hedge accounting:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Net investment gains (losses), excluding embedded derivatives........................................ $15 $(12) $10
EMBEDDED DERIVATIVES The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts include guaranteed minimum withdrawal contracts and guaranteed minimum accumulation contracts. The following table presents the fair value of the Company's embedded derivatives at:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Embedded derivative assets................................... $56 $-- Embedded derivative liabilites............................... $-- $37
The following table presents changes in fair value related to embedded derivatives:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Net investment gains (losses)........................ $91 $(30) $(7)
CREDIT RISK The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company's derivative contracts is limited to the fair value at the reporting date. The credit exposure of the Company's derivative transactions is represented by the fair value of contracts with a net positive fair value at the reporting date. The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit related losses in the event of nonperformance by counterparties to such derivative instruments. F-36 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) In addition, the Company may have exchange traded futures, which require the pledging of collateral. At both December 31, 2007 and 2006, the Company pledged collateral of $3 million, which is included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral. 4. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Information regarding DAC and VOBA is as follows:
DAC VOBA TOTAL ---- ---- ----- (IN MILLIONS) Balance at January 1, 2005............................. $391 $182 $573 Capitalizations...................................... 66 -- 66 ---- ---- ---- Subtotal.......................................... 457 182 639 ---- ---- ---- Less: Amortization related to: Net investment gains (losses), as restated, see Note 13......................................... (2) -- (2) Unrealized investment gains (losses).............. (4) (6) (10) Other expenses, as restated, see Note 13.......... 22 25 47 ---- ---- ---- Total amortization.............................. 16 19 35 ---- ---- ---- Balance at December 31, 2005, as restated, see Note 13................................................... 441 163 604 Capitalizations...................................... 80 -- 80 ---- ---- ---- Subtotal.......................................... 521 163 684 ---- ---- ---- Less: Amortization related to: Net investment gains (losses), as restated, see Note 13......................................... (13) (3) (16) Unrealized investment gains (losses).............. -- (1) (1) Other expenses, as restated, see Note 13.......... 85 (17) 68 ---- ---- ---- Total amortization.............................. 72 (21) 51 ---- ---- ---- Balance at December 31, 2006, as restated, see Note 13................................................... 449 184 633 Capitalizations...................................... 89 -- 89 ---- ---- ---- Subtotal.......................................... 538 184 722 ---- ---- ---- Less: Amortization related to: Net investment gains (losses)..................... 34 6 40 Unrealized investment gains (losses).............. (3) (1) (4) Other expenses.................................... 63 25 88 ---- ---- ---- Total amortization.............................. 94 30 124 ---- ---- ---- Balance at December 31, 2007........................... $444 $154 $598 ==== ==== ====
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $19 million in 2008, $17 million in 2009, $15 million in 2010, $13 million in 2011 and $13 million in 2012. Amortization of VOBA and DAC is related to: (i) investment gains and losses and the impact of such gains and losses on the amount of the amortization; (ii) unrealized investment gains and losses to provide information regarding the amount that would have been amortized if such gains and losses had been recognized; and (iii) other F-37 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) expenses to provide amounts related to the gross profits originating from transactions other than investment gains and losses. 5. INSURANCE INSURANCE LIABILITIES Insurance liabilities are as follows:
DECEMBER 31, ------------------------------------------------ FUTURE POLICYHOLDER OTHER POLICY ACCOUNT POLICYHOLDER BENEFITS BALANCES FUNDS ----------- --------------- ---------------- 2007 2006 2007 2006 2007 2006 ---- ---- ------ ------ ---- ---- (IN MILLIONS) Traditional life.................... $ 8 $ 7 $ -- $ -- $-- $-- Universal variable life............. -- -- 134 137 3 4 Annuities........................... 284 281 2,033 2,406 31 27 ---- ---- ------ ------ --- --- Total............................. $292 $288 $2,167 $2,543 $34 $31 ==== ==== ====== ====== === ===
SALES INDUCEMENTS Information regarding deferred sales inducements, which are reported in other assets, is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Balance at January 1,................................ $80 $ 75 $59 Capitalization....................................... 19 19 19 Amortization......................................... (9) (14) (3) --- ---- --- Balance at December 31,.............................. $90 $ 80 $75 === ==== ===
SEPARATE ACCOUNTS Separate account assets and liabilities consist of pass-through separate accounts totaling $9,432 million and $8,757 million at December 31, 2007 and 2006, respectively, for which the policyholder assumes all investment risk. Fees charged to the separate accounts by the Company (including mortality charges, policy administration fees and surrender charges) are reflected in the Company's revenues as universal life and investment-type product policy fees and totaled $138 million, $115 million and $93 million for the years ended December 31, 2007, 2006 and 2005, respectively. For each of the years ended December 31, 2007, 2006 and 2005, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. GUARANTEES The Company issues annuity contracts which may include contractual guarantees to the contractholder for: (i) return of no less than total deposits made to the contract less any partial withdrawals ("return of net deposits"); and (ii) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary, or total deposits made to the contract less any partial withdrawals plus a minimum return ("anniversary F-38 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) contract value" or "minimum return"). These guarantees include benefits that are payable in the event of death or at annuitization. Information regarding the types of guarantees relating to annuity contracts is as follows:
AT DECEMBER 31, --------------------------------------------------------------- 2007 2006 ------------------------------ ------------------------------ IN THE AT IN THE AT EVENT OF DEATH ANNUITIZATION EVENT OF DEATH ANNUITIZATION -------------- ------------- -------------- ------------- (IN MILLIONS) ANNUITY CONTRACTS(1) RETURN OF NET DEPOSITS Separate account value................ $ 2,635 N/A $ 1,941 N/A Net amount at risk(2)................. $ 10(3) N/A $ 1(3) N/A Average attained age of contractholders..................... 60 years N/A 65 years N/A ANNIVERSARY CONTRACT VALUE OR MINIMUM RETURN Separate account value................ $ 8,070 $ 5,516 $ 8,072 $ 5,157 Net amount at risk(2)................. $ 225(3) $ 89(4) $ 151(3) $ 18(4) Average attained age of contractholders..................... 63 years 62 years 65 years 61 years
- -------- (1) The Company's annuity contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2) The net amount at risk is based on the direct amount at risk (excluding reinsurance). (3) The net amount at risk for guarantees of amounts in the event of death is defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. (4) The net amount at risk for guarantees of amounts at annuitization is defined as the present value of the minimum guaranteed annuity payments available to the contractholder determined in accordance with the terms of the contract in excess of the current account balance. Information regarding the liabilities for guarantees (excluding base policy liabilities) relating to annuity contracts is as follows:
ANNUITY CONTRACTS ------------- GUARANTEED ANNUITIZATION BENEFITS ------------- Balance at January 1, 2005................................... $-- Incurred guaranteed benefits................................. -- Paid guaranteed benefits..................................... -- --- Balance at December 31, 2005................................. -- Incurred guaranteed benefits................................. -- Paid guaranteed benefits..................................... -- --- Balance at December 31, 2006................................. -- Incurred guaranteed benefits................................. 8 Paid guaranteed benefits..................................... -- --- Balance at December 31, 2007................................. $ 8 ===
F-39 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) Excluded from the table above are guaranteed annuitization benefit liabilities on the Company's annuity contracts of $21 million, $24 million and $17 million at December 31, 2007, 2006 and 2005, respectively, which were reinsured 100% to an affiliate and had corresponding recoverables from affiliated reinsurers related to such guarantee liabilities. Account balances of contracts with insurance guarantees are invested in separate account asset classes as follows:
AT DECEMBER 31, --------------- 2007 2006 ------ ------ (IN MILLIONS) Mutual Fund Groupings Equity.................................................. $4,670 $7,550 Bond.................................................... 445 499 Balanced................................................ 4,073 454 Money Market............................................ 125 107 Specialty............................................... 58 93 ------ ------ Total................................................ $9,371 $8,703 ====== ======
6. REINSURANCE The Company's life insurance operations participate in reinsurance activities in order to limit losses, minimize exposure to large risks, and provide additional capacity for future growth. The Company has historically reinsured the mortality risk on new individual life insurance policies primarily on an excess of retention basis or a quota share basis. Starting in 2002, the Company reinsured up to 90% of the mortality risk for all new individual life insurance policies. During 2005, the Company changed its retention practices for individual life insurance. Amounts reinsured in prior years remain reinsured under the original reinsurance; however, under the new retention guidelines, the Company retains up to $100,000 per life and reinsures 100% of amounts in excess of the Company's retention limits. The Company evaluates its reinsurance programs routinely and may increase or decrease its retention at any time. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specific characteristics. In addition to reinsuring mortality risk as described previously, the Company reinsures other risks, as well as specific coverages. The Company routinely reinsures certain classes of risks in order to limit its exposure to particular travel, avocation and lifestyle hazards. The Company has exposure to catastrophes, which could contribute to significant fluctuations in the Company's results of operations. The Company uses excess of retention and quota share reinsurance arrangements to provide greater diversification of risk and minimize exposure to larger risks. The Company reinsures 90% of its new production of fixed annuities to an affiliate. The Company currently reinsures 100% of its new production of riders containing benefit guarantees related to variable annuities to an affiliate. The Company reinsures its business through a diversified group of reinsurers. No single unaffiliated reinsurer has a material obligation to the Company nor is the Company's business substantially dependent upon any reinsurance contracts. The Company is contingently liable with respect to ceded reinsurance should any reinsurer be unable to meet its obligations under these agreements. F-40 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) The amounts in the statements of income are presented net of reinsurance ceded. Information regarding the effect of reinsurance is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Direct premiums earned............................... $13 $65 $122 Reinsurance ceded.................................... (1) -- -- --- --- ---- Net premiums earned.................................. $12 $65 $122 === === ====
Unaffiliated reinsurance recoverables, included in premiums and other receivables, were insignificant at both December 31, 2007 and 2006. Unaffiliated reinsurance and ceded commissions payables, included in other liabilities, were insignificant at both December 31, 2007 and 2006. RELATED PARTY REINSURANCE TRANSACTIONS The Company has reinsurance agreements with certain MetLife subsidiaries including Exeter Reassurance Company, Ltd., MLIC and Reinsurance Group of America, Incorporated. At December 31, 2007, the Company had reinsurance-related assets and liabilities from these agreements totaling $877 million and $5 million, respectively. At December 31, 2006, comparable assets and liabilities were $978 million and $8 million, respectively. The following table reflects the related party reinsurance information recorded in income for the:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Ceded fees, included in universal life and investment- type product policy fees............................ $38 $33 $28 Interest earned on ceded reinsurance, included in other revenues...................................... $45 $45 $47 Ceded benefits, included in policyholder benefits and claims.............................................. $ 7 $ 8 $ 8 Interest costs on ceded reinsurance, included in other expenses............................................ $(2) $(2) $(3)
The Company has ceded risks related to guaranteed minimum benefit riders written by the Company to another affiliate. The guaranteed minimum benefit riders directly written by the Company are embedded derivatives and changes in their fair value are included within net investment gains (losses). The ceded reinsurance agreements also contain embedded derivatives and changes in their fair value are also included within net investment gains (losses). The ceded amounts, included in net investment gains (losses), were $110 million, ($36) million and ($8) million for the years ended December 31, 2007, 2006 and 2005, respectively. F-41 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) 7. INCOME TAXES The provision (benefit) for income tax is as follows:
YEARS ENDED DECEMBER 31, --------------------------- AS RESTATED, SEE NOTE 13 -------------------- 2007 2006 2005 ---- ------------- ---- (IN MILLIONS) Current: Federal............................................ $(4) $(81) $ 4 Deferred: Federal............................................ 27 64 (1) --- ---- --- Provision (benefit) for income tax................... $23 $(17) $ 3 === ==== ===
The reconciliation of the income tax provision (benefit) at the U.S. statutory rate to the provision (benefit) for income tax as reported is as follows:
YEARS ENDED DECEMBER 31, --------------------------- AS RESTATED, SEE NOTE 13 -------------------- 2007 2006 2005 ---- ------------- ---- (IN MILLIONS) Tax provision at U.S. statutory rate................. $33 $ (4) $ 9 Tax effect of: Tax-exempt investment income....................... (9) (9) (6) Prior year tax..................................... (2) (3) -- Other.............................................. 1 (1) -- --- ---- --- Provision (benefit) for income tax................... $23 $(17) $ 3 === ==== ===
F-42 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following:
DECEMBER 31, -------------------- AS RESTATED, SEE NOTE 13 ------------ 2007 2006 ----- ------------ (IN MILLIONS) Deferred income tax assets: Policyholder liabilities and receivables.............. $ 73 $103 Tax credit carryforwards.............................. -- 2 Net unrealized investment losses...................... 7 2 Other, net............................................ 1 5 ----- ---- 81 112 ----- ---- Deferred income tax liabilities: Investments........................................... 13 10 DAC................................................... 184 196 ----- ---- 197 206 ----- ---- Net deferred income tax liability....................... $(116) $(94) ===== ====
A valuation allowance is provided when it is more likely than not that some portion of the deferred income tax assets will not be realized. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the remaining deferred income tax assets. Effective January 1, 2006, the Company joined with MetLife and its includable affiliates in filing a federal income tax return. The Company participates in a tax sharing agreement with MetLife. Under the agreement, current federal income tax expense (benefit) is computed on a separate return basis and provides that members shall make payments or receive reimbursements to the extent that their income (loss) contributes to or reduces consolidated federal tax expense. The consolidating companies are reimbursed for net operating losses or other tax attributes they have generated when utilized in the consolidated return. Pursuant to the tax sharing agreement, the amount due from affiliates is $2 million and $82 million as of December 31, 2007 and 2006, respectively. The Company files income tax returns with the U.S. federal government and various state and local jurisdictions. The Company is under continuous examination by the Internal Revenue Service ("IRS") and other tax authorities in jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction. With a few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2003. The Company believes that any adjustments that might be required for open years will not have a material effect on the Company's financial statements. As a result of the implementation of FIN 48, the Company recognized a $5 million decrease in the liability for unrecognized tax benefits and a corresponding increase to the January 1, 2007 balance of retained earnings. Upon adoption of FIN 48, the Company did not have any unrecognized tax benefits. On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which announced its intention to issue regulations with respect to certain computational aspects of the Dividends Received Deduction ("DRD") on separate account assets held in connection with variable annuity contracts. Revenue Ruling 2007-61 suspended a revenue ruling issued in August 2007 that would have changed accepted industry and IRS interpretations of the F-43 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) statutes governing these computational questions. Any regulations that the IRS ultimately proposes for issuance in this area will be subject to public notice and comment, at which time insurance companies and other interested parties will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown at this time. For the year ended December 31, 2007, the Company recognized an income tax benefit of $9 million related to the separate account DRD. 8. CONTINGENCIES, COMMITMENTS AND GUARANTEES CONTINGENCIES LITIGATION The Company has faced claims alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. The Company continues to vigorously defend against the claims in all pending matters. Some sales practices claims may be resolved through settlement. Other sales practices claims may be won by dispositive motion or may go to trial. The current cases may seek substantial damages, including in some cases punitive and treble damages and attorneys' fees. Additional litigation relating to the Company's marketing and sales of individual life insurance, annuities, mutual funds or other products may be commenced in the future. Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company's financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, employer, investor, investment advisor or taxpayer. Further, federal, state or industry regulatory or governmental authorities may conduct investigations, serve subpoenas or make other inquiries concerning a wide variety of issues, including the Company's compliance with applicable insurance and other laws and regulations. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses. In some of the matters, large and/or indeterminate amounts, including punitive and treble damages, may be sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's financial position, based on information currently known by the Company's management, in its opinion, the outcomes of pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts that may be sought in certain matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's net income or cash flows. INSOLVENCY ASSESSMENTS Most of the jurisdictions in which the Company is admitted to transact business require insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. Assessments levied against the Company were less than $1 million for each of the years ended December 31, 2007, 2006 and 2005. At December 31, 2007 and 2006, the Company maintained a liability of $8 million and $12 million, respectively. The related asset for premium tax offsets was $800 thousand and $400 thousand at December 31, 2007 and 2006, respectively, for undiscounted future assessments in respect of impaired, insolvent or failed insurers. At December 31, 2007 and 2006, the Company also held a receivable of $7 million and $10 million, respectively, recorded in other assets, for reimbursement of assessments incurred in a prior acquisition. F-44 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) COMMITMENTS COMMITMENTS TO FUND PRIVATE CORPORATE BOND INVESTMENTS The Company commits to lend funds under private corporate bond investments. At December 31, 2007, there were no unfunded commitments. The amount of these unfunded commitments was $8 million at December 31, 2006. GUARANTEES In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company's interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. The Company had no liability for indemnities, guarantees and commitments at December 31, 2007 and 2006. 9. EQUITY STATUTORY EQUITY AND INCOME The Company's state of domicile imposes minimum risk-based capital ("RBC") requirements that were developed by the National Association of Insurance Commissioners ("NAIC"). The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The Company exceeded the minimum RBC requirements for all periods presented herein. The NAIC adopted the Codification of Statutory Accounting Principles ("Codification") in 2001. Codification was intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. The Missouri State Department of Insurance ("the Department") has adopted Codification with certain modifications for the preparation of statutory financial statements of insurance companies domiciled in Missouri. Modifications by state insurance departments may impact the effect of the Codification on the statutory surplus and capital of the Company. F-45 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant assets not admitted by the Company are net deferred income tax assets resulting from temporary differences between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within a year. Statutory net income of the Company, as filed with the Department, was $40 million, $116 million and $5 million for the years ended December 31, 2007, 2006 and 2005, respectively. Statutory capital and surplus, as filed with the Department, was $329 million and $284 million at December 31, 2007 and 2006, respectively. DIVIDEND RESTRICTIONS Under Missouri State Insurance Law, the maximum amount of dividends the Company is permitted, without prior insurance regulatory clearance, to pay is the greater of: (i) 10% of its surplus to policyholders as of the immediately preceding calendar year or (ii) its statutory net gain from operations for the immediately preceding year (excluding realized investment gains). However, dividends may only be paid from positive balances in statutory unassigned funds. Since the Company's statutory unassigned funds surplus is less than zero, no dividends are permissible in 2008 without prior approval of the Missouri Commissioner of Insurance. OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the reclassification adjustments required for the years ended December 31, 2007, 2006 and 2005 in other comprehensive income (loss) that are included as part of net income for the current year that have been reported as a part of other comprehensive income (loss) in the current or prior year:
YEARS ENDED DECEMBER 31, --------------------------- 2007 2006 2005 ---- ------------- ---- (IN MILLIONS) Holding losses on investments arising during the year.............................................. $(27) $(22) $(50) Income tax effect of holding gains (losses)......... 9 8 17 Reclassification adjustments: Recognized holding (gains) losses included in current year income............................ 7 18 16 Amortization of premiums and accretion of discounts associated with investments.......... -- 4 9 Income tax effect................................... (3) (8) (9) Allocation of holding gains on investments relating to other policyholder amounts..................... 4 1 10 Income tax effect of allocation of holding gains to other policyholder amounts........................ (1) -- (3) ---- ---- ---- Other comprehensive income (loss)................... $(11) $ 1 $(10) ==== ==== ====
F-46 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) 10. OTHER EXPENSES Information on other expenses is as follows:
YEARS ENDED DECEMBER 31, ------------------ AS RESTATED, SEE NOTE 13 ----------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Compensation........................................... $ -- $ 1 $ 1 Commissions............................................ 95 82 71 Amortization of DAC and VOBA........................... 128 52 45 Capitalization of DAC.................................. (89) (80) (66) Insurance tax.......................................... 3 3 4 Other.................................................. 68 64 56 ---- ---- ---- Total other expenses................................. $205 $122 $111 ==== ==== ====
For the years ended December 31, 2007, 2006 and 2005, commissions and capitalization of DAC include the impact of affiliated reinsurance transactions. See Note 6. See also Note 12 for discussion of affiliated expenses included in the table above. 11. FAIR VALUE INFORMATION The estimated fair value of financial instruments has been determined by using available market information and the valuation methodologies described below. Considerable judgment is often required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein may not necessarily be indicative of amounts that could be realized in a current market exchange. The use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. The implementation of SFAS 157 may impact the fair value assumptions and methodologies associated with the valuation of assets and liabilities. See also Note 1 regarding the adoption of SFAS 157. Amounts related to the Company's financial instruments are as follows:
NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE -------- -------- ---------- (IN MILLIONS) DECEMBER 31, 2007 Assets: Fixed maturity securities...................... $2,017 $2,017 Equity securities.............................. $ 18 $ 18 Mortgage loans on real estate.................. $ 74 $ 76 Policy loans................................... $ 29 $ 29 Short-term investments......................... $ 74 $ 74 Cash and cash equivalents...................... $ 81 $ 81 Accrued investment income...................... $ 20 $ 20 Liabilities: Policyholder account balances.................. $2,033 $1,956 Payables for collateral under securities loaned transactions................................ $ 541 $ 541
F-47 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED)
NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE -------- -------- ---------- (IN MILLIONS) DECEMBER 31, 2006 Assets: Fixed maturity securities...................... $2,084 $2,084 Equity securities.............................. $ 1 $ 1 Mortgage loans on real estate.................. $ 90 $ 90 Policy loans................................... $ 28 $ 28 Short-term investments......................... $ 83 $ 83 Cash and cash equivalents...................... $ 117 $ 117 Accrued investment income...................... $ 22 $ 22 Commitments to fund private corporate bond investments................................. $8 $ -- $ -- Liabilities: Policyholder account balances.................. $2,406 $2,300 Payables for collateral under securities loaned transactions................................ $ 529 $ 529
The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: FIXED MATURITY SECURITIES AND EQUITY SECURITIES The fair values of publicly held fixed maturity securities and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases where quoted market prices are not available, such as for private fixed maturity securities, fair values are estimated using present value or valuation techniques. The determination of fair values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include: coupon rate, maturity, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of comparable securities. MORTGAGE LOANS ON REAL ESTATE AND COMMITMENTS TO FUND PRIVATE CORPORATE BOND INVESTMENTS Fair values for mortgage loans on real estate are estimated by discounting expected future cash flows, using current interest rates for similar loans with similar credit risk. For commitments to fund private corporate bond investments, the estimated fair value is the net premium or discount of the commitments. POLICY LOANS The carrying values for policy loans approximate fair value. CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS The carrying values for cash and cash equivalents and short-term investments approximate fair values due to the short-term maturities of these instruments. F-48 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) ACCRUED INVESTMENT INCOME The carrying value for accrued investment income approximates fair value. POLICYHOLDER ACCOUNT BALANCES The fair value of policyholder account balances which have final contractual maturities are estimated by discounting expected future cash flows based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the agreements being valued. The fair value of policyholder account balances without final contractual maturities are assumed to equal their current net surrender value. PAYABLES FOR COLLATERAL UNDER SECURITIES LOANED TRANSACTIONS The carrying value for payables for collateral under securities loaned transactions approximates fair value. DERIVATIVE FINANCIAL INSTRUMENTS The fair value of derivative financial instruments are based upon quotations obtained from dealers or other reliable sources. See Note 3 for derivative fair value disclosures. 12. RELATED PARTY TRANSACTIONS SERVICE AGREEMENTS The Company has entered into a Master Service Agreement with MLIC which provides administrative, accounting, legal and similar services to the Company. MLIC charged the Company $11 million, $11 million and $9 million, included in other expenses, for services performed under the Master Service Agreement for the years ended December 31, 2007, 2006 and 2005, respectively. The Company entered into a Service Agreement with MetLife Group, Inc. ("MetLife Group"), a wholly-owned subsidiary of MetLife, under which MetLife Group provides personnel services, as needed, to support the activities of the Company. MetLife Group charged the Company $20 million, $30 million and $24 million, included in other expenses, for services performed under the Service Agreement for the years ended December 31, 2007, 2006 and 2005, respectively. The Company has entered into various additional agreements with other affiliates to provide and receive services necessary to conduct its activities. Typical services provided under these agreements include management, policy administrative functions, and distribution services. Expenses incurred, net of income earned, related to these agreements and recorded in other expenses, were $25 million, $14 million and $15 million for the years ended December 31, 2007, 2006 and 2005, respectively. At December 31, 2007 and 2006, amounts due (to)/from affiliates were ($11) million and $1 million respectively. These amounts exclude affiliated reinsurance balances discussed in Note 6. See Notes 2 and 6 for additional related party transactions. 13. RESTATEMENT As discussed in Note 6, the Company has ceded risks related to guaranteed minimum benefit riders written by the Company to an affiliate. Prior to 2007, the Company accounted for these reinsurance treaties in the same manner as the related direct guaranteed minimum benefit rider. Subsequent to the issuance of the 2006 financial statements, the Company determined that a portion of the minimum benefit guarantee within the reinsurance contract was an embedded derivative which should be measured at fair value. As such, the Company has restated its financial statements for the years ended December 31, 2006 and 2005 to properly reflect the embedded derivatives at fair F-49 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED) values. The impact to the Company's financial statements for the years ended December 31, 2006 and 2005 was an increase to net realized losses of $30 million and $7 million, respectively, a decrease to other expenses of $10 million and $3 million, respectively and an increase to policyholder benefits and claims of $0 and $3 million, respectively. The resulting impact to the Company's net income for the years ended December 31, 2006 and 2005 was a reduction of $12 million and $5 million, respectively. The related impact on the Company's balance sheet at December 31, 2006 was a reduction to premiums and other receivables of $40 million and an increase to DAC of $13 million and a decrease to deferred income tax liability of $10 million. Subsequent to the issuance of its 2006 financial statements, the Company identified items that were inadvertently excluded from its analysis of the amortization of DAC. These items changed the level of DAC amortization related to historical rider charges, partial withdrawals, lapses, interest rates and other assumptions. The Company has restated its financial statements for the years ended December 31, 2006 and 2005 to reflect the appropriate rate of amortization of DAC. The impact to the Company's financial statements for the years ended December 31, 2006 and 2005 was an increase to other expenses of $1 million and $11 million, respectively. The impact to the Company's financial statements for the year ended December 31, 2006 was an increase to policyholder benefits and claims of $1 million. The resulting impact to the Company's net income for the years ended December 31, 2006 and 2005 was a reduction of $1 million and $7 million, respectively. The related impact on the Company's balance sheet at December 31, 2006 was a decrease to DAC of $12 million and a decrease to other assets of $1 million and a decrease to deferred income tax liability of $5 million. A summary of the effects of these restatements on the Company's financial statements is as follows:
DECEMBER 31, 2006 --------------------------- AS PREVIOUSLY REPORTED AS RESTATED ------------- ----------- (IN MILLIONS) ASSETS: Premiums and other receivables..................... $ 1,033 $ 993 Deferred policy acquisitions and value of business acquired........................................ $ 632 $ 633 Other assets....................................... $ 125 $ 124 Total assets....................................... $13,067 $13,027 LIABILITIES: Deferred income tax liability...................... $ 109 $ 94 Total liabilities.................................. $12,320 $12,305 STOCKHOLDER'S EQUITY: Retained earnings.................................. $ 158 $ 133 Total stockholder's equity......................... $ 747 $ 722 Total liabilities and stockholder's equity......... $13,067 $13,027
F-50 METLIFE INVESTORS INSURANCE COMPANY (A Wholly-Owned Subsidiary of MetLife, Inc.) NOTES TO FINANCIAL STATEMENTS (AS RESTATED, SEE NOTE 13) -- (CONTINUED)
- ---------------------------------------------------------------------------------------------------- FOR THE YEAR ENDED FOR THE YEAR ENDED DECEMBER 31, 2006 DECEMBER 31, 2005 --------------------------- --------------------------- AS PREVIOUSLY AS PREVIOUSLY REPORTED AS RESTATED REPORTED AS RESTATED ------------- ----------- ------------- ----------- (IN MILLIONS) REVENUES: Net investment gains (losses).......... $(30) $(60) $ (6) $(13) Total revenues......................... $346 $316 $406 $399 EXPENSES: Policyholder benefits and claims....... $ 90 $ 91 $139 $142 Other expenses......................... $131 $122 $103 $111 Total expenses......................... $335 $327 $362 $373 Income before provision (benefit) for income tax............................. $ 11 $(11) $ 44 $ 26 Provision (benefit) for income tax....... $ (8) $(17) $ 9 $ 3 Net income............................... $ 19 $ 6 $ 35 $ 23
FOR THE YEAR ENDED FOR THE YEAR ENDED DECEMBER 31, 2006 DECEMBER 31, 2005 --------------------------- --------------------------- AS PREVIOUSLY AS PREVIOUSLY REPORTED AS RESTATED REPORTED AS RESTATED ------------- ----------- ------------- ----------- (IN MILLIONS) CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................. $ 19 $ 6 $ 35 $ 23 (Gains) losses from sales of investments and businesses, net..... $ 30 $ 60 $ 6 $ 13 Change in premiums and other receivables......................... $(28) $(28) $(77) $(74) Change in deferred policy acquisition costs, net.......................... $(18) $(27) $(29) $(21) Change in income tax payable........... $ (6) $(15) $ 30 $ 24 Change in other assets................. $120 $121 $ 83 $ 83
F-51 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS for the Years Ended December 31, 2007, 2006 and 2005 and Report of Independent Registered Public Accounting Firm F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholder of General American Life Insurance Company: We have audited the accompanying consolidated balance sheets of General American Life Insurance Company and subsidiaries (the "Company") as of December 31, 2007 and 2006, and the related consolidated statements of income, stockholder's equity, and cash flows for each of the three years in the period ended December 31, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of General American Life Insurance Company and subsidiaries as of December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, the Company changed its method of accounting for deferred acquisition costs and for income taxes as required by accounting guidance adopted on January 1, 2007, and changed its method of accounting for defined benefit pension and other postretirement plans as required by accounting guidance adopted on December 31, 2006. /s/ DELOITTE & TOUCHE LLP Certified Public Accountants Tampa, Florida April 14, 2008 F-2 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2007 AND 2006 (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)
2007 2006 ------- ------- ASSETS Investments: Fixed maturity securities available-for-sale, at estimated fair value (amortized cost: $16,422 and $15,282, respectively).............................................. $17,317 $16,134 Equity securities available-for-sale, at estimated fair value (cost: $187 and $205, respectively)........................ 168 210 Mortgage loans on real estate................................. 1,073 971 Policy loans.................................................. 2,716 2,664 Real estate and real estate joint ventures held-for- investment................................................. 55 56 Other limited partnership interests........................... 33 20 Short-term investments........................................ 312 435 Other invested assets......................................... 4,735 4,068 ------- ------- Total investments.......................................... 26,409 24,558 Cash and cash equivalents....................................... 507 357 Accrued investment income....................................... 185 183 Premiums and other receivables.................................. 3,482 3,256 Deferred policy acquisition costs and value of business acquired...................................................... 3,650 3,388 Current income tax recoverable.................................. 86 168 Other assets.................................................... 327 339 Separate account assets......................................... 2,097 2,210 ------- ------- Total assets............................................... $36,743 $34,459 ======= ======= LIABILITIES AND STOCKHOLDER'S EQUITY LIABILITIES: Future policy benefits........................................ $11,285 $10,291 Policyholder account balances................................. 10,791 10,398 Other policyholder funds...................................... 2,492 2,202 Policyholder dividends payable................................ 102 108 Short-term debt -- affiliated................................. 50 -- Long-term debt................................................ 628 408 Collateral financing arrangements............................. 850 850 Junior subordinated debt securities........................... 399 399 Shares subject to mandatory redemption........................ 159 159 Deferred income tax liability................................. 973 1,022 Payables for collateral under securities loaned and other transactions............................................... 1,438 1,642 Other liabilities............................................. 2,201 1,736 Separate account liabilities.................................. 2,097 2,210 ------- ------- Total liabilities.......................................... 33,465 31,425 ------- ------- CONTINGENCIES, COMMITMENTS AND GUARANTEES (NOTE 14) STOCKHOLDER'S EQUITY: Common stock, par value $1.00 per share; 5,000,000 shares authorized; 3,000,000 shares issued and outstanding........... 3 3 Additional paid-in capital...................................... 1,849 1,839 Retained earnings............................................... 969 775 Accumulated other comprehensive income.......................... 457 417 ------- ------- Total stockholder's equity................................. 3,278 3,034 ------- ------- Total liabilities and stockholder's equity................. $36,743 $34,459 ======= =======
See accompanying notes to consolidated financial statements. F-3 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
2007 2006 2005 ------ ------ ------ REVENUES Premiums.................................................. $5,218 $4,647 $4,179 Universal life and investment-type product policy fees.... 188 226 149 Net investment income..................................... 1,419 1,302 1,171 Other revenues............................................ 104 67 57 Net investment gains (losses)............................. (268) (14) 57 ------ ------ ------ Total revenues....................................... 6,661 6,228 5,613 ------ ------ ------ EXPENSES Policyholder benefits and claims.......................... 4,474 3,935 3,714 Interest credited to policyholder account balances........ 409 405 374 Policyholder dividends.................................... 163 170 171 Other expenses............................................ 1,293 1,361 1,147 ------ ------ ------ Total expenses....................................... 6,339 5,871 5,406 ------ ------ ------ Income before provision for income tax.................... 322 357 207 Provision for income tax.................................. 123 125 66 ------ ------ ------ Net income................................................ $ 199 $ 232 $ 141 ====== ====== ======
See accompanying notes to consolidated financial statements. F-4 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME ----------------------------------------- NET FOREIGN DEFINED ADDITIONAL UNREALIZED CURRENCY BENEFIT COMMON PAID-IN RETAINED INVESTMENT TRANSLATION PLANS STOCK CAPITAL EARNINGS GAINS (LOSSES) ADJUSTMENT ADJUSTMENT TOTAL ------- ---------- -------- -------------- ----------- ---------- ------- Balance at January 1, 2005.......... $ 3 $ 1,843 $ 428 $ 356 $ 38 $ (6) $ 2,662 Sale of subsidiary.................. 7 7 Equity transactions of majority owned subsidiary.................. (14) (14) Dividends on common stock........... (13) (13) Comprehensive income: Net income........................ 141 141 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax....... 75 75 Foreign currency translation adjustments, net of income tax.......................... 3 3 Additional minimum pension liability adjustment, net of income tax................... 2 2 ------- Other comprehensive income (loss)....................... 80 ------- Comprehensive income.............. 221 ------- -------- ------ ----------- ----------- --------- ------- Balance at December 31, 2005........ 3 1,836 556 431 41 (4) 2,863 Sale of subsidiary.................. (9) (9) Equity transactions of majority owned subsidiary.................. 12 12 Dividends on common stock........... (13) (13) Comprehensive income: Net income........................ 232 232 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax....... (62) (62) Foreign currency translation adjustments, net of income tax.......................... 11 11 Additional minimum pension liability adjustment, net of income tax................... 1 1 ------- Other comprehensive income (loss)....................... (50) ------- Comprehensive income.............. 182 ------- Adoption of SFAS 158, net of income tax..................... (1) (1) ------- -------- ------ ----------- ----------- --------- ------- Balance at December 31, 2006........ 3 1,839 775 369 52 (4) 3,034 Cumulative effect of a change in accounting principle, net of income tax (Note 1)............... (5) (5) ------- -------- ------ ----------- ----------- --------- ------- Balance at January 1, 2007.......... 3 1,839 770 369 52 (4) 3,029 Equity transactions of majority owned subsidiary.................. 10 10 Comprehensive income: Net income........................ 199 199 Other comprehensive income (loss): Unrealized investment gains (losses), net of related offsets and income tax....... (21) (21) Foreign currency translation adjustments, net of income tax.......................... 60 60 Defined benefit plans adjustment, net of income tax.......................... 1 1 ------- Other comprehensive income (loss)....................... 40 ------- Comprehensive income.............. 239 ------- -------- ------ ----------- ----------- --------- ------- Balance at December 31, 2007........ $3 $1,849 $969 $348 $112 $(3) $3,278 ======= ======== ====== =========== =========== ========= =======
See accompanying notes to consolidated financial statements. F-5 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
2007 2006 2005 ------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net income.............................................. $ 199 $ 232 $ 141 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expenses............. 7 8 12 Amortization of premiums and accretion of discounts associated with investments, net................. (33) (13) (11) (Gains) losses from sales of investments and businesses, net.................................. 268 14 (57) Interest credited to policyholder account balances......................................... 409 405 374 Universal life and investment-type product policy fees............................................. (188) (226) (149) Change in premiums and other receivables........... (226) (511) (25) Change in deferred policy acquisition costs, net... (339) (306) (219) Change in insurance-related liabilities............ 1,348 963 874 Change in income tax payable....................... 65 194 (14) Change in other assets............................. 117 87 (93) Change in other liabilities........................ 432 97 52 Other, net......................................... 3 (24) (2) ------- ------- ------- Net cash provided by operating activities............... 2,062 920 883 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Sales, maturities and repayments of: Fixed maturity securities.......................... 2,974 4,623 5,353 Equity securities.................................. 34 68 -- Mortgage loans on real estate...................... 26 87 194 Real estate and real estate joint ventures......... 1 -- 6 Other limited partnership interests................ 1 5 2 Purchases of: Fixed maturity securities.......................... (4,116) (6,056) (6,686) Equity securities.................................. (12) (40) (28) Mortgage loans on real estate...................... (129) (160) (38) Real estate and real estate joint ventures......... (1) (3) (1) Other limited partnership interests................ (19) -- -- Net change in short-term investments.................. 123 (282) (67) Proceeds from sales of businesses, net of cash disposed of $0, $5 and $0, respectively............ -- 71 37 Net change in other invested assets................... (976) (705) (521) Other, net............................................ (43) (50) (18) ------- ------- ------- Net cash used in investing activities................... $(2,137) $(2,442) $(1,767) ------- ------- -------
See accompanying notes to consolidated financial statements. F-6 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005 (IN MILLIONS)
2007 2006 2005 ------ ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Policyholder account balances: Deposits............................................. $1,147 $1,446 $1,424 Withdrawals.......................................... (986) (828) (953) Net change in payables for collateral under securities loaned and other transactions........................ (204) 259 (78) Net change in short-term debt -- affiliated............. 50 -- -- Long-term debt issued................................... 297 -- -- Long-term debt repaid................................... (79) (100) (3) Collateral financing arrangements issued................ -- 850 -- Capital contribution from parent from sales of subsidiaries, net.................................... -- -- 7 Junior subordinated debt securities issued.............. -- -- 397 Dividends on common stock............................... -- (13) (13) Debt issuance costs..................................... -- (13) (6) Other, net.............................................. -- 10 5 ------ ------ ------ Net cash provided by financing activities................. 225 1,611 780 ------ ------ ------ Change in cash and cash equivalents....................... 150 89 (104) Cash and cash equivalents, beginning of year.............. 357 268 372 ------ ------ ------ CASH AND CASH EQUIVALENTS, END OF YEAR.................... $ 507 $ 357 $ 268 ====== ====== ====== Supplemental disclosures of cash flow information: Net cash paid (received) during the year for: Interest............................................. $ 129 $ 73 $ 48 ====== ====== ====== Income tax........................................... $ (85) $ -- $ 143 ====== ====== ====== Non-cash transactions during the year: Business dispositions: Assets disposed.................................... $ -- $ 321 $ 40 Less: liabilities disposed......................... -- 236 3 ------ ------ ------ Net assets disposed................................ -- 85 37 Less: cash disposed................................ -- 5 -- ------ ------ ------ Business dispositions, net of cash disposed........ $ -- $ 80 $ 37 ====== ====== ====== Return of capital to parent from sale of subsidiary.. $ -- $ (9) $ -- ====== ====== ======
See accompanying notes to consolidated financial statements. F-7 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS General American Life Insurance Company ("General American") and its subsidiaries (collectively the "Company"), is a wholly-owned subsidiary of GenAmerica Financial, LLC ("GenAmerica" or the "Holding Company"). General American is a Missouri corporation incorporated in 1933. GenAmerica is a wholly- owned subsidiary of Metropolitan Life Insurance Company ("MLIC"), which is a wholly-owned subsidiary of MetLife, Inc. ("MetLife"). The Company provides insurance and financial services to individual and institutional customers. The Company offers life insurance and annuities to individuals, group insurance and reinsurance. The Company distributes its products and services primarily through a nationwide network of general agencies and independent brokers. The Company is licensed to conduct business in forty- nine states, ten Canadian provinces, Puerto Rico, and the District of Columbia. Through its subsidiaries, the Company has operations in Europe, Pacific Rim countries, Latin America, Africa and Australia. On May 1, 2006, the Company sold its wholly-owned subsidiary, Paragon Life Insurance Company ("Paragon"), to its ultimate parent, MetLife. Immediately following the sale, Paragon was merged with and into MLIC. Paragon is included in the accompanying consolidated financial statements until the date of its sale. See Note 2. BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of General American and its subsidiaries, including Reinsurance Group of America, Incorporated ("RGA"). Intercompany accounts and transactions have been eliminated. General American owned approximately 52% of RGA in 2007 and 53% in 2006 and 2005. See Note 14. The Company uses the equity method of accounting for investments in equity securities in which it has more than a 20% interest and for real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint venture's or partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint venture's or partnership's operations. Minority interest related to consolidated entities included in other liabilities was $1,534 million and $1,347 million at December 31, 2007 and 2006, respectively. Certain amounts in the prior years' consolidated financial statements have been reclassified to conform with the 2007 presentation. Such reclassifications include $850 million relating to long-term debt reclassified to collateral financing arrangements on the consolidated balance sheet at December 31, 2006 and the consolidated statement of cash flows for the year ended December 31, 2006. See Note 10 for a description of the transaction. Since the Company is a member of a controlled group of affiliated companies, its results may not be indicative of those of a stand-alone entity. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to adopt accounting policies and make estimates and F-8 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) assumptions that affect amounts reported in the consolidated financial statements. The most critical estimates include those used in determining: (i) the fair value of investments in the absence of quoted market values; (ii) investment impairments; (iii) the recognition of income on certain investments; (iv) the application of the consolidation rules to certain investments; (v) the fair value of and accounting for derivatives; (vi) the capitalization and amortization of deferred policy acquisition costs ("DAC") and the establishment and amortization of value of business acquired ("VOBA"); (vii) the liability for future policyholder benefits; (viii) accounting for income taxes and the valuation of deferred tax assets; (ix) accounting for reinsurance transactions; (x) accounting for employee benefit plans; and (xi) the liability for litigation and regulatory matters. A description of such critical estimates is incorporated within the discussion of the related accounting policies which follows. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to the Company's businesses and operations. Actual results could differ from these estimates. Investments The Company's investments are in fixed maturity and equity securities, mortgage loans on real estate, policy loans, real estate, real estate joint ventures and other limited partnerships, short-term investments and other invested assets. The accounting policies related to each are as follows: Fixed Maturity and Equity Securities. The Company's fixed maturity and equity securities are classified as available-for-sale and are reported at their estimated fair value. Unrealized investment gains and losses on these securities are recorded as a separate component of other comprehensive income or loss, net of policyholder related amounts and deferred income taxes. All security transactions are recorded on a trade date basis. Investment gains and losses on sales of securities are determined on a specific identification basis. Interest income on fixed maturity securities is recorded when earned using an effective yield method giving effect to amortization of premiums and accretion of discounts. Dividends on equity securities are recorded when declared. These dividends and interest income are recorded as part of net investment income. Included within fixed maturity securities are loan-backed securities including mortgage-backed and asset-backed securities. Amortization of the premium or discount from the purchase of these securities considers the estimated timing and amount of prepayments of the underlying loans. Actual prepayment experience is periodically reviewed and effective yields are recalculated when differences arise between the prepayments originally anticipated and the actual prepayments received and currently anticipated. Prepayment assumptions for single class and multi-class mortgage-backed and asset-backed securities are obtained from broker-dealer survey values or internal estimates. For credit-sensitive mortgage-backed and asset-backed securities and certain prepayment-sensitive securities, the effective yield is recalculated on a prospective basis. F-9 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) For all other mortgage-backed and asset-backed securities, the effective yield is recalculated on a retrospective basis. The cost of fixed maturity and equity securities is adjusted for impairments in value deemed to be other-than-temporary in the period in which the determination is made. These impairments are included within net investment gains (losses) and the cost basis of the fixed maturity and equity securities is reduced accordingly. The Company does not change the revised cost basis for subsequent recoveries in value. The assessment of whether impairments have occurred is based on management's case-by-case evaluation of the underlying reasons for the decline in fair value. The Company's review of its fixed maturity and equity securities for impairments includes an analysis of the total gross unrealized losses by three categories of securities: (i) securities where the estimated fair value had declined and remained below cost or amortized cost by less than 20%; (ii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for less than six months; and (iii) securities where the estimated fair value had declined and remained below cost or amortized cost by 20% or more for six months or greater. Additionally, management considers a wide range of factors about the security issuer and uses its best judgment in evaluating the cause of the decline in the estimated fair value of the security and in assessing the prospects for near-term recovery. Inherent in management's evaluation of the security are assumptions and estimates about the operations of the issuer and its future earnings potential. Considerations used by the Company in the impairment evaluation process include, but are not limited to: (i) the length of time and the extent to which the market value has been below cost or amortized cost; (ii) the potential for impairments of securities when the issuer is experiencing significant financial difficulties; (iii) the potential for impairments in an entire industry sector or sub-sector; (iv) the potential for impairments in certain economically depressed geographic locations; (v) the potential for impairments of securities where the issuer, series of issuers or industry has suffered a catastrophic type of loss or has exhausted natural resources; (vi) the Company's ability and intent to hold the security for a period of time sufficient to allow for the recovery of its value to an amount equal to or greater than cost or amortized cost (See also Note 3); (vii) unfavorable changes in forecasted cash flows on mortgage-backed and asset-backed securities; and (viii) other subjective factors, including concentrations and information obtained from regulators and rating agencies. The Company purchases and receives beneficial interests in special purpose entities ("SPEs"), which enhance the Company's total return on its investment portfolio principally by providing equity-based returns on debt securities. These investments are generally made through structured notes and similar instruments (collectively, "Structured Investment Transactions"). The Company has not guaranteed the performance, liquidity or obligations of the SPEs and its exposure to loss is limited to its carrying value of the beneficial interests in the SPEs. The Company does not consolidate such SPEs as it has determined it is not the primary beneficiary. These Structured Investment Transactions are included in fixed maturity securities and their income is generally recognized using the retrospective interest method. Impairments of these investments are included in net investment gains (losses). Securities Lending. Securities loaned transactions are treated as financing arrangements and are recorded at the amount of cash received. The Company obtains collateral in an amount equal to 102% of the fair value of the securities loaned. The Company monitors the market value of the securities loaned on a daily basis with additional collateral obtained as necessary. Substantially all of the Company's securities loaned transactions are with large brokerage firms. Income and expenses associated with securities loaned transactions are reported as investment income and investment expense, respectively, within net investment income. Mortgage Loans on Real Estate. Mortgage loans on real estate are stated at unpaid principal balance, adjusted for any unamortized premium or discount, deferred fees or expenses, net of valuation allowances. F-10 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Interest income is accrued on the principal amount of the loan based on the loan's contractual interest rate. Amortization of premiums and discounts is recorded using the effective yield method. Interest income, amortization of premiums and discounts, and prepayment fees are reported in net investment income. Loans are considered to be impaired when it is probable that, based upon current information and events, the Company will be unable to collect all amounts due under the contractual terms of the loan agreement. Valuation allowances are established for the excess carrying value of the loan over the present value of expected future cash flows discounted at the loan's original effective interest rate, the value of the loan's collateral if the loan is in the process of foreclosure or otherwise collateral dependent, or the loan's market value if the loan is being sold. The Company also establishes allowances for loan losses when a loss contingency exists for pools of loans with similar characteristics, such as mortgage loans based on similar property types or loan to value risk factors. A loss contingency exists when the likelihood that a future event will occur is probable based on past events. Interest income earned on impaired loans is accrued on the principal amount of the loan based on the loan's contractual interest rate. However, interest ceases to be accrued for loans on which interest is generally more than 60 days past due and/or where the collection of interest is not considered probable. Cash receipts on such impaired loans are recorded as a reduction of the recorded investment. Gains and losses from the sale of loans and changes in valuation allowances are reported in net investment gains (losses). Policy Loans. Policy loans are stated at unpaid principal balances. Interest income on such loans is recorded as earned using the contractually agreed upon interest rate. Generally, interest is capitalized on the policy's anniversary date. Real Estate. Real estate held-for-investment, including related improvements, is stated at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful life of the asset (typically 20 to 55 years). Rental income is recognized on a straight-line basis over the term of the respective leases. The Company classifies a property as held-for-sale if it commits to a plan to sell a property within one year and actively markets the property in its current condition for a price that is reasonable in comparison to its fair value. The Company classifies the results of operations and the gain or loss on sale of a property that either has been disposed of or classified as held- for-sale as discontinued operations, if the ongoing operations of the property will be eliminated from the ongoing operations of the Company and if the Company will not have any significant continuing involvement in the operations of the property after the sale. The Company periodically reviews its properties held-for-investment for impairment and tests properties for recoverability whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable and the carrying value of the property exceeds its fair value. Properties whose carrying values are greater than their undiscounted cash flows are written down to their fair value, with the impairment loss included in net investment gains (losses). Impairment losses are based upon the estimated fair value of real estate, which is generally computed using the present value of expected future cash flows from the real estate discounted at a rate commensurate with the underlying risks. Real Estate Joint Ventures and Other Limited Partnership Interests. The Company uses the equity method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has more than a minor equity interest or more than a minor influence over the joint ventures or partnership's operations, but does not have a controlling interest and is not the primary beneficiary. The Company uses the cost method of accounting for investments in real estate joint ventures and other limited partnership interests in which it has a minor equity investment and virtually no influence over the joint ventures or the partnership's operations. In addition to the investees performing regular evaluations for the impairment of underlying investments, the Company routinely evaluates its investments in real estate joint ventures and other limited partnerships for impairments. For its cost method investments, the Company follows an impairment analysis which is similar to the process followed for its fixed maturity and equity securities as described previously. For equity method investees, the Company considers financial and other information provided by the investee, other known information and inherent risks in the underlying investments, as well as F-11 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) future capital commitments, in determining whether an impairment has occurred. When an other-than-temporary impairment is deemed to have occurred, the Company records a realized capital loss within net investment gains (losses) to record the investment at its fair value. Short-term Investments. Short-term investments include investments with remaining maturities of one year or less, but greater than three months, at the time of acquisition and are stated at amortized cost, which approximates fair value. Other Invested Assets. Other invested assets consist primarily of funds withheld at interest. Funds withheld represent amounts contractually withheld by ceding companies in accordance with reinsurance agreements. For agreements written on a modified coinsurance basis and certain agreements written on a coinsurance basis, assets supporting the reinsured policies, and equal to the net statutory reserves, are withheld and continue to be legally owned by the ceding companies. The Company records a funds withheld receivable rather than the underlying investments. The Company recognizes interest on funds withheld at rates defined by the treaty terms which may be contractually specified or directly related to the investment portfolio and records it in net investment income. Other invested assets also include stand-alone derivatives with positive fair values and the fair value of embedded derivatives related to funds withheld and modified coinsurance contracts. Estimates and Uncertainties. The Company's investments are exposed to three primary sources of risk: credit, interest rate and market valuation. The financial statement risks, stemming from such investment risks, are those associated with the recognition of impairments, the recognition of income on certain investments, and the determination of fair values. The determination of the amount of allowances and impairments, as applicable, are described previously by investment type. The determination of such allowances and impairments is highly subjective and is based upon the Company's periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such evaluations and assessments are revised as conditions change and new information becomes available. Management updates its evaluations regularly and reflects changes in allowances and impairments in operations as such evaluations are revised. The recognition of income on certain investments (e.g., loan-backed securities including mortgage-backed and asset-backed securities, certain investment transactions, etc.) is dependent upon market conditions, which could result in prepayments and changes in amounts to be earned. The fair values of publicly held fixed maturity securities and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases where quoted market prices are not available, such as for private fixed maturity securities, fair values are estimated using present value or valuation techniques. The determination of fair values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are made at a specific point in time, based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include: coupon rate, maturity, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of comparable securities. The use of different methodologies and assumptions may have a material effect on the estimated fair value amounts. Additionally, when the Company enters into certain structured investment transactions, real estate joint ventures and other limited partnerships for which the Company may be deemed to be the primary beneficiary under Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46(r), Consolidation of Variable Interest Entities -- An Interpretation of ARB No. 51, it may be required to consolidate such investments. The accounting rules for the determination of the primary beneficiary are complex and require evaluation of the contractual rights and obligations associated with each party involved in the F-12 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) entity, an estimate of the entity's expected losses and expected residual returns and the allocation of such estimates to each party. The use of different methodologies and assumptions as to the determination of the fair value of investments, the timing and amount of impairments, the recognition of income, or consolidation of investments may have a material effect on the amounts presented within the consolidated financial statements. Derivative Financial Instruments Derivatives are financial instruments whose values are derived from interest rates, foreign currency exchange rates, or other financial indices. Derivatives may be exchange-traded or contracted in the over-the-counter market. The Company uses a variety of derivatives, including swaps, forwards and futures, to manage the risk associated with variability in cash flows or changes in fair values related to the Company's financial instruments. The Company also uses derivative instruments to hedge its currency exposure associated with net investments in certain foreign operations. To a lesser extent, the Company uses credit derivatives, such as credit default swaps, to synthetically replicate investment risks and returns which are not readily available in the cash market. The Company also purchases certain securities, issues certain insurance policies and investment contracts and engages in certain reinsurance contracts that have embedded derivatives. Freestanding derivatives are carried on the Company's consolidated balance sheet either as assets within other invested assets or as liabilities within other liabilities at fair value as determined by quoted market prices or through the use of pricing models. The determination of fair value, when quoted market values are not available, is based on valuation methodologies and assumptions deemed appropriate under the circumstances. Derivative valuations can be affected by changes in interest rates, foreign currency exchange rates, financial indices, credit spreads, market volatility, and liquidity. Values can also be affected by changes in estimates and assumptions used in pricing models. Such assumptions include estimates of volatility, interest rates, foreign currency exchange rates, other financial indices and credit ratings. Essential to the analysis of the fair value is risk of counterparty default. The use of different assumptions may have a material effect on the estimated derivative fair value amounts, as well as the amount of reported net income. If a derivative is not designated as an accounting hedge or its use in managing risk does not qualify for hedge accounting, changes in the fair value of the derivative are generally reported in net investment gains (losses). The fluctuations in fair value of derivatives which have not been designated for hedge accounting can result in significant volatility in net income. To qualify for hedge accounting, at the inception of the hedging relationship, the Company formally documents its risk management objective and strategy for undertaking the hedging transaction, as well as its designation of the hedge as either (i) a hedge of the fair value of a recognized asset or liability or an unrecognized firm commitment ("fair value hedge"); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow hedge"); or (iii) a hedge of a net investment in a foreign operation. In this documentation, the Company sets forth how the hedging instrument is expected to hedge the designated risks related to the hedged item and sets forth the method that will be used to retrospectively and prospectively assess the hedging instrument's effectiveness and the method which will be used to measure ineffectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and periodically throughout the life of the designated hedging relationship. Assessments of hedge effectiveness and measurements of ineffectiveness are also subject to interpretation and estimation and different interpretations or estimates may have a material effect on the amount reported in net income. The accounting for derivatives is complex and interpretations of the primary accounting standards continue to evolve in practice. Judgment is applied in determining the availability and application of hedge accounting designations and the appropriate accounting treatment under these accounting standards. If it was determined that F-13 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) hedge accounting designations were not appropriately applied, reported net income could be materially affected. Differences in judgment as to the availability and application of hedge accounting designations and the appropriate accounting treatment may result in a differing impact on the consolidated financial statements of the Company from that previously reported. Under a fair value hedge, changes in the fair value of the hedging derivative, including amounts measured as ineffectiveness, and changes in the fair value of the hedged item related to the designated risk being hedged, are reported within net investment gains (losses). The fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of income within interest income or interest expense to match the location of the hedged item. Under a cash flow hedge, changes in the fair value of the hedging derivative measured as effective are reported within other comprehensive income (loss), a separate component of stockholder's equity, and the deferred gains or losses on the derivative are reclassified into the consolidated statement of income when the Company's earnings are affected by the variability in cash flows of the hedged item. Changes in the fair value of the hedging instrument measured as ineffectiveness are reported within net investment gains (losses). The fair values of the hedging derivatives are exclusive of any accruals that are separately reported in the consolidated statement of income within interest income or interest expense to match the location of the hedged item. In a hedge of a net investment in a foreign operation, changes in the fair value of the hedging derivative that are measured as effective are reported within other comprehensive income (loss) consistent with the translation adjustment for the hedged net investment in the foreign operation. Changes in the fair value of the hedging instrument measured as ineffectiveness are reported within net investment gains (losses). The Company discontinues hedge accounting prospectively when: (i) it is determined that the derivative is no longer highly effective in offsetting changes in the fair value or cash flows of a hedged item; (ii) the derivative expires, is sold, terminated, or exercised; (iii) it is no longer probable that the hedged forecasted transaction will occur; (iv) a hedged firm commitment no longer meets the definition of a firm commitment; or (v) the derivative is de- designated as a hedging instrument. When hedge accounting is discontinued because it is determined that the derivative is not highly effective in offsetting changes in the fair value or cash flows of a hedged item, the derivative continues to be carried on the consolidated balance sheet at its fair value, with changes in fair value recognized currently in net investment gains (losses). The carrying value of the hedged recognized asset or liability under a fair value hedge is no longer adjusted for changes in its fair value due to the hedged risk, and the cumulative adjustment to its carrying value is amortized into income over the remaining life of the hedged item. Provided the hedged forecasted transaction is still probable of occurrence, the changes in fair value of derivatives recorded in other comprehensive income (loss) related to discontinued cash flow hedges are released into the consolidated statement of income when the Company's earnings are affected by the variability in cash flows of the hedged item. When hedge accounting is discontinued because it is no longer probable that the forecasted transactions will occur by the end of the specified time period or the hedged item no longer meets the definition of a firm commitment, the derivative continues to be carried on the consolidated balance sheet at its fair value, with changes in fair value recognized currently in net investment gains (losses). Any asset or liability associated with a recognized firm commitment is derecognized from the consolidated balance sheet, and recorded currently in net investment gains (losses). Deferred gains and losses of a derivative recorded in other comprehensive income (loss) pursuant to the cash flow hedge of a forecasted transaction are recognized immediately in net investment gains (losses). In all other situations in which hedge accounting is discontinued, the derivative is carried at its fair value on the consolidated balance sheet, with changes in its fair value recognized in the current period as net investment gains (losses). F-14 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company is also a party to financial instruments that contain terms which are deemed to be embedded derivatives. The Company assesses each identified embedded derivative to determine whether it is required to be bifurcated. If the instrument would not be accounted for in its entirety at fair value and it is determined that the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and that a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative. Such embedded derivatives are carried on the consolidated balance sheet at fair value with the host contract and changes in their fair value are reported currently in net investment gains (losses) or interest credited to policyholder balances. If the Company is unable to properly identify and measure an embedded derivative for separation from its host contract, the entire contract is carried on the balance sheet at fair value, with changes in fair value recognized in the current period in net investment gains (losses) or interest credited to policyholder balances. Additionally, the Company may elect to carry an entire contract on the balance sheet at fair value, with changes in fair value recognized in the current period in net investment gains (losses) or interest credited to policyholder account balances, if that contract contains an embedded derivative that requires bifurcation. There is a risk that embedded derivatives requiring bifurcation may not be identified and reported at fair value in the consolidated financial statements and that their related changes in fair value could materially affect reported net income. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less at the date of purchase to be cash equivalents. Property, Equipment, Leasehold Improvements and Computer Software Property, equipment and leasehold improvements, which are included in other assets, are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using either the straight-line or sum-of-the-years- digits method over the estimated useful lives of the assets, as appropriate. The estimated life for company occupied real estate property is generally 40 years. Estimated lives generally range from five to ten years for leasehold improvements and three to seven years for all other property and equipment. The cost basis of the property, equipment and leasehold improvements was $106 million and $105 million at December 31, 2007 and 2006, respectively. Accumulated depreciation and amortization of property, equipment and leasehold improvements was $71 million at both December 31, 2007 and 2006, respectively. Related depreciation and amortization expense was $7 million for each of the years ended December 31, 2007, 2006 and 2005. Computer software, which is included in other assets, is stated at cost, less accumulated amortization. Purchased software costs, as well as certain internal and external costs incurred to develop internal-use computer software during the application development stage, are capitalized. Such costs are amortized generally over a four-year period using the straight-line method. The cost basis of computer software was $59 million and $56 million at December 31, 2007 and 2006, respectively. Accumulated amortization of capitalized software was $37 million and $30 million at December 31, 2007 and 2006, respectively. Related amortization expense was $7 million, $6 million and $11 million for the years ended December 31, 2007, 2006 and 2005, respectively. Deferred Policy Acquisition Costs and Value of Business Acquired The Company incurs significant costs in connection with acquiring new and renewal insurance business. Costs that vary with and relate to the production of new business are deferred as DAC. Such costs consist principally of commissions and agency and policy issue expenses. VOBA is an intangible asset that reflects the estimated fair value of in-force contracts in a life insurance company acquisition and represents the portion of the purchase price that is allocated to the value of the right to receive future cash flows from the business in- force at the acquisition date. VOBA is based on actuarially determined projections, by each block of business, of future policy and contract charges, premiums, mortality and morbidity, separate account performance, surrenders, operating expenses, F-15 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) investment returns and other factors. Actual experience on the purchased business may vary from these projections. The recovery of DAC and VOBA is dependent upon the future profitability of the related business. DAC and VOBA are aggregated in the financial statements for reporting purposes. DAC and VOBA on life insurance or investment-type contracts are amortized in proportion to gross premiums, gross margins or gross profits, depending on the type of contract as described below. The Company amortizes DAC and VOBA related to non-participating and non- dividend-paying traditional contracts (term insurance, non-participating whole life insurance and traditional group life insurance) over the entire premium paying period in proportion to the present value of actual historic and expected future gross premiums. The present value of expected premiums is based upon the premium requirement of each policy and assumptions for mortality, morbidity, persistency, and investment returns at policy issuance, or policy acquisition, as it relates to VOBA, that include provisions for adverse deviation and are consistent with the assumptions used to calculate future policyholder benefit liabilities. These assumptions are not revised after policy issuance or acquisition unless the DAC or VOBA balance is deemed to be unrecoverable from future expected profits. Absent a premium deficiency, variability in amortization after policy issuance or acquisition is caused only by variability in premium volumes. The Company amortizes DAC and VOBA related to participating, dividend- paying traditional contracts over the estimated lives of the contracts in proportion to actual and expected future gross margins. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The future gross margins are dependent principally on investment returns, policyholder dividend scales, mortality, persistency, expenses to administer the business, creditworthiness of reinsurance counterparties, and certain economic variables, such as inflation. For participating contracts, future gross margins are also dependent upon changes in the policyholder dividend obligation. Of these factors, the Company anticipates that investment returns, expenses, persistency, and other factor changes and policyholder dividend scales are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross margins with the actual gross margins for that period. When the actual gross margins change from previously estimated gross margins, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross margins exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross margins are below the previously estimated gross margins. Each reporting period, the Company also updates the actual amount of business in-force, which impacts expected future gross margins. The Company amortizes DAC and VOBA related to fixed and variable universal life contracts and fixed and variable deferred annuity contracts over the estimated lives of the contracts in proportion to actual and expected future gross profits. The amortization includes interest based on rates in effect at inception or acquisition of the contracts. The amount of future gross profits is dependent principally upon returns in excess of the amounts credited to policyholders, mortality, persistency, interest crediting rates, expenses to administer the business, creditworthiness of reinsurance counterparties, the effect of any hedges used, and certain economic variables, such as inflation. Of these factors, the Company anticipates that investment returns, expenses, and persistency are reasonably likely to impact significantly the rate of DAC and VOBA amortization. Each reporting period, the Company updates the estimated gross profits with the actual gross profits for that period. When the actual gross profits change from previously estimated gross profits, the cumulative DAC and VOBA amortization is re-estimated and adjusted by a cumulative charge or credit to current operations. When actual gross profits exceed those previously estimated, the DAC and VOBA amortization will increase, resulting in a current period charge to earnings. The opposite result occurs when the actual gross profits are below the previously estimated gross profits. Each reporting period, the Company also updates the actual amount of business remaining in-force, which impacts expected future gross profits. Separate account rates of return on variable universal life contracts and variable deferred annuity contracts affect in-force account balances on such contracts each reporting period. Returns that are higher than the F-16 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Company's long-term expectation produce higher account balances, which increases the Company's future fee expectations and decreases future benefit payment expectations on minimum death benefit guarantees, resulting in higher expected future gross profits. The opposite result occurs when returns are lower than the Company's long-term expectation. The Company's practice to determine the impact of gross profits resulting from returns on separate accounts assumes that long- term appreciation in equity markets is not changed by short-term market fluctuations, but is only changed when sustained interim deviations are expected. The Company monitors these changes and only changes the assumption when its long-term expectation changes. The Company also reviews periodically other long-term assumptions underlying the projections of estimated gross margins and profits. These include investment returns, policyholder dividend scales, interest crediting rates, mortality, persistency, and expenses to administer business. Management annually updates assumptions used in the calculation of estimated gross margins and profits which may have significantly changed. If the update of assumptions causes expected future gross margins and profits to increase, DAC and VOBA amortization will decrease, resulting in a current period increase to earnings. The opposite result occurs when the assumption update causes expected future gross margins and profits to decrease. Prior to 2007, DAC related to any internally replaced contract was generally expensed at the date of replacement. As described more fully in "Adoption of New Accounting Pronouncements", effective January 1, 2007, the Company adopted Statement of Position ("SOP") 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance Contracts ("SOP 05-1"). Under SOP 05-1, an internal replacement is defined as a modification in product benefits, features, rights or coverages that occur by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by election or coverage within a contract. If the modification substantially changes the contract, the DAC is written off immediately through income and any new deferrable costs associated with the replacement contract are deferred. If the modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are expensed. Goodwill Goodwill, which is included in other assets, is the excess of cost over the fair value of net assets acquired. Goodwill is not amortized but is tested for impairment at least annually or more frequently if events or circumstances, such as adverse changes in the business climate, indicate that there may be justification for conducting an interim test. Impairment testing is performed using the fair value approach, which requires the use of estimates and judgment. If the carrying value of goodwill exceeds its fair value, the excess is recognized as an impairment and recorded as a charge against net income. The fair value is determined using a market multiple, a discounted cash flow model, or a cost approach. The critical estimates necessary in determining fair value are projected earnings, comparative market multiples and the discount rate. Liability for Future Policy Benefits and Policyholder Account Balances The Company establishes liabilities for amounts payable under insurance policies, including traditional life insurance, traditional annuities and non- medical health insurance. Generally, amounts are payable over an extended period of time and related liabilities are calculated as the present value of future expected benefits to be paid reduced by the present value of future expected premiums. Such liabilities are established based on methods and underlying assumptions in accordance with GAAP and applicable actuarial standards. Principal assumptions used in the establishment of liabilities for future policy benefits are mortality, morbidity, policy lapse, renewal, retirement, disability incidence, disability terminations, investment returns, inflation, expenses and other contingent events as appropriate to the respective product type. Utilizing these assumptions, liabilities are established on a block of business basis. Future policy benefit liabilities for participating traditional life insurance policies are equal to the aggregate of (i) net level premium reserves for death and endowment policy benefits (calculated based upon the non- forfeiture F-17 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) interest rate, ranging from 3% to 6%, and mortality rates guaranteed in calculating the cash surrender values described in such contracts); and (ii) the liability for terminal dividends. Future policy benefit liabilities for non-participating traditional life insurance policies are equal to the aggregate of the present value of expected future benefit payments and related expenses less the present value of expected future net premiums. Assumptions as to mortality and persistency are based upon the Company's experience when the basis of the liability is established. Interest rates for the aggregate future policy benefit liabilities range from 3% to 7%. Participating business represented approximately 30% and 31% of General American's life insurance in-force, and 52% and 56% of the number of its life insurance policies in-force, at December 31, 2007 and 2006, respectively. Participating policies represented approximately 95%, 99% and 98% of gross life insurance premiums for the years ended December 31, 2007, 2006 and 2005, respectively. Total premiums for General American were $302 million, $299 million and $311 million for the years ended December 31, 2007, 2006 and 2005, respectively. Future policy benefit liabilities for individual and group traditional fixed annuities after annuitization are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 4% to 11%. Future policy benefit liabilities for non-medical health insurance are calculated using the net level premium method and assumptions as to future morbidity, withdrawals and interest, which provide a margin for adverse deviation. The interest rate used in establishing such liabilities is 5%. Future policy benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. Interest rates used in establishing such liabilities range from 3% to 6%. Liabilities for unpaid claims are estimated based upon the Company's historical experience and other actuarial assumptions that consider the effects of current developments, anticipated trends and risk management programs. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur. Liabilities for universal and variable life secondary guarantees are determined by estimating the expected value of death benefits payable when the account balance is projected to be zero and recognizing those benefits ratably over the accumulation period based on total expected assessments. The Company regularly evaluates estimates used and adjusts the additional liability balances, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised. The assumptions used in estimating the secondary guarantee liabilities are consistent with those used for amortizing DAC, and are thus subject to the same variability and risk. The assumptions of investment performance and volatility for variable products are consistent with historical Standard & Poor's 500 Index experience. The benefits used in calculating the liabilities are based on the average benefits payable over a range of scenarios. The Company periodically reviews its estimates of actuarial liabilities for future policy benefits and compares them with its actual experience. Differences between actual experience and the assumptions used in pricing these policies and guarantees and in the establishment of the related liabilities result in variances in profit and could result in losses. The effects of changes in such estimated liabilities are included in the results of operations in the period in which the changes occur. Policyholder account balances relate to investment-type contracts and universal life-type policies. Investment-type contracts principally include traditional individual fixed annuities in the accumulation phase and non- variable group annuity contracts. Policyholder account balances are equal to (i) policy account values, which consist of an accumulation of gross premium payments and (ii) credited interest, ranging from 3% to 6%, less expenses, mortality charges, and withdrawals. F-18 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Other Policyholder Funds Other policyholder funds include policy and contract claims, unearned revenue liabilities, premiums received in advance, policyholder dividends due and unpaid, and policyholder dividends left on deposit. The liability for policy and contract claims generally relates to incurred but not reported death and disability claims as well as claims which have been reported but not yet settled. The liability for these claims is based on the Company's estimated ultimate cost of settling all claims. The Company derives estimates for the development of incurred but not reported claims principally from actuarial analyses of historical patterns of claims and claims development for each line of business. The methods used to determine these estimates are continually reviewed. Adjustments resulting from this continuous review process and differences between estimates and payments for claims are recognized in policyholder benefits and claims expense in the period in which the estimates are changed or payments are made. The unearned revenue liability relates to universal life-type and investment-type products and represents policy charges for services to be provided in future periods. The charges are deferred as unearned revenue and amortized using the product's estimated gross profits, similar to DAC. Such amortization is recorded in universal life and investment-type product policy fees. The Company accounts for the prepayment of premiums on its group life and health contracts as premium received in advance and applies the cash received to premiums when due. Also included in other policyholder funds are policyholder dividends due and unpaid on participating policies and policyholder dividends left on deposit. Such liabilities are presented at amounts contractually due to policyholders. Recognition of Insurance Revenue and Related Benefits Premiums related to traditional life and annuity policies with life contingencies are recognized as revenues when due from policyholders. Policyholder benefits and expenses are provided against such revenues to recognize profits over the estimated lives of the policies. When premiums are due over a significantly shorter period than the period over which benefits are provided, any excess profit is deferred and recognized into operations in a constant relationship to insurance in-force or, for annuities, the amount of expected future policy benefit payments. Premiums related to non-medical health and disability contracts are recognized on a pro rata basis over the applicable contract term. Deposits related to universal life-type and investment-type products are credited to policyholder account balances. Revenues from such contracts consist of amounts assessed against policyholder account balances for mortality, policy administration and surrender charges and are recorded in universal life and investment-type product policy fees in the period in which services are provided. Amounts that are charged to operations include interest credited and benefit claims incurred in excess of related policyholder account balances. Premiums, policy fees, policyholder benefits and expenses are presented net of reinsurance. Other Revenues Other revenues include advisory fees, broker-dealer commissions and fees and administrative service fees. Such fees and commissions are recognized in the period in which services are performed. Other revenues also include changes in account value relating to corporate-owned life insurance ("COLI"). Under certain COLI contracts, if the Company reports certain unlikely adverse results in its consolidated financial statements, withdrawals would not be immediately available and would be subject to market value adjustment, which could result in a reduction of the account value. F-19 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Policyholder Dividends Policyholder dividends are approved annually by General American's board of directors. The aggregate amount of policyholder dividends is related to actual interest, mortality, morbidity and expense experience for the year, as well as management's judgment as to the appropriate level of statutory surplus to be retained by General American. Income Taxes General American joins with MetLife and its includable life insurance and non-life insurance subsidiaries in filing a consolidated U.S. federal income tax return in accordance with the provisions of the Internal Revenue Code of 1986, as amended. Non-includable subsidiaries file either a separate individual corporate tax returns or separate consolidated tax returns. The Company's accounting for income taxes represents management's best estimate of various events and transactions. Deferred tax assets and liabilities resulting from temporary differences between the financial reporting and tax bases of assets and liabilities are measured at the balance sheet date using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. The realization of deferred tax assets depends upon the existence of sufficient taxable income within the carryback or carryforward periods under the tax law in the applicable tax jurisdiction. Valuation allowances are established when management determines, based on available information, that it is more likely than not that deferred income tax assets will not be realized. Significant judgment is required in determining whether valuation allowances should be established as well as the amount of such allowances. When making such determination, consideration is given to, among other things, the following: (i) future taxable income exclusive of reversing temporary differences and carryforwards; (ii) future reversals of existing taxable temporary differences; (iii) taxable income in prior carryback years; and (iv) tax planning strategies. The Company may be required to change its provision for income taxes in certain circumstances. Examples of such circumstances include when the ultimate deductibility of certain items is challenged by taxing authorities (See also Note 13) or when estimates used in determining valuation allowances on deferred tax assets significantly change or when receipt of new information indicates the need for adjustment in valuation allowances. Additionally, future events, such as changes in tax laws, tax regulations, or interpretations of such laws or regulations, could have an impact on the provision for income tax and the effective tax rate. Any such changes could significantly affect the amounts reported in the consolidated financial statements in the year these changes occur. As described more fully in "Adoption of New Accounting Pronouncements", the Company adopted FIN No. 48, Accounting for Uncertainty in Income Taxes -- An Interpretation of FASB Statement No. 109 ("FIN 48") effective January 1, 2007. Under FIN 48, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. Unrecognized tax benefits due to tax uncertainties that do not meet the threshold are included within other liabilities and are charged to earnings in the period that such determination is made. The Company classifies interest recognized as interest expense and penalties recognized as a component of income tax. F-20 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Reinsurance The Company enters into reinsurance transactions as both a provider and a purchaser of reinsurance for its life insurance products. For each of its reinsurance contracts, the Company determines if the contract provides indemnification against loss or liability relating to insurance risk in accordance with applicable accounting standards. The Company reviews all contractual features, particularly those that may limit the amount of insurance risk to which the reinsurer is subject or features that delay the timely reimbursement of claims. For reinsurance of existing in-force blocks of long-duration contracts that transfer significant insurance risk, the difference, if any, between the amounts paid (received), and the liabilities ceded (assumed) related to the underlying contracts is considered the net cost of reinsurance at the inception of the contract. The net cost of reinsurance is recorded as an adjustment to DAC and recognized as a component of other expenses on a basis consistent with the way the acquisition costs on the underlying reinsured contracts would be recognized. Subsequent amounts paid (received) on the reinsurance of in-force blocks, as well as amounts paid (received) related to new business, are recorded as ceded (assumed) premiums and ceded (assumed) future policy benefit liabilities are established. For prospective reinsurance of short-duration contracts that meet the criteria for reinsurance accounting, amounts paid (received) are recorded as ceded (assumed) premiums and ceded (assumed) unearned premiums and are reflected as a component of premiums and other receivables (future policy benefits). Such amounts are amortized through earned premiums over the remaining contract period in proportion to the amount of protection provided. For retroactive reinsurance of short-duration contracts that meet the criteria of reinsurance accounting, amounts paid (received) in excess of (which do not exceed) the related insurance liabilities ceded (assumed) are recognized immediately as a loss. Any gains on such retroactive contracts are deferred and recorded in other liabilities. The gains are amortized primarily using the recovery method. The assumptions used to account for both long and short-duration reinsurance contracts are consistent with those used for the underlying contracts. Ceded policyholder and contract related liabilities, other than those currently due, are reported gross on the balance sheet. Amounts currently recoverable under reinsurance contracts are included in premiums and other receivables and amounts currently payable are included in other liabilities. Such assets and liabilities relating to reinsurance contracts with the same reinsurer may be recorded net on the balance sheet, if a right of offset exists within the reinsurance contract. Premiums, fees and policyholder benefits and claims include amounts assumed under reinsurance contracts and are net of reinsurance ceded. If the Company determines that a reinsurance contract does not expose the reinsurer to a reasonable possibility of a significant loss from insurance risk, the Company records the contract using the deposit method of accounting. Deposits received are included in other liabilities and deposits made are included within other assets. As amounts are paid or received, consistent with the underlying contracts, the deposit assets or liabilities are adjusted. Interest on such deposits is recorded as other revenues or other expenses, as appropriate. Periodically, the Company evaluates the adequacy of the expected payments or recoveries and adjusts the deposit asset or liability through other revenues or other expenses, as appropriate. Amounts received from reinsurers for policy administration are reported in other revenues. Accounting for reinsurance requires extensive use of assumptions and estimates, particularly related to the future performance of the underlying business and the potential impact of counterparty credit risks. The Company periodically reviews actual and anticipated experience compared to the aforementioned assumptions used to establish assets and liabilities relating to ceded and assumed reinsurance and evaluates the financial strength of F-21 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) counterparties to its reinsurance agreements using criteria similar to that evaluated in the security impairment process discussed previously. Separate Accounts Separate accounts are established in conformity with insurance laws and are generally not chargeable with liabilities that arise from any other business of the Company. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. The Company reports separately, as assets and liabilities, investments held in separate accounts and liabilities of the separate accounts if (i) such separate accounts are legally recognized; (ii) assets supporting the contract liabilities are legally insulated from the Company's general account liabilities; (iii) investments are directed by the contractholder; and (iv) all investment performance, net of contract fees and assessments, is passed through to the contractholder. The Company reports separate account assets meeting such criteria at their fair value. Investment performance (including investment income, net investment gains (losses) and changes in unrealized gains (losses)) and the corresponding amounts credited to contractholders of such separate accounts are offset within the same line in the consolidated statements of income. The Company's revenues reflect fees charged to the separate accounts, including mortality charges, risk charges, policy administration fees, investment management fees and surrender charges. Employee Benefit Plans The Company's employees, who meet specified eligibility requirements, participate in pension, other postretirement and postemployment plans in various forms. These benefit plans are accounted for following the guidance outlined in Statement of Financial Accounting Standards ("SFAS") No. 87, Employers' Accounting for Pensions ("SFAS 87"), SFAS No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions, SFAS No. 112, Employers Accounting for Postemployment Benefits -- An Amendment of FASB Statements No. 5 and No. 43 and as of December 31, 2006, SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and SFAS No. 132(r) ("SFAS 158"). The obligations and expenses associated with these plans require an extensive use of assumptions such as the discount rate, expected rate of return on plan assets, rate of future compensation increases, healthcare cost trend rates, as well as assumptions regarding participant demographics such as rate and age of retirements, withdrawal rates, and mortality. Management, in consultation with its external actuarial firm, determines these assumptions based upon a variety of factors such as historical performance of the plan and its assets, currently available market and industry data, and expected benefit payout streams. The assumptions used may differ materially from actual results due to, among other factors, changing market and economic conditions and changes in participant demographics. These differences may have a significant effect on the Company's consolidated financial statements and liquidity. As described more fully in "Adoption of New Accounting Pronouncements", effective December 31, 2006, the Company adopted SFAS 158. Effective with the adoption of SFAS 158 on December 31, 2006, the Company recognizes the funded status of the benefit obligations for each of its plans on the consolidated balance sheet. The actuarial gains or losses, prior service costs and credits, and the remaining net transition asset or obligation that had not yet been included in net periodic benefit costs as of December 31, 2006 are now charged, net of income tax, to accumulated other comprehensive income. Additionally, these changes eliminated the additional minimum pension liability provisions of SFAS 87. Foreign Currency Balance sheet accounts of foreign operations are translated at the exchange rates in effect at each year-end and income and expense accounts are translated at the average rates of exchange prevailing during the year. The local currencies of foreign operations generally are the functional currencies unless the local economy is highly F-22 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) inflationary. Translation adjustments are charged or credited directly to other comprehensive income or loss. Gains and losses from foreign currency transactions are reported as net investment gains (losses) in the period in which they occur. Litigation Contingencies The Company is a party to a number of legal actions and is involved in a number of regulatory investigations. Given the inherent unpredictability of these matters, it is difficult to estimate the impact on the Company's financial position. Liabilities are established when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. On a quarterly and annual basis, the Company reviews relevant information with respect to liabilities for litigation, regulatory investigations and litigation-related contingencies to be reflected in the Company's consolidated financial statements. It is possible that an adverse outcome in certain of the Company's litigation and regulatory investigations, or the use of different assumptions in the determination of amounts recorded could have a material effect upon the Company's consolidated net income or cash flows. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Income Taxes Effective January 1, 2007, the Company adopted FIN 48. FIN 48 clarifies the accounting for uncertainty in income tax recognized in a company's financial statements. FIN 48 requires companies to determine whether it is "more likely than not" that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. It also provides guidance on the recognition, measurement, and classification of income tax uncertainties, along with any related interest and penalties. Previously recorded income tax benefits that no longer meet this standard are required to be charged to earnings in the period that such determination is made. As a result of the implementation of FIN 48, the Company recognized a $6 million increase in the liability for unrecognized tax benefits and a $5 million increase in the interest liability for unrecognized tax benefits, offset by $11 million of minority interest, resulting in no corresponding change to the January 1, 2007 balance of retained earnings. See also Note 13. Insurance Contracts Effective January 1, 2007, the Company adopted SOP 05-1 which provides guidance on accounting by insurance enterprises for DAC on internal replacements of insurance and investment contracts other than those specifically described in SFAS 97, Accounting and Reporting by Insurance Enterprises for Certain Long- Duration Contracts and for Realized Gains and Losses from the Sale of Investments. SOP 05-1 defines an internal replacement and is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. In addition, in February 2007, the American Institute of Certified Public Accountants ("AICPA") issued related Technical Practice Aids ("TPAs") to provide further clarification of SOP 05-1. The TPAs became effective concurrently with the adoption of SOP 05-1. As a result of the adoption of SOP 05-1 and the related TPAs, if an internal replacement modification substantially changes a contract, then the DAC is written off immediately through income and any new deferrable costs associated with the new replacement are deferred. If a contract modification does not substantially change the contract, the DAC amortization on the original contract will continue and any acquisition costs associated with the related modification are immediately expensed. The adoption of SOP 05-1 and the related TPAs resulted in a reduction to DAC and VOBA on January 1, 2007 and an acceleration of the amortization period relating primarily to the Company's group life and health insurance contracts that contain certain rate reset provisions. Prior to the adoption of SOP 05-1, DAC on such contracts was amortized over the expected renewable life of the contract. Upon adoption of SOP 05-1, DAC on such contracts is to F-23 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) be amortized over the rate reset period. The impact as of January 1, 2007 was a cumulative effect adjustment of ($5) million, net of income tax of ($3) million, which was recorded as a reduction to retained earnings. Defined Benefit and Other Postretirement Plans Effective December 31, 2006, the Company adopted SFAS 158. The pronouncement revises financial reporting standards for defined benefit pension and other postretirement plans by requiring the: (i) recognition in the statement of financial position of the funded status of defined benefit plans measured as the difference between the fair value of plan assets and the benefit obligation, which is the projected benefit obligation for pension plans and the accumulated postretirement benefit obligation for other postretirement plans; (ii) recognition as an adjustment to accumulated other comprehensive income (loss), net of income tax, those amounts of actuarial gains and losses, prior service costs and credits, and net asset or obligation at transition that have not yet been included in net periodic benefit costs as of the end of the year of adoption; (iii) recognition of subsequent changes in funded status as a component of other comprehensive income; (iv) measurement of benefit plan assets and obligations as of the date of the statement of financial position; and (v) disclosure of additional information about the effects on the employer's statement of financial position. The adoption of SFAS 158 resulted in a reduction of $1 million, net of income tax, to accumulated other comprehensive income, which is included as a component of total consolidated stockholder's equity. As the Company's measurement date for its pension and other postretirement benefit plans is already December 31 there was no impact of adoption due to changes in measurement date. See also "Summary of Significant Accounting Policies and Critical Accounting Estimates" and Note 15. Derivative Financial Instruments The Company has adopted guidance relating to derivative financial instruments as follows: - Effective January 1, 2006, the Company adopted prospectively SFAS No. 155, Accounting for Certain Hybrid Instruments ("SFAS 155"). SFAS 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging ("SFAS 133"), and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("SFAS 140"). SFAS 155 allows financial instruments that have embedded derivatives to be accounted for as a whole, eliminating the need to bifurcate the derivative from its host, if the holder elects to account for the whole instrument on a fair value basis. In addition, among other changes, SFAS 155: (i) clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS 133; (ii) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation; (iii) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and F-24 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (iv) amends SFAS 140 to eliminate the prohibition on a qualifying special-purpose entity ("QSPE") from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial interest. The adoption of SFAS 155 did not have a material impact on the Company's consolidated financial statements. - Effective October 1, 2006, the Company adopted SFAS 133 Implementation Issue No. B40, Embedded Derivatives: Application of Paragraph 13(b) to Securitized Interests in Prepayable Financial Assets ("Issue B40"). Issue B40 clarifies that a securitized interest in prepayable financial assets is not subject to the conditions in paragraph 13(b) of SFAS 133, if it meets both of the following criteria: (i) the right to accelerate the settlement if the securitized interest cannot be controlled by the investor; and (ii) the securitized interest itself does not contain an embedded derivative (including an interest rate-related derivative) for which bifurcation would be required other than an embedded derivative that results solely from the embedded call options in the underlying financial assets. The adoption of Issue B40 did not have a material impact on the Company's consolidated financial statements. - Effective January 1, 2006, the Company adopted prospectively SFAS 133 Implementation Issue No. B38, Embedded Derivatives: Evaluation of Net Settlement with Respect to the Settlement of a Debt Instrument through Exercise of an Embedded Put Option or Call Option ("Issue B38") and SFAS 133 Implementation Issue No. B39, Embedded Derivatives: Application of Paragraph 13(b) to Call Options That Are Exercisable Only by the Debtor ("Issue B39"). Issue B38 clarifies that the potential settlement of a debtor's obligation to a creditor occurring upon exercise of a put or call option meets the net settlement criteria of SFAS 133. Issue B39 clarifies that an embedded call option, in which the underlying is an interest rate or interest rate index, that can accelerate the settlement of a debt host financial instrument should not be bifurcated and fair valued if the right to accelerate the settlement can be exercised only by the debtor (issuer/borrower) and the investor will recover substantially all of its initial net investment. The adoption of Issues B38 and B39 did not have a material impact on the Company's consolidated financial statements. Other Effective January 1, 2007, the Company adopted SFAS No. 156, Accounting for Servicing of Financial Assets -- an amendment of FASB Statement No. 140 ("SFAS 156"). Among other requirements, SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in certain situations. The adoption of SFAS 156 did not have an impact on the Company's consolidated financial statements. Effective November 15, 2006, the Company adopted U.S. Securities and Exchange Commission Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements ("SAB 108"). SAB 108 provides guidance on how prior year misstatements should be considered when quantifying misstatements in current year financial statements for purposes of assessing materiality. SAB 108 requires that registrants quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying a misstatement that, when relevant quantitative and qualitative factors are considered, is material. SAB 108 permits companies to initially apply its provisions by either restating prior financial statements or recording a cumulative effect adjustment to the carrying values of assets and liabilities as of January 1, 2006 with an offsetting adjustment to retained earnings for errors that were previously deemed immaterial but are material under the guidance in SAB 108. The adoption of SAB 108 did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2006, the Company adopted prospectively Emerging Issues Task Force ("EITF") Issue No. 05-7, Accounting for Modifications to Conversion Options Embedded in Debt Instruments and Related Issues ("EITF 05- 7"). EITF 05-7 provides guidance on whether a modification of conversion options embedded in debt results in an extinguishment of that debt. In certain situations, companies may change the terms of an embedded F-25 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) conversion option as part of a debt modification. The EITF concluded that the change in the fair value of an embedded conversion option upon modification should be included in the analysis of EITF Issue No. 96-19, Debtor's Accounting for a Modification or Exchange of Debt Instruments, to determine whether a modification or extinguishment has occurred and that a change in the fair value of a conversion option should be recognized upon the modification as a discount (or premium) associated with the debt, and an increase (or decrease) in additional paid-in capital. The adoption of EITF 05-7 did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2006, the Company adopted EITF Issue No. 05-8, Income Tax Consequences of Issuing Convertible Debt with a Beneficial Conversion Feature ("EITF 05-8"). EITF 05-8 concludes that: (i) the issuance of convertible debt with a beneficial conversion feature results in a basis difference that should be accounted for as a temporary difference; and (ii) the establishment of the deferred tax liability for the basis difference should result in an adjustment to additional paid-in capital. EITF 05-8 was applied retrospectively for all instruments with a beneficial conversion feature accounted for in accordance with EITF Issue No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, and EITF Issue No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments. The adoption of EITF 05-8 did not have a material impact on the Company's consolidated financial statements. Effective January 1, 2006, the Company adopted SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3 ("SFAS 154"). SFAS 154 requires retrospective application to prior periods' financial statements for a voluntary change in accounting principle unless it is deemed impracticable. It also requires that a change in the method of depreciation, amortization, or depletion for long-lived, non- financial assets be accounted for as a change in accounting estimate rather than a change in accounting principle. The adoption of SFAS 154 did not have a material impact on the Company's consolidated financial statements. In June 2005, the EITF reached consensus on Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights ("EITF 04-5"). EITF 04-5 provides a framework for determining whether a general partner controls and should consolidate a limited partnership or a similar entity in light of certain rights held by the limited partners. The consensus also provides additional guidance on substantive rights. EITF 04-5 was effective after June 29, 2005 for all newly formed partnerships and for any pre- existing limited partnerships that modified their partnership agreements after that date. For all other limited partnerships, EITF 04-5 required adoption by January 1, 2006 through a cumulative effect of a change in accounting principle recorded in opening equity or applied retrospectively by adjusting prior period financial statements. The adoption of the provisions of EITF 04-5 did not have a material impact on the Company's consolidated financial statements. Effective November 9, 2005, the Company prospectively adopted the guidance in FASB Staff Position ("FSP") No. FAS 140-2, Clarification of the Application of Paragraphs 40(b) and 40(c) of FAS 140 ("FSP 140-2"). FSP 140-2 clarified certain criteria relating to derivatives and beneficial interests when considering whether an entity qualifies as a QSPE. Under FSP 140-2, the criteria must only be met at the date the QSPE issues beneficial interests or when a derivative financial instrument needs to be replaced upon the occurrence of a specified event outside the control of the transferor. The adoption of FSP 140-2 did not have a material impact on the Company's consolidated financial statements. Effective July 1, 2005, the Company adopted SFAS No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 ("SFAS 153"). SFAS 153 amended prior guidance to eliminate the exception for nonmonetary exchanges of similar productive assets and replaced it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS 153 were required to be applied prospectively for fiscal periods beginning after June 15, 2005. The adoption of SFAS 153 did not have a material impact on the Company's consolidated financial statements. F-26 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Effective July 1, 2005, the Company adopted EITF Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements ("EITF 05-6"). EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. As required by EITF 05-6, the Company adopted this guidance on a prospective basis which had no material impact on the Company's consolidated financial statements. In June 2005, the FASB completed its review of EITF Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments ("EITF 03-1"). EITF 03-1 provides accounting guidance regarding the determination of when an impairment of debt and marketable equity securities and investments accounted for under the cost method should be considered other-than- temporary and recognized in income. EITF 03-1 also requires certain quantitative and qualitative disclosures for debt and marketable equity securities classified as available-for-sale or held-to-maturity under SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, that are impaired at the balance sheet date but for which an other-than-temporary impairment has not been recognized. The FASB decided not to provide additional guidance on the meaning of other-than-temporary impairment but has issued FSP Nos. FAS 115-1 and FAS 124-1, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments ("FSP 115-1"), which nullifies the accounting guidance on the determination of whether an investment is other-than-temporarily impaired as set forth in EITF 03-1. As required by FSP 115-1, the Company adopted this guidance on a prospective basis, which had no material impact on the Company's consolidated financial statements, and has provided the required disclosures. FUTURE ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS Fair Value In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. Effective January 1, 2008, the Company adopted SFAS 157 and applied the provisions of the statement prospectively to assets and liabilities measured and disclosed at fair value. In addition to new disclosure requirements, the adoption of SFAS 157 changes the valuation of certain freestanding derivatives by moving from a mid to bid pricing convention as well as changing the valuation of embedded derivatives associated with annuity contracts. The change in valuation of embedded derivatives associated with annuity contracts results from the incorporation of risk margins and the Company's own credit standing in their valuation. While the Company does not expect such changes in valuation to have a material impact on the Company's financial statements at January 1, 2008, the addition of risk margins and the Company's own credit spread in the valuation of embedded derivatives associated with annuity contracts may result in significant volatility in the Company's consolidated net income. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 permits entities the option to measure most financial instruments and certain other items at fair value at specified election dates and to report related unrealized gains and losses in earnings. The fair value option is generally applied on an instrument-by-instrument basis and is generally an irrevocable election. Effective January 1, 2008, the Company did not elect the fair value option for any instruments. Accordingly, there was no impact on the Company's retained earnings or equity as of January 1, 2008. In June 2007, the AICPA issued SOP 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies ("SOP 07-1") . Upon adoption of SOP 07-1, the Company must also adopt the provisions of FASB Staff Position No. FIN 46(r)-7, Application of FASB Interpretation No. 46 to Investment Companies ("FSP FIN 46(r)-7"), which permanently exempts investment companies from applying the provisions of FIN No. 46(r), Consolidation of Variable Interest Entities -- An Interpretation of Accounting Research Bulletin No. 51, and its December 2003 revision ("FIN 46(r)") to investments carried at fair value. SOP 07-1 provides guidance for determining whether an entity falls within the scope of the AICPA Audit and Accounting Guide Investment Companies and whether investment company accounting should be retained by a parent company upon F-27 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) consolidation of an investment company subsidiary or by an equity method investor in an investment company. In certain circumstances, SOP 07-1 precludes retention of specialized accounting for investment companies (i.e., fair value accounting), when similar direct investments exist in the consolidated group and are measured on a basis inconsistent with that applied to investment companies. Additionally, SOP 07-1 precludes retention of specialized accounting for investment companies if the reporting entity does not distinguish through documented policies the nature and type of investments to be held in the investment companies from those made in the consolidated group where other accounting guidance is being applied. In February 2008, the FASB issued FSP No. SOP 7-1-1, Effective Date of AICPA Statement of Position 07-1, which delays indefinitely the effective date of SOP 07-1. The Company is closely monitoring further FASB developments. In May 2007, the FASB issued FSP No. FIN 39-1, Amendment of FASB Interpretation No. 39 ("FSP 39-1"). FSP 39-1 amends FIN No. 39, Offsetting of Amounts Related to Certain Contracts ("FIN 39"), to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. FSP 39-1 also amends FIN 39 for certain terminology modifications. FSP 39-1 applies to fiscal years beginning after November 15, 2007. FSP 39-1 will be applied retrospectively, unless it is impracticable to do so. Upon adoption of FSP 39-1, the Company is permitted to change its accounting policy to offset or not offset fair value amounts recognized for derivative instruments under master netting arrangements. The adoption of FSP 39-1 will not have an impact on the Company's financial statements. Business Combinations In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations -- A Replacement of FASB Statement No. 141 ("SFAS 141(r)") and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements -- An Amendment of ARB No. 51 ("SFAS 160") which are effective for fiscal years beginning after December 15, 2008. Under SFAS 141(r) and SFAS 160: - All business combinations (whether full, partial, or "step" acquisitions) result in all assets and liabilities of an acquired business being recorded at fair value, with limited exceptions. - Acquisition costs are generally expensed as incurred; restructuring costs associated with a business combination are generally expensed as incurred subsequent to the acquisition date. - The fair value of the purchase price, including the issuance of equity securities, is determined on the acquisition date. - Certain acquired contingent liabilities are recorded at fair value at the acquisition date and subsequently measured at either the higher of such amount or the amount determined under existing guidance for non-acquired contingencies. - Changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally affect income tax expense. - Noncontrolling interests (formerly known as "minority interests") are valued at fair value at the acquisition date and are presented as equity rather than liabilities. - When control is attained on previously noncontrolling interests, the previously held equity interests are remeasured at fair value and a gain or loss is recognized. - Purchases or sales of equity interests that do not result in a change in control are accounted for as equity transactions. - When control is lost in a partial disposition, realized gains or losses are recorded on equity ownership sold and the remaining ownership interest is remeasured and holding gains or losses are recognized. F-28 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The pronouncements are effective for fiscal years beginning on or after December 15, 2008 and apply prospectively to business combinations. Presentation and disclosure requirements related to noncontrolling interests must be retrospectively applied. The Company is currently evaluating the impact of SFAS 141(r) on its accounting for future acquisitions and the impact of SFAS 160 on its consolidated financial statements. Other In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities -- An Amendment of FASB Statement No. 133 ("SFAS 161"). SFAS 161 requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS 161 on its consolidated financial statements. In February 2008, the FASB issued FSP No. FAS 140-3, Accounting for Transfers of Financial Assets and Repurchase Financing Transactions ("FSP 140- 3"). FSP 140-3 provides guidance for evaluating whether to account for a transfer of a financial asset and repurchase financing as a single transaction or as two separate transactions. FSP 140-3 is effective prospectively for financial statements issued for fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact of FSP 140-3 on its consolidated financial statements. In January 2008, the FASB cleared SFAS 133 Implementation Issue E23, Clarification of the Application of the Shortcut Method ("Issue E23"). Issue E23 amends SFAS 133 by permitting interest rate swaps to have a non-zero fair value at inception, as long as the difference between the transaction price (zero) and the fair value (exit price), as defined by SFAS 157, is solely attributable to a bid-ask spread. In addition, entities would not be precluded from assuming no ineffectiveness in a hedging relationship of interest rate risk involving an interest bearing asset or liability in situations where the hedged item is not recognized for accounting purposes until settlement date as long as the period between trade date and settlement date of the hedged item is consistent with generally established conventions in the marketplace. Issue E23 is effective for hedging relationships designated on or after January 1, 2008. The Company does not expect the adoption of Issue E23 to have a material impact on its consolidated financial statements. In December 2007, the FASB ratified as final the consensus on EITF Issue No. 07-6, Accounting for the Sale of Real Estate When the Agreement Includes a Buy-Sell Clause ("EITF 07-6"). EITF 07-6 addresses whether the existence of a buy-sell arrangement would preclude partial sales treatment when real estate is sold to a jointly owned entity. The consensus concludes that the existence of a buy-sell clause does not necessarily preclude partial sale treatment under current guidance. EITF 07-6 applies prospectively to new arrangements entered into and assessments on existing transactions performed in fiscal years beginning after December 15, 2008. The Company does not expect the adoption of EITF 07-6 to have a material impact on its consolidated financial statements. 2. DISPOSITIONS On May 1, 2006, the Company sold Paragon to its ultimate parent, MetLife. The Company received consideration of $71 million, net of cash sold of $5 million. Immediately following the sale, MetLife merged Paragon with and into MLIC. The amount received below book value was recorded as a return of capital to MLIC of $9 million. Total assets and total liabilities of Paragon at December 31, 2005 were $727 million and $643 million, respectively. Total revenues of Paragon included in the Company's consolidated revenues were $23 million and $61 million for the years ended December 31, 2006 and 2005, respectively. In March 2005, the Company sold its White Oak and Krisman subsidiaries to MLIC for consideration of $44 million. The amount received above book value was recorded as a capital contribution from MLIC of $7 million. F-29 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Total assets and total liabilities of the entities sold at December 31, 2004 were $40 million and $3 million, respectively. Total revenues of the entities sold included in the Company's consolidated revenues were less than $1 million for the year ended December 31, 2005. 3. INVESTMENTS FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized gain and loss, and estimated fair value of the Company's fixed maturity and equity securities, the percentage that each sector represents by the total fixed maturity securities holdings and by the total equity securities holdings at:
DECEMBER 31, 2007 ---------------------------------------------- GROSS COST OR UNREALIZED AMORTIZED ------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ------ ---- ---------- ----- (IN MILLIONS) U.S. corporate securities............. $ 5,940 $ 129 $163 $ 5,906 34.1% Foreign government securities......... 2,486 868 8 3,346 19.3 Residential mortgage-backed securities.......................... 3,142 25 26 3,141 18.2 Foreign corporate securities.......... 1,986 170 39 2,117 12.2 Commercial mortgage-backed securities.......................... 1,517 20 19 1,518 8.8 Asset-backed securities............... 820 2 48 774 4.5 U.S. Treasury/agency securities....... 372 14 -- 386 2.2 State and political subdivision securities.......................... 56 -- 1 55 0.3 Other fixed maturity securities....... 103 -- 29 74 0.4 ------- ------ ---- ------- ----- Total fixed maturity securities..... $16,422 $1,228 $333 $17,317 100.0% ======= ====== ==== ======= ===== Non-redeemable preferred stocks....... $ 159 $ 2 $ 21 $ 140 83.3% Common stocks......................... 28 -- -- 28 16.7 ------- ------ ---- ------- ----- Total equity securities............. $ 187 $ 2 $ 21 $ 168 100.0% ======= ====== ==== ======= =====
F-30 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2006 ---------------------------------------------- GROSS COST OR UNREALIZED AMORTIZED ------------- ESTIMATED % OF COST GAIN LOSS FAIR VALUE TOTAL --------- ------ ---- ---------- ----- (IN MILLIONS) U.S. corporate securities............. $ 5,714 $ 153 $ 71 $ 5,796 35.9% Foreign government securities......... 1,947 687 5 2,629 16.3 Residential mortgage-backed securities.......................... 3,158 13 33 3,138 19.5 Foreign corporate securities.......... 1,519 153 13 1,659 10.3 Commercial mortgage-backed securities.......................... 1,259 14 14 1,259 7.8 Asset-backed securities............... 854 4 2 856 5.3 U.S. Treasury/agency securities....... 657 3 5 655 4.1 State and political subdivision securities.......................... 72 1 1 72 0.4 Other fixed maturity securities....... 102 -- 32 70 0.4 ------- ------ ---- ------- ----- Total fixed maturity securities..... $15,282 $1,028 $176 $16,134 100.0% ======= ====== ==== ======= ===== Non-redeemable preferred stocks....... $ 191 $ 4 $ 2 $ 193 91.9% Common stocks......................... 14 3 -- 17 8.1 Total equity securities............. $ 205 $ 7 $ 2 $ 210 100.0% ======= ====== ==== ======= =====
The Company held foreign currency derivatives with notional amounts of $839 million and $670 million to hedge the exchange rate risk associated with foreign denominated fixed maturity securities at December 31, 2007 and 2006, respectively. The Company is not exposed to any significant concentrations of credit risk in its equity securities portfolio. The Company is exposed to concentrations of credit risk related to U.S. Treasury securities and obligations of U.S. government corporations and agencies. Additionally, at December 31, 2007 and 2006, the Company had exposure to fixed maturity securities backed by sub-prime mortgages with estimated fair values of $285 million and $349 million, respectively, and unrealized losses of $28 million and less than $1 million, respectively. These securities are classified within asset-backed securities in the immediately preceding table. At December 31, 2007, 14% have been guaranteed by financial guarantors, of which 27% was guaranteed by financial guarantors who remain Aaa rated through March 2008. Overall, at December 31, 2007, $729 million of the estimated fair value of the Company's fixed maturity securities were credit enhanced by financial guarantors of which $375 million, $227 million and $127 million at December 31, 2007, are included within asset-backed securities, corporate securities and state and political subdivision securities, respectively, and 86% were guaranteed by financial guarantors who remained Aaa rated through March 2008. The Company held fixed maturity securities at estimated fair values that were below investment grade or not rated by an independent rating agency that totaled $488 million and $452 million at December 31, 2007 and 2006, respectively. These securities had net unrealized gains of $4 million and $18 million at December 31, 2007 and 2006, respectively. Non-income producing fixed maturity securities were less than $1 million at December 31, 2007. There were no non-income producing fixed maturity securities at December 31, 2006. Net unrealized gains associated with non-income producing fixed maturity securities were less than $1 million at December 31, 2007. F-31 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The amortized cost and estimated fair value of fixed maturity securities, by contractual maturity date (excluding scheduled sinking funds), are as follows:
DECEMBER 31, ----------------------------------------------- 2007 2006 ---------------------- ---------------------- AMORTIZED ESTIMATED AMORTIZED ESTIMATED COST FAIR VALUE COST FAIR VALUE --------- ---------- --------- ---------- (IN MILLIONS) Due in one year or less................. $ 269 $ 276 $ 326 $ 331 Due after one year through five years... 2,290 2,348 2,052 2,103 Due after five years through ten years.. 2,615 2,668 2,649 2,680 Due after ten years..................... 5,769 6,592 4,984 5,767 ------- ------- ------- ------- Subtotal.............................. 10,943 11,884 10,011 10,881 Mortgage-backed and other asset-backed securities............................ 5,479 5,433 5,271 5,253 ------- ------- ------- ------- Total fixed maturity securities....... $16,422 $17,317 $15,282 $16,134 ======= ======= ======= =======
Fixed maturity securities not due at a single maturity date have been included in the above table in the year of final contractual maturity. Actual maturities may differ from contractual maturities due to the exercise of prepayment options. Sales or disposals of fixed maturity and equity securities classified as available-for-sale are as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Proceeds............................................ $2,572 $3,989 $5,608 Gross investment gains.............................. $ 36 $ 47 $ 99 Gross investment losses............................. $ (59) $ (67) $ (65)
F-32 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) UNREALIZED LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the estimated fair value and gross unrealized loss of the Company's fixed maturity (aggregated by sector) and equity securities in an unrealized loss position, aggregated by length of time that the securities have been in a continuous unrealized loss position at:
DECEMBER 31, 2007 --------------------------------------------------------------------------- EQUAL TO OR GREATER THAN LESS THAN 12 MONTHS 12 MONTHS TOTAL ----------------------- ----------------------- ----------------------- GROSS GROSS GROSS ESTIMATED UNREALIZED ESTIMATED UNREALIZED ESTIMATED UNREALIZED FAIR VALUE LOSS FAIR VALUE LOSS FAIR VALUE LOSS ---------- ---------- ---------- ---------- ---------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) U.S. corporate securities.......... $1,914 $105 $1,048 $ 58 $2,962 $163 Foreign government securities...... 231 3 101 5 332 8 Residential mortgage-backed securities....................... 690 14 705 12 1,395 26 Foreign corporate securities....... 510 23 254 16 764 39 Commercial mortgage-backed securities....................... 154 6 529 13 683 19 Asset-backed securities............ 557 37 117 11 674 48 U.S. Treasury/agency securities.... 1 -- -- -- 1 -- State and political subdivision securities....................... 28 1 15 -- 43 1 Other fixed maturity securities.... 74 29 -- -- 74 29 ------ ---- ------ ---- ------ ---- Total fixed maturity securities.. $4,159 $218 $2,769 $115 $6,928 $333 ====== ==== ====== ==== ====== ==== Equity securities.................. $ 92 $ 19 $ 15 $ 2 $ 107 $ 21 ====== ==== ====== ==== ====== ==== Total number of securities in an unrealized loss position......... 1,160 607 ====== ======
DECEMBER 31, 2006 --------------------------------------------------------------------------- EQUAL TO OR GREATER THAN LESS THAN 12 MONTHS 12 MONTHS TOTAL ----------------------- ----------------------- ----------------------- GROSS GROSS GROSS ESTIMATED UNREALIZED ESTIMATED UNREALIZED ESTIMATED UNREALIZED FAIR VALUE LOSS FAIR VALUE LOSS FAIR VALUE LOSS ---------- ---------- ---------- ---------- ---------- ---------- (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) U.S. corporate securities.......... $1,397 $19 $1,322 $ 52 $2,719 $ 71 Foreign government securities...... 267 4 31 1 298 5 Residential mortgage-backed securities....................... 855 7 1,267 26 2,122 33 Foreign corporate securities....... 407 8 139 5 546 13 Commercial mortgage-backed securities....................... 319 1 508 13 827 14 Asset-backed securities............ 272 1 60 1 332 2 U.S. Treasury/agency securities.... 458 4 60 1 518 5 State and political subdivision securities....................... 29 -- 13 1 42 1 Other fixed maturity securities.... 71 32 -- -- 71 32 ------ --- ------ ---- ------ ---- Total fixed maturity securities.. $4,075 $76 $3,400 $100 $7,475 $176 ====== === ====== ==== ====== ==== Equity securities.................. $ 49 $ 1 $ 16 $ 1 $ 65 $ 2 ====== === ====== ==== ====== ==== Total number of securities in an unrealized loss position......... 907 676 ====== ======
F-33 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) AGING OF GROSS UNREALIZED LOSS FOR FIXED MATURITY AND EQUITY SECURITIES AVAILABLE-FOR-SALE The following tables present the cost or amortized cost, gross unrealized loss and number of securities for fixed maturity and equity securities, where the estimated fair value had declined and remained below cost or amortized cost by less than 20%, or 20% or more at:
DECEMBER 31, 2007 ------------------------------------------------------------ COST OR AMORTIZED GROSS UNREALIZED NUMBER OF COST LOSS SECURITIES ------------------ ------------------ ------------------ LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Less than six months.................... $2,388 $159 $ 94 $43 550 88 Six months or greater but less than nine months................................ 1,243 10 64 3 340 8 Nine months or greater but less than twelve months......................... 715 -- 40 -- 186 -- Twelve months or greater................ 2,864 10 107 3 595 4 ------ ---- ---- --- Total................................. $7,210 $179 $305 $49 ====== ==== ==== ===
DECEMBER 31, 2006 ------------------------------------------------------------ COST OR AMORTIZED GROSS UNREALIZED NUMBER OF COST LOSS SECURITIES ------------------ ------------------ ------------------ LESS THAN 20% OR LESS THAN 20% OR LESS THAN 20% OR 20% MORE 20% MORE 20% MORE --------- ------ --------- ------ --------- ------ (IN MILLIONS, EXCEPT NUMBER OF SECURITIES) Less than six months.................... $3,369 $ 8 $ 58 $ 2 621 4 Six months or greater but less than nine months................................ 184 -- 3 -- 78 -- Nine months or greater but less than twelve months......................... 640 -- 14 -- 204 -- Twelve months or greater................ 3,516 1 101 -- 675 1 ------ --- ---- --- Total................................. $7,709 $ 9 $176 $ 2 ====== === ==== ===
At December 31, 2007 and 2006, $305 million and $176 million, respectively, of unrealized losses related to securities with an unrealized loss position of less than 20% of cost or amortized cost, which represented 4% and 2%, respectively, of the cost or amortized cost of such securities. At December 31, 2007, $49 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 27% of the cost or amortized cost of such securities. Of such unrealized losses of $49 million, $43 million related to securities that were in an unrealized loss position for a period of less than six months. At December 31, 2006, $2 million of unrealized losses related to securities with an unrealized loss position of 20% or more of cost or amortized cost, which represented 22% of the cost or amortized cost of such securities. All such unrealized losses related to securities that were in an unrealized loss position for a period of less than six months. The Company held no fixed maturity and equity securities with a gross unrealized loss at December 31, 2007 of greater than $10 million. The Company held one fixed maturity security with a gross unrealized loss at December 31, 2006 of equal to or greater than $10 million. This security represented 6%, or $10 million in the aggregate, of the gross unrealized loss on fixed maturity and equity securities. F-34 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) At December 31, 2007 and 2006, the Company had $354 million and $178 million, respectively, of gross unrealized losses related to its fixed maturity and equity securities. These securities are concentrated, calculated as a percentage of gross unrealized loss, as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- SECTOR: U.S. corporate securities.................................... 46% 40% Asset-backed securities...................................... 14 1 Foreign corporate securities................................. 11 7 Residential mortgage-backed securities....................... 7 19 Commercial mortgage-backed securities........................ 5 8 Other........................................................ 17 25 --- --- Total...................................................... 100% 100% === === INDUSTRY: Finance...................................................... 37% 11% Asset-backed................................................. 14 1 Mortgage-backed.............................................. 12 27 Utility...................................................... 8 13 Industrial................................................... 6 16 Government................................................... 2 6 Other........................................................ 21 26 --- --- Total...................................................... 100% 100% === ===
As described more fully in Note 1, the Company performs a regular evaluation, on a security-by-security basis, of its investment holdings in accordance with its impairment policy in order to evaluate whether such securities are other-than-temporarily impaired. One of the criteria which the Company considers in its other-than-temporary impairment analysis is its intent and ability to hold securities for a period of time sufficient to allow for the recovery of their value to an amount equal to or greater than cost or amortized cost. The Company's intent and ability to hold securities considers broad portfolio management objectives such as asset/liability duration management, issuer and industry segment exposures, interest rate views and the overall total return focus. In following these portfolio management objectives, changes in facts and circumstances that were present in past reporting periods may trigger a decision to sell securities that were held in prior reporting periods. Decisions to sell are based on current conditions or the Company's need to shift the portfolio to maintain its portfolio management objectives including liquidity needs or duration targets on asset/liability managed portfolios. The Company attempts to anticipate these types of changes and if a sale decision has been made on an impaired security and that security is not expected to recover prior to the expected time of sale, the security will be deemed other-than- temporarily impaired in the period that the sale decision was made and an other- than-temporary impairment loss will be recognized. Based upon the Company's current evaluation of the securities in accordance with its impairment policy, the cause of the decline being principally attributable to the general rise in interest rates during the holding period, and the Company's current intent and ability to hold the fixed maturity and equity securities with unrealized losses for a period of time sufficient for them to recover, the Company has concluded that the aforementioned securities are not other-than-temporarily impaired. F-35 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SECURITIES LENDING The Company participates in a securities lending program whereby blocks of securities, which are included in fixed maturity and equity securities, are loaned to third parties, primarily major brokerage firms. The Company requires a minimum of 102% of the fair value of the loaned securities to be separately maintained as collateral for the loans. Securities with a cost or amortized cost of $1,372 million and $1,566 million and an estimated fair value of $1,392 million and $1,587 million were on loan under the program at December 31, 2007 and 2006, respectively. Securities loaned under such transactions may be sold or repledged by the transferee. The Company was liable for cash collateral under its control of $1,434 million and $1,640 million at December 31, 2007 and 2006, respectively. There was no security collateral on deposit from customers in connection with the securities lending transactions at December 31, 2007 and 2006. ASSETS ON DEPOSIT AND HELD IN TRUST AND ASSETS PLEDGED AS COLLATERAL The Company had investment assets on deposit with regulatory agencies with a fair market value of $1,368 million and $1,009 million at December 31, 2007 and 2006, respectively, consisting primarily of fixed maturity securities. Company securities held in trust to satisfy collateral requirements had a cost or amortized cost of $2,307 million and $2,228 million at December 31, 2007 and 2006, respectively, consisting primarily of fixed maturity and equity securities. Certain of the Company's fixed maturity securities are pledged as collateral for various derivative transactions as described in Note 4. MORTGAGE LOANS ON REAL ESTATE Mortgage loans on real estate are categorized as follows:
DECEMBER 31, ----------------------------------- 2007 2006 ---------------- ---------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- (IN MILLIONS) Commercial mortgage loans..................... $1,033 96% $925 95% Agricultural mortgage loans................... 42 4 46 5 ------ --- ---- --- Total....................................... 1,075 100% 971 100% === === Less: Valuation allowances.................... 2 -- ------ ---- Mortgage loans on real estate............... $1,073 $971 ====== ====
Mortgage loans on real estate are collateralized by properties primarily located in the United States. At December 31, 2007, 22%, 12% and 7% of the value of the Company's mortgage loans on real estate were collateralized by property located in California, Florida and Illinois, respectively. Generally, the Company, as the lender, only loans up to 75% of the purchase price of the underlying real estate. Information regarding loan valuation allowances for mortgage loans on real estate is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Balance at January 1,.................................. $-- $ 1 $ 3 Additions.............................................. 2 -- -- Deductions............................................. -- (1) (2) --- --- --- Balance at December 31,................................ $ 2 $-- $ 1 === === ===
F-36 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A portion of the Company's mortgage loans on real estate was impaired and consisted of the following:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Impaired loans with valuation allowances..................... $6 $ 6 Less: Valuation allowances on impaired loans................. 2 -- -- --- Impaired loans............................................. $4 $ 6 == ===
The average investment on impaired loans was $6 million, $1 million and $3 million for the years ended December 31, 2007, 2006 and 2005, respectively. Interest income on impaired loans was less than $1 million for each of the years ended December 31, 2007, 2006 and 2005. REAL ESTATE HOLDINGS Real estate holdings consisted of the following:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Real estate.................................................. $ 68 $ 68 Accumulated depreciation..................................... (16) (14) ---- ---- Net real estate.............................................. 52 54 Real estate joint ventures................................... 3 2 ---- ---- Total real estate holdings................................. $ 55 $ 56 ==== ====
All of the Company's real estate holdings are classified as held-for- investment. Related depreciation expense on real estate was $2 million, $1 million and $1 million for the years ended December 31, 2007, 2006 and 2005, respectively. Real estate holdings were categorized as follows:
DECEMBER 31, ----------------------------------- 2007 2006 ---------------- ---------------- AMOUNT PERCENT AMOUNT PERCENT ------ ------- ------ ------- (IN MILLIONS) Office........................................ $37 67% $37 66% Industrial.................................... 16 29 17 30 Retail........................................ 2 4 2 4 --- --- --- --- Total real estate holdings.................. $55 100% $56 100% === === === ===
The Company's real estate holdings are located in the United States. At December 31, 2007, 95% of the Company's real estate holdings were located in California. OTHER LIMITED PARTNERSHIP INTERESTS The carrying value of other limited partnership interests (which primarily represent ownership interests in pooled investment funds that make private equity investments in companies in the United States and overseas) was $33 million and $20 million at December 31, 2007 and 2006, respectively. Included within other limited partnership interests at December 31, 2007 are $9 million of hedge funds. The Company had no hedge funds included within other limited partnership interests at December 31, 2006. For the year ended December 31, 2007, net investment F-37 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) income from other limited partnership interests included a loss of less than $1 million, related to hedge funds. The Company did not have net investment income from other limited partnership interests related to hedge funds for the years ended December 31, 2006 and 2005. FUNDS WITHHELD AT INTEREST Funds withheld at interest, included in other invested assets, were $4,508 million and $3,806 million at December 31, 2007 and 2006, respectively. NET INVESTMENT INCOME The components of net investment income are as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Fixed maturity securities........................... $ 951 $ 864 $ 772 Equity securities................................... 15 16 11 Mortgage loans on real estate....................... 65 63 75 Policy loans........................................ 164 154 159 Real estate and real estate joint ventures.......... 11 12 11 Other limited partnership interests................. (4) (1) (5) Cash, cash equivalents and short-term investments... 29 17 11 Interest on funds held at interest.................. 277 257 192 Other............................................... 16 16 9 ------ ------ ------ Total investment income........................... 1,524 1,398 1,235 Less: Investment expenses........................... 105 96 64 ------ ------ ------ Net investment income............................. $1,419 $1,302 $1,171 ====== ====== ======
For the years ended December 31, 2007 and 2006, there was no affiliated net investment income related to fixed maturity securities. For the year ended December 31, 2005, affiliated net investment income related to fixed maturity securities was less than $1 million and is included in the table above. For each of the years ended December 31, 2007 and 2006, affiliated investment expenses of $5 million are included in the table above. For the year ended December 31, 2005, there were no affiliated investment expenses. See Related Party Investment Transactions for discussion of affiliated net investment income related to short-term investments included in the table above. F-38 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NET INVESTMENT GAINS (LOSSES) The components of net investment gains (losses) are as follows:
YEARS ENDED DECEMBER 31, ------------------- 2007 2006 2005 ----- ---- ---- (IN MILLIONS) Fixed maturity securities.............................. $ (32) $(27) $ 32 Equity securities...................................... -- 6 -- Mortgage loans on real estate.......................... (2) 1 10 Real estate and real estate joint ventures............. 1 -- 4 Derivatives............................................ (257) 8 (15) Other.................................................. 22 (2) 26 ----- ---- ---- Net investment gains (losses)........................ $(268) $(14) $ 57 ===== ==== ====
For the years ended December 31, 2007 and 2005, affiliated net investment gains of less then $1 million and $29 million, respectively, are included in the table above. There were no affiliated net investment gains (losses) for the year ended December 31, 2006. The Company periodically disposes of fixed maturity and equity securities at a loss. Generally, such losses are insignificant in amount or in relation to the cost basis of the investment, are attributable to declines in fair value occurring in the period of the disposition or are as a result of management's decision to sell securities based on current conditions or the Company's need to shift the portfolio to maintain its portfolio management objectives. Losses from fixed maturity and equity securities deemed other-than- temporarily impaired, included within net investment gains (losses), were $9 million, $1 million and $2 million for the years ended December 31, 2007, 2006 and 2005, respectively. NET UNREALIZED INVESTMENT GAINS (LOSSES) The components of net unrealized investment gains (losses), included in accumulated other comprehensive income, are as follows:
YEARS ENDED DECEMBER 31, --------------------- 2007 2006 2005 ----- ----- ----- (IN MILLIONS) Fixed maturity securities............................ $ 893 $ 852 $ 997 Equity securities.................................... (19) 5 2 Derivatives.......................................... (2) (2) (2) Minority interest.................................... (150) (159) (171) Other................................................ (28) (20) (39) ----- ----- ----- Subtotal........................................... 694 676 787 ----- ----- ----- Amounts allocated from DAC and VOBA.................. (97) (27) (45) Deferred income tax.................................. (249) (280) (311) ----- ----- ----- Subtotal........................................... (346) (307) (356) ----- ----- ----- Net unrealized investment gains (losses)............. $ 348 $ 369 $ 431 ===== ===== =====
F-39 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The changes in net unrealized investment gains (losses) are as follows:
YEARS ENDED DECEMBER 31, ------------------- 2007 2006 2005 ---- ----- ---- (IN MILLIONS) Balance, January 1,................................... $369 $ 431 $356 Unrealized investment gains (losses) during the year.. 18 (111) 94 Unrealized gains (losses) relating to: DAC and VOBA........................................ (70) 18 42 Deferred income tax................................. 31 31 (61) ---- ----- ---- Balance, December 31,................................. $348 $ 369 $431 ==== ===== ==== Net change in unrealized investment gains (losses).... $(21) $ (62) $ 75 ==== ===== ====
VARIABLE INTEREST ENTITIES The following table presents the total assets of and maximum exposure to loss relating to variable interest entities ("VIEs") for which the Company has concluded that it holds significant variable interests but it is not the primary beneficiary and which have not been consolidated:
DECEMBER 31, 2007 ----------------------- NOT PRIMARY BENEFICIARY ----------------------- MAXIMUM TOTAL EXPOSURE TO ASSETS(1) LOSS(2) --------- ----------- (IN MILLIONS) Other limited partnership interest(3).................. $ 7 $ 5 Trust preferred securities(4).......................... 5,275 67 ------ --- Total................................................ $5,282 $72 ====== ===
- -------- (1) The assets of the other limited partnership interests and trust preferred securities are reflected at the carrying amounts at which such assets would have been reflected on the Company's consolidated balance sheet had the Company consolidated the VIE from the date of its initial investment in the entity. (2) The maximum exposure to loss relating to other limited partnership interests and trust preferred securities is equal to the carrying amounts plus any unfunded commitments, reduced by amounts guaranteed by other partners. Such a maximum loss would be expected to occur only upon bankruptcy of the issuer or investee. (3) Other limited partnership interests include partnerships established for the purpose of investing in public and private debt and equity securities. (4) Trust preferred securities are complex, uniquely structured investments which contain features of both equity and debt, may have an extended or no stated maturity, and may be callable at the issuer's option after a defined period of time. RELATED PARTY INVESTMENT TRANSACTIONS As of December 31, 2007 and 2006, the Company held $224 million and $238 million, respectively, of its total invested assets in the MetLife Intermediate Income Pool, an affiliated partnership. These amounts are included in short-term investments. Net investment income from these invested assets was $15 million, $4 million and less than $1 million for the years ended December 31, 2007, 2006 and 2005, respectively. F-40 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In the normal course of business, the Company transfers invested assets, primarily consisting of fixed maturity securities, to and from affiliates. Assets transferred to and from affiliates, inclusive of amounts related to reinsurance agreements, are as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Estimated fair value of assets transferred to affiliates......................................... $19 $-- $536 Amortized cost of assets transferred to affiliates... $19 $-- $501 Net investment gains (losses) recognized on transfers.......................................... $-- $-- $ 35 Estimated fair value of assets transferred from affiliates......................................... $10 $-- $382
4. DERIVATIVE FINANCIAL INSTRUMENTS TYPES OF DERIVATIVE FINANCIAL INSTRUMENTS The following table presents the notional amount and current market or fair value of derivative financial instruments held at:
DECEMBER 31, 2007 DECEMBER 31, 2006 ------------------------------- ------------------------------- CURRENT MARKET CURRENT MARKET OR FAIR VALUE OR FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Interest rate swaps...................... $ 422 $38 $ 1 $ 359 $29 $ 2 Financial futures........................ 213 1 2 213 2 -- Foreign currency swaps................... 226 -- 11 31 -- 4 Foreign currency forwards................ 815 38 -- 643 20 -- Financial forwards....................... -- -- -- -- -- 1 Credit default swaps..................... 395 1 2 241 -- -- ------ --- --- ------ --- --- Total.................................. $2,071 $78 $16 $1,487 $51 $ 7 ====== === === ====== === ===
The above table does not include notional amounts for equity futures and equity variance swaps. At December 31, 2007, the Company owned 160 equity futures. The Company did not own equity futures at December 31, 2006. Fair values of equity futures are included in financial futures in the preceding table. At both December 31, 2007 and 2006, the Company owned 4,500 equity variance swaps. Fair values of equity variance swaps are included in financial forwards in the preceding table. F-41 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table presents the notional amount of derivative financial instruments by maturity at December 31, 2007:
REMAINING LIFE ------------------------------------------------------------------------------------ AFTER ONE YEAR AFTER FIVE YEARS ONE YEAR OR LESS THROUGH FIVE YEARS THROUGH TEN YEARS AFTER TEN YEARS TOTAL ---------------- ------------------ ----------------- --------------- ------ (IN MILLIONS) Interest rate swaps..... $ 18 $ 91 $ 66 $247 $ 422 Financial futures....... 213 -- -- -- 213 Foreign currency swaps.. -- 5 20 201 226 Foreign currency forwards.............. 807 -- -- 8 815 Credit default swaps.... -- 147 23 225 395 ------ ---- ---- ---- ------ Total................. $1,038 $243 $109 $681 $2,071 ====== ==== ==== ==== ======
Interest rate swaps are used by the Company primarily to reduce market risks from changes in interest rates and to alter interest rate exposure arising from mismatches between assets and liabilities (duration mismatches). In an interest rate swap, the Company agrees with another party to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts as calculated by reference to an agreed notional principal amount. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by the counterparty at each due date. In exchange-traded interest rate (Treasury and swap) and equity futures transactions, the Company agrees to purchase or sell a specified number of contracts, the value of which is determined by the different classes of interest rate and equity securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. The Company enters into exchange-traded futures with regulated futures commission merchants that are members of the exchange. Exchange-traded interest rate (Treasury and swap) futures are used primarily to hedge mismatches between the duration of assets in a portfolio and the duration of liabilities supported by those assets, to hedge against changes in value of securities the Company owns or anticipates acquiring and to hedge against changes in interest rates on anticipated liability issuances by replicating Treasury or swap curve performance. The value of interest rate futures is substantially impacted by changes in interest rates and they can be used to modify or hedge existing interest rate risk. Exchange-traded equity futures are used primarily to hedge liabilities embedded in certain variable annuity products offered by the Company. Foreign currency derivatives, including foreign currency swaps and foreign currency forwards, are used by the Company to reduce the risk from fluctuations in foreign currency exchange rates associated with its assets and liabilities denominated in foreign currencies. The Company also uses foreign currency forwards and swaps to hedge the foreign currency risk associated with certain of its net investments in foreign operations. In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another at a forward exchange rate calculated by reference to an agreed upon principal amount. The principal amount of each currency is exchanged at the inception and termination of the currency swap by each party. In a foreign currency forward transaction, the Company agrees with another party to deliver a specified amount of an identified currency at a specified future date. The price is agreed upon at the time of the contract and payment for such a contract is made in a different currency at the specified future date. F-42 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Equity variance swaps are used by the Company primarily to hedge minimum guarantees embedded in certain variable annuity products offered by the Company. In an equity variance swap, the Company agrees with another party to exchange amounts in the future, based on changes in equity volatility over a defined period. Equity variance swaps are included in financial forwards in the preceding table. Certain credit default swaps are used by the Company to hedge against credit-related changes in the value of its investments and to diversify its credit risk exposure in certain portfolios. In a credit default swap transaction, the Company agrees with another party, at specified intervals, to pay a premium to insure credit risk. If a credit event, as defined by the contract, occurs, generally the contract will require the swap to be settled gross by the delivery of par quantities of the referenced investment equal to the specified swap notional in exchange for the payment of cash amounts by the counterparty equal to the par value of the investment surrendered. Credit default swaps are also used to synthetically create investments that are either more expensive to acquire or otherwise unavailable in the cash markets. These transactions are a combination of a derivative and a cash instrument such as a U.S. Treasury or Agency security. HEDGING The following table presents the notional amount and fair value of derivatives by type of hedge designation at:
DECEMBER 31, 2007 DECEMBER 31, 2006 ------------------------------- ------------------------------- FAIR VALUE FAIR VALUE NOTIONAL -------------------- NOTIONAL -------------------- AMOUNT ASSETS LIABILITIES AMOUNT ASSETS LIABILITIES -------- ------ ----------- -------- ------ ----------- (IN MILLIONS) Fair value...................... $ 17 $-- $ 1 $ 3 $-- $-- Cash flow....................... 4 -- -- 9 -- -- Foreign operations.............. 197 -- 5 -- -- -- Non-qualifying.................. 1,853 78 10 1,475 51 7 ------ --- --- ------ --- --- Total......................... $2,071 $78 $16 $1,487 $51 $ 7 ====== === === ====== === ===
The Company recognized insignificant net investment income (expense) from settlement payments related to qualifying hedges for the years ended December 31, 2007, 2006 and 2005. The Company recognized net investment gains (losses) from settlement payments related to non-qualifying hedges of $3 million, $3 million, and $11 million for the years ended December 31, 2007, 2006 and 2005, respectively. FAIR VALUE HEDGES The Company utilizes interest rate swaps to convert fixed rate investments to floating rate investments. The Company designates and accounts for these interest rate swaps as fair value hedges when they have met the requirements of SFAS 133. The Company recognized net investment gains (losses) representing the ineffective portion of all fair value hedges as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Changes in the fair value of derivatives.............. $(1) $-- $-- Changes in the fair value of the items hedged......... 1 -- -- --- --- --- Net ineffectiveness of fair value hedging activities.. $-- $-- $-- === === ===
F-43 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued fair value hedge accounting due to a hedged firm commitment no longer qualifying as a fair value hedge. CASH FLOW HEDGES The Company designates and accounts for the following as cash flow hedges, when they have met the requirements of SFAS 133: (i) interest rate swaps to convert floating rate investments to fixed rate investments; (ii) interest rate swaps to convert floating rate liabilities to fixed rate liabilities; and (iii) foreign currency swaps to hedge the foreign currency cash flow exposure of foreign currency denominated investments. For the years ended December 31, 2007 and 2006, the Company did not recognize any net investment gains (losses) as the ineffective portion of all cash flow hedges. For the year ended December 31, 2005, the Company recognized an insignificant amount in net investment gains (losses), which represent the ineffective portion of all cash flow hedges. All components of each derivative's gain or loss were included in the assessment of hedge effectiveness. There were no instances in which the Company discontinued cash flow hedge accounting because the forecasted transactions did not occur on the anticipated date or in the additional time period permitted by SFAS 133. There were no hedged forecasted transactions, other than the receipt or payment of variable interest payments for the years ended December 31, 2007, 2006 and 2005. For the years ended December 31, 2007 and 2006, the net amount deferred in other comprehensive income (loss) relating to cash flow hedges was insignificant. For the year ended December 31, 2005, the net amount deferred in other comprehensive income (loss) relating to cash flow hedges was ($2) million. At December 31, 2007, 2006 and 2005, the net amount accumulated in other comprehensive income (loss) relating to cash flow hedges was ($2) million. At December 31, 2007, insignificant amounts of the deferred net gains (losses) on derivatives accumulated in other comprehensive income (loss) is expected to be reclassified to earnings during the year ending December 31, 2008. HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS The Company uses forward exchange contracts to hedge portions of its net investments in foreign operations against adverse movements in exchange rates. The Company measures ineffectiveness on the forward exchange contracts based upon the change in forward rates. There was no ineffectiveness recorded for the years ended December 31, 2007, 2006 and 2005. The Company's consolidated statement of stockholder's equity for the year ended December 31, 2007 includes gains (losses) of ($5) million related to foreign currency contracts used to hedge its net investments in foreign operations. The Company did not record any gains (losses) on foreign currency contracts for the years ended December 31, 2006 and 2005. At December 31, 2007, the cumulative foreign currency translation gain (loss) recorded in accumulated other comprehensive income related to these hedges was approximately ($5) million. There was no foreign currency translation gain (loss) recorded in 2006. When substantially all of the net investments in foreign operations are sold or liquidated, the amounts in accumulated other comprehensive income are reclassified to the consolidated statements of income, while a pro rata portion will be reclassified upon partial sale of the net investments in foreign operations. NON-QUALIFYING DERIVATIVES AND DERIVATIVES FOR PURPOSES OTHER THAN HEDGING The Company enters into the following derivatives that do not qualify for hedge accounting under SFAS 133 or for purposes other than hedging: (i) interest rate swaps and interest rate futures to economically hedge its exposure to interest rate volatility; (ii) foreign currency forwards and swaps to economically hedge its exposure to adverse movements in exchange rates; (iii) credit default swaps to minimize its exposure to adverse movements in credit; F-44 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (iv) equity variance swaps, equity futures and interest rate futures to economically hedge liabilities embedded in certain variable annuity products; and (v) credit default swaps to synthetically create investments. The following table presents changes in fair value related to derivatives that do not qualify for hedge accounting:
YEARS ENDED DECEMBER 31, ------------------------- 2007 2006 2005 ----- ---- ---- (IN MILLIONS) Net investment gains (losses), excluding embedded derivatives....................................... $(110) $(3) $(34)
EMBEDDED DERIVATIVES The Company has certain embedded derivatives that are required to be separated from their host contracts and accounted for as derivatives. These host contracts include modified coinsurance contracts. The following table presents the fair value of the Company's embedded derivatives at:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Embedded derivatives assets.................................. $ 66 $57 Embedded derivatives liabilities............................. $628 $52
The following table presents changes in fair value related to embedded derivatives:
YEARS ENDED DECEMBER 31, ------------------- 2007 2006 2005 ----- ---- ---- (IN MILLIONS) Net investment gains (losses).......................... $(150) $ 7 $ 7 Interest credited to policyholder account balances..... $ (66) $(80) $(45)
CREDIT RISK The Company may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. Generally, the current credit exposure of the Company's derivative contracts is limited to the fair value at the reporting date. The credit exposure of the Company's derivative transactions is represented by the fair value of contracts with a net positive fair value at the reporting date. The Company manages its credit risk related to over-the-counter derivatives by entering into transactions with creditworthy counterparties, maintaining collateral arrangements and through the use of master agreements that provide for a single net payment to be made by one counterparty to another at each due date and upon termination. Because exchange traded futures are effected through regulated exchanges, and positions are marked to market on a daily basis, the Company has minimal exposure to credit-related losses in the event of nonperformance by counterparties to such derivative instruments. The Company enters into various collateral arrangements, which require the accepting of collateral in connection with its derivative instruments. As of December 31, 2007 and 2006, the Company was obligated to return cash collateral under its control of $4 million and $2 million, respectively. This unrestricted cash collateral is included in cash and cash equivalents and the obligation to return it is included in payables for collateral under securities loaned and other transactions in the consolidated balance sheets. The Company has exchange traded futures, which require the pledging of collateral. At both December 31, 2007 and 2006, the Company pledged collateral of $2 million, which is included in fixed maturity securities. The counterparties are permitted by contract to sell or repledge this collateral. F-45 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED Information regarding DAC and VOBA is as follows:
DAC VOBA TOTAL ------ ---- ------ (IN MILLIONS) Balance at January 1, 2005.......................... $2,617 $648 $3,265 Capitalizations................................... 649 -- 649 ------ ---- ------ Subtotal....................................... 3,266 648 3,914 ------ ---- ------ Less: Amortization related to: Net investment gains (losses).................. 12 2 14 Unrealized investment gains (losses)........... (28) (14) (42) Other expenses................................. 652 31 683 ------ ---- ------ Total amortization........................... 636 19 655 ------ ---- ------ Less: Dispositions and other...................... 120 -- 120 ------ ---- ------ Balance at December 31, 2005........................ 2,510 629 3,139 Capitalizations................................... 761 -- 761 ------ ---- ------ Subtotal....................................... 3,271 629 3,900 ------ ---- ------ Less: Amortization related to: Net investment gains (losses).................. 2 (2) -- Unrealized investment gains (losses)........... (3) (15) (18) Other expenses................................. 570 (15) 555 ------ ---- ------ Total amortization........................ 569 (32) 537 ------ ---- ------ Less: Dispositions and other...................... (52) 27 (25) ------ ---- ------ Balance at December 31, 2006........................ 2,754 634 3,388 Effect of SOP 05-1 adoption....................... (3) (5) (8) Capitalizations................................... 810 -- 810 ------ ---- ------ Subtotal....................................... 3,561 629 4,190 ------ ---- ------ Less: Amortization related to: Net investment gains (losses).................. (112) (2) (114) Unrealized investment gains (losses)........... (1) 71 70 Other expenses................................. 644 12 656 ------ ---- ------ Total amortization........................ 531 81 612 ------ ---- ------ Less: Dispositions and other...................... (72) -- (72) ------ ---- ------ Balance at December 31, 2007........................ $3,102 $548 $3,650 ====== ==== ======
The estimated future amortization expense allocated to other expenses for the next five years for VOBA is $39 million in 2008, $33 million in 2009, $33 million in 2010, $35 million in 2011 and $36 million in 2012. Amortization of VOBA and DAC is related to (i) investment gains and losses and the impact of such gains and losses on the amount of the amortization; (ii) unrealized investment gains and losses to provide information regarding the amount that would have been amortized if such gains and losses had been recognized; and (iii) other F-46 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) expenses to provide amounts related to the gross margins or profits originating from transactions other than investment gains and losses. 6. GOODWILL Goodwill, which is included in other assets, is the excess of cost over the fair value of net assets acquired. Information regarding goodwill is as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Balance at January 1,....................................... $131 $134 Dispositions and other, net................................. -- (3) ---- ---- Balance at December 31,..................................... $131 $131 ==== ====
7. INSURANCE INSURANCE LIABILITIES Insurance liabilities are as follows:
DECEMBER 31, ------------------------------------------------------- POLICYHOLDER OTHER FUTURE POLICY ACCOUNT POLICYHOLDER BENEFITS BALANCES FUNDS ----------------- ----------------- --------------- 2007 2006 2007 2006 2007 2006 ------- ------- ------- ------- ------ ------ (IN MILLIONS) Group life.................... $ 34 $ 39 $ -- $ -- $ 1 $ 1 Retirement & savings.......... 35 36 42 65 -- -- Non-medical health & other.... 329 352 -- -- 5 4 Traditional life.............. 4,596 4,616 -- -- 118 113 Universal variable life....... 64 65 3,079 3,069 58 59 Annuities..................... 87 76 886 926 -- -- Reinsurance................... 6,159 5,140 6,657 6,212 2,297 1,978 Other......................... (19) (33) 127 126 13 47 ------- ------- ------- ------- ------ ------ Total....................... $11,285 $10,291 $10,791 $10,398 $2,492 $2,202 ======= ======= ======= ======= ====== ======
Affiliated future policy benefits, included in the table above, were less than $1 million at both December 31, 2007 and 2006. Affiliated policyholder account balances, included in the table above, were less than $1 million at both December 31, 2007 and 2006. Affiliated other policyholder funds, included in the table above, were ($227) million and ($163) million at December 31, 2007 and 2006, respectively. SEPARATE ACCOUNTS Separate account assets and liabilities include two categories of account types: pass-through separate accounts totaling $2,020 million and $1,997 million at December 31, 2007 and 2006, respectively, for which the policyholder assumes all investment risk, and separate accounts with a minimum return or account value for which the Company contractually guarantees either a minimum return or account value to the policyholder which totaled $77 million and $213 million at December 31, 2007 and 2006, respectively. The average interest rate credited on these contracts was 4.14% and 4.02% at December 31, 2007 and 2006, respectively. F-47 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Fees charged to the separate accounts by the Company (including mortality charges, policy administration fees and surrender charges) are reflected in the Company's revenues as universal life and investment-type product policy fees and totaled $57 million, $84 million and $113 million for the years ended December 31, 2007, 2006 and 2005, respectively. For each of the years ended December 31, 2007, 2006 and 2005, there were no investment gains (losses) on transfers of assets from the general account to the separate accounts. OBLIGATIONS UNDER GUARANTEED INTEREST CONTRACT PROGRAM RGA issues fixed and floating rate obligations under its GIC program which are denominated in either U.S. dollars or foreign currencies. During the years ended December 31, 2007, 2006 and 2005, there were no new issuances by RGA under the GIC program. During the years ended December 31, 2007, 2006 and 2005, RGA repaid $5 million, $3 million and $23 million, respectively, of GICs under this program. At December 31, 2007 and 2006, GICs outstanding, which are included in policyholder account balances, were $15 million and $17 million, respectively. During each of the years ended December 31, 2007, 2006 and 2005, interest credited on the contracts, which is included in interest credited to policyholder account balances, was $1 million. GUARANTEES The Company issues annuity contracts which may include contractual guarantees to the contractholder for: (i) return of no less than total deposits made to the contract less any partial withdrawals ("return of net deposits") and (ii) the highest contract value on a specified anniversary date minus any withdrawals following the contract anniversary, or total deposits made to the contract less any partial withdrawals plus a minimum return ("anniversary contract value" or "minimum return"). 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 or at annuitization. The Company also issues universal and variable life contracts where the Company contractually guarantees to the contractholder a secondary guarantee benefit. F-48 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the types of guarantees relating to annuity contracts and universal and variable life contracts is as follows:
DECEMBER 31, ----------------------------------------------------------------- 2007 2006 ------------------------------- ------------------------------- IN THE EVENT OF AT IN THE EVENT OF AT DEATH ANNUITIZATION DEATH ANNUITIZATION --------------- ------------- --------------- ------------- (IN MILLIONS) ANNUITY CONTRACTS (1) TWO TIER ANNUITIES General account value....... N/A $ 286 N/A $ 296 Net amount at risk (2)...... N/A $ 51(4) N/A $ 53(4) Average attained age of contractholders.......... N/A 60 years N/A 58 years DECEMBER 31, ----------------------------------------------------------------- 2007 2006 ------------------------------- ------------------------------- SECONDARY PAID UP SECONDARY PAID UP GUARANTEES GUARANTEES GUARANTEES GUARANTEES --------------- ------------- --------------- ------------- (IN MILLIONS) UNIVERSAL AND VARIABLE LIFE CONTRACTS (1) Account value (general and separate account)........... $ 1,107 N/A $ 1,024 N/A Net amount at risk (2)........ $ 18,250(3) N/A $ 19,066(3) N/A Average attained age of policyholders............... 57 years N/A 56 years N/A
- -------- (1) The Company's annuity and life contracts with guarantees may offer more than one type of guarantee in each contract. Therefore, the amounts listed above may not be mutually exclusive. (2) The net amount at risk is based on the direct amount at risk (excluding reinsurance). (3) The net amount at risk for guarantees of amounts in the event of death is defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. (4) The net amount at risk for two tier annuities is based on the excess of the upper tier, adjusted for a profit margin, less the lower tier. F-49 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Information regarding the liabilities for guarantees (excluding base policy liabilities) relating to annuity and universal and variable life contracts is as follows:
UNIVERSAL AND VARIABLE LIFE CONTRACTS ------------- ANNUITY CONTRACTS ------------- GUARANTEED ANNUITIZATION SECONDARY BENEFITS GUARANTEES TOTAL ------------- ------------- ----- (IN MILLIONS) Balance at January 1, 2005..................... $ 7 $ 5 $12 Incurred guaranteed benefits................... -- 1 1 Paid guaranteed benefits....................... -- -- -- --- --- --- Balance at December 31, 2005................... 7 6 13 Incurred guaranteed benefits................... -- -- -- Paid guaranteed benefits....................... -- -- -- --- --- --- Balance at December 31, 2006................... 7 6 13 Incurred guaranteed benefits................... -- -- -- Paid guaranteed benefits....................... -- -- -- --- --- --- Balance at December 31, 2007................... $ 7 $ 6 $13 === === ===
Account balances of contracts with insurance guarantees are invested in separate account asset classes as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Mutual Fund Groupings Equity..................................................... $18 $16 Bond....................................................... 1 1 Balanced................................................... 2 -- Money Market............................................... 2 3 --- --- Total................................................... $23 $20 === ===
8. REINSURANCE General American's life insurance operations participate in reinsurance activities in order to limit losses, minimize exposure to large risks, and to provide additional capacity for future growth. General American has historically reinsured the mortality risk on new individual life insurance policies primarily on an excess of retention basis or a quota share basis. Until 2005, General American reinsured up to 90% of the mortality risk for all new individual life insurance. This practice was initiated for different products starting at various points in time between the mid-1990's and 2000. During 2005, General American changed its retention practices for certain individual life insurance. Amounts reinsured in prior years remain reinsured under the original reinsurance; however, under the new retention guidelines, General American reinsures up to 90% of the mortality risk in excess of $1 million for most new individual life insurance policies that it writes and for certain individual life policies the retention limits remained unchanged. On a case by case basis, General American may retain up to $2.5 million per life and reinsure 100% of amounts in excess of General American retention limits. RGA retains a maximum of $6 million of coverage per individual life with respect to its assumed business. The Company evaluates its reinsurance programs F-50 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) routinely and may increase or decrease its retention at any time. Placement of reinsurance is done primarily on an automatic basis and also on a facultative basis for risks with specific characteristics. In addition to reinsuring mortality risk as described previously, the Company reinsures other risks, as well as specific coverages. The Company routinely reinsures certain classes of risks in order to limit its exposure to particular travel, avocation and lifestyle hazards. The Company has exposure to catastrophes, which could contribute to significant fluctuations in the Company's results of operations. The Company uses excess of retention and quota share reinsurance arrangements to provide greater diversification of risk and minimize exposure to larger risks. The Company reinsures its business through a diversified group of reinsurers. No single unaffiliated reinsurer has a material obligation to the Company nor is the Company's business substantially dependent upon any reinsurance contracts. The Company is contingently liable with respect to ceded reinsurance should any reinsurer be unable to meet its obligations under these agreements. The amounts in the consolidated statements of income are presented net of reinsurance ceded. Information regarding the effect of reinsurance is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Direct premiums..................................... $ 412 $ 415 $ 445 Reinsurance assumed................................. 5,575 4,737 4,222 Reinsurance ceded................................... (769) (505) (488) ------ ------ ------ Net premiums........................................ $5,218 $4,647 $4,179 ====== ====== ====== Reinsurance recoverables netted against policyholder benefits and claims............................... $ 372 $ 375 $ 321 ====== ====== ======
Reinsurance assumed premiums for the years ended December 31, 2007, 2006 and 2005 include $5,394 million, $4,735 million and $4,220 million, respectively, from RGA, a life reinsurer. Reinsurance recoverables, included in premiums and other receivables, were $1,246 million and $1,137 million at December 31, 2007 and 2006, respectively. Reinsurance and ceded commissions payables, included in other liabilities, were $331 million and $245 million at December 31, 2007 and 2006, respectively. RELATED PARTY REINSURANCE TRANSACTIONS The Company has reinsurance agreements with certain MetLife subsidiaries, including Exeter Reassurance Company, Ltd. ("Exeter Re"), MetLife Insurance Company of Connecticut, MetLife Investors USA Insurance Company ("MLI USA"), Metropolitan Tower Life Insurance Company, New England Life Insurance Company, MLIC and Missouri Reinsurance (Barbados), Inc. ("Missouri Re"), all of which are related parties. At December 31, 2007, the Company had reinsurance-related assets and liabilities from these agreements totaling $760 million and $227 million, respectively. At December 31, 2006, comparable assets and liabilities were $653 million and $171 million, respectively. F-51 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table reflects the related party reinsurance information recorded in income for the:
YEARS ENDED DECEMBER 31, ------------------ 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Assumed premiums....................................... $129 $129 $129 Assumed benefits, included in policyholder benefits and claims............................................... $194 $155 $174 Assumed benefits, included in policyholder dividends... $ 9 $ 7 $ 6 Assumed acquisition costs, included in other expenses.. $ -- $ 1 $ -- Ceded premiums......................................... $ 80 $ 85 $108 Ceded fees, included in universal life and investment- type product policy fees............................. $ 65 $ 90 $260 Interest earned on ceded reinsurance, included in other revenues............................................. $ 2 $ 2 $ 5 Ceded benefits, included in policyholder benefits and claims............................................... $ 25 $ 10 $ 90 Ceded benefits, included in interest credited to policyholder account balances........................ $ 58 $ 54 $ 54 Ceded benefits, included in policyholder dividends..... $ 9 $ 7 $ 6 Interest costs on ceded reinsurance, included in other expenses............................................. $ 5 $ 45 $106
Effective September 30, 2005, the Company recaptured its reinsurance agreement with Missouri Re. This agreement ceded, on a coinsurance basis, all business owned life insurance policies. As a result of the recapture of this agreement, the Company paid a recapture fee of $15 million to Missouri Re and $276 million in assets representing the liabilities on this treaty were transferred from Missouri Re to the Company. Effective January 1, 2005, the Company entered into a reinsurance agreement to cede an in-force block of business to MLI USA. This agreement covers certain term and universal life policies issued by the Company on and after January 1, 2000 through December 31, 2004. The agreement also covers certain term and universal life policies issued on or after January 1, 2005. Under this agreement, the Company transferred $797 million of liabilities and $411 million in assets to MLI USA related to the policies in force as of December 31, 2004. As a result of the transfer of assets, the Company realized a gain of $20 million, net of income taxes. The Company also received and deferred 100% of a $386 million ceding commission resulting in no gain or loss on the transfer of the in-force business as of January 1, 2005. For the policies issued on or after January 1, 2005, the Company ceded premiums and related fees of $121 million, $119 million and $192 million and ceded benefits and related costs of $86 million, $98 million and $143 million for the years ended December 31, 2007, 2006 and 2005, respectively. Reinsurance recoverables, included in premiums and other receivables, related to this reinsurance agreement as of December 31, 2007 and 2006 were $1,096 million and $1,020 million, respectively. Effective January 1, 2005, the Company recaptured its reinsurance agreement with Exeter Re. This agreement ceded, on a modified coinsurance basis, certain policies issued by the Company with universal life secondary guarantees. There was no recapture fee paid since the terms of the recapture agreement for this treaty resulted in no fees due to either party. For the year ended December 31, 2005, the final treaty settlement resulted in a pre-tax gain of $1 million. F-52 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 9. LONG-TERM DEBT AND SHORT-TERM DEBT -- AFFILIATED Long-term debt and short-term debt -- affiliated outstanding is as follows:
INTEREST RATES DECEMBER ------------------------ 31, WEIGHTED ----------- RANGE AVERAGE MATURITY 2007 2006 ------------- -------- --------- ---- ---- (IN MILLIONS) Senior notes..................... 5.63% - 6.75% 6.08% 2011-2017 $497 $200 Fixed rate notes................. 7.25% 7.25% 2008 30 107 Surplus notes.................... 7.63% 7.63% 2024 100 100 Other notes...................... 8% - 12% 9.44% 2009-2016 1 1 ---- ---- Total long-term debt............. 628 408 Total short-term debt -- affiliated............. 50 -- ---- ---- Total.......................... $678 $408 ==== ====
The aggregate maturities of long-term debt as of December 31, 2007 for the next five years are $30 million in 2008, less than $1 million in 2009, less than $1 million in 2010, $200 million in 2011, less than $1 million in 2012 and $398 million thereafter. Unsecured senior debt ranks highest in priority and consists of senior notes, fixed rate notes and other notes with varying interest rates; followed by subordinated debt which consists of junior subordinated debentures and surplus notes. Payments of interest and principal on the Company's surplus notes, which are subordinate to all other debt, may be made only with the prior approval of the insurance department of the state of domicile. SENIOR NOTES In March 2007, RGA issued $300 million of 10-year senior notes with a fixed rate of 5.625%, payable semiannually. RGA used $50 million of the net proceeds of the offering to repay existing debt during the year ended December 31, 2007. RGA repaid a $100 million 7.25% senior note which matured in April 2006. SHORT-TERM DEBT -- AFFILIATED On December 31, 2007, MetLife Credit Corp., an affiliate, issued a $50 million short-term loan to the Company with a fixed rate of 4.82%, which was repaid at maturity on January 2, 2008. The Company used the net proceeds of the loan for general corporate purposes. INTEREST EXPENSE Interest expense related to the Company's indebtedness included in other expenses was $42 million, $30 million and $35 million for the years ended December 31, 2007, 2006 and 2005, respectively, and does not include interest expense on collateral financing arrangements, junior subordinated debt securities or shares subject to mandatory redemption. See Notes 10, 11, and 12. F-53 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CREDIT AND COMMITTED FACILITIES AND LETTERS OF CREDIT Credit Facilities. RGA maintains committed and unsecured credit facilities aggregating $824 million as of December 31, 2007. When drawn upon, these facilities bear interest at varying rates in accordance with the respective agreements. Information on these credit facilities as of December 31, 2007 is as follows:
LETTER OF CREDIT UNUSED BORROWER(S) EXPIRATION CAPACITY ISSUANCES DRAWDOWNS COMMITMENTS - ----------- ---------- -------- --------- --------- ----------- (IN MILLIONS) Reinsurance Group of America, Incorporated....................... May 2008 $ 30 $ -- $30 $ -- Reinsurance Group of America, Incorporated....................... September 2012(1) 750 406 -- 344 Reinsurance Group of America, Incorporated....................... March 2011 44 -- -- 44 ---- ---- --- ---- Total.............................. $824 $406 $30 $388 ==== ==== === ====
- -------- (1) In September 2007, RGA and certain of its subsidiaries entered into a credit agreement with various financial institutions. Under the credit agreement, RGA may borrow and obtain letters of credit for general corporate purposes for its own account or for the account of its subsidiaries with an overall credit facility amount of up to $750 million. The credit agreement replaced a former credit agreement in the amount of up to $600 million which was scheduled to expire on September 29, 2010. Committed Facilities. Information on committed facilities as of December 31, 2007 is as follows:
LETTER OF CREDIT UNUSED MATURITY ACCOUNT PARTY/BORROWER(S) EXPIRATION CAPACITY DRAWDOWNS ISSUANCES COMMITMENTS (YEARS) - ------------------------- ------------ -------- --------- --------- ----------- -------- (IN MILLIONS) Timberlake Financial L.L.C. ................... June 2036(1) $1,000 $850 $-- $150 29 ====== ==== === ====
- -------- (1) As described in Note 10, RGA may, at its option, offer up to $150 million of additional notes under this facility in the future. Letters of Credit. At December 31, 2007, the Company had outstanding $482 million in letters of credit from various financial institutions, of which $406 million were part of credit facilities. As commitments associated with letters of credit and financing arrangements may expire unused, these amounts do not necessarily reflect the Company's actual future cash funding requirements. 10. COLLATERAL FINANCING ARRANGEMENTS In June 2006, Timberlake Financial L.L.C. ("Timberlake Financial"), a subsidiary of RGA, completed an offering of $850 million of Series A Floating Rate Insured Notes due June 2036 in a private placement. Interest on the notes accrues at an annual rate of 1-month LIBOR plus 29 basis points payable monthly. The payment of interest and principal on the notes is insured through a financial guaranty insurance policy with a third party. The notes represent senior, secured indebtedness of Timberlake Financial with no recourse to RGA or its other subsidiaries. Up to $150 million of additional notes may be offered in the future. In order to make payments of principal and interest on the notes, Timberlake Financial will rely upon the receipt of interest and principal payments on surplus notes and dividend payments from its wholly-owned subsidiary, Timberlake Reinsurance Company II ("Timberlake Re"), a South Carolina captive insurance company. The ability of Timberlake Re to make interest and principal payments on the surplus note and dividend payments to Timberlake Financial is contingent upon South Carolina regulatory approval and the performance of specified term life insurance policies with guaranteed level premiums retroceded by RGA's subsidiary, RGA Reinsurance Company ("RGA Reinsurance"), to Timberlake Re. F-54 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Proceeds from the offering of the notes, along with a $113 million direct investment by RGA, collateralize the notes and are not available to satisfy the general obligations of RGA or the Company. Most of these assets were placed in a trust and provide long-term collateral as support for statutory reserves required by U.S. Valuation of Life Policies Model Regulation (commonly referred to as Regulation XXX) on term life insurance policies with guaranteed level premium periods reinsured by RGA Reinsurance. The trust is consolidated by Timberlake Re which in-turn is consolidated by Timberlake Financial. Timberlake Financial is considered to be a VIE and RGA is considered to be the primary beneficiary. As such, the results of Timberlake Financial have been consolidated by RGA and ultimately by the Company. At December 31, 2007, the Company held assets in trust of $899 million associated with the transaction. In addition, the Company held $50 million in custody as of December 31, 2007. The Company's consolidated balance sheets include the assets of Timberlake Financial recorded as fixed maturity securities and other invested assets, which consists of the restricted cash and cash equivalents held in custody. The Company's consolidated statements of income include the investment returns on the assets held as collateral as investment income and the interest on the notes is included as a component of other expenses. Issuance costs associated with the offering of the notes of $13 million have been capitalized, are included in other assets, and are amortized using the effective interest method over the estimated life of the notes. Total interest expense was $52 million and $26 million for the years ended December 31, 2007 and 2006, respectively. 11. JUNIOR SUBORDINATED DEBENTURES In December 2005, RGA issued junior subordinated debentures with a face amount of $400 million. Interest is payable semi-annually at a fixed rate of 6.75% up to but not including the scheduled redemption date, December 15, 2015. The debentures may be redeemed (i) in whole or in part, at any time on or after December 15, 2015 at their principal amount plus accrued and unpaid interest to the date of redemption, or (ii) in whole or in part, prior to December 15, 2015 at their principal amount plus accrued and unpaid interest to the date of redemption or, if greater, a make-whole price. In the event the debentures are not redeemed on or before the scheduled redemption date of December 15, 2015, interest on these debentures will accrue at an annual rate of 3-month LIBOR plus a margin equal to 2.665%, payable quarterly in arrears. The final maturity of the debentures is December 15, 2065. RGA has the right to, and in certain circumstances the requirement to, defer interest payments on the debentures for a period up to ten years. Upon an optional or mandatory deferral of interest payments, RGA is generally not permitted to pay common stock dividends or make payments of interest or principal on securities which rank equal or junior to the subordinated debentures, until the accrued and unpaid interest on the subordinated debentures is paid. Interest compounds during periods of deferral. Issuance costs associated with the offering of the debentures of $6 million have been capitalized, are included in other assets, and are amortized using the effective interest method over the period from the issuance date of the debentures until their scheduled redemption. Interest expense on the debentures was $27 million, $27 million and $2 million for the years ended December 31, 2007, 2006 and 2005, respectively. 12. SHARES SUBJECT TO MANDATORY REDEMPTION AND COMPANY-OBLIGATED MANDATORILY REDEEMABLE SECURITIES OF SUBSIDIARY TRUSTS RGA Capital Trust I. In December 2001, RGA, through its wholly-owned trust, RGA Capital Trust I (the "RGA Trust"), issued 4,500,000 Preferred Income Equity Redeemable Securities ("PIERS") Units. Each PIERS unit consists of: (i) a preferred security issued by the RGA Trust, having a stated liquidation amount of $50 per unit, representing an undivided beneficial ownership interest in the assets of the RGA Trust, which consist solely of junior subordinated debentures issued by RGA which have a principal amount at maturity of $50 and a stated maturity of March 18, 2051; and (ii) a warrant to purchase, at any time prior to December 15, 2050, 1.2508 shares of RGA stock at an exercise price of $50. F-55 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The fair market value of the warrant on the issuance date was $14.87 and is detachable from the preferred security. RGA fully and unconditionally guarantees, on a subordinated basis, the obligations of the Trust under the preferred securities. The preferred securities and subordinated debentures were issued at a discount (original issue discount) to the face or liquidation value of $14.87 per security. The securities will accrete to their $50 face/liquidation value over the life of the security on a level yield basis. The weighted average effective interest rate on the preferred securities and the subordinated debentures is 8.25% per annum. Capital securities outstanding were $159 million, net of unamortized discounts of $66 million, at both December 31, 2007 and 2006. Interest expense on these instruments is included in other expenses and was $13 million for each of the years ended December 31, 2007, 2006 and 2005. 13. INCOME TAXES The provision for income tax is as follows:
YEARS ENDED DECEMBER 31, ------------------- 2007 2006 2005 ---- ----- ---- (IN MILLIONS) Current: Federal.............................................. $(41) $(154) $ 23 Foreign.............................................. 60 41 70 ---- ----- ---- Subtotal............................................. 19 (113) 93 ---- ----- ---- Deferred: Federal.............................................. 93 228 (31) Foreign.............................................. 11 10 4 ---- ----- ---- Subtotal............................................. 104 238 (27) ---- ----- ---- Provision for income tax............................... $123 $ 125 $ 66 ==== ===== ====
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported is as follows:
YEARS ENDED DECEMBER 31, ---------------------- 2007 2006 2005 ---- ---- ---- (IN MILLIONS) Tax provision at U.S. statutory rate.................. $113 $125 $72 Tax effect of: Foreign tax rate differing from U.S. tax rate....... (2) (2) (2) Tax-exempt investment income........................ 2 (2) (1) State and local income taxes........................ -- 1 1 Prior year tax...................................... 8 (2) (2) Valuation allowance for carryforward items.......... 1 -- (2) Other, net.......................................... 1 5 -- ---- ---- --- Provision for income tax.............................. $123 $125 $66 ==== ==== ===
F-56 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following:
DECEMBER 31, ---------------- 2007 2006 ------ ------- (IN MILLIONS) Deferred income tax assets: Employee benefits...................................... $ 64 $ 35 Investments............................................ -- 27 Loss and credit carryforwards.......................... 334 781 Other.................................................. 13 71 ------ ------- 411 914 Less: Valuation allowance.............................. 8 5 ------ ------- 403 909 ------ ------- Deferred income tax liabilities: DAC.................................................... 885 1,141 Liability for future poicy benefits.................... 27 486 Investments............................................ 200 -- Net unrealized investment gains........................ 249 280 Other.................................................. 15 24 ------ ------- 1,376 1,931 ------ ------- Net deferred income tax liability........................ $ (973) $(1,022) ====== =======
The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign subsidiaries, except for RGA International Reinsurance Company Ltd. and RGA Global Reinsurance Company, Ltd., because the Company considers these earnings to be permanently reinvested and does not expect these earnings to be repatriated in the foreseeable future. The Company believes that it is more likely than not that the deferred tax assets established will be realized except for the amount of the valuation allowance. As of December 31, 2007, and 2006, a valuation allowance for deferred tax assets of approximately $8 million and $5 million respectively, was provided on the foreign tax credits, net operating and capital losses of General American Argentina Seguros de Vida, S.A., RGA South Africa Holdings, RGA Financial Products Limited, RGA UK Services Limited, and RGA Reinsurance Company. At December 31, 2007 the Company's subsidiaries had net operating loss carryforwards of $932 million, which begin to expire in 2019, capital loss carryforwards of $11 million, which begin to expire in 2010, and tax credit carryforwards of $4 million, which begin to expire in 2009. The remaining loss carryforwards and tax credit carryforwards are expected to be utilized during the period allowed. Effective January 1, 2006, General American joined with MetLife and its includable affiliates in filing a federal income tax return. General American participates in a tax sharing agreement with MetLife. Under the agreement, current federal income tax expense (benefit) is computed on a separate return basis and provides that members shall make payments or receive reimbursements to the extent that their income (loss) contributes to or reduces consolidated federal tax expense. The consolidating companies are reimbursed for net operating losses or other tax attributes they have generated when utilized in the consolidated return. Pursuant to the tax sharing agreement, the amount due from affiliates is $120 million and $238 million as of December 31, 2007 and 2006, respectively. F-57 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company files income tax returns with the U.S. federal government and various state and local jurisdictions, as well as foreign jurisdictions. General American is under continuous examination by the Internal Revenue Service ("IRS") and other tax authorities in jurisdictions in which General American has significant business operations. The income tax years under examination vary by jurisdiction. With a few exceptions, General American is no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years prior to 2001. Due to a lapse of the statute of limitations, the 2003 tax year is no longer subject to audit. In the first quarter of 2005, the IRS commenced an examination of General American's U.S. income tax returns for 2001 and 2002 that is anticipated to be completed in 2008. RGA files income tax returns with the U.S. federal government and various state and non U.S. jurisdictions. RGA is under continuous examination by the IRS and is subject to audit by taxing authorities in other non U.S. jurisdictions in which RGA has significant business operations. The income tax years under examination vary by jurisdiction. With a few exceptions, RGA is no longer subject to U.S. federal, state and non U.S. income tax examinations by tax authorities for years prior to 2003. As a result of the implementation of FIN 48, the Company recognized a $6 million increase in the liability for unrecognized tax benefits, and a $5 million increase in the interest liability for unrecognized tax benefits, offset by $11 million of minority interest, resulting in no corresponding change to the January 1, 2007 balance of retained earnings. The Company's total amount of unrecognized tax benefits upon adoption of FIN 48 was $217 million. The Company reclassified, at adoption, $41 million of current income tax payables to the liability for unrecognized tax benefits included within other liabilities. The Company also reclassified, at adoption, $170 million of deferred income tax liabilities, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility, to the liability for unrecognized tax benefits. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The total amount of unrecognized tax benefits as of January 1, 2007 that would affect the effective tax rate, if recognized, was $47 million. The Company also had $33 million of accrued interest, included within other liabilities, as of January 1, 2007. The Company classifies interest accrued related to unrecognized tax benefits in interest expense, while penalties are included within income tax expense. As of December 31, 2007, the Company's total amount of unrecognized tax benefits is $222 million, an increase of $5 million from the date of adoption, and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, is $52 million. The Company does not anticipate any material change in the total amount of unrecognized tax benefits over the ensuing 12 month period. A reconciliation of the beginning and ending amount of unrecognized tax benefits, for the year ended December 31, 2007, is as follows:
TOTAL UNRECOGNIZED TAX BENEFITS ------------------ (IN MILLIONS) Balance at January 1, 2007 (date of adoption)............. $217 Reductions for tax positions of prior years............... (6) Additions for tax positions of current year............... 15 Lapses of statutes of limitations......................... (4) ---- Balance at December 31, 2007.............................. $222 ====
During the year ended December 31, 2007, the Company recognized $5 million in interest expense associated with the liability for unrecognized tax benefits. As of December 31, 2007, the Company had $38 million of accrued interest associated with the liability for unrecognized tax benefits. The $5 million increase from the date of adoption in accrued interest resulted from an increase of $19 million of interest expense and a decrease of $14 million primarily related to effectively settled positions. F-58 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which announced its intention to issue regulations with respect to certain computational aspects of the Dividends Received Deduction ("DRD") on separate account assets held in connection with variable annuity contracts. Revenue Ruling 2007-61 suspended a revenue ruling issued in August 2007 that would have changed accepted industry and IRS interpretations of the statutes governing these computational questions. Any regulations that the IRS ultimately proposes for issuance in this area will be subject to public notice and comment, at which time insurance companies and other interested parties will have the opportunity to raise legal and practical questions about the content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations are unknown at this time. For the year ended December 31, 2007, the Company recognized an income tax benefit of $1 million related to the separate account DRD. 14. CONTINGENCIES, COMMITMENTS AND GUARANTEES CONTINGENCIES LITIGATION The Company and certain affiliates have faced numerous claims, including class action lawsuits, alleging improper marketing or sales of individual life insurance policies, annuities, mutual funds or other products. The Company and its affiliates continue to vigorously defend against the claims in these matters. Some sales practices claims have been resolved through settlement. Other sales practices claims have been won by dispositive motions or have gone to trial. Most of the current cases seek substantial damages, including in some cases punitive and treble damages and attorneys' fees. Additional litigation relating to the Company and its affiliates' marketing and sales of individual life insurance, annuities, mutual funds or other products may be commenced in the future. Regulators have requested information relating to market timing and late trading of mutual funds and variable insurance products and, generally, the marketing of products. The Company has been cooperating fully with these inquiries. The Company is not aware of any systemic problems with respect to such matters that may have a material adverse effect on the Company's financial position. Various litigation, claims and assessments against the Company, in addition to those discussed previously and those otherwise provided for in the Company's consolidated financial statements, have arisen in the course of the Company's business, including, but not limited to, in connection with its activities as an insurer, employer, investor, investment advisor or taxpayer. Further, state insurance regulatory authorities or other federal, state or industry authorities may conduct investigations or make inquiries, such as information requests, subpoenas, or books and records examinations, concerning a wide variety of issues, including the Company's compliance with applicable insurance and other laws and regulations. It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings or provide reasonable ranges of potential losses. In some of the matters referred to above, large and/or indeterminate amounts, including punitive and treble damages, are sought. Although in light of these considerations it is possible that an adverse outcome in certain cases could have a material adverse effect upon the Company's financial position, based on information currently known by the Company's management, in its opinion, the outcomes of such pending investigations and legal proceedings are not likely to have such an effect. However, given the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's consolidated net income or cash flows. In 2007, the Company received $39 million, included in other revenues, based on the resolution of an indemnification claim associated with the 2000 acquisition of the Company by MLIC. F-59 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) INSOLVENCY ASSESSMENTS Most of the jurisdictions in which the Company is admitted to transact business require insurers doing business within the jurisdiction to participate in guaranty associations, which are organized to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed insurers. These associations levy assessments, up to prescribed limits, on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the lines of business in which the impaired, insolvent or failed insurer engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. Assessments levied against the Company were less than $1 million for each of the years ended December 31, 2007, 2006, and 2005. At December 31, 2007 and 2006, the Company maintained a liability of $4 million and $5 million, respectively. The related asset for premium tax offsets was $3 million at both December 31, 2007 and 2006 for undiscounted future assessments in respect of impaired, insolvent or failed insurers. The Company maintained at both December 31, 2007 and 2006, an asset related to paid assessments representing currently available premium tax offsets of less than $1 million. COMMITMENTS LEASES The Company, as lessee, has entered into various lease and sublease agreements for office space, data processing and other equipment. Future minimum rental and sublease income, and minimum gross rental payments relating to these lease agreements are as follows:
GROSS RENTAL SUBLEASE RENTAL INCOME INCOME PAYMENTS ------ -------- -------- (IN MILLIONS) 2008............................................... $7 $ 4 $ 9 2009............................................... $4 $ 4 $ 8 2010............................................... $3 $-- $ 7 2011............................................... $2 $-- $ 4 2012............................................... $2 $-- $ 4 Thereafter......................................... $1 $-- $11
COMMITMENTS TO FUND PARTNERSHIP INVESTMENTS The Company makes commitments to fund partnership investments in the normal course of business. The amounts of these unfunded commitments were $164 million and $34 million at December 31, 2007 and 2006, respectively. The Company anticipates that these amounts will be invested in partnerships over the next five years. MORTGAGE LOAN COMMITMENTS The Company commits to lend funds under mortgage loan commitments. The amounts of these mortgage loan commitments were $5 million and $20 million at December 31, 2007 and 2006, respectively. COMMITMENTS TO FUND BANK CREDIT FACILITIES The Company commits to lend funds under bank credit facilities. At December 31, 2007, there were no unfunded commitments. The amount of these unfunded commitments was $11 million at December 31, 2006. F-60 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OTHER COMMITMENTS In December 2005, RGA repurchased 1.6 million shares of its outstanding common stock at an aggregate price of $76 million under an accelerated share repurchase agreement with a major bank. The bank borrowed the stock sold to RGA from third parties and purchased the shares in the open market over the subsequent few months to return to the lenders. RGA would either pay or receive an amount based on the actual amount paid by the bank to purchase the shares. These repurchases resulted in an increase in the Company's ownership percentage of RGA to approximately 53% at December 31, 2005 from approximately 52% at December 31, 2004. In February 2006, the final purchase price was determined, resulting in a cash settlement substantially equal to the aggregate cost. RGA recorded the initial repurchase of shares as treasury stock and recorded the amount received as an adjustment to the cost of the treasury stock. GUARANTEES In the normal course of its business, the Company has provided certain indemnities, guarantees and commitments to third parties pursuant to which it may be required to make payments now or in the future. In the context of acquisition, disposition, investment and other transactions, the Company has provided indemnities and guarantees, including those related to tax, environmental and other specific liabilities, and other indemnities and guarantees that are triggered by, among other things, breaches of representations, warranties or covenants provided by the Company. In addition, in the normal course of business, the Company provides indemnifications to counterparties in contracts with triggers similar to the foregoing, as well as for certain other liabilities, such as third party lawsuits. These obligations are often subject to time limitations that vary in duration, including contractual limitations and those that arise by operation of law, such as applicable statutes of limitation. In some cases, the maximum potential obligation under the indemnities and guarantees is subject to a contractual limitation ranging from less than $2 million to $45 million, with a cumulative maximum of $106 million, while in other cases such limitations are not specified or applicable. Since certain of these obligations are not subject to limitations, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these guarantees in the future. In addition, the Company indemnifies its directors and officers as provided in its charters and by-laws. Also, the Company indemnifies its agents for liabilities incurred as a result of their representation of the Company's interests. Since these indemnities are generally not subject to limitation with respect to duration or amount, the Company does not believe that it is possible to determine the maximum potential amount that could become due under these indemnities in the future. During the year ended December 31, 2007, the Company did not record any liabilities for indemnities, guarantees and commitments. The Company had no liability for indemnities, guarantees and commitments at both December 31, 2007 and 2006. In connection with synthetically created investment transactions, the Company writes credit default swap obligations that generally require payment of principal outstanding due in exchange for the referenced credit obligation. If a credit event, as defined by the contract, occurs the Company's maximum amount at risk, assuming the value of the referenced credits becomes worthless, was $3 million at December 31, 2007. The credit default swaps expire at various times during the next five years. 15. EMPLOYEE BENEFIT PLANS PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS General American's employees, sales representatives and retirees participate in qualified and non-qualified defined benefit pension plans and other postretirement employee benefit plans sponsored by MLIC. Pension benefits are provided utilizing either a traditional formula or cash balance formula. The traditional formula provides benefits based upon years of credited service and either final average or career average earnings. The cash balance F-61 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) formula utilizes hypothetical or notional accounts which credit participants with benefits equal to a percentage of eligible pay as well as earnings credits, determined annually, for each account balance. The majority of the plan's obligation is calculated using the traditional formula. The non-qualified plan provides supplemental pension benefits to certain executive level employees and retirees. General American also provides certain postemployment benefits and certain postretirement medical and life insurance benefits for retired employees through a plan sponsored by MLIC. Employees of General American who were hired prior to 2003 (or, in certain cases, rehired during or after 2003) and meet age and service criteria while working for General American, may become eligible for these other postretirement benefits, at various levels, in accordance with the applicable plans. Virtually all retirees, or their beneficiaries, contribute a portion of the total cost of postretirement medical benefits. Employees hired after 2003 are not eligible for any employer subsidy for postretirement medical benefits. General American is allocated both pension and other postretirement expenses from MLIC associated with benefits provided to its employees and does not bear direct obligation for benefits under these benefit plans. Therefore, the assets and obligations of these benefit plans are not included in the accompanying consolidated balance sheets or the additional disclosure below. General American's share of pension expense was $7 million, $8 million and $8 million for the years ended December 31, 2007, 2006 and 2005, respectively. In addition, General American's share of other postretirement expense was less than $1 million, $3 million and $3 million for the years ended December 31, 2007, 2006 and 2005, respectively. The combined allocated benefit expense is included in the accompanying consolidated statements of income. General American continues to sponsor non-qualified defined benefit pension plans. Accordingly, the obligations and related net periodic expense associated with these plans are included in the accompanying financial statements and the additional disclosures below. These non-qualified plans have ceased accepting new participants. Participants with accrued benefits continue to earn vesting service credits while employed, but are not accruing additional benefits in these plans. RGA sponsors separate defined benefit pension plans for its eligible employees. Also, RGA sponsors a postretirement plan. Employees of RGA may also become eligible for certain postretirement medical and life insurance benefits if they attain retirement age, with sufficient service, while working for RGA. The assets and obligations of the RGA plans, along with the related net periodic expense, are included in the accompanying consolidated financial statements and additional disclosures below. Effective December 31, 2006, the Company adopted SFAS 158. The adoption of SFAS 158 required the recognition of the funded status of defined benefit pension and other postretirement plans and eliminated the additional minimum pension liability provision of SFAS 87. The Company's additional minimum pension liability was $7 million at December 31, 2005, $4 million net of income tax, and was recorded as a reduction of accumulated other comprehensive income. At December 31, 2006, immediately prior to adopting SFAS 158, the Company's additional minimum pension liability was $6 million, $4 million, net of income tax of $2 million, and remained as a reduction of accumulated other comprehensive income. Upon adoption of SFAS 158, the Company eliminated the additional minimum pension liability and recognized as an adjustment to accumulated other comprehensive income, net of income tax, those amounts of actuarial gains and losses, and prior service costs and credits that had not yet been included in net periodic benefit cost at the date of adoption. The following table summarizes the F-62 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) adjustments to the December 31, 2006 consolidated balance sheet as a result of recognizing the funded status of the defined benefit plans:
DECEMBER 31, 2006 ------------------------------------------------- ADDITIONAL MINIMUM PRE PENSION ADOPTION OF POST SFAS 158 LIABILITY SFAS 158 SFAS 158 ADJUSTMENTS ADJUSTMENT ADJUSTMENT ADJUSTMENTS BALANCE SHEET CAPTION ----------- ---------- ----------- ----------- (IN MILLIONS) Other liabilities: Accrued pension benefit cost.......................................... $ (47) $ 1 $ (3) $ (49) Other liabilities: Accrued postretirement benefit cost.................................. $ (7) $-- $(5) $(12) -------- ------- Accumulated other comprehensive income (loss), before income tax: Defined benefit plans......................... $ (7) $ 1 $(8) $(14) Minority interest............................... $-- $ 8 Deferred income tax............................. $-- $(1) Accumulated other comprehensive income (loss), net of income tax: -------- ------- Defined benefit plans......................... $ (4) $ 1 $(1) $ (4) ======== =======
A December 31 measurement date is used for all of the Company's defined benefit pension and other postretirement benefit plans. F-63 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OBLIGATIONS, FUNDED STATUS AND NET PERIODIC BENEFIT COSTS The aggregate projected benefit obligation and aggregate fair value of plan assets for the pension plans were as follows:
DECEMBER 31, ------------------------- OTHER POSTRETIRE- PENSION MENT BENEFITS BENEFITS ----------- ----------- 2007 2006 2007 2006 ---- ---- ---- ---- (IN MILLIONS) Change in projected benefit obligation: Projected benefit obligation at beginning of year.. $ 71 $ 60 $ 12 $ 10 Service cost..................................... 3 3 1 1 Interest cost.................................... 4 4 -- -- Net actuarial (gains) losses..................... (3) 2 (2) 1 Change in benefits............................... -- 5 -- -- Benefits paid.................................... (4) (3) -- -- ---- ---- ---- ---- Benefit obligation at end of year.................. 71 71 11 12 ---- ---- ---- ---- Change in plan assets: Fair value of plan assets at beginning of year..... 22 16 -- -- Actual return on plan assets..................... 1 2 -- -- Employer contribution............................ 5 7 -- -- Benefits paid.................................... (4) (3) -- -- ---- ---- ---- ---- Fair value of plan assets at end of year........... 24 22 -- -- ---- ---- ---- ---- Funded status at end of year....................... $(47) $(49) $(11) $(12) ==== ==== ==== ==== Amounts recognized in consolidated balance sheet consist of: Other liabilities................................ $(47) $(49) $(11) $(12) ==== ==== ==== ==== Accumulated other comprehensive (income) loss: Net actuarial losses............................. $ 19 $ 23 $ 2 $ 5 Prior service credit............................. (11) (14) -- -- ---- ---- ---- ---- 8 9 2 5 Deferred income tax and minority interest........ (6) (7) (1) (3) ---- ---- ---- ---- $ 2 $ 2 $ 1 $ 2 ==== ==== ==== ====
The aggregate projected benefit obligation and aggregate fair value of plan assets for the pension plans were as follows:
NON- QUALIFIED QUALIFIED PLAN PLAN TOTAL ----------- ----------- ----------- 2007 2006 2007 2006 2007 2006 ---- ---- ---- ---- ---- ---- (IN MILLIONS) Aggregate fair value of plan assets....... $24 $22 $ -- $ -- $ 24 $ 22 Aggregate projected benefit obligation.... 26 25 45 46 71 71 --- --- ---- ---- ---- ---- Over (under) funded....................... $(2) $(3) $(45) $(46) $(47) $(49) === === ==== ==== ==== ====
F-64 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The accumulated benefit obligation for all defined benefit pension plans was $65 million and $61 million at December 31, 2007 and 2006, respectively. Information for pension plans with an accumulated benefit obligation in excess of plan assets is as follows:
DECEMBER 31, ----------- 2007 2006 ---- ---- (IN MILLIONS) Projected benefit obligation................................. $45 $45 Accumulated benefit obligation............................... $42 $40 Fair value of plan assets.................................... $-- $--
The projected benefit obligation exceeded assets for all pension and postretirement plans at December 31, 2007 and 2006. The components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income were as follows:
OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS ------------------ ------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- (IN MILLIONS) NET PERIODIC BENEFIT COST Service cost............................. $ 3 $ 3 $ 2 $ 1 $ 1 $ 1 Interest cost............................ 4 4 3 -- -- -- Expected return on plan assets........... (2) (2) (1) -- -- -- Amortization of net actuarial (gains) losses................................ 1 1 1 -- -- -- Amortization of prior service cost (credit).............................. (2) (2) (2) -- -- -- --- --- --- --- --- --- Net periodic benefit cost................ 4 $ 4 $ 3 1 $ 1 $ 1 --- === === --- === === OTHER CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OTHER COMPREHENSIVE INCOME Net acturial (gains) losses.............. (3) (3) Prior Service cost (credit).............. 1 -- Amortization of net actuarial gains (losses).............................. (1) -- Amortization of prior service (cost) credit................................ 2 -- --- --- Total recognized in other comprehensive income................ (1) (3) --- --- Total recognized in net periodic benefit cost and other comprehensive income.............................. $ 3 $(2) === ===
Included in other comprehensive income for the year ended December 31, 2007 are other changes in plan assets and benefit obligations associated with pension benefits of ($1) million and other postretirement benefits of ($3) million for an aggregate reduction in other comprehensive losses of ($4) million before income tax and ($1) million, net of income tax and minority interest for the year ended December 31, 2007. The estimated net actuarial loss and prior service credit for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year are less than $1 million and $2 million, respectively. It is anticipated that no net actuarial loss will be amortized from accumulated other comprehensive income into net periodic benefit cost for the other postretirement plans over the next year. F-65 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) ASSUMPTIONS Assumptions used in determining benefit obligations were as follows:
DECEMBER 31, ---------------------------------- OTHER PENSION POSTRETIREMENT BENEFITS BENEFITS -------------- -------------- 2007 2006 2007 2006 ---- ---- ---- ---- Weighted average discount rate............... 6.24% 5.85% 6.00% 5.75% Rate of compensation increase................ 4.25% 4.25% N/A N/A
Assumptions used in determining net periodic benefit cost were as follows:
DECEMBER 31, --------------------------------------- OTHER POSTRETIREMENT PENSION BENEFITS BENEFITS ------------------ ------------------ 2007 2006 2005 2007 2006 2005 ---- ---- ---- ---- ---- ---- Weighted average discount rate............ 5.75% 5.75% 5.76% 5.75% 5.75% 5.75% Expected rate of return on plan assets.... 8.50% 8.50% 8.50% N/A N/A N/A Rate of compensation increase............. 4.25% 4.25% 4.25% N/A N/A N/A
The discount rate is determined annually based on the yield, measured on a yield to worst basis, of a hypothetical portfolio constructed of high quality debt instruments available on the valuation date, which would provide the necessary future cash flows to pay the aggregate projected benefit obligation when due. The expected rate of return on plan assets is based on anticipated performance of the various asset sectors in which the plan invests, weighted by target allocation percentages. Anticipated future performance is based on long- term historical returns of the plan assets by sector, adjusted for the Company's long-term expectations on the performance of the markets. While the precise expected return derived using this approach will fluctuate from year to year, the Company's policy is to hold this long-term assumption constant as long as it remains within reasonable tolerance from the derived rate. The weighted expected return on plan assets for use in the plan's valuation in 2008 is currently anticipated to be 8.50% for pension benefits. The assumed healthcare cost trend rates used in measuring the accumulated postretirement benefit obligation and net periodic benefit cost were as follows:
DECEMBER 31, ---------------------------------------------- 2007 2006 --------------------- ---------------------- Pre-Medicare eligible claims........ 9% down to 5% in 2012 10% down to 5% in 2012 Medicare eligible claims............ 9% down to 5% in 2012 10% down to 5% in 2012
Assumed healthcare cost trend rates may have a significant effect on the amounts reported for healthcare plans. A one-percentage point change in assumed healthcare cost trend rates would have the following effects:
ONE PERCENT ONE PERCENT INCREASE DECREASE ----------- ----------- (IN THOUSANDS) Effect on total of service and interest cost components......................................... $ 314 $ (235) Effect on accumulated postretirement benefit obligation......................................... $2,372 $(1,827)
F-66 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PLAN ASSETS The targeted and weighted average allocations of the pension plan assets are as follows:
DECEMBER TARGET 31, ------ ----------- 2008 2007 2006 ASSET CATEGORY ------ ---- ---- Equity securities....................................... 75% 75% 76% Fixed maturity securities............................... 25% 25% 24% --- --- --- Total................................................. 100% 100% 100% === === ===
Target allocations of assets are determined with the objective of maximizing returns and minimizing volatility of net assets through adequate asset diversification and partial liability immunization. Adjustments are made to target allocations based on an assessment of the impact of economic factors and market conditions. CASH FLOWS In 2008, the Company expects to make contributions of $4 million to its pension plans, which includes $3 million of benefit payments for its non- qualified pension plans. Benefit payments are funded from the Company's general assets as they become due under the provision of the plans. Other postretirement benefits represent a non-vested, non-guaranteed obligation of the Company and current regulations do not require specific funding levels for these benefits. The Company uses its general assets to pay claims as they come due. The Company does not anticipate making any contributions other than benefits payments to its postretirement plan. Gross benefit payments for the next ten years, which reflect expected future service as appropriate, are expected to be as follows:
PENSION BENEFITS OTHER POSTRETIREMENT BENEFITS ---------------- ----------------------------- (IN MILLIONS) 2008...................................... $ 4 $-- 2009...................................... $ 5 $-- 2010...................................... $ 5 $-- 2011...................................... $ 5 $-- 2012...................................... $ 6 $-- 2013 -- 2017.............................. $31 $ 2
SAVINGS AND INVESTMENT PLANS The Company's employees participate in savings and investment plans for which a portion of employee contributions are matched. The Company's expense was $3 million, $2 million and $3 million to these plans during the years ended December 31, 2007, 2006 and 2005, respectively. 16. EQUITY STATUTORY EQUITY AND INCOME Each insurance company's state of domicile imposes minimum risk-based capital ("RBC") requirements that were developed by the National Association of Insurance Commissioners ("NAIC"). The formulas for determining the amount of RBC specify various weighting factors that are applied to financial balances or various levels of activity based on the perceived degree of risk. Regulatory compliance is determined by a ratio of total adjusted capital, as defined by the NAIC, to authorized control level RBC, as defined by the NAIC. Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective F-67 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) action. General American and RGA's U.S. insurance subsidiaries each exceeded the minimum RBC requirements for all periods presented herein. The NAIC adopted the Codification of Statutory Accounting Principles ("Codification") in 2001. Codification was intended to standardize regulatory accounting and reporting to state insurance departments. However, statutory accounting principles continue to be established by individual state laws and permitted practices. Modifications by state insurance departments may impact the effect of Codification on the statutory capital and surplus of General American and RGA's U.S. insurance subsidiaries. Statutory accounting principles differ from GAAP primarily by charging policy acquisition costs to expense as incurred, establishing future policy benefit liabilities using different actuarial assumptions, reporting surplus notes as surplus instead of debt and valuing securities on a different basis. In addition, certain assets are not admitted under statutory accounting principles and are charged directly to surplus. The most significant assets not admitted by General American are net deferred income tax assets resulting from temporary differences between statutory accounting principles basis and tax basis not expected to reverse and become recoverable within a year. Further, statutory accounting principles do not give recognition to purchase accounting adjustments. Statutory net income (loss) of General American, a Missouri domiciled insurer, was $106 million, $316 million and ($50) million for the years ended December 31, 2007, 2006 and 2005, respectively. Statutory capital and surplus, as filed with the Missouri State Department of Insurance, was $2,280 million and $2,142 million at December 31, 2007 and 2006, respectively. DIVIDEND RESTRICTIONS Under Missouri State Insurance Law, General American is permitted, without prior insurance regulatory clearance, to pay a stockholder dividend to its parent as long as the aggregate amount of all such dividends in any calendar year does not exceed the greater of: (i) 10% of its statutory surplus to policyholders as of the immediately preceding calendar year or (ii) its statutory net gain from operations for the immediately preceding calendar year (excluding realized investment gains). General American will be permitted to pay a stockholder dividend to GenAmerica in excess of the greater of such two amounts only if it files notice of its intention to declare such a dividend and the amount thereof with the Missouri Director of Insurance (the "Director"). For the year ended December 31, 2007, the Company did not pay any dividends to GenAmerica. The Company paid $13 million for each of the years ended December 31, 2006 and 2005 in dividends for which prior insurance regulatory clearance was not required. Based on amounts at December 31, 2007, General American could pay to GenAmerica a stockholder dividend of $228 million without prior approval of the Director in 2008. F-68 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the reclassification adjustments required for the years ended December 31, 2007, 2006 and 2005 in other comprehensive income (loss) that are included as part of net income for the current year that have been reported as a part of other comprehensive income (loss) in the current or prior year:
YEARS ENDED DECEMBER 31, ----------------- 2007 2006 2005 ---- ----- ---- (IN MILLIONS) Holding gains (losses) on investments arising during the year...................................................... $ 22 $(115) $137 Income tax effect of holding gains (losses)................. (13) 38 (61) Reclassification adjustments: Recognized holding (gains) losses included in current year income................................................. 29 16 (35) Amortization of premiums and accretion of discounts associated with investments............................ (33) (12) (8) Income tax effect........................................... 2 (1) 21 Allocation of holding gains (losses) on investments relating to other policyholder amounts............................. (70) 18 42 Income tax effect of allocation of holding gains (losses) to other policyholder amounts................................ 42 (6) (21) ---- ----- ---- Net unrealized investment gains (losses).................... (21) (62) 75 Foreign currency translation adjustment..................... 60 11 3 Minimum pension liability adjustment........................ -- 1 2 Defined benefit plans adjustment............................ 1 -- -- ---- ----- ---- Other comprehensive income (loss)........................... $ 40 $ (50) $ 80 ==== ===== ====
17. OTHER EXPENSES Information on other expenses is as follows:
YEARS ENDED DECEMBER 31, ------------------------ 2007 2006 2005 ------ ------ ------ (IN MILLIONS) Compensation........................................ $ 10 $ 21 $ 39 Commissions......................................... 877 904 493 Interest and debt issue costs....................... 139 96 50 Amortization of DAC and VOBA........................ 542 555 697 Capitalization of DAC............................... (810) (761) (649) Minority interest................................... 217 211 164 Insurance tax....................................... 267 239 186 Other............................................... 51 96 167 ------ ------ ------ Total other expenses.............................. $1,293 $1,361 $1,147 ====== ====== ======
For the years ended December 31, 2007, 2006 and 2005, commissions and capitalization of DAC include the impact of affiliated reinsurance transactions. See Note 8. See also Note 19 for discussion of affiliated expenses included in the table above. 18. FAIR VALUE INFORMATION The estimated fair value of financial instruments has been determined by using available market information and the valuation methodologies described below. Considerable judgment is often required in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein may not necessarily be F-69 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) indicative of amounts that could be realized in a current market exchange. The use of different assumptions or valuation methodologies may have a material effect on the estimated fair value amounts. The implementation of SFAS 157 may impact the fair value assumptions and methodologies associated with the valuation of assets and liabilities. See also Note 1 regarding the adoption of SFAS 157. Amounts related to the Company's financial instruments are as follows:
NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE -------- -------- ---------- (IN MILLIONS) DECEMBER 31, 2007 Assets: Fixed maturity securities...................... $17,317 $17,317 Equity securities.............................. $ 168 $ 168 Mortgage loans on real estate.................. $ 1,073 $ 1,088 Policy loans................................... $ 2,716 $ 2,716 Short-term investments......................... $ 312 $ 312 Cash and cash equivalents...................... $ 507 $ 507 Accrued investment income...................... $ 185 $ 185 Mortgage loan commitments...................... $5 $ -- $ -- Liabilities: Policyholder account balances.................. $ 6,034 $ 5,262 Short-term debt -- affiliated.................. $ 50 $ 50 Long-term debt................................. $ 628 $ 638 Collateral financing arrangements.............. $ 850 $ 761 Junior subordinated debt securities............ $ 399 $ 356 Shares subject to mandatory redemption......... $ 159 $ 178 Payables for collateral under securities loaned and other transactions...................... $ 1,438 $ 1,438
F-70 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTIONAL CARRYING ESTIMATED AMOUNT VALUE FAIR VALUE -------- -------- ---------- (IN MILLIONS) DECEMBER 31, 2006 Assets: Fixed maturity securities...................... $16,134 $16,134 Equity securities.............................. $ 210 $ 210 Mortgage loans on real estate.................. $ 971 $ 943 Policy loans................................... $ 2,664 $ 2,664 Short-term investments......................... $ 435 $ 435 Cash and cash equivalents...................... $ 357 $ 357 Accrued investment income...................... $ 183 $ 183 Mortgage loan commitments...................... $20 $ -- $ -- Commitments to fund bank credit facilities..... $11 $ -- $ -- Liabilities: Policyholder account balances.................. $ 5,739 $ 4,999 Long-term debt................................. $ 408 $ 443 Collateral financing arrangements.............. $ 850 $ 850 Junior subordinated debt securities............ $ 399 $ 400 Shares subject to mandatory redemption........... $ 159 $ 226 Payables for collateral under securities loaned and other transactions...................... $ 1,642 $ 1,642
The methods and assumptions used to estimate the fair value of financial instruments are summarized as follows: FIXED MATURITY SECURITIES AND EQUITY SECURITIES The fair values of publicly held fixed maturity securities and publicly held equity securities are based on quoted market prices or estimates from independent pricing services. However, in cases where quoted market prices are not available, such as for private fixed maturity securities, fair values are estimated using present value or valuation techniques. The determination of fair values is based on: (i) valuation methodologies; (ii) securities the Company deems to be comparable; and (iii) assumptions deemed appropriate given the circumstances. The fair value estimates are based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or counterparty. Factors considered in estimating fair value include: coupon rate, maturity, estimated duration, call provisions, sinking fund requirements, credit rating, industry sector of the issuer, and quoted market prices of comparable securities. MORTGAGE LOANS ON REAL ESTATE, MORTGAGE LOAN COMMITMENTS AND COMMITMENTS TO FUND BANK CREDIT FACILITIES Fair values for mortgage loans on real estate are estimated by discounting expected future cash flows using current interest rates for similar loans with similar credit risk. For mortgage loan commitments and commitments to fund bank credit facilities, the estimated fair value is the net premium or discount of the commitments. POLICY LOANS The carrying values for policy loans approximate fair value. F-71 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS The carrying values for cash and cash equivalents and short-term investments approximate fair values due to the short-term maturities of these instruments. ACCRUED INVESTMENT INCOME The carrying value for accrued investment income approximates fair value. POLICYHOLDER ACCOUNT BALANCES The fair value of policyholder account balances which have final contractual maturities are estimated by discounting expected future cash flows based upon interest rates currently being offered for similar contracts with maturities consistent with those remaining for the agreements being valued. The fair value of policyholder account balances without final contractual maturities are assumed to equal their current net surrender value. SHORT-TERM DEBT -- AFFILIATED, LONG-TERM DEBT, COLLATERAL FINANCING ARRANGEMENTS, JUNIOR SUBORDINATED DEBT SECURITIES AND SHARES SUBJECT TO MANDATORY REDEMPTION The carrying value for short-term debt -- affiliated approximates fair value due to the short-term duration of the instrument. The fair values of long- term debt, collateral financing arrangements, junior subordinated debt securities and shares subject to mandatory redemption are determined by discounting expected future cash flows using risk rates currently available for debt with similar terms and remaining maturities. PAYABLES FOR COLLATERAL UNDER SECURITIES LOANED AND OTHER TRANSACTIONS The carrying value for payables for collateral under securities loaned and other transactions approximates fair value. DERIVATIVE FINANCIAL INSTRUMENTS The fair value of derivative financial instruments are based upon quotations obtained from dealers or other reliable sources. See Note 4 for derivative fair value disclosures. 19. RELATED PARTY TRANSACTIONS SERVICE AGREEMENTS The Company has entered into a Master Service Agreement with MLIC which provides administrative, accounting, legal and similar services to the Company. MLIC charged the Company $44 million, $50 million and $60 million, included in other expenses, for services performed under the Master Service Agreement for the years ended December 31, 2007, 2006 and 2005, respectively. The Company entered into a Service Agreement with MetLife Group, Inc. ("MetLife Group"), a wholly-owned subsidiary of MetLife, under which MetLife Group provides personnel services, as needed, to support the activities of the Company. MetLife Group charged the Company $5 million, $8 million and $16 million, included in other expenses, for services performed under the Service Agreement for the years ended December 31, 2007, 2006 and 2005, respectively. The Company has entered into various additional agreements with other affiliates to provide and receive services necessary to conduct its activities. Typical services provided under these agreements include management, policy administrative functions and distribution services. Expenses and (fees) related to these agreements and recorded in other expenses, were $11 million, $31 million and ($13) million for the years ended December 31, 2007, 2006 and 2005, respectively. F-72 GENERAL AMERICAN LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In 2005, the Company entered into broker-dealer wholesale sales agreements with several affiliates ("Distributors"), in which the Distributors agree to sell, on the Company's behalf, fixed rate insurance products through authorized retailers. The Company agrees to compensate the Distributors for the sale and servicing of such insurance products in accordance with the terms of the agreements. The Distributors charged the Company $1 million, $2 million and $10 million, included in other expenses, for the years ended December 31, 2007, 2006 and 2005, respectively. The Company received fees for this service of $26 million, $11 million and $4 million, included in other expenses, for the years ended December 31, 2007, 2006 and 2005. At December 31, 2007 and 2006, amounts due from affiliates were $32 million and $4 million, respectively, related to the net expenses discussed previously. These receivables exclude affiliated reinsurance balances discussed in Note 8. See Notes 3, 7, 8 and 9 for additional related party transactions. F-73 PART C OTHER INFORMATION ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS a. Financial Statements ----------------------------------------------------------------------------------------- The following financial statements of the Separate Account are included in Part B hereof: 1. Report of Independent Registered Public Accounting Firm. 2. Statement of Assets and Liabilities as of December 31, 2007. 3. Statement of Operations for the year ended December 31, 2007. 4. Statements of Changes in Net Assets for the years ended December 31, 2007 and 2006. 5. Notes to Financial Statements The following financial statements of the Company are included in Part B hereof: 1. Report of Independent Registered Public Accounting Firm. 2. Balance Sheets as of December 31, 2007 and 2006. 3. Statements of Income for the years ended December 31, 2007, 2006 and 2005. 4. Statements of Stockholder's Equity for the years ended December 31, 2007, 2006 and 2005. 5. Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005. 6. Notes to Financial Statements.
The following consolidated financial statements of General American Life Insurance Company (the "Guarantor") are included in Part B hereof: 1. Report of Independent Registered Public Accounting Firm. 2. Consolidated Balance Sheets as of December 31, 2007 and 2006. 3. Consolidated Statements of Income for the years ended December 31, 2007, 2006 and 2005. 4. Consolidated Statements of Stockholder's Equity for the years ended December 31, 2007, 2006 and 2005. 5. Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005. 6. Notes to Consolidated Financial Statements.
b. Exhibits --------- 1. (i) Resolution of Board of Directors of the Company authorizing the establishment of the Variable Account(1) (ii) Revised and Restated Resolutions of Board of Directors (adopted June 11, 2004)(11) 2. Not Applicable. 3. (i) Form of Principal Underwriter's Agreement(7) (ii) Principal Underwriter's and Selling Agreement (effective January 1, 2001)(11) (iii) Amendment to Principal Underwriter's and Selling Agreement (effective January 1, 2002)(11) (iv) Amendment No. 2 to Principal Underwriter's and Selling Agreement (effective December 2, 2002)(11) (v) Form of Retail Sales Agreement (MLIDC 7-1-05 (LTC))(19) (vi) Agreement and Plan of Merger (12-01-04)(MLIDC into GAD)(22) 4. (i) Individual Flexible Purchase Payment Deferred Variable Annuity Contract(5) (ii) Enhanced Dollar Cost Averaging Rider(5) (iii) Three Month Market Entry Rider(5) (iv) Death Benefit Rider - (Compounded-Plus)(5) (v) Death Benefit Rider - (Annual)(5) (vi) Death Benefit Rider - (Annual Step-Up)(5)
(vii) Guaranteed Minimum Income Benefit Rider - (GMIB)(5) (viii) Additional Death Benefit Rider - (Earnings Preservation Benefit)(5) (ix) Waiver of Withdrawal Charge for Nursing Home or Hospital Confinement Rider(5) (x) Terminal Illness Rider(5) (xi) Individual Retirement Annuity Endorsement(5) (xii) Roth Individual Retirement Annuity Endorsement(5) (xiii) 401 Plan Endorsement(5) (xiv) Tax Sheltered Annuity Endorsement(5) (xv) Unisex Annuity Rates Rider(5) (xvi) Form of Endorsement (Name change - effective February 5, 2001. MetLife Investors Insurance Company; formerly, Cova Financial Services Life Insurance Company.)(2) (xvii) Form of Guaranteed Minimum Income Benefit Rider - (Living Benefit) (GMIB II 03/03)(23) (xviii) Form of Guaranteed Withdrawal Benefit Rider MLI-690-1 (7/04)(24) (xix) Individual Retirement Annuity Endorsement 7023.1 (9/02)(11) (xx) Roth Individual Retirement Annuity Endorsement 7024.1 (9/02)(11) (xxi) 401(a)/403(a) Plan Endorsement 7026.1 (9/02)(11) (xxii) Tax Sheltered Annuity Endorsement 7026.1 (9/02)(11) (xxiii) Simple Individual Retirement Annuity Endorsement 7276 (9/02)(11) (xxiv) Form of Contract Schedule [Class AA, B, C, L, VA or XC 7028-2] (7/04)(11) (xxv) Form of Contract Schedule 7028-3 (27) (xxvi) Designated Beneficiary Non-Qualified Annuity Endorsement MLI-NQ-1 (11/05)-I (14) (xxvii) Form of Lifetime Guaranteed Withdrawal Benefit Rider (17) (xxviii) Form of Guaranteed Minimum Income Benefit Rider (17) (xxix) Form of Contract Schedule (enhanced GMIB Plus) (17) (xxx) Lifetime Guaranteed Withdrawal Benefit Rider MLIU-690-3 (6/06)(18) (xxxi) Form of Contract Schedule [Class AA, B, C, L, or XC] 7028-4 (11/05)(27) (xxxii) Guaranteed Minimum Accumulation Benefit Rider MLI-670-1 (11/05)(27) (xxxiii) Guaranteed Withdrawal Benefit Endorsement MLI-GWB (11/05)(27) (xxxiv) Purchase Payment Credit Rider 7030 (11/00)(28) (xxxv) Form of Contract Schedule [Class AA, B, C, L, VA or XC] 7028-5 (6/06)(19) (xxxvi) Non-qualified Annuity Endorsement MLI-NQ (11/04)-I(20) (xxxvii) Form of Guaranteed Minimum Death Benefit Rider MLI-640-1 (4/08) (31) (xxxviii) Form of Contract Schedule MLI-EDB (4/08) (31) (xxxix) Form of Guaranteed Minimum Income Benefit Rider-Living Benefit MLI-560-4 (4/08)(31) (xl) Form of Lifetime Guaranteed Withdrawal Benefit Rider MLI-690-4 (4/08) (31) 5. (i) Form of Variable Annuity Application(5) (ii) Form of Variable Annuity Application Class XC: [Class VA 7029 (7/04) APPVA-504VA](24) (iii) Form of Variable Annuity Application [Class VA] 7029 (1/05) APPVA105VA(27) (iv) Form of Variable Annuity Application [Class VA] 7029 (4/05) APPVA1105VA(13) (v) Form of Variable Annuity Application [Class VA] 7029 (1/06) APPVAVA 606(19) (vi) Form of Variable Annuity Application [Class XC] 7029 (10/07) APPXC April 2008 (filed herewith) 6. (i) Copy of Articles of Incorporation of the Company(6)
(ii) Copy of the Bylaws of the Company(6) 7. (i) Reinsurance Agreement between MetLife Investors Insurance Company and Metropolitan Life Insurance Company(25) (ii) Automatic Reinsurance Agreement between MetLife Investors Insurance Company and Exeter Reassurance Company, Ltd(25) (iii) Contingent Reinsurance Agreement between MetLife Investors Insurance Company and General American Life Insurance Company(18) 8. (i) Participation Agreement Among Met Investors Series Trust, Met Investors Advisory Corp., Met Investors Distribution Company and MetLife Investors Insurance Company (February 12, 2001)(26) (ii) First Amendment to Participation Agreement Among Met Investors Series Trust, Met Investors Advisory Corp., Met Investors Distribution Company and MetLife Investors Insurance Company (September 14, 2001)(26) (iii) Participation Agreement Among Metropolitan Series Fund, Inc., Metropolitan Life Insurance Company and Cova Financial Services Life Insurance Company (effective September 1, 2000)(11) (iv) Participation Agreement Among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, Metropolitan Life Insurance Company and MetLife Investors Insurance Company (effective July 1, 2004)(16) (v) Net Worth Agreement among MetLife, Inc. and MetLife Investors Insurance Company (effective December 31, 2002)(18) (vi) Guarantee Agreement (General American Life Insurance Company) (June 1, 1995)(20) (vii) Participation Agreement Among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, MetLife Securities, Inc. and MetLife Investors Insurance Company (effective April 30, 2007)(22) (viii) Participation Agreement Among Metropolitan Series Fund, Inc., MetLife Advisers, LLC, MetLife Investors Distribution Company and MetLife Investors Company (effective August 31, 2007)(30) 9. (i) Opinion of Counsel (22) (ii) Opinion of Counsel (General American Life Insurance Company)(21) 10. Consent of Independent Registered Public Accounting Firm (Deloitte & Touche LLP) for the Depositor, Registrant and the Guarantor (filed herewith) 11. Not Applicable. 12. Agreement Governing Contribution (1) 13. (i) Powers of Attorney for Michael K. Farrell, Jay S. Kaduson, Susan A. Buffum, Margaret C. Fechtmann, Paul A. Sylvester, Richard C. Pearson, Elizabeth M. Forget, Charles V. Curcio, Jeffrey A. Tupper and George Foulke (22) (ii) Powers of Attorney (General American Life Insurance Company) for Lisa M. Weber, Michael K. Farrell, William J. Mullaney, James L. Lipscomb, Catherine A. Rein, Stanley J. Talbi, Michael J. Vietri, William J. Wheeler, Anthony J. Williamson, Joseph J. Prochaska, Jr., and Charles V. Curcio (22) (iii) Power of Attorney (General American Life Insurance Company) for James J. Reilly. (29) (1) incorporated herein by reference to Registrant's Post-Effective Amendment No. 15 on Form N-4 (File Nos. 033-39100 and 811-05200) as electronically filed on April 29, 1999. (2) incorporated herein by reference to Registrant's Post-Effective Amendment No. 1 on Form N-4 (File Nos. 333-50540 and 811-05200) as electronically filed on May 1, 2001. (3) incorporated herein by reference to Registrant's Post-Effective Amendment No. 1 on Form N-4 (File Nos. 333-34741 and 811-05200) as electronically filed on November 20, 1997. (4) incorporated herein by reference to Registrant's Post-Effective Amendment No. 1 on Form N-4 (File Nos. 333-34741 and 811-05200) as electronically filed on January 26, 1998. (5) incorporated herein by reference to Registrant's N-4 (File Nos. 333-50540 and 811-05200) as electronically filed on November 22, 2000. (6) incorporated herein by reference to Registrant's Form N-4 (File Nos. 333-34741 and 811-05200) as electronically filed on August 29, 1997.
(7) incorporated herein by reference to Registrant's Pre-Effective Amendment No. 1 on Form N-4 (File Nos. 333-50540 and 811-05200) as electronically filed on March 6, 2001. (8) incorporated herein by reference to Registrant's Post-Effective Amendment No. 3 on Form N-4 (File Nos. 333-54358 and 811-05200) as electronically filed on April 30, 2003. (9) incorporated herein by reference to Registrant's Post-Effective Amendment No. 7 on Form N-4 (File Nos. 333-50540 and 811-05200) as electronically filed on April 27, 2004. (10) incorporated herein by reference to Registrant's Post-Effective Amendment No. 4 to Form N-4 (Files Nos. 333-54358 and 811-05200) filed electronically on April 28, 2004. (11) incorporated herein by reference to Registrant's Post-Effective Amendment No. 9 to Form N-4 (Files Nos. 333-50540 and 811-05200) filed electronically on July 15, 2004. (12) incorporated herein by reference to Registrant's Post-Effective Amendment No. 7 to Form N-4 (Files Nos. 333-50540 and 811-05200) filed electronically on November 2, 2004. (13) incorporated herein by reference to Registrant's Post-Effective Amendment No. 7 to Form N-4 (Files Nos. 333-54358 and 811-05200) filed electronically on July 13, 2005. (14) incorporated herein by reference to Registrant's Post-Effective Amendment No. 13 to Form N-4 (Files Nos. 333-50540 and 811-05200) filed electronically on September 9, 2005. (15) incorporated herein by reference to Registrant's Post-Effective Amendment No. 8 to Form N-4 (Files Nos. 333-54358 and 811-05200) filed electronically on September 9, 2005. (16) incorporated herein by reference to Registrant's Post-Effective Amendment No. 14 to Form N-4 (Files Nos. 333-50540 and 811-03365) filed electronically on October 7, 2005. (17) incorporated herein by reference to MetLife Investors USA Separate Account A's Post-Effective Amendment No. 16 to Form N-4 (Files Nos. 333-54464 and 811-03365) filed electronically on January 13, 2006. (18) incorporated herein by reference to Registrant's Post-Effective Amendment No. 16 to Form N-4 (Files Nos. 333-51950 and 811-05200) filed electronically on April 21, 2006. (19) incorporated herein by reference to MetLife Investors USA Separate Account A's Post-Effective Amendment No. 19 to Form N-4 (Files Nos. 333-54464 and 811-03365) filed electronically on April 24, 2006. (20) incorporated herein by reference to First MetLife Investors Variable Annuity Separate Account One's Post-Effective Amendment No.11 to Form N-4 (Files Nos. 333-96795 and 811-08306) filed electronically on July 27, 2006. (21) incorporated herein by reference to Registrant's Post-Effective Amendment No. 17 to Form N-4 (Files Nos. 333-50540 and 811-05200) filed electronically on July 28, 2006. (22) incorporated herein by reference to Registrant's Post-Effective Amendment No. 15 to Form N-4 (Files Nos. 333-51950 and 811-05200) filed electronically on April 19, 2007. (23) incorporated herein by reference to MetLife Investors USA Separate Account A's Post-Effective Amendment No. 5 to Form N-4 (File Nos. 333-54464 and 811-03365) filed electronically on April 27, 2004. (24) incorporated herein by reference to Registrant's Post-Effective Amendment No. 8 to Form N-4 (File Nos. 333-50540 and 811-05200) filed electronically on May 19, 2004. (25) incorporated herein by reference to Registrant's Post-Effective Amendment No. 6 to Form N-4 (File Nos. 333-50540 and 811-05200) filed electronically on April 30, 2003. (26) incorporated herein by reference to Registrant's Post-Effective Amendment No. 4 to Form N-4 (File Nos. 333-51950 and 811-05200) filed electronically on April 30, 2003. (27) incorporated herein by reference to Registrant's Post-Effective Amendment No. 12 to Form N-4 (File Nos. 333-50540 and 811-05200) filed electronically on July 13, 2005. (28) incorporated herein by reference to Registrant's Post-Effective Amendment No. 9 to Form N-4 (File Nos. 333-51950 and 811-05200) filed electronically on July 14, 2005. (29) incorporated herein by reference to Registrant's Post-Effective Amendment No.16 to Form N-4 (File Nos. 333-51950 and 811-05200 filed electronically on July 12, 2007. (30) incorporated herein by reference to Registrant's Post-Effective Amendment No. 17 to Form N-4 (File Nos. 333-51950 and 811-05200) filed electronically on October 31, 2007.
(31) incorporated herein by reference to Registrant's Post-Effective Amendment No. 18 to Form N-4 (File Nos. 333-51950 and 811-05200) filed electronically on December 21, 2007.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR The following are the Officers and Directors who are engaged directly or indirectly in activities relating to the Registrant or the variable annuity contracts offered by the Registrant and the executive officers of the Company:
NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR - ------------------------------------- ------------------------------------------------------------------ Michael K. Farrell Chairman of the Board, President, 10 Park Avenue Chief Executive Officer and Director Morristown, NJ 07962 Susan A. Buffum Director 10 Park Avenue Morristown, NJ 07962 Charles V. Curcio Vice President-Finance (principal financial officer and principal 501 Route 22 accounting officer) Bridgewater, NJ 08807 Jay S. Kaduson Vice President and Director 10 Park Avenue Morristown, NJ 07962 Margaret C. Fechtmann Director 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Elizabeth M. Forget Executive Vice President and Director 260 Madison Avenue New York, NY 10016 George Foulke Director 334 Madison Avenue Convent Station, NJ 07961 Paul A. Sylvester Director 10 Park Avenue, Morristown, NJ 07967 Kevin J. Paulson Senior Vice President 4700 Westown Parkway West Des Moines, IA 50266 Richard C. Pearson Vice President, 5 Park Plaza, Suite 1900 Associate General Counsel, Secretary and Director Irvine, CA 92614 Jeffrey A. Tupper Assistant Vice President and Director 5 Park Plaza, Suite 1900 Irvine, CA 92614 Roberto Baron Vice President 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Debora L. Buffington Vice President, Director of Compliance 5 Park Plaza, Suite 1900 Irvine, CA 92614 Johnathan L. Rosenthal Vice President, Chief Hedging Officer 10 Park Avenue Morristown, NJ 07962
NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH DEPOSITOR - ------------------------------------- ------------------------------------- Betty E. Davis Vice President 1125 - 17th Street Denver, CO 80202 Brian C. Kiel Vice President, Appointed Actuary 501 Route 22 Bridgewater, NJ 08807 Christopher A. Kremer Vice President 501 Boylston Street Boston, MA 02116 Marian J. Zeldin Vice President 300 Davidson Avenue Somerset, NY 08873 Karen A. Johnson Vice President 501 Boylston Street Boston, MA 02116 Deron J. Richens Vice President 5 Park Plaza, Suite 1900 Irvine, CA 92614 Garth A. Bernard Vice President 501 Boylston Street Boston, MA 02116 Gregory E. Illson Vice President 501 Boylston Street Boston, MA 02116 Paul L. LeClair Vice President 501 Boylston Street Boston, MA 02116 Robert L. Staffier Vice President 501 Boylston Street Boston, MA 02116 Mark S. Reilly Vice President 185 Asylum Street Hartford, CT 06103 Gene L. Lunman Vice President 185 Asylum Street Hartford, CT 06103 Bennett D. Kleinberg Vice President 185 Asylum Street Hartford, CT 06103 Lisa S. Kuklinski Vice President 260 Madison Avenue New York, NY 10016 Eric T. Steigerwalt Treasurer 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Jeffrey N. Altman Vice President 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Jeffrey P. Halperin Vice President 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT The Registrant is a separate account of MetLife Investors Insurance Company under Missouri insurance law. MetLife Investors Insurance Company is a wholly-owned direct subsidiary of MetLife, Inc., a publicly traded company. The following outline indicates those entities that are controlled by MetLife, Inc. or are under the common control of MetLife, Inc. No person is controlled by the Registrant. ORGANIZATIONAL STRUCTURE OF METLIFE, INC. AND SUBSIDIARIES AS OF DECEMBER 31, 2007 The following is a list of subsidiaries of MetLife, Inc. updated as of December 31, 2007. Those entities which are listed at the left margin (labeled with capital letters) are direct subsidiaries of MetLife, Inc. Unless otherwise indicated, each entity which is indented under another entity is a subsidiary of that other entity and, therefore, an indirect subsidiary of MetLife, Inc. Certain inactive subsidiaries have been omitted from the MetLife, Inc. organizational listing. The voting securities (excluding directors' qualifying shares, (if any)) of the subsidiaries listed are 100% owned by their respective parent corporations, unless otherwise indicated. The jurisdiction of domicile of each subsidiary listed is set forth in the parenthetical following such subsidiary. A. MetLife Group, Inc. (NY) B. MetLife Bank National Association (USA) C. Exeter Reassurance Company, Ltd. (Bermuda) D. MetLife Taiwan Insurance Company Limited (Taiwan) E. Metropolitan Tower Life Insurance Company (DE) 1. TH Tower NGP, LLC (DE) 2. Partners Tower, L.P. (DE) - a 99% limited partnership interest of Partners Tower, L.P. is held by Metropolitan Tower Life Insurance Company and 1% general partnership interest is held by TH Tower NGP, LLC (DE) 3. TH Tower Leasing, LLC (DE) 4. MetLife Reinsurance Company of Charleston (SC) 5. MetLife Reinsurance Company of Vermont (VT) 6. Entrecap Real Estate II, LLC (DE) a) PREFCO Dix-Huit LLC (CT) b) PREFCO X Holdings LLC (CT) c) PREFCO Ten Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Ten Limited Partnership is held by Entrecap Real Estate II, LLC and 0.1% general partnership is held by PREFCO X Holdings LLC. a) PREFCO Vingt LLC (CT) b) PREFCO Twenty Limited Partnership (CT) - a 99% limited partnership interest of PREFCO Twenty Limited Partnership is held by Entrecap Real Estate II, LLC and 1% general partnership is held by PREFCO Vingt LLC. 7. Plaza Drive Properties, LLC (DE) 8. MTL Leasing, LLC (DE) a) PREFCO IX Realty LLC (CT) b) PREFCO XIV Holdings LLC (CT) c) PREFCO Fourteen Limited Partnership (CT) - a 99.9% limited partnership interest of PREFCO Fourteen Limited Partnership is held by MTL Leasing, LLC and 0.1% general partnership is held by PREFCO XIV Holdings LLC. F. MetLife Pensiones S.A. (Mexico)- 97.4738% is owned by MetLife, Inc. and 2.5262% is owned by MetLife International Holdings, Inc. G. MetLife Chile Inversiones Limitada (Chile)- 99.9999999% is owned by MetLife, Inc. and 0.0000001% is owned by Natiloportem Holdings, Inc. 1. MetLife Chile Seguros de Vida S.A. (Chile)- 99.99% is owned by MetLife Chile Inversiones Limitada and 0.01% is owned by MetLife International Holdings, Inc. a) MetLife Chile Administradora de Mutuos Hipotecarios S.A. (Chile)- 99.99% is owned by MetLife Chile Seguros de Vida S.A. and 0.01% is owned by MetLife Chile Inversiones Limitada. H. MetLife Mexico S.A. (Mexico)- 98.70541% is owned by MetLife, Inc., 1.29459% is owned by MetLife International Holdings, Inc. 1. MetLife Afore, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Mexico S.A. (Mexico) and 0.01% is owned by MetLife Pensiones S.A. a) Met1 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) b) Met2 SIEFORE, S.A. de C.V. (Mexico)- 99.99% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) c) MetA SIEFORE, S.A. de C.V. (Mexico)- 99.9% is owned by MetLife Afore, S.A. de C.V. and 0.01% is owned by MetLife Mexico S.A. (Mexico) I. MetLife Mexico Servicios, S.A. de C.V. (Mexico)- 98% is owned by MetLife, Inc. and 2% is owned by MetLife International Holdings, Inc. J. MetLife Seguros de Vida S.A. (Uruguay) K. MetLife Securities, Inc. (DE) L. Enterprise General Insurance Agency, Inc. (DE) 1. MetLife General Insurance Agency of Texas, Inc. (DE) 2. MetLife General Insurance Agency of Massachusetts, Inc. (MA) 1 M. Metropolitan Property and Casualty Insurance Company (RI) 1. Metropolitan General Insurance Company (RI) 2. Metropolitan Casualty Insurance Company (RI) 3. Metropolitan Direct Property and Casualty Insurance Company (RI) 4. Met P&C Managing General Agency, Inc. (TX) 5. MetLife Auto & Home Insurance Agency, Inc. (RI) 6. Metropolitan Group Property and Casualty Insurance Company (RI) a) Metropolitan Reinsurance Company (U.K.) Limited (United Kingdom) 7. Metropolitan Lloyds, Inc. (TX) a) Metropolitan Lloyds Insurance Company of Texas (TX)- Metropolitan Lloyds Insurance Company of Texas, an affiliated association, provides automobile, homeowner and related insurance for the Texas market. It is an association of individuals designated as underwriters. Metropolitan Lloyds, Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company, serves as the attorney-in-fact and manages the association. 8. Economy Fire & Casualty Company (IL) a) Economy Preferred Insurance Company (IL) b) Economy Premier Assurance Company (IL) N. Cova Corporation (MO) 1. Texas Life Insurance Company (TX) 2. Cova Life Management Company (DE) O. MetLife Investors Insurance Company (MO) P. First MetLife Investors Insurance Company (NY) Q. Walnut Street Securities, Inc. (MO) R. Newbury Insurance Company, Limited (BERMUDA) S. MetLife Investors Group, Inc. (DE) 1. MetLife Investors Distribution Company (MO) 2. Met Investors Advisory, LLC (DE) 3. MetLife Investors Financial Agency, Inc. (TX) 2 T. MetLife International Holdings, Inc. (DE) 1. MetLife Mexico Cares, S.A. de C.V. (Mexico) a) Fundacion MetLife Mexico, A.C. (Mexico) 2. Natiloportem Holdings, Inc. (DE) a) Servicios Administrativos Gen, S.A. de C.V. (Mexico) (1) MLA Comercial, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. (2) MLA Servicios, S.A. de C.V. (Mexico) 99% is owned by Servicios Administrativos Gen, S.A. de C.V. and 1% is owned by MetLife Mexico Cares, S.A. de C.V. 3. MetLife India Insurance Company Private Limited (India)- 26% is owned by MetLife International Holdings, Inc. and 74% is owned by third parties. 4. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)- 99.99905% is owned by MetLife International Holdings, Inc. and 0.00095% is owned by Natiloporterm Holdings, Inc. 5. Metropolitan Life Seguros de Retiro S.A. (Argentina)- 95.23% is owned by MetLife International Holdings, Inc. and 4.77% is owned by Natiloportem Holdings, Inc. 6. Metropolitan Life Seguros de Vida S.A. (Argentina)- 95.2499% is owned by MetLife International Holdings, Inc. and 4.7473% is owned by Natiloportem Holdings, Inc. 7. MetLife Insurance Company of Korea Limited (South Korea)- 21.22% of MetLife Insurance Company of Korea Limited is owned by MetLife, Mexico, S.A. and 78.78% is owned by Metlife International Holdings, Inc. 8. Metropolitan Life Seguros e Previdencia Privada S.A. (Brazil)- 74.5485235740% is owned by MetLife International Holdings, Inc. and 25.451476126% is owned by MetLife Worldwide Holdings, Inc. and 0.0000003% is owned by Natiloportem Holdings, Inc. 9. MetLife Global, Inc. (DE) 10. MetLife Administradora de Fundos Multipatrocinados Ltda (Brazil) - 95.4635% is owned by MetLife International Holdings, Inc. and 4.5364% is owned by Natiloportem Holdings, Inc. 11. MetLife Insurance Limited (United Kingdom) 12. MetLife General Insurance Limited (Australia) 13. MetLife Limited (United Kingdom) 14. MetLife Insurance S.A./NV (Belgium) - 99.9% is owned by MetLife International Holdings, Inc. and 0.1% is owned by third parties. 15. MetLife Services Limited (United Kingdom) 16. MetLife Insurance Limited (Australia) a) MetLife Insurance and Investment Trust (Australia) b) MetLife Investments Pty Limited (Australia) c) MetLife Services (Singapore) PTE Limited (Australia) 17. Siembra Seguros de Retiro S.A. (Argentina) - 96.8819% is owned by MetLife International Holdings, Inc. and 3.1180% is owned by Natiloportem Holdings, Inc. 18. Best Market S.A. (Argentina) - 5% of the shares are held by Natiloportem Holdings, Inc. and 94.9999% is owned by MetLife International Holdings Inc. 19. Compania Previsional MetLife S.A. (Brazil) - 95.4635% is owned by MetLife International Holdings, Inc. and 4.5364% is owned by Natiloportem Holdings, Inc. (a) Met AFJP S.A. (Argentina) - 75.4088% of the shares of Met AFJP S.A. are held by Compania Previsional MetLife SA, 19.5912% is owned by Metropolitan Life Seguros de Vida SA, 3.9689% is held by Natiloportem Holdings, Inc. and 1.0310% is held by Metropolitan Life Seguros de Retiro SA. 20. MetLife Worldwide Holdings, Inc. (DE) a) MetLife Towarzystwo Ubezpieczen na Zycie Spolka Akcyjna. (Poland) b) MetLife Direct Co., Ltd. (Japan) c) MetLife Fubon Limited (Japan) U. Metropolitan Life Insurance Company (NY) 1. 334 Madison Euro Investments, Inc. (DE) a) Park Twenty Three Investments Company (United Kingdom)- 1% voting control of Park Twenty Three Investments Company is held by St. James Fleet Investments Two Limited. 1% of the shares of Park Twenty Three Investments Company is held by Metropolitan Life Insurance Company. 99% is owned by 334 Madison Euro Investment, Inc. (1) Convent Station Euro Investments Four Company (United Kingdom)- 1% voting control of Convent Station Euro Investments Four Company is held by 334 Madison Euro Investments, Inc. as nominee for Park Twenty Three Investments Company. 99% is owned by Park Twenty Three Investments Company. 2. St. James Fleet Investments Two Limited (Cayman Islands)- 34% of the shares of St. James Fleet Investments Two Limited is held by Metropolitan Life Insurance Company. 3. One Madison Investments (Cayco) Limited (Cayman Islands)- 10.1% voting control of One Madison Investments (Cayco) Limited is held by Convent Station Euro Investments Four Company. 89.9% of the shares of One Madison Investments (Cayco) Limited is held by Metropolitan Life Insurance Company. 4. CRB Co, Inc. (MA)- AEW Real Estate Advisors, Inc. holds 49,000 preferred non-voting shares and AEW Advisors, Inc. holds 1,000 preferred non-voting shares of CRB, Co., Inc. 5. GA Holding Corp. (MA) 3 6. Thorngate, LLC (DE) 7. Alternative Fuel I, LLC (DE) 8. Transmountain Land & Livestock Company (MT) 9. MetPark Funding, Inc. (DE) 10. HPZ Assets LLC (DE) 11. Missouri Reinsurance (Barbados), Inc. (Barbados) 12. Metropolitan Tower Realty Company, Inc. (DE) a) Midtown Heights, LLC (DE) 13. MetLife Real Estate Cayman Company (Cayman Islands) 14. Metropolitan Marine Way Investments Limited (Canada) 15. MetLife Private Equity Holdings, LLC (DE) 16. 23rd Street Investments, Inc. (DE) a) Mezzanine Investment Limited Partnership-BDR (DE). Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-BDR and 23rd Street Investments, Inc. is a 1% general partner. b) Mezzanine Investment Limited Partnership-LG (DE). 23rd Street Investments, Inc. is a 1% general partner of Mezzanine Investment Limited Partnership-LG. Metropolitan Life Insurance Company holds a 99% limited partnership interest in Mezzanine Investment Limited Partnership-LG. c) MetLife Capital Credit L.P. (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc., 99% Limited Partnership Interest is held by Metropolitan Life Insurance Company. d) MetLife Capital Limited Partnership (DE)- 1% General Partnership interest is held by 23rd Street Investments, Inc., 99% Limited Partnership Interest is held by Metropolitan Life Insurance Company. 17. Metropolitan Realty Management, Inc. (DE) 18. Hyatt Legal Plans, Inc. (DE) a) Hyatt Legal Plans of Florida, Inc. (FL) 19. MetLife Holdings, Inc. (DE) a) MetLife Credit Corp. (DE) b) MetLife Funding, Inc. (DE) 4 20. Bond Trust Account A (MA) 21. MetLife Investments Asia Limited (Hong Kong). 22. MetLife Investments Limited (United Kingdom)- 23rd Street Investments, Inc. holds one share of MetLife Investments Limited. 23. MetLife Latin America Asesorias e Inversiones Limitada (Chile)- 23rd Street Investments, Inc. holds 0.01% of MetLife Latin America Asesorias e Inversiones Limitada. 24. New England Life Insurance Company (MA) a) MetLife Advisers, LLC (MA) b) New England Securities Corporation (MA) 25. GenAmerica Financial, LLC (MO) a) GenAmerica Capital I (DE) b) General American Life Insurance Company (MO) (1) GenAmerica Management Corporation (MO) 5 (2) Reinsurance Group of America, Incorporated (MO) - 52% is owned by General American Life Insurance Company. (a) Reinsurance Company of Missouri, Incorporated (MO) (i) Timberlake Financial, L.L.C. (DE) (A) Timberlake Reinsurance Company II (SC) (ii) RGA Reinsurance Company (MO) (A) Reinsurance Partners, Inc. (MO) (iii) Parkway Reinsuarnce Company (MO) (b) RGA Worldwide Reinsurance Company, Ltd. (Barbados) (c) RGA Atlantic Reinsurance Company, Ltd. (Barbados) (d) RGA Americas Reinsurance Company, Ltd. (Barbados) (e) RGA Reinsurance Company (Barbados) Ltd. (Barbados) (i) RGA Financial Group, L.L.C. (DE)- 80% is owned by RGA Reinsurance Company (Barbados) Ltd. RGA Reinsurance Company also owns a 20% non-equity membership in RGA Financial Group, L.L.C. (f) RGA Life Reinsurance Company of Canada (Canada) (g) RGA International Corporation (Nova Scotia/Canada) (h) RGA Holdings Limited (U.K.) (United Kingdom) (i) RGA UK Services Limited (United Kingdom) (ii) RGA Capital Limited U.K. (United Kingdom) (iii) RGA Reinsurance (UK) Limited (United Kingdom) (iv) RGA Services India Private Limited (India) - Reinsurance Group of America Incorporated owns 99% of RGA Services India Private Limited and RGA Holdings Limited owns 1%. (i) RGA South African Holdings (Pty) Ltd. (South Africa) (i) RGA Reinsurance Company of South Africa Limited (South Africa) (j) RGA Australian Holdings PTY Limited (Australia) (i) RGA Reinsurance Company of Australia Limited (Australia) (ii) RGA Asia Pacific PTY, Limited (Australia) (k) General American Argentina Seguros de Vida, S.A. (Argentina) - 95% of General American Argentina Seguros de Vida, S.A. is owned by Reinsurance Group of America, Incorporated and 5% is owned by RGA Reinsurance Company (Barbados) Ltd. 6 (l) RGA Technology Partners, Inc. (MO) (m) RGA International Reinsurance Company (Ireland) (n) RGA Capital Trust I (DE) (i) RGA Global Reinsurance Company, Ltd. (Bermuda) 26. Corporate Real Estate Holdings, LLC (DE) 27. Ten Park SPC (CAYMAN ISLANDS ) - 1% voting control of Ten Park SPC is held by 23rd Street Investments, Inc. 28. MetLife Tower Resources Group, Inc. (DE) 29. Headland - Pacific Palisades, LLC (CA) 30. Headland Properties Associates (CA) - 1% is owned by Headland - Pacific Palisades, LLC and 99% is owned by Metropolitan Life Insurance Company. 31. Krisman, Inc. (MO) 32. Special Multi-Asset Receivables Trust (DE) 33. White Oak Royalty Company (OK) 34. 500 Grant Street GP LLC (DE) 35. 500 Grant Street Associates Limited Partnership (CT) - 99% of 500 Grant Street Associates Limited Partnership is held by Metropolitan Life Insurance Company and 1% by 500 Grant Street GP LLC 36. MetLife Canada/MetVie Canada (Canada) 37. MetLife Retirement Services LLC (NJ) a) MetLife Investment Funds Services LLC (NJ) b) MetLife Investment Funds Management LLC (NJ) c) MetLife Associates LLC (DE) 38. Euro CL Investments LLC (DE) 39. MEX DF Properties, LLC (DE) 40. MSV Irvine Property, LLC (DE) - 4% of MSV Irvine Property, LLC is owned by Metropolitan Tower Realty Company, Inc. and 96% is owned by Metropolitan Life Insurance Company 41. MetLife Properties Ventures, LLC (DE) a) Citypoint Holdings II Limited (UK) 42. Housing Fund Manager, LLC (DE) 43. MTC Fund I, LLC (DE) 0.01% of MTC Fund I, LLC is held by Housing Fund Manager, LLC. 44. MTC Fund II, LLC (DE) V. MetLife Capital Trust II (DE) W. MetLife Capital Trust III (DE) X. MetLife Capital Trust IV (DE) Y. MetLife Insurance Company of Connecticut (CT) - 86.72% is owned by MetLife, Inc. and 13.28% is owned by MetLife Investors Group, Inc. (Life Department)(Accident Department) The operations of the Accident Department have ceased as a result of the transfer of the worker's compensation business to an unrelated party. 1. 440 South LaSalle LLC (DE) 2. Pilgrim Investments Oakmont Lane, LLC (DE) - 50% is owned by MetLife Insurance Company of Connecticut and 50% is owned by a third party. 3. Pilgrim Alternative Investments Opportunity Fund I, LLC (DE) - 67% is owned by MetLife Insurance Company of Connecticut, and 33% is owned by third party. 4. Pilgrim Alternative Investments Opportunity Fund III Associates, LLC (CT) - 67% is owned by MetLife Insurance Company of Connecticut, and 33% is owned by third party. 5. Pilgrim Investments Highland Park, LLC (DE) 6. Metropolitan Connecticut Properties Ventures, LLC (DE) 7. MetLife Canadian Property Ventures LLC (NY) 8. Euro TI Investments LLC (DE) 9. Greenwich Street Investments, LLC (DE) a) Greenwich Street Capital Offshore Fund, Ltd. (Virgin Islands) b) Greenwich Street Investments, L.P. (DE) 10. Hollow Creek, L.L.C. (CT) 11. One Financial Place Corporation (DE) - 100% is owned in the aggregate by MetLife Insurance Company of Connecticut. 12. One Financial Place Holdings, LLC (DE)-100% is owned in the aggregate by MetLife Insurance Company of Connecticut. 13. Plaza LLC (CT) a) Tower Square Securities, Inc. (CT) 1) Tower Square Securities Insurance Agency of New Mexico, Inc. (NM) 2) Tower Square Securities Insurance Agency of Ohio, Inc. (OH) 99% is owned by Tower Square Securities, Inc. 14. TIC European Real Estate LP, LLC (DE) 15. MetLife European Holdings, Inc. (UK) a) MetLife Europe Limited (IRELAND) (i) MetLife Pensions Trustees Limited (UK) b) MetLife Assurance Limited (UK) 16. Travelers International Investments Ltd. (Cayman Islands) 17. Euro TL Investments LLC (DE) 18. Corrigan TLP LLC (DE) 19. TLA Holdings LLC (DE) a) The Prospect Company (DE) 1) Panther Valley, Inc. (NJ) 20. TRAL & Co. (CT) - TRAL & Co. is a general partnership. Its partners are MetLife Insurance Company of Connecticut and Metropolitan Life Insurance Company. 21. Tribeca Distressed Securities L.L.C. (DE) 22. MetLife Investors USA Insurance Comapny (DE) 23. MetLife Property Ventures Canada ULC (Canada) Z. MetLife Reinsurance Company of South Carolina (SC) AA. MetLife Investment Advisors Company, LLC (DE) BB. MetLife Standby I, LLC (DE) 1. MetLife Exchange Trust I (DE) CC. MetLife Services and Solutions, LLC (DE) 1. MetLife Solutions Pte. Ltd. (Singapore) (i) MetLife Services East Private Limited (India) DD. Soap Acquisition Corporation (NY) The voting securities (excluding directors' qualifying shares, if any) of each subsidiary shown on the organizational chart are 100% owned by their respective parent corporation, unless otherwise indicated. In addition to the entities shown on the organizational chart, MetLife, Inc. (or where indicated, a subsidiary) also owns interests in the following entities: 1) Metropolitan Life Insurance Company owns varying interests in certain mutual funds distributed by its affiliates. These ownership interests are generally expected to decrease as shares of the funds are purchased by unaffiliated investors. 2) Metropolitan Life Insurance Company indirectly owns 100% of the non-voting preferred stock of Nathan and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting common stock of this company is held by an individual who has agreed to vote such shares at the direction of N.L. HOLDING CORP. (DEL), a direct wholly owned subsidiary of MetLife, Inc. 3) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited partnerships, are investment vehicles through which investments in certain entities are held. A wholly owned subsidiary of Metropolitan Life Insurance Company serves as the general partner of the limited partnerships and Metropolitan Life Insurance Company directly owns a 99% limited partnership interest in each MILP. The MILPs have various ownership and/or debt interests in certain companies. 4) The Metropolitan Money Market Pool and MetLife Intermediate Income Pool are pass-through investment pools, of which Metropolitan Life Insurance Company and/or its subsidiaries and/or affiliates are general partners. NOTE: THE METLIFE, INC. ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE JOINT VENTURES AND PARTNERSHIPS OF WHICH METLIFE, INC. AND/OR ITS SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE SUBSIDIARIES HAVE ALSO BEEN OMITTED. 7 ITEM 27. NUMBER OF CONTRACT OWNERS As of January 31, 2008, there were 6,737 qualified contract owners and 5,041 non-qualified contract owners of Class XC contracts. ITEM 28. INDEMNIFICATION The Depositor's parent, MetLife, Inc. has secured a Financial Institutions Bond in the amount of $50,000,000, subject to a $5,000,000 deductible. MetLife, Inc. also maintains a Directors and Officers Liability and Corporate Reimbursement Insurance Policy with limits of $400 million under which the Depositor and MetLife Investors Distribution Company, the Registrant's underwriter (the "underwriter"), as well as certain other subsidiaries of MetLife are covered. A provision in MetLife, Inc.'s by-laws provides for the indemnification (under certain circumstances) of individuals serving as directors or officers of certain organizations, including the Depositor and the Underwriter. The Bylaws of the Company (Article IV, Section 1) provide that: Each person who is or was a director, officer or employee of the corporation or is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person) shall be indemnified by the corporation as of right to the full extent permitted or authorized by the laws of the State of Missouri, as now in effect and as hereafter amended, against any liability, judgment, fine, amount paid in settlement, cost and expenses (including attorney's fees) asserted or threatened against and incurred by such person in his capacity as or arising out of his status as a director, officer or employee of the corporation or if serving at the request of the corporation, as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise. The indemnification provided by this bylaw provision shall not be exclusive of any other rights to which those indemnified may be entitled under any other bylaw or under any agreement, vote of shareholders or disinterested directors or otherwise, and shall not limit in any way any right which the corporation may have to make different or further indemnification with respect to the same or different persons or classes of persons. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors and officers or controlling persons of the Company pursuant to the foregoing, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. ITEM 29. PRINCIPAL UNDERWRITERS (a) MetLife Investors Distribution Company is the principal underwriter for the following investment companies (other than Registrant): Met Investors Series Trust MetLife Investors USA Separate Account A MetLife Investors Variable Annuity Account Five MetLife Investors Variable Life Account One MetLife Investors Variable Life Account Five MetLife Investors USA Variable Life Account A First MetLife Investors Variable Annuity Account One General American Separate Account Eleven General American Separate Account Twenty-Eight General American Separate Account Twenty-Nine General American Separate Account Two Security Equity Separate Account Twenty-Six Security Equity Separate Account Twenty-Seven MetLife of CT Fund U for Variable Annuities MetLife of CT Fund BD for Variable Annuities MetLife of CT Fund BD II for Variable Annuities MetLife of CT Fund BD III for Variable Annuities MetLife of CT Fund BD IV for Variable Annuities MetLife of CT Fund ABD for Variable Annuities MetLife of CT Fund ABD II for Variable Annuities MetLife of CT Separate Account PF for Variable Annuities MetLife of CT Separate Account PF II for Variable Annuities MetLife of CT Separate Account QP for Variable Annuities MetLife of CT Separate Account QPN for Variable Annuities MetLife of CT Separate Account TM for Variable Annuities MetLife of CT Separate Account TM II for Variable Annuities MetLife of CT Separate Account Five for Variable Annuities MetLife of CT Separate Account Six for Variable Annuities MetLife of CT Separate Account Seven for Variable Annuities MetLife of CT Separate Account Eight for Variable Annuities MetLife of CT Separate Account Nine for Variable Annuities MetLife of CT Separate Account Ten for Variable Annuities MetLife of CT Fund UL for Variable Life Insurance, MetLife of CT Fund UL II for Variable Life Insurance MetLife of CT Fund UL III for Variable Life Insurance MetLife of CT Variable Life Insurance Separate Account One MetLife of CT Variable Life Insurance Separate Account Two MetLife of CT Variable Life Insurance Separate Account Three Metropolitan Life Variable Annuity Separate Account I Metropolitan Life Variable Annuity Separate Account II MetLife of CT Separate Account Eleven for Variable Annuities MetLife of CT Separate Account Twelve for Variable Annuities MetLife of CT Separate Account Thirteen for Variable Annuities MetLife of CT Separate Account Fourteen for Variable Annuities MetLife Insurance Company of Connecticut Variable Annuity Separate Account 2002 MetLife Life and Annuity Company of Connecticut Variable Annuity Separate Account 2002 Metropolitan Life Separate Account E Metropolitan Life Separate Account UL Paragon Separate Account A Paragon Separate Account B Paragon Separate Account C Paragon Separate Account D Metropolitan Series Fund, Inc. Metropolitan Tower Life Separate Account One Metropolitan Tower Life Separate Account Two (b) MetLife Investors Distribution Company is the principal underwriter for the Contracts. The following persons are the officers and directors of MetLife Investors Distribution Company. The principal business address for MetLife Investors Distribution Company is 5 Park Plaza, Suite 1900, Irvine, CA 92614.
NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER - ------------------------------------- ----------------------------------------------------------------- Michael K. Farrell Director 10 Park Avenue Morristown, NJ 07962 Craig W. Markham Director and Vice President 13045 Tesson Ferry Road St. Louis, MO 63128 William J. Toppeta Director 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Paul A. Sylvester President, National Sales Manager-Annuities & LTC 10 Park Avenue Morristown, NJ 07962 Elizabeth M. Forget Executive Vice President, Investment Fund Management & Marketing 260 Madison Avenue New York, NY 10016 Paul A. LaPiana Executive Vice President, National Sales Manager-Life 5 Park Plaza Suite 1900 Irvine, CA 92614 Richard C. Pearson Executive Vice President, 5 Park Plaza General Counsel and Secretary Suite 1900 Irvine, CA 92614 Peter Gruppuso Vice President, Chief Financial Officer 485-E US Highway 1 South Iselin, NJ 08830 Leslie Sutherland Senior Vice President, Channel Head-Broker/Dealers 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Edward C. Wilson Senior Vice President, Channel Head-Wirehouse 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Douglas P. Rodgers Senior Vice President, Channel Head-LTC 10 Park Avenue Morristown, NJ 07962 Curtis Wohlers Senior Vice President, Channel Head-Planners 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Myrna F. Solomon Senior Vice President, Channel Head-Banks 501 Boylston Street Boston, MA 02116 Jeffrey A. Barker Senior Vice President, Channel Head-Independent Accounts 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101
NAME AND PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER - ------------------------------------- ------------------------------------------------------ Andrew Aiello Senior Vice President, Channel Head-National Accounts 5 Park Plaza Suite 1900 Irvine, CA 92614 Jay S. Kaduson Senior Vice President 10 Park Avenue Morristown, NJ 07962 Eric T. Steigerwalt Treasurer 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101 Debora L. Buffington Vice President, Director of Compliance 5 Park Plaza Suite 1900 Irvine, CA 92614 David DeCarlo Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Paul M. Kos Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Deron J. Richens Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Cathy Sturdivant Vice President 5 Park Plaza Suite 1900 Irvine, CA 92614 Paulina Vakouros Vice President 260 Madison Avenue New York, NY 10016 Charles M. Deuth Vice President, National Accounts 1 MetLife Plaza 27-01 Queens Plaza North Long Island City, NY 11101
(c) Compensation From the Registrant: The following commissions and other compensation were received by the Distributor, directly or indirectly, from the Registrant during the Registrant's last fiscal year:
(1) (2) (3) (4) (5) Net Underwriting Discounts And Compensation Brokerage Other Name of Principal Underwriter Commissions On Redemption Commissions Compensation - ----------------------------------------- ----------------- --------------- ------------- ------------- MetLife Investors Distribution Company $93,279,104 $0 $0 $0
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS The following companies will maintain possession of the documents required by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder: (a) Registrant (b) MetLife Annuity Operations, 4700 Westown Parkway, Bldg. 4, Suite 200, West Des Moines, IA 50266 (c) State Street Bank & Trust Company, 225 Franklin Street, Boston, MA 02110 (d) MetLife Investors Distribution Company, 5 Park Plaza, Suite 1900, Irvine, CA 92614 (e) MetLife Investors Insurance Company, 5 Park Plaza, Suite 1900, Irvine, CA 92614 (f) MetLife, 4010 Boy Scout Blvd., Tampa, FL 33607 (g) MetLife, 501 Boylston Street, Boston, MA 02116 (h) MetLife, 200 Park Avenue, New York, NY 10166 (i) General American Life Insurance Company, 13045 Tesson Ferry Road, St. Louis, MO 63128 (with respect to the Guarantee Agreement only) ITEM 31. MANAGEMENT SERVICES Not Applicable. ITEM 32. UNDERTAKINGS a. Registrant hereby undertakes to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen (16) months old for so long as payment under the variable annuity contracts may be accepted. b. Registrant hereby undertakes to include either (1) as part of any application to purchase a contract offered by the Prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a postcard or similar written communication affixed to or included in the Prospectus that the applicant can remove to send for a Statement of Additional Information. c. Registrant hereby undertakes to deliver any Statement of Additional Information and any financial statement required to be made available under this Form promptly upon written or oral request. d. During any time there are insurance obligations outstanding and covered by the guarantee issued by General American Life Insurance Company ("Guarantee Period"), previously filed as an exhibit with the SEC (the "Guarantee"), the Depositor hereby undertakes to provide notice to contract owners covered by the Guarantee promptly after the happening of significant events related to the Guarantee. These significant events include: (i) termination of the Guarantee that has a material adverse effect on the contract owner's rights under the Guarantee; (ii) a default under the Guarantee that has a material adverse effect on the contract owner's rights under the Guarantee; or (iii) the insolvency of General American Life Insurance Company ("Guarantor"). Depositor hereby undertakes during the Guarantee Period to cause Registrant to file post-effective amendments to this Registration Statement as frequently as is necessary to ensure that the current annual audited financial statements of the Guarantor in the Registration Statement are updated to be as of a date not more than 16 months prior to the effective date of this Registration Statement, and to cause Registrant to include as an exhibit to this Registration Statement the consent of the independent registered public accounting firm of the Guarantor regarding such financial statements. During the Guarantee Period, the Depositor hereby undertakes to include in the prospectus to contract owners, an offer to supply the Statement of Additional Information which shall contain the annual audited financial statements of the Guarantor, free of charge upon a contract owner's request. REPRESENTATIONS MetLife Investors Insurance Company ("Company") hereby represents that the fees and charges deducted under the Contracts described in the Prospectus, in the aggregate, are reasonable in relation to the services rendered, the expenses to be incurred and the risks assumed by the Company. The Company hereby represents that it is relying upon a No-Action Letter issued to the American Council of Life Insurance dated November 28, 1988 (Commission ref. IP-6-88) and that the following provisions have been complied with: 1. Include appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in each registration statement, including the prospectus, used in connection with the offer of the contract; 2. Include appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in any sales literature used in connection with the offer of the contract; 3. Instruct sales representatives who solicit participants to purchase the contract specifically to bring the redemption restrictions imposed by Section 403(b)(11) to the attention of the potential participants; 4. Obtain from each plan participant who purchases a Section 403(b) annuity contract, prior to or at the time of such purchase, a signed statement acknowledging the participant's understanding of (1) the restrictions on redemption imposed by Section 403(b)(11), and (2) other investment alternatives available under the employer's Section 403(b) arrangement to which the participant may elect to transfer his contract value. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has caused this Registration Statement to be signed on its behalf in the City of Irvine and State of California on this 22nd day of April 2008. METLIFE INVESTORS VARIABLE ANNUITY ACCOUNT ONE (Registrant) By: METLIFE INVESTORS INSURANCE COMPANY By: /s/ Richard C. Pearson ---------------------------------------- Richard C. Pearson Vice President, Associate General Counsel and Secretary METLIFE INVESTORS INSURANCE COMPANY (Depositor) By: /s/ Richard C. Pearson ---------------------------------------- Richard C. Pearson Vice President, Associate General Counsel and Secretary
As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 22, 2008.
/s/ Michael K. Farrell* - -------------------------------- Chairman of the Board, Chief Executive Officer, Michael K. Farrell President and Director /s/ Jay S. Kaduson* Vice President and Director - -------------------------------- Jay S. Kaduson /s/ Charles V. Curcio* Vice President-Finance - -------------------------------- (principal financial officer and principal accounting officer) Charles V. Curcio /s/ Susan A. Buffum* Director - -------------------------------- Susan A. Buffum /s/ Margaret C. Fechtmann* Director - -------------------------------- Margaret C. Fechtmann /s/ Elizabeth M. Forget* Executive Vice President and Director - -------------------------------- Elizabeth M. Forget /s/ George Foulke* Director - -------------------------------- George Foulke /s/ Paul A. Sylvester* Director - -------------------------------- Paul A. Sylvester /s/ Richard C. Pearson* Vice President, Associate General Counsel, Secretary and - -------------------------------- Richard C. Pearson Director /s/ Jeffrey A. Tupper* Assistant Vice President and Director - -------------------------------- Jeffrey A. Tupper
*By: /s/ Michele H. Abate ---------------------------------------- Michele H. Abate, Attorney-In-Fact April 22, 2008
*MetLife Investors Insurance Company. Executed by Michele H. Abate, Esquire on behalf of those indicated pursuant to powers of attorney incorporated herein by reference to Registrant's Post-Effective Amendment No. 15 to Form N-4 (File Nos. 333-51950/811-05200) filed as Exhibit 13(i) on April 19, 2007. SIGNATURES As required by the Securities Act of 1933, General American Life Insurance Company has caused this Registration Statement to be signed on its behalf, in the city of St. Louis and State of Missouri this 22nd day of April 2008. GENERAL AMERICAN LIFE INSURANCE COMPANY (Guarantor) By: /s/ William C. Lane ---------------------------------------- William C. Lane Vice President and Associate General Counsel
As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated on April 22, 2008.
/s/ Lisa M. Weber* - -------------------------------- Chairman of the Board, Chief Executive Officer, Lisa M. Weber President and Director /s/ Michael K. Farrell* Director - -------------------------------- Michael K. Farrell /s/ William J. Mullaney* Director - -------------------------------- William J. Mullaney /s/ James L. Lipscomb* Director - -------------------------------- James L. Lipscomb /s/ Joseph J. Prochaska, Jr.* Executive Vice President and Chief Accounting Officer - -------------------------------- Joseph J. Prochaska, Jr. /s/ Stanley J. Talbi* Director - -------------------------------- Stanley J. Talbi /s/ Michael J. Vietri* Director - -------------------------------- Michael J. Vietri /s/ William J. Wheeler* Director - -------------------------------- William J. Wheeler /s/ James J. Reilly* Vice President (principal financial officer) - -------------------------------- James J. Reilly - -------------------------------- Eric T. Steigerwalt Senior Vice President, Treasurer and Director
*By: /s/ Michele H. Abate ---------------------------------------- Michele H. Abate, Attorney-In-Fact April 22, 2008
* General American Life Insurance Company. Executed by Michele H. Abate, Esquire on behalf of those indicated pursuant to powers of attorney incorporated herein by reference to Registrant's Post-Effective Amendment No. 15 to Form N-4 (File Nos. 333-51950/811-05200) filed as Exhibit 13(ii) on April 19, 2007, except for the power of attorney for James J. Reilly, which is incorporated herein by reference to Registrant's Post-Effective Amendment No. 16 to Form N-4 (File Nos. 333-51950/811-05200) filed as Exhibit 13(iii) on July 12, 2007. INDEX TO EXHIBITS 5(vi) Form of Variable Annuity Application 10 Consent of Independent Registered Public Accounting Firm (Deloitte & Touche LLP) for the Depositor, Registrant and the Guarantor EX-99.5(VI) 2 dex995vi.txt FORM OF VARIABLE ANNUITY APPLICATION [LOGO] MetLife(R) VARIABLE ANNUITY APPLICATION SEND APPLICATION AND CHECK TO: Home Office Address (no correspondence) METLIFE INVESTORS INSURANCE COMPANY 13045 Tesson Ferry . St. Louis, MO 63128 Policy Service Office: P.O. Box 10366 . Des Moines, Iowa 50306-0366 For Express Mail Only . 4700 Westown Parkway Ste. 200 . West Des Moines, IA 50266-2266 MetLife Investors Variable Annuity Class XC FOR ASSISTANCE CALL: THE SALES DESK ACCOUNT INFORMATION 1. ANNUITANT - --------------------------------------------------------------------- Social Name (First) (Middle) (Last) Security Number ___________ -- _________ -- _________ Sex [_] M [_] F Date of Birth ______/______/_______ - --------------------------------------------------------------------- Address (Street - No P.O. Box) (City) (State) (Zip) Phone (______) ______________________________________ 2. OWNER (COMPLETE ONLY IF DIFFERENT THAN ANNUITANT) Correspondence is sent to the Owner. - --------------------------------------------------------------------- Social Name (First) (Middle) (Last) Security/Tax ID Number _______ -- ______ -- _________ Sex [_] M [_] F Date of Birth/Trust ____/____/_____ - --------------------------------------------------------------------- Address (Street - No P.O. Box) (City) (State) (Zip) Phone (______) ______________________________________ 3. JOINT OWNER - --------------------------------------------------------------------- Social Name (First) (Middle) (Last) Security Number ___________ -- _________ -- _________ Sex [_] M [_] F Date of Birth ______/______/_______ - --------------------------------------------------------------------- Address (Street - No P.O. Box) (City) (State) (Zip) Phone (______) ______________________________________ 4. BENEFICIARY Show full name(s), address(es), relationship to Owner, Social Security Number(s), and percentage each is to receive. Use the Special Requests section if additional space is needed. UNLESS SPECIFIED OTHERWISE IN THE SPECIAL REQUESTS SECTION, IF JOINT OWNERS ARE NAMED, UPON THE DEATH OF EITHER JOINT OWNER, THE SURVIVING JOINT OWNER WILL BE THE PRIMARY BENEFICIARY, AND THE BENEFICIARIES LISTED BELOW WILL BE CONSIDERED CONTINGENT BENEFICIARIES. -- -- - ----------------------------------------------------------------------------------------------------------------------------- Primary Name (Street - No P.O. Box) Relationship Social Security Number % -- -- - ----------------------------------------------------------------------------------------------------------------------------- Primary Name (Street - No P.O. Box) Relationship Social Security Number % -- -- - ----------------------------------------------------------------------------------------------------------------------------- Contingent Name (Street - No P.O. Box) Relationship Social Security Number % -- -- - ----------------------------------------------------------------------------------------------------------------------------- Contingent Name (Street - No P.O. Box) Relationship Social Security Number % ANNUITY PAYMENTS AND TERMINATION VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE SEPARATE ACCOUNT, ARE VARIABLE, MAY INCREASE OR DECREASE, AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOUNT. 5. PLAN TYPE 6. PURCHASE PAYMENT INDICATE ONLY HOW CONTRACT IS TO BE ISSUED. Funding Source of Purchase Payment -------------------------------------- [_] 1035 Exchange [_] Check [_] Wire .. NON-QUALIFIED ............ [_] Initial Purchase .. QUALIFIED Payment $ ____________________________ TRADITIONAL IRA* ......... [_] Transfer [_] Rollover [_] Contribution - Year _____ Make Check Payable to MetLife Investors .. QUALIFIED SEP IRA* ....... [_] Transfer [_] Rollover [_] Contribution - Year _____ (Estimate dollar amount for 1035 .. QUALIFIED ROTH IRA* ...... [_] Transfer [_] Rollover [_] Contribution - Year _____ exchanges, transfers, rollovers, etc.) .. QUALIFIED 401 ............ [_] Minimum Initial Purchase Payment: $10,000 Non-Qualified/Qualified *THE ANNUITANT AND OWNER MUST BE THE SAME PERSON. 7029 (10/07) APPXC APRIL 2008
Page 1 RIDERS 7. BENEFIT RIDERS (subject to state availability and age restrictions ) These riders may only be chosen at time of application. PLEASE NOTE, THERE ARE ADDITIONAL CHARGES FOR THE OPTIONAL RIDERS. ONCE ELECTED THESE OPTIONS MAY NOT BE CHANGED. 1) LIVING BENEFIT RIDERS (Optional. Only ONE of the following Riders may be elected) [_] Guaranteed Minimum Income Benefit Rider (GMIB) [_] Guaranteed Minimum Income Benefit Plus Rider (GMIB PLUS) (2008) [_] Guaranteed Withdrawal Benefit (GWB) [_] Single Life - Lifetime Withdrawal Guarantee (LWG) (2008) [_] Joint Life - Lifetime Withdrawal Guarantee (LWG) (2008) [_] Guaranteed Minimum Accumulation Benefit Rider (GMAB) 2) DEATH BENEFIT RIDERS (Check one. If no election is made, the Principal Protection option will apply). [_] Principal Protection (no additional charge) [_] Annual Step-Up [_] Enhanced Death Benefit (may only be elected with GMIB Plus or without an optional Living Benefit Rider.) 3) [_] Earnings Preservation Benefit Rider COMMUNICATIONS 8. TELEPHONE TRANSFER I (We) authorize MetLife Investors Insurance Company (MetLife Investors) or any person authorized by MetLife Investors to accept telephone transfer instructions and/or future payment allocation changes from me (us) and my Registered Representative/Agent. Telephone transfers will be automatically permitted unless you check one or both of the boxes below indicating that you do not wish to authorize telephone transfers. MetLife Investors will use reasonable procedures to confirm that instructions communicated by telephone are genuine. I (We) DO NOT wish to authorize telephone transfers for the following (check applicable boxes): [_] Owner(s) [_] Registered Representative/Agent SIGNATURES 9. REPLACEMENTS Does the applicant have any existing life insurance policies or annuity contracts? [_] Yes [_] No Is this annuity being purchased to replace any existing life insurance or annuity policy(ies)? [_] Yes [_] No If "Yes," applicable disclosure and replacement forms must be attached. 10. FRAUD STATEMENT & DISCLOSURE NOTICE TO APPLICANT: ARKANSAS, LOUISIANA, AND NEW MEXICO RESIDENTS ONLY: Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and criminal penalties. DISTRICT OF COLUMBIA RESIDENTS ONLY: WARNING: It is a crime to provide false or misleading information to an insurer for the purpose of defrauding the insurer or any other person. Penalties include imprisonment and/or fines. In addition, an insurer may deny insurance benefits if false information materially related to a claim was provided by the applicant. KENTUCKY RESIDENTS ONLY: Any person who knowingly and with the intent to defraud any insurance company or other person files an application for insurance containing any materially false information or conceals, for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime. MAINE, TENNESSEE, AND WASHINGTON RESIDENTS ONLY: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits. NEW JERSEY RESIDENTS ONLY: Any person who includes any false or misleading information on an application for an insurance policy is subject to criminal and civil penalties. OHIO RESIDENTS ONLY: A person who, with intent to defraud or knowing that he is facilitating a fraud against an insurer, submits an application or files a claim containing false or deceptive statement is guilty of insurance fraud. PENNSYLVANIA RESIDENTS ONLY: ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT. PENNSYLVANIA RESIDENTS ONLY: Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties. MASSACHUSETTS RESIDENTS ONLY: The variable annuity for which you are making this application gives us the right to restrict or discontinue allocations of purchase payments to the Fixed Account and reallocation from the Investment Divisions to the Fixed Account. This discontinuance right may be exercised for reasons which include but are not limited to our ability to support the minimum guaranteed interest rate of the Fixed Account when the yields on our Investments would not be sufficient to do so. This discontinuance will not be exercised in an unfairly discriminatory manner. The prospectus also contains additional information about our right to restrict access to the Fixed Account in the future. BY SIGNING THIS APPLICATION, I ACKNOWLEDGE THAT I HAVE RECEIVED, READ AND UNDERSTOOD THE STATEMENTS IN THIS APPLICATION AND IN THE PROSPECTUS THAT THE FIXED ACCOUNT MAY NOT BE AVAILABLE AT SOME POINT DURING THE LIFE OF THE CONTRACT INCLUDING POSSIBLY WHEN THIS CONTRACT IS ISSUED. FLORIDA RESIDENTS ONLY: A PERSON WHO KNOWINGLY AND WITH INTENT TO INJURE, DEFRAUD OR DECEIVE ANY INSURANCE COMPANY FILES A STATEMENT OF CLAIM CONTAINING FALSE, INCOMPLETE OR MISLEADING INFORMATION IS GUILTY OF A FELONY OF THE THIRD DEGREE. 11. ACKNOWLEDGEMENT AND AUTHORIZATION I (We) agree that the above information and statements and those made on all pages of this application are true and correct to the best of my (our) knowledge and belief and are made as the basis of my (our) application. I (We) acknowledge receipt of the current prospectus of MetLife Investors Variable Annuity Account One. PAYMENTS AND VALUES PROVIDED BY THE CONTRACT FOR WHICH APPLICATION IS MADE ARE VARIABLE AND ARE NOT GUARANTEED AS TO DOLLAR AMOUNT. I HAVE READ THE STATE FRAUD STATEMENT IN SECTION 10 ABOVE APPLICABLE TO ME. - -------------------------------------------------------------------------------- (OWNER SIGNATURE & TITLE, ANNUITANT UNLESS OTHERWISE NOTED) - -------------------------------------------------------------------------------- (JOINT OWNER SIGNATURE & TITLE) - -------------------------------------------------------------------------------- (SIGNATURE OF ANNUITANT IF OTHER THAN OWNER) Signed at ---------------------------------------------------------------------- (City) (State) Date --------------------------------------------------------------------------- 12. AGENT'S REPORT Does the applicant have any existing life insurance policies or annuity contracts? [_] Yes [_] No Is this annuity being purchased to replace any existing life insurance or annuity policy(ies)? [_] Yes [_] No If "Yes," applicable disclosure and replacement forms must be attached. - -------------------------------------------------------------------------------- AGENT'S SIGNATURE - -------------------------------------------------------------------------------- Phone - -------------------------------------------------------------------------------- Agent's Name and Number - -------------------------------------------------------------------------------- Name and Address of Firm - -------------------------------------------------------------------------------- State License ID Number (Required for FL) - -------------------------------------------------------------------------------- Client Account Number Home Office Program Information: - -------------------------------- Select one. Once selected, the option cannot be changed. Option A ________________ Option B ________________ 7029 (10/07) APPXC APRIL 2008 Page 2 EX-99.10 3 dex9910.txt CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (DELOITTE & TOUCHE LLP) Exhibit 10 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the use in this Post-Effective Amendment No. 22/Amendment No. 179 to Registration Statement Nos. 333-51950/811-05200 on Form N-4 of our report dated March 24, 2008, relating to the financial statements of each of the Sub- Accounts of MetLife Investors Variable Annuity Account One, our report dated April 21, 2008, relating to the financial statements of MetLife Investors Insurance Company (the "Company") (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the fact that the Company changed its method of accounting for income taxes, as required by accounting guidance adopted on January 1, 2007, and includes an explanatory paragraph referring to the fact that the Company's 2006 and 2005 financial statements have been restated), and our report dated April 14, 2008, relating to the consolidated financial statements of General American Life Insurance Company (the "Guarantor") (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the fact that the Guarantor changed its method of accounting for deferred acquisition costs, and for income taxes, as required by accounting guidance adopted on January 1, 2007, and changed its method of accounting for defined benefit pension and other postretirement plans, as required by accounting guidance adopted on December 31, 2006), all appearing in the Statement of Additional Information, which is part of such Registration Statement, and to the reference to us under the heading "Independent Registered Public Accounting Firm" also in the Statement of Additional Information. /s/ Deloitte & Touche LLP Tampa, Florida April 22, 2008 -----END PRIVACY-ENHANCED MESSAGE-----